Foreign Aid With Impact

Money for former East bloc should follow shift in services from national to local governments

UNITED States foreign-aid policy toward the former communist countries is missing the boat. Since 1989, the US has given more than $10 billion to the republics of the former Soviet Union and almost $2 billion to the countries of Central and Eastern Europe. However, these countries face new challenges that foreign aid currently fails to meet.

Every dollar of this aid could have been better spent had the US government responded to the growing needs of local leaders in these countries.

The US and its allies must recognize that, concurrent with democratization, a large-scale transfer of power has occurred in the former Soviet Union and almost every Central and Eastern European country. The highly centralized communist regimes are yielding to far more decentralized systems in which municipalities and localities are shouldering responsibilities previously handled by the national government. Nowhere is this more evident than in Poland, a country that exemplifies this shift in authority and

the resulting problems that can follow.

In March 1990, a major transfer of responsibility and authority advanced in Poland when the Local Self-Government Act (LGSA) was enacted. The act shifted responsibility for numerous services from the federal to the local level. These include transportation, environmental protection, water supply and sanitation, energy and heat, health services, housing, and education.

Under the LGSA, local governments are relatively autonomous, with the majority of revenue coming from taxes on local property, personal and corporate income, and user fees.

The city of Glogow in the Silesia region of Poland provides a case study of the new responsibilities that local governments now face. The city's current waste-water treatment system releases effluent waste well below European Community standards.

Thus, the city has begun plans for building a new facility. In the past, the facility would have been designed, maintained, and primarily financed by the central government and the organizations under its control. Now, the local government is responsible for all of these activities.

Many of Poland's local leaders, like those in other former communist nations, are currently unprepared to handle these new responsibilities. Although local government was in place throughout the years of communism, local leaders had little or no authority of their own. They simply performed tasks handed to them.

The Polish example is indicative of the obstacles that all countries of the former Soviet Union and Central and Eastern Europe must overcome.

A study by the World Bank concluded that "local governments operate under difficult conditions. Their resources are not predictable, their experience limited and their tasks immense."

If democracy is to become vibrant in the region, the United States and its allies must focus their responses to the transfer of authority in these countries by training and otherwise enabling local leaders to meet their growing responsibilities. US aid to these countries must, for the first time, place a priority on programs that seek to meet these needs at the local level.

It is simply not enough to continue to provide aid to the national governments of these countries and assume that this money will trickle down to the local level. For instance, although the LGSA gave local leaders an enormous amount of new responsibility, the central government still controls almost all of Poland's finances; less than 12 percent of Poland's budget was allocated to local government.

Local leaders currently are unable to depend on their central governments to provide them with reliable financial support. Developed countries like the US must fill this void now.

This is not to suggest, however, that the US should increase its foreign aid to the former Soviet Union and Central and Eastern Europe; that is debatable. But if the funding currently allocated is to be used efficiently, then there must be an attempt to meet the needs of these countries at the local level.

Clearly it is more difficult for countries such as the US to support local programs; it it much easier simply to transfer payments to central governments.

However, if the Western democracies want aid policies for the former communist countries that are effective rather than merely attractive, then their funding packages must reflect the decentralized nature of the countries that they are helping.