6 Donors in Focus: Major Donors and Donor - Recipient Interactions

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It is the aim of the following chapter to briefly portray civil society assistance in CEE by describing major donors, and their civil society programs. In doing so, the chapter focuses on four exemplary donors for reasons given above (see section 5.3.2): The European Union, the United States, Germany and the network of Soros foundations. The first part of the chapter gives a descriptive overview of these four donors. Emphasis is placed on the programs and strategies of major donors to assist the democratic transformation of the CEE states in general and the activities to support civil society in particular. In a second step, the chapter additionally outlines the main types of donor-recipient relations and sketches the various networks and links between donors and recipients that channel civil society assistance.

6.1 Major Donors of Civil Society Assistance in Central and Eastern Europe

6.1.1 Civil Society Assistance as Part of an Integration Strategy – The European Union and its Phare Program

The most salient supranational actor involved in CEE is doubtlessly the EU. According to Pridham (1999) the EU applies a strategy of “dual conditionality” in Central and Eastern Europe. The first conditionality refers to the practice of the EU to attach membership in the EU to certain criteria, outlined at the summit in Copenhagen in 1993. From the early 1990s the European Union regards integration as the major strategy to achieve stability in the CEE states (Frantz 2000: 220). At the summit in Copenhagen, the EU worked out a catalogue of criteria that subsequently function as a “timetable to integration”, and gives the states seeking memberships a clear idea what they must do to their goal of accession. According to the Copenhagen criteria, the accession states have to meet three major conditions:

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  1. Stable institutions guaranteeing democracy, the rule of law, human rights, and the protection of minorities,
  2. The existence of a functioning market economy as well as the capacity to cope with competitive pressure and market forces within the Union,
  3. The ability to meet the obligations of membership (adoption of the acquis communautaire) including adherence to the aims of political, economic and monetary union (see e.g. Frantz 2000: 230).91 

The first part of the “dual conditionality” thus underlines that integration requires not only economic but also democratic stability and thus aims to ensure the political motivation of the states seeking membership to democratically transform the political system. The second part of the “dual conditionality” refers to the practice to directly grant technical and financial assistance to the CEE states and is thus more important for this study. The EU does not leave the accession aspirants alone on their path towards membership but provides assistance via the Phare program. While the initial idea behind Phare was mere economic assistance to the newly emerging democracies, the program steadily evolved as a pre-accession instrument that aimed to keep the CEE states on a continual transformation path.

Originally Phare was implemented in 1989 as a form of economic aid to Poland and Hungary (as indicated by the full name “Poland Hungary Assistance for the Reconstruction of the Economy”) with the goal of supporting economic reforms and enhancing the private sector. It focused on measures in the area of agriculture, environment, restructuring of the economy, human resources (education and training), and other technical assistance. In the first year, the largest part of the funds (up to 50%) was dedicated to the restructuring of the economy.92 However, the program steadily expanded in terms of geography, content and objectives.93 In the early years the program was truly demand-driven, i.e. the major share was subject to national programs negotiated between the recipient government and the Commission. Only up to 15% of the funds went into so-called ‘horizontal programs’, i.e., programs designed and administered by the Commission.94 In 1993 after the Copenhagen summit new guidelines have been elaborated for the years 1993 - 1997. Afterwards, Phare incorporated a more performance oriented approach, as well as a more explicit conditionality. Furthermore new European Agreement activities – focusing on European integration including institution building and administrative measures – were implemented. Infrastructural measures were also integrated to a large extent into the program decreasing the emphasis on economic restructuring. In 1997 the Phare Program was fully restructured into a pre-accession instrument. Phare is no longer demand-driven but accession-driven. The different measures should follow the priorities listed in the relevant Accession Partnerships.95 Now 30% of the funds are attributed to institution building and 70% are left to investments. The major objectives are to focus on certain crucial needs for accession (institution building, technical assistance in the areas of adopting the acquis, public administration, advancement of economic and social coherence) and to train the candidate countries to manage the community funds, which will be available after accession.96

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I now turn to the question how the Phare program supported civil society in CEE. In the first years Phare did not include projects with a special focus on democracy and civil society. In 1991 it was simply stated that the Phare assistance contained a general commitment to recognize the value of non-governmental organizations while implementing Phare projects (European Commission 1991: 19). In some Phare sector programs, e.g. concerning SMEs, the environment, social and employment policy, key importance was given to the support of intermediary bodies. In other sector programs such as the local government support programs NGOs were increasingly chosen as responsible for implementing Phare programs (ibid.). In particular, in the context of Phare regional development programs, substantial activities have been undertaken by NGOs. For example in Poland the majority of projects in this area were implemented by non-state actors (European Commission 1997a: 53). Besides this indirect way of supporting actors of civil society, two further channels of assistance can be identified: (1) via special, so called “horizontal” programs, and (2) via the national programs.

In 1992 a special Phare (and Tacis) Democracy Program was launched on initiative of the European Parliament in order to “counter the fact that Western attention and assistance has been focused largely on the creation of market economies in the CEEC” (European Commission 1997b: 2). The program aimed to support the establishment of political and civil institutions crucial for the achievement of political consensus and stability. Between 1992 and 1997 the program financed democratic initiatives worth of 56 Million ECU. The program supported three different types of projects:

  1. ad hoc projects, designed and administered by the European Commission to meet a specific need (10% of the budget);
  2. macro-projects up to 200,000 € which involve partnerships between NGOs in East and West (biannual competitions); only NGOs eligible; managed by European Human Rights Foundation since 1993 (70% of budget);
  3. micro-projects up to 10,000 € approved in target countries; only NGOs eligible, managed by EU delegations that often delegated the task to local organizations (e.g. Cooperation Fund in Poland, Civil Society Development Foundation in Slovakia) (20 % of budget).

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Although the Democracy Program was not exclusively designed as a civil society program, in practice its major objective was the support of actors of civil society, namely of NGOs. This is mainly the case because only NGOs were eligible to apply to the major share (90%) of the projects funded.97 Moreover, the evaluation of the Phare Democracy program conducted in 1997 revealed that the major share of the realized projects fell into the category “development of NGOs” (46%), followed by the categories “awareness raising and education” (15%), “media” (19%), and “human rights” (10%) (European Commission 1997b: 35pp).98 The Phare Democracy Program is, however, not the only program that has been designed in order to support civil society, NGOs and local structures. Other multi-country programs, namely the Phare NGO and LIEN program starting in 1992 and 1993 respectively and the Phare Partnership Program starting in 1992 provide support for civil society development (European Commission 1998b: 31). Here NGO and LIEN are “social” programs targeting specifically at NGOs, and supporting activities to promote integration of disadvantaged groups (unemployed, homeless, handicapped people, etc.) in the population. Socially active NGOs were the main beneficiaries of the 40 million ECU earmarked for LIEN (1993-1997) (ibid). The Phare Partnership program (41 Million ECU between 1993-1997) in contrast, focused primarily on support for local economic development, cooperation between the private sector, local government and civil society and aimed to trigger transnational European networks. NGOs, independent organizations and institutes were the main beneficiaries of the Partnership Program.

Moreover, civil society assistance is a frequent part of the national programs negotiated between the recipient governments and the Commission. In most of the CEE countries civil society development programs have been established that are subject to the Phare national program (as was the case for example in Bulgaria in 1996, the Civil Dialogue Program has fulfilled the same function in Poland since 1992 already). The objectives of Phare’s civil society programs are “to strengthen the capacity of leading institutions and to assist them in expanding the range of their activities, increasing their self-reliance and enhancing their participation in society and their support of NGOs” (European Commission 1997a: 53). In brief, the programs focus on some leading NGOs who aim to advance civil society development. The funds are mainly distributed by specially founded quasi-independent funds such as e.g. the Cooperation Fund in Poland, or the Civil Society Development Foundations in Slovakia, Bulgaria or Romania.

In sum, one can distinguish between three different channels through which actors and organizations of civil society benefited from Phare money. Firstly, NGOs benefited indirectly from the assistance provided as they frequently implemented Phare projects in a variety of areas ranking from environment to decentralization. Secondly, certain horizontal programs, such as democracy, LIEN or the partnership program mainly focused on NGOs. Thirdly, some recipient states chose civil society development as one field of assistance of their national programs. These various distribution channels make it difficult to estimate how many funds went to the benefit of civil society. The evaluation of the Phare Partnership Program estimates that between 1992 and 1997 Phare programs in favor of civil society development (Democracy, Lien, Partnership, Civil Society Development Program) account for 157.7 million ECU in the years 1991-1991. This translates to 2% of the total Phare budget.

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Table 3: Phare Programs in Favor of Civil Society Development 1991- 1997(MECU)

Program

1992

1993

1994

1995

1996

1997

Total

%

Partnership

10

11

10

10

41

26.0

Democracy

5

20

20

20

22

20

56

35.5

NGO/LIEN

5

5

10

10

10

40

24.4

Civil Society Dev.

4

6.2

0.5

2

8

20.7

13.2

TOTAL

9

25

21.2

1.5

33

28

157.7

100

Source: European Commission (1998b: 31).

6.1.2 Forerunners in the Promotion of Democracy: United States Agency for International Development (USAID), and the National Endowment for Democracy (NED) 

The USA can be viewed as a forerunner in the support to democratization. As early as 1983 the Reagan administration established the National Endowment for Democracy (NED), a quasi-independent foundation with the explicit purpose of promoting and assisting democracy abroad. It has an independent bipartisan board of directors, but receives congressional funding (Diamond 1997: 315pp). However, while the early years of democracy promotion were highly influenced by bipolarity and the cold war, the new emphasis on the promotion of democracy as a goal in itself instead of an ideological weapon has evolved slowly since the middle of the 1980s. According to Carothers (1999a: 49) democracy promotion became a full-fledged, integral part of US foreign policy at the beginning of the 1990 in response to the new challenges in the East.

The new emphasis on foreign policy is portrayed by the announcement of the “Democratic Initiative” of the United States Agency for International Development in late 1990. While since its creation in 1961, the agency previously focused mainly on social and economic development, in 1990 the agency established the promotion of democracy as one of its central objectives (ibid). This reads in the Strategic Plan for 1997 as follows:

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“Broad based participation and democratic processes are integral elements of sustainable development: they encourage individuals and societies to take responsibility for their own progress, ensure the protection of human rights and foster informed civic participation…. To achieve the broad goals of democracy, USAID supports programs that strengthen democratic practices and institutions, and ensure the full participation of women and other groups lacking full access to the political system…” (USAID Strategic Plan 1997 cit. on website).

With this reorientation from a development policy that mainly focused upon economic development to one that emphasizes the importance of political restructuring, USAID was among the first development agencies to take this turn. From 1991 - 1999 only the expenditures for democracy projects from USAID increased nearly by four and went up from 165.2 Million US$ to 637 million US$ (Carothers 1999a: 49). USAID breaks down the strategic goal of “democratic transition” into five distinct areas: Rule of law; public administration; independent media; political and social process including electoral assistance and trade union assistance; and non-government organization development. In line with these objectives, the assistance also granted to CEE countries aims to support economic as well as political transformation. The US assistance to CEE countries is based on the Support For East European Democracy, or SEED Act, fashioned by the U.S. Congress in 1989 already. At that time, the Congress authorized $1 billion for Central and Eastern European assistance. The law was seen as setting the foundations for a new Marshall Plan designed to revitalize post-Cold War Europe and aimed to provide for assistance to promote democracy and economic reforms throughout Central and Eastern Europe.99

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With regard to American civil society assistance, one has to note that in the early 1990s NGO development only played a minor role in overall democracy assistance. According to Carothers (1999: 59), American donors regarded civil society assistance simply as an “initial dose” that would soon roll back for the benefit of top-down programs. Major emphasis was instead placed on electoral assistance and institution building. However, this does not imply that civic initiatives and NGOs did not receive assistance. As Petrescu points out for the case of Romania, assistance to civil society came in fast and without bureaucratic hurdles. Most grants were made directly by the National Endowment of Democracy or by their grantee “Institute for Democracy in Eastern Europe” (IDEE).

“These first small grants had a decisive impact. They helped establish the credibility of a few organizations, set them up as institutions and formed a group of “traditional recipients” of grants” (Petrescu 2000: 219).

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However, the emphasis in the first years was on civic education, namely on voter education and thus indirectly served the purpose of setting up democratic elections. If other forms of civic initiatives were supported, the assistance was often the result of personal contacts of aid officers in the field and thus followed a trial and error strategy and not a thoroughly elaborated programmatic approach.

However, in 1995 USAID stressed the importance of NGO development as an integral part of democracy assistance and firstly institutionalized an NGO support program: the “Democracy Network Project” (DemNet). DemNet aimed to strengthen public policy oriented NGOs and was concurrently implemented in the countries of CEE. Other NGO support programs farther East followed suit. What all NGO support programs had in common was that they provided small grants to chosen NGOs, emphasized the importance of a transparent grant making procedure, integrated training and technical assistance and used one American NGO per country in an intermediary implementation role. In each country the objectives of the grant schemes and the focus points varied depending on local needs and the agenda of the intermediary American NGO (that mostly opened an office with local staff in the respective country).100 DemNet also included regional components that aimed to strengthen cross-border linkages. Moreover, a regional project in which the International Center for Not-for-Profit Law (ICNL) operated as an intermediary body concentrated on the NGO legal environment in the region. DemNet lasted three years and ended in most of the CEE states in 1998. USAID also made progress in conceptual terms. In 1996 it presented a study on strategic approaches for donor-supported civic advocacy programs that provided the ground for a programmatic strategy focusing upon advocacy groups (USAID 1996).

The quasi-independent National Endowment for Democracy (NED) is also active in the region. Its activities proved especially decisive at the beginning of transition due to its unbureaucratic and fast assistance. The NED identifies its mandate as:

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“…. promoting U.S. non-governmental participation in democratic institution building abroad… (including) strengthening democratic electoral processes in cooperation with indigenous democratic forces, fostering cooperation with those abroad dedicated to the cultural values, institutions and organizations of democratic pluralism; and encouraging the establishment and growth of democratic development in a manner consistent both with the broad concerns of U.S. national interests and with specific requirements of democratic groups in other countries” (NED, 1997 cit. in: Glenn 1999: 6).

The NED relies on four traditional “core” grantees or satellite organizations that receive two-thirds of its annual program funding. Two of these grantees are the two party institutes: the National Democratic Institute for International Affairs (NDI), and the International Republican Institute (IRI). The other two, the Free Trade Union Institute (FTUI) and the Center for International Private Enterprise (CIPE) are affiliated with the U.S. labor federation and the U.S. Chamber of Commerce respectively. Due to this arrangement it comes as no surprise that the NED is mainly active in the areas political party assistance, trade union assistance, and assistance to associations and institutes aiming to support private enterprises. Although it has its own budget, the NED occasionally acts as an intermediary for projects funded by USAID if the projects fall within its area of expertise.

6.1.3 The Enlargement of European Networks – The German Transform-Program and the German Political Foundations

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In Germany concerns about “good governance” and “democracy promotion” increasingly also were incorporated into foreign and development policy. However, the new democratic face of development policy only gained prominence in the second part of the 1990s and thus at a later point than in other European countries.101 

Unlike the USA, Germany chose not to operate exclusively via its traditional development agencies102, but launched a special program for the assistance of transformation states in response to the distinct character of the transformation processes in Eastern Europe: the Transform-Program. Established in 1993, the program integrated various single measures by the German government that had been assisting the transformation processes in CEE since the end of the Cold War.103 By the end of 1997 1.6 bill. DM have been spent in 11 countries.104 The Transform-Program provides technical assistance, mainly focusing on economic reform. The major part of the financial resources is devoted to fostering the business sector (46%), followed by education and training (12%) and the advancement of the financial sector (9%). Further areas of assistance are governmental and legal assistance in economic and European matters (8%), agriculture (7%), research (7%), the development of an effective administrative system (5%), and assistance in the area of labor and social policy (4%) (figures from 1998, see appendix 2, tables 1+2). The aim of the program is to establish the structural preconditions necessary for the establishment of democracy and a social market economy (BuWi 1998: 24). Since 1998 the program has stated that the facilitation of the integration of the candidate states into EU is a further major objective. The strategy of the program can be characterized as demand-driven, reactive and top-down. The program is designed to meet the different needs of the countries. Therefore country-specific programs are developed in cooperation with the respective countries (ibid: 21). Letting the business sector aside, the strategy follows a top-down approach as it concentrates on major institutions such as governmental agencies or the judiciary. This approach is based on the assumption that certain structural conditions are a prerequisite for economic (and political) development. Examples for this approach are several projects training civil servants, especially with respect to EU enlargement; and legal assistance concerning economic and European law.

German civil society assistance is mainly left to the German political foundations. The work of the political foundations in the Federal Republic goes back to 1947 when Social-Democratic politicians re-established the Friedrich-Ebert-Foundation (FES). Other political groups in Germany soon followed this example: The Konrad-Adenauer-Foundation (KAS) representing the Christian Democrats was established in 1956, the liberal Friedrich-Naumann-Foundation (FNS) in 1958 and the Bavarian Christian Social Union founded the Hans-Seidel-Foundation (HSS) in 1967. In the meantime the Green party and the PDS also have created political foundations: the Heinrich Böll Foundation (HBS) and the Rosa Luxembourg Foundation.

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The German political foundations have a somewhat complicated status. On the one hand, they are formally independent, decide on their own strategy and budget, and are very eager to maintain this independence. On the other hand, they are financed exclusively by the state, i.e. by the ministry of development and foreign ministry with regard to their international activities. Moreover, they are also affiliated with their respective political parties despite being formally independent.

Mainly devoted to civic and political education - a task which the founders of the new German after-war democracy considered to be extremely important - the political foundations have been pursuing this goal since 1957 at the international level as well.105 Since then they have become a constant cooperation partner of the German government in the area of development and foreign policy. This cooperation follows guidelines that were already established in 1973 (BMZ 1973). According to those guidelines, the activities of the foundation:

  1. have to follow the structural-political approach of the BMZ and aim to foster long-term structures and conditions for development and – along the same lines – democracy (1973: 63). The German government emphasizes a structural approach and aims to establish long-term structures and institutions necessary for stable democracy and development. Main areas of interest are civic education and institution building.
  2. The foundation activities are limited in the following respects: First, measures with a negative effect on the bilateral relations between Germany and the recipient country are not funded. Second, the foundations are not allowed to take sides in internal conflicts (ibid: 69).

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In this sense the activities of the foundations conform with – or at least do not contradict German foreign policy. The German political foundations thus act as “unofficial” German representatives.106 The special status of the political foundations is also eminent in the way they are financed. The foundations are mainly state-financed. Contrary to other NGOs they are only partly project-financed but also have a fixed quota at their disposal that is distributed between the foundations according to a special key.107 This system allows the foundations to react quickly and independently to new developments in the recipient country and to satisfy new demand without having to master bureaucratic obstacles and follow long bureaucratic procedures. In the field offices, in particular, the foundations and their representatives enjoy therefore great freedom of action.

One should not forget, however, that the foundations are not so much in line with the government, rather with the different parties. The foundations are independent and – according to the German constitutional court – “obey the necessary distance to the respective parties” (BVerfg 1986:1, own translation). Nonetheless, close cooperation and personal contacts exist among foundations and their respective parties. Furthermore, the foundations and the parties are connected by the same political viewpoints and ideology. More than being ‘German representatives’ the foundations are therefore representatives of a special political spectrum and aim to transport certain key values, a fact that automatically translates into partial sponsorship. In other countries such as the US this practice is regarded as inadequate to nurture democracy. Faced with such critique, the foundations and the BMZ point to the fact that all foundations are active in the different countries and therefore ultimately offer political advice to the whole political spectrum.

As regards the special status of the German political foundations, their long tradition and experience in the area of civic and political education and in developing states, it is hardly surprising that political foundations have been the main actors of German democracy and civil society assistance in CEE. Between 1989 and 1994 the political foundations received a government allocation of 135 million DM in support of their activities in CEE. This corresponds to 0.09% of all official German aid given to the region (145 billion DM).

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The goal of the political foundations in CEE can be described as fostering democracy and market economy by supporting and creating structural and civic conditions necessary for a stable democracy (BMZ 1995: 6pp). The promotion of democracy is, however, not the only objective of the political foundations. As already mentioned, foreign policy goals are also on the agenda as well as goals resulting from their political background such as ‘support of Christian-democratic values, principles and institutions (KAS 1996:11) or to foster social dialogue (FES: homepage). Furthermore the foundations strive for a social market-economy, decentralization and federal structures and local self-government.

In new recipient countries like in Central and Eastern Europe, the German foundations seek to establish a network of contacts with the political elite in order to exercise long-term influence. This implies cooperation with the respective parties in the transition country that are close to their own background. Although the political foundations do not conduct direct party assistance through direct funding because German law forbids this, they do support their sister-parties indirectly by providing technical and organizational advice and a network of international contacts. The aim of the foundations is to establish one strong sister party that is able to play a decisive role in the political process. In this sense attempts are often made to unite similar parties and e.g. bring together several social democratic parties.108 

In order to achieve these goals the foundations follow a strategy that can be described as moderately demand-driven and elite-focused with a heavy reliance on and freedom of action of the field offices.109 Moreover, despite being politically partisan, the foundations comply with the strict rule not to polarize and not to get involved in internal conflicts of their partners, in line with the ‘intervention proscription’ outlined in the guidelines for the cooperation with the BMZ. In this sense, the foundations perceive themselves as a ‘neutral instance’ (KAS) or ‘institution without interest’ (FES) that ‘provides platform for dialogue’, aims to initiate public debate, and puts political issues on the agenda (Interview Weber). The programs are often designed quite vaguely with a time frame of several years. The KAS coordinates only one project per country, which states rather broad goals such as ‘decentralization’, ‘social market economy’ or ‘rule of law’. The FES has several projects per country but those are also ‘catch all projects’ - able to integrate different measures such as ‘social cooperation’ or ‘economic and social policy’. By these means, it is possible for the foundations to react quickly to new political issues and demands. This open and relatively unbureaucratic form of financing is symbolic of the institutionalized cooperation between the ministry and the foundations as well as the independence of the foundations.

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The foundation’s strategy differs as to whether to follow a ‘partner-principal’ or to conceptualize ‘regime-measures’. The KAS opts for the former, while the FES for the later option. ‘Partner-principal’ implies that the work focuses on a limited number of long-term partners that are bound to the foundation by a partner contract. The main purpose is institution building. The partners receive financial support and implement measures on their own with the advice of the KAS. This strategy has the advantage that the organizational and personnel expenditures can be kept to a minimum. However, the approach heavily relies on the respective partner and the cooperation with the partner. A further problem is the question of sustainability. As the KAS is not supposed to create dependencies, the question whether sustainability can be achieved is decisive for a new partnership. Due to the limited resources of the partners such sustainability is, however, hard to achieve. ‘Regime-measures’, in contrast, are single measures conceptualized and implemented by the FES in cooperation with different, changing partner organizations. This strategy allows them to concentrate on different topics rather than partners. Regime-measures are especially useful in the uncertain transition phase in which the identification of adequate partners is difficult. Yet, in the area of trade union support the strategy of the FES is close to the ‘partner principal’ of institution building.

The main partners of the political foundations are usually universities, research institutes, associations, NGOs, trade unions or foundations. As parties cannot be funded, party-oriented organizations such as party foundations or educational centers are often supported. Unlike American donors, the European Union, or the Soros foundations, the German political foundations do not run grant schemes that follow specific guidelines and operate with tenders. They instead operate on the basis of informal requests as in the case with the FES or with long-term partner-contracts as in the case with the KAS.

Although the political foundations are similar in many respects, there are also important differences. These are highlighted in a brief portrait of each political foundation active in CEE (see appendix 1).

6.1.4 Private Actors – Efforts “From Below”

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In the following I briefly highlight the variety of private actors involved in CEE, before concentrating on the major private donor active in CEE: the Soros foundations.

The Variety of Private Actors

One of the major particularities of civil society assistance to Central and Eastern Europe is the variety and magnitude of private commitment. This is even more so, as a majority of private actors operating in CEE are active for the first time in their history in the international scene (Quigley 1997). Moreover, the variety of private actors involved is also unique. One can identify three basic groups: Among the active organizations are international NGOs that operate on a global scale, such as amnesty international or transparency international. The latter in particular conducted several projects aiming to assist democratization and the development of civil society in CEE. Moreover, international NGOs engage in global networks that also embrace CEE NGOs. Secondly, several philanthropic foundations aim to support civil society in the region. Those foundations are inspired by humanistic ideals often combined with the wish to support former motherlands. The majority of them are US-based (examples are the Ford Foundation, Charles Stewart Mott Foundation, Rockefeller Brothers Fund, Open Society Institute), but European Foundations are also active – mainly represented by the European Foundation Center (EFC). The magnitude of such private commitment, as compared with the activities of quasi-national commitments, is illustrated by the following comparison: Between 1989 - 1994 the German political foundations spent a total of 53.2 million US$ in the Visegrad countries. In contrast, the foundations of George Soros alone spent the amount of 62 million US$ in the same period and area, not even including the support of the foundation and academic activities of the Central European University (CEU). US state-funded foundations (NED, German Marshall Fund) lay far behind such figures with 28.3 million US$ (Quigley 1997: 122). Finally, national interest groups, associations and NGOs of donor countries are active in CEE and in partnerships with their CEE counterparts. In contrast to the first two types of actors that may be categorized as manifestations of an increasing internationalization, the activities of this group are to be seen in a European context and can be categorized as the expansion of European networks. The organizations either attempt to establish transnational coalitions with future allies in an enlarged Europe or minimize the anticipated risks of enlargement. Moreover, the respective governments often nurture such partnerships in their attempt to facilitate the European integration of CEE by enlarging existing European transnational networks (as demonstrated by the case of Germany above). For example, the German Landkreistag (association of regional districts) assisted associations active in decentralization in Poland in order to press through a territorial reform that introduces a district level. The territorial reform carried out in 1999 created a new territorial level in Poland that only has one counterpart in the EU – the German districts. Thus, by advancing the territorial reform in Poland, the German districts gained an ally in the European Council of Regions (interview v. Hausen). Other examples of associations which established transnational bonds are the German Paritätischer Wohlfahrtsverband, which is active in supporting non-partisan social welfare NGOs in Poland. Trade unions mainly support their counterparts in CEE to prevent social dumping in neighboring countries. What all those activities have in common is that they work less with grants and financial support but rely more on the transfer of know-how and technical assistance. Moreover, international assistance is not a core activity of the respective organizations but a minor additional task only carried out in CEE.

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Unfortunately it augments the scope of this study to portray the variety of private commitment in CEE in the area of civil society assistance. Instead, the author restricts herself to covering the activities of the major private donor active in CEE: the network of the Open Society Fund, sponsored by George Soros.

Building Open Societies – The Open Society Institute and the Soros Foundation Ne t work

The network of Soros foundations has been the most far-reaching and significant private commitment in CEE. Inspired by the writings of Karl Popper, the US financier George Soros established his first foundation, the Open Society Fund in New York in 1979 with the aim of advancing an open society based not only on democracy and the market economy but also on tolerance, the rule of law, historical truth, a thriving civil society and respect for minorities.110 The first Soros foundation in Central and Eastern Europe was established in 1984 in Hungary. The Soviet Union followed in 1987, Poland in 1988. During most of the 1990s, the Soros foundations network developed in nearly all post-communist states and increasingly expanded in other world regions, such as Africa, Asia and the Americas. Today the network of the foundations of the Hungarian émigré includes 29 national and 4 regional foundations and covers more than 50 countries all over the world, and according to the presentation on their website: “…lays the foundation for a truly global alliance for open society”.

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The Soros foundation’s network in CEE includes the national Soros foundations and the Open Society Institute (OSI) in Budapest. The Soros foundations operate largely autonomously. The priorities and specific activities of each Soros foundation are determined by a local board of directors and staff in consultation with George Soros and OSI boards and advisors. As result, and in contrast to other donors operating in the region, the Soros network explicitly makes use of domestic human resources and local expertise. The nation-based approach of the foundation is further stressed by the fact that all national foundations operate as locally registered non-governmental organizations. Moreover, many foundations seek to attract funding from sources other than the Open Society Institute and are thus donors and recipients (or intermediary) at the same time. The Open Society Institute in Budapest provides administrative, financial, and technical assistance to the Soros foundations and also operates independent programs and initiatives, which address specific issues on a regional basis. Again the majority of the employed staff is from the region. As for their areas of activity, the Soros network focuses on efforts in civil society, education, media, public health, and human and women’s rights as well as social, legal, and economic reform. Since the end of the 1990s the Soros foundations have also been assisting the CEE countries that are candidates for EU membership in preparing for accession. In doing so, the foundations focus on membership criteria that are also central to the network’s mission such as the protection of the rights of Roma and other minorities, criminal justice reform, the reduction of corruption and strengthening civil society participation in policymaking. Several foundations also support programs to inform leaders about EU policies and to educate the public about the impact of European integration (Soros foundation network 2000: 16).

The activities and expenditures of the Soros foundation network grew significantly from 1994 (300 million US$) to the peak years of 1998 (574.7 million US$) and 1999 (560 million US$). In 2000 the expenditures were slightly reduced to 494 million US$ and are planned to remain at that level for the previous years (ibid: 9). Thereby approximately half of the expenditures are spent in favor of the national foundations. In 2000, the national foundations in the CEE accession states spent 58.6 million US$ together.111 The majority of funds have been devoted to grant making to non-governmental organizations. Other activities include training and educational measures.

Additionally, the Soros network supports “the most influential institution of higher learning in the post-Communist world” (Pridham 1994: 17), the Central European University located in Warsaw and Budapest. Between its founding in 1990 and 2002 nearly 5000 students from over 40 different countries graduated from the CEU. As a result, the CEU contributed not only to the advancement of higher education in the region while “bringing together students and faculty from a diverse regional and international base in an open and liberal academic setting” and “preparing its graduates to serve as the region's next generation of leaders and scholars” (CEU website), but it created a tight network of individuals and built the human resources from which the national foundations can profit.

6.2 The Network of Donor-Recipient Relationships 

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Knowing the major actors, the question arises how they relate to each other? Can we identify ‘national tribes’, i.e. governmental and non-governmental actors from the same country who cooperate in their endeavors to support civil society beyond their borders? Or are the donor-recipient relationships determined by a strict distinction between state and non-state actors leaving civil society assistance exclusively to non-governmental donors, invoking the vision of charitable bonds or brother activists inside a “global civil society”? Are there steady bonds between donors and “their” recipients, or are the transactions between donors and recipients in constant flux?

It will be evident in the following that civil society assistance is shaped by complex networks between several, legally different actors. These networks often follow national lines. Thus, governmental agencies mainly rely on national NGOs, foundations or consultancies to run their programs. Nonetheless, horizontal ties between organizations active in common issue-areas are constant practice. Especially if informal networks are included which serve mainly informative and consultative purposes, the various connections cut across national as well as legal lines. Thus a group of governmental and non-governmental actors with different national backgrounds, including donor and recipient organizations may be the major driving force behind a domestic campaign to strengthen the NGO sector.

In order to unfold the various relations between donors and recipients, it is useful to look at the practice of aid distribution of the four donors under investigation.

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As already mentioned, civil society assistance in Germany is to a large extent left to the German political foundations. Additionally, the Transform Program provides funds that benefit NGOs and democratic stability. Recently, the German embassies have been giving direct grants to domestic recipients in certain countries. This is taking place, for example, with funds from the Stability Pact in the Balkan region. The support programs are administered by respective ministries, mainly the BMZ and the foreign ministry (Stability Pact) and their aligned organizations.112 In certain issue areas specialized organizations have been founded to implement assistance to CEE.113 Additionally, existing associations and NGOs may directly apply for project money at different ministries. This brief summary demonstrates that the assistance market in Germany is highly determined by public administration and state-aligned institutes or agencies and by non-profit seeking non-governmental actors. Profit seeking consultancies do exist, but they are more the exception than the rule.

A quite different picture is found in the US. In contrast to German ministries, USAID delegates the management of its programs mainly to private and partly to non-profit sectors. The distribution of US civil society assistance funds is thus characterized by a high permeability between the private and the public sector. Most projects handled by USAID including civil society projects are contracted out to external, private and profit-seeking firms. These are commonly well-established development consultancy firms such as Chemonics, Management Systems International, Creative Associates International, KPMG or Barents Group. The firm that wins the contract then assembles a consortium of specialized sub-sub-contractors including institutes, non-profit organizations and smaller consultancies (see Guilhot 2003). In the field of civil society assistance, in which the sums are often smaller and might not be that attractive for large companies, specialized non-for-profit organizations often fulfill the role of the sub-contractor.114 One can conclude that the logic behind the program management of USAID follows the logic of a market marked by oligopoly, and thus highly differs from the above illustrated example of the public-dominated German practice.

The EU’s distributive practice may be characterized as a mixture of the two. Parts of the Phare program with relevance to civil society assistance are administered by the commission. In these cases, which mainly concern cross-country partnerships, i.e. projects, which involve at least two civil society organizations from different countries and horizontal programs, recipients apply directly in Brussels. However, the recipients often disapprove of this approach due to long and bureaucratic procedures. According to an additional distribution practice, funds are administered by the delegations of the Commission in the respective target countries. They in turn may rely on further sub-contractors. For example, in Poland, the Cooperation Fund fulfills this function. Finally, the Commission often relies on specialized NGOs or consultancies often located in Brussels to administer programs, e.g. the European Human Rights Council (EHRC) which administers the macro-grant projects of the Phare and Tacis Democracy Program.

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Private organizations are known for having the most direct chain between donors and recipients. The Soros foundations directly administer their programs. Hence, they give grants, but do not conduct projects themselves. However, the various national foundations may also act as sub-grantees of other donors. Due to their acknowledged regional and national expertise, they are attractive intermediaries that may distribute German, European or American funds. The different distribution channels are illustrated in table 4 (next page).115

Table 4: Donor-Recipient Relationships (by Direction of Money Flows).

Based on the outlined distribution practice of four donors we can make the following observations on donor-recipient relationships in civil society assistance. First, civil society assistance in CEE is marked by a variety of actors involved: governmental and quasi-governmental agencies on the one hand, non-for-profit and for-profit non-governmental organizations on the other. As a result, civil society assistance is administered by different links between the public sector and the private sector in the donor country. On the one hand, there is a free market and flexible business conditions, on the other hand stable political-administrative arrangements between governmental and non-governmental agencies within national borders determine the paths of assistance (see Guilhot 2003). Second, one has to acknowledge the fact that a clear-cut distinction between those who give, those who administer, those who implement and those who receive is difficult to detect. Although there is a general tendency for governmental agencies to shape the framework of assistance and provide the funds, while NGOs implement the project in the field, several organizations may be sometimes the donor, sometimes the recipient or both at the same time. This leads us to the third observation: the frequent use of sub-grantees and -contractors or even sub-sub-grantees. In particular with regard to governmental agencies, the project administration is more often than not delegated to either profit-seeking firms or to non-for-profit oriented organizations depending on the linkage between the public and the private sector common in the donor country. Fourth, “national tribes” can be identified, but they are blurred the closer one gets to the recipient side of the chain. Whereas contracts from the American SEED-Program went to US-firms or NGOs and exclusively German organizations applied for Transform-projects, some consultancies operate on an European if not global scale and administer temporally bilateral projects, World Bank or Phare projects. Moreover, international NGOs specializing in civil society assistance act as intermediaries of governmental, EU and private funds. And certain highly professional operating recipient organizations apply everywhere. Finally and closely related to the previous point, there is a pronounced tendency to choose local organizations to implement civil society projects. As a result, certain organizations in recipient countries re-distribute funds and act as intermediaries between foreign donors and domestic recipients and as professional ‘brokers of aid’.

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We can conclude that civil society assistance in CEE is shaped by a variety of different actors with various and overlapping relations. In international relations literature this complex picture of various relations of state and non-state actors has been described as a multi-level relationship (especially in order to comprehend processes of European politics). Although this model allows for alignments between state and non-state, sub-national and supranational level it sill preserves the impression of being vertical. However, it was demonstrated that various relations cut across national borders. The metaphor of a network seems more useful to describe the various relations and links between the different donors and recipients. This point becomes especially apparent if working relationships, private contacts, and informal networks serving informative and consultative purposes are included. Not just one network evolves but several networks, which are also interlinked and overlap. There are the national policy-networks of development ministries, agencies, democracy promotion foundations and important consultants that design and conceptualize policies and programs. There are international networks between certain kinds of donors such as the ‘democracy foundations’, quasi-governmental foundations whose major aim is to support civil society and democracy abroad. There are certain issue area networks such as human right networks. And in the recipient countries there are networks between donors – often called ‘donor forums’116 What evolves is a network of various communities with different, more or less institutionalized links.


Footnotes and Endnotes

91 For the criteria of membership outlined in Copenhagen and for the mechanisms installed by the European Union in order to monitor and assess the progresses of the accession states: see Bursis / Ochmann (1996).

92 See: Europäische Kommission (1990).

93 By the year 2000, PHARE included the 10 accession countries (Bulgaria, the Czech Republic, Estonia, Latvia, Lithuania, Poland, Romania, Slovakia, Slovenia, and Hungary) and three non-candidate countries (Albania, Bosnia and Herzegovina, and FYROM). For an overview of the history of the program see: Europäische Kommission (2000).

94 Horizontal programs are complementary programs that supplement the national programs. In contrast to the national programs, horizontal programs are not subject to negotiations between the EU and the respective recipient government. Examples are: the ‘regional cooperation’ program, ‘multidisciplinary measures’, the PHARE Information Action, the PHARE Democracy Programme (1992), or the Partnership and Institution Building Program (1993).

95 In 1997, the “Accession Partnerships” was introduced by the Commission in order to streamline the pre-accession support. In contrast to the “Association Agreements” that previously regulated the relationship between the EU and the Candidate States (see Jacobson 1997: 8), the “Accession Partnerships” provide a clearly defined program to prepare for membership, involving commitments by the applicants to particular priorities and a calendar for carrying them out. The implementation of the “Accession partnerships” is steadily monitored. By connecting the PHARE funds to the “Accession Partnerships”, conditionality has been strengthened. PHARE funds can thus be restrained if the state in question fails to pursue a reform path agreed upon (for information on the accession partnerships consult the website of the European Commission: europa.eu.int/comm/enlargement/ac_part_10_99/intro/index.htm).

96 For this reason after 2000 two new programs are introduced which supplement PHARE: SAPARD: a program focusing on agriculture and the development of rural areas (precursor to the EU agricultural funds); ISPA: focusing on transport, environment and infrastructure (precursor to cohesion funds). PHARE funds are allocated to economic and social coherence with a regional and training focus. In this sense PHARE functions as the precursor to the structural funds.

97 See European Commission (1997b). For micro- and macro-projects only NGOs are eligible. Ad-hoc projects were mainly conducted by (Western) NGOs.

98 The democracy programme supported projects in eight areas of activity: (1) Parliamentary practice and procedures, (2) Transparency of public administration and public management; (3) Development of NGOs and representative structures; (4) Independent, pluralistic and responsible media; (5) Awareness building and civic education; (6) Promoting and monitoring human rights; (7) Civilian monitoring of security structures; (8) minority rights, equal opportunities and non-discrimination (European Commission 1997b: 4).

99 See the USAID website on its activities in CEE and Eurasia:
http://www.usaid.gov/locations/europe_eurasia/index.html. See also appendix 2, table 5.

100 For more on the USAID NGO support programs, their similarities, differences, failures and achievements: see USAID ( 1999).

101 While in 1997 the development ministry carefully stressed the importance of political conditions for the success of development measures and raised the question whether “good governance is a precondition or outcome of developing aid” (BMZ aktuell Nr. 076/Feb.97), in 1998 five criteria (human rights, citizenship participation, rule of law, social market economy, development-oriented policy) were identified and made conditional for aid (BMZ aktuell Nr. 090/April 1998). In this sense, aid either has to open up the room for reform discussions in the case of autocratic regimes – in brief promote democracy – or support and assist the reform process in the case of transition countries – in brief, protect democracy (ibid).

102 Usually the German ministry of development (Bundesministerium für wirtschaftliche Zusammenarbeit und Entwicklung – BMZ) relies on two core organization for the implementation of its political objectives: These are for technical assistance the Gesellschaft für technische Zusammenarbeit (GTZ) (Society for Technical Assistance) and for financial assistance the Kreditanstalt für Wiederaufbau (KfW) (Bank for Reconstruction).

103 The program includes assistance measures of various ministries and is coordinated by a consortium of the ministry of development, the foreign ministry and the ministry of economy, with the managerial support of the KfW (see BMWi 1998: pp. 23). The projects are conducted by organizations such as the GTZ, NGOs, associations, administrative bodies or, to a lesser degree, consultants.

104 The countries involved are: Russia, Ukraine, Belorussia (Byelorus), Poland, Hungary, the Czech Republic, Slovakia, Estonia, Latvia, Lithuania and since 1998 Slovenia. For the Czech Republic and Estonia, the aid program will end by the end of 1998 due to their good economic performance. In Poland and Hungary the aid will be reduced. Bulgaria was part of the program until 1998. From 1999 onwards Bulgaria has been classified as a developing country and as such part of the developing aid policy of the ministry of development (BMZ). In this way technical and financial assistance can be given for a longer period of time (BMWi 1998: 22).

105 The German political foundations are therefore often regarded as the real forerunners of democracy assistance long before the promotion of democracy found its way in official foreign policy documents. They became especially prominent for the role they played in the Spanish and Portuguese democratization processes. See for the work of the German political foundations in Spain: Powell (1996: 306f).

106 The conformity of the foundations’ objectives with official foreign policy is evident in such stated goals such as: “presenting Germany’s role in the world”; “advancing European integration’”or “the improvement of Czech – German relationship”. Moreover, the political foundations often aim to spread German ‘achievements’ such as the social market-economy (KAS 1996: 11).

107 The KAS and FES receive 32.5% of the resources available, while the HSS and FNS receive 12.5% and the HBS only 10% of the resources (BMZ 1995:3; interview). The HBS was only included in this financing method in 1996. From then on, its share grew over the years at the expense of the other small foundations FNS and HSS. This process will come to an end in the year 2000 when all three small foundations will receive 11.66 % of the resources. This key will be changed again after the year 2000 when a PDS-oriented foundation will receive project-related financial resources In 1999 the PDS foundation will receive 4 Million DM from the interior ministry for institutional support. From the year 2000 onwards it will be included in the finance splitting between the foundations in similar fashion as the HBS with steadily growing percentage.

108 For example, such attempts at combining forces have been successful in Bulgaria where the representative of the FNS was able to persuade four liberal parties to integrate into one party (interview Thebaud). However, similar attempts undertaken by the FES in Bulgaria at a conference failed.

109 All foundations run field offices in Central and Eastern Europe depending on their financial resources. The ‘small’ foundations, namely the FNS, HBS and HSS, can only afford one office in the region. HBS has its office in Prague, the FNS in Budapest. The heads of the offices enjoy a great leeway of action. They design and conceptualize the different measures, search for and identify partners and keep contact to the respective sister-party. Consequently, the work of the foundations and the activities taken heavily depend on the single person on site.

110 See for the history and activities of the Network of Soros foundations and the Open Society Institute in Budapest: Diamond (1997) and their homepage: www.soros.org.

111 Own calculation based on the expenditures of the Soros foundation in Bulgaria, Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Romania and Slovakia given in the Soros Foundation Network Annual Report 2000.

112 In the case of the BMZ these are the Gesellschaft für technische Zusammenarbeit (GTZ) and the Kreditanstalt für Wiederaufbau (KfW), in the case of the foreign ministry e.g. the Institut für Auslandsbeziehungen or Inwent (formerly Carl Duisberg Gesellschaft).

113 Examples include the ”Stiftung für wirtschaftliche Entwicklung und berufliche Qualifizierung“ (SEQUA), an organization established in 1991 with the aim of mobilizing the know-how and commitments of economic organizations and firms in the area of international assistance. SEQUA is closely aligned with the German chambers of commerce and administers e.g. several projects supporting chambers of commerce and SMEs in CEE (see http://www.sequa.de/). Another example is the “Deutsche Stiftung für internationale rechtliche Zusammenarbeit e.V.“ (German Foundation for International Legal Cooperation) (IRZ) that “supports partner states in reforming their legal system and their judiciary” on behalf of the German government. The IRZ foundation was established in 1992 as a non-profit making association on the initiative of the then Federal Minister Klaus Kinkel. According to their website, in previous years the work of the foundation was largely promoted within the framework of the Transform program. The major share of funding now comes from the budget of the Federal Ministry of Justice (http://www.irz.de/).

114 e.g. the Academy for Educational Development that implemented the DemNet program in Poland (see chapter 7.3, and appendix 5, portray 10).

115 Note that the graph mainly serves illustrative purposes.

116 ‚Donor forums‘, i.e. regular and more or less institutionalized meetings between various donor organizations with the aim of exchanging information and coordinate action, can be found e.g. in Slovakia and the Czech Republic. In Poland an attempt to establish a similar body failed. The principle behind the establishment of such forums or organizations is to coordinate donor activities in order to prevent double-funding of single projects and in order to be more effective. In Slovakia the previously informal donor forum was registered as a civic association last year. The donor forums can thus be comprehended as the result of a learning process on side of the donors.



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