Eurasia
Center for International Private Enterprise
1155 15th Street NW, Suite 700
Washington, DC 20005
ph: (202) 721-9200
fax: (202) 721-9250
cipe@cipe.org
2009 EURASIA PARTNERS AND PROJECTS
ARMENIA
Association for Foreign Investment and Cooperation
Building Private Sector Capacity for Reform
AZERBAIJAN
Entrepreneurship Development Foundation
Implementing the National Business Agenda through an Advocacy Campaign
Improving the Business Environment
BELARUS
Analytical Center “Strategy,” Institute for Privatization Management, and Minsk Union of Entrepreneurs and Employers
Business Advocacy in Belarus
GEORGIA
Association of Young Economists of Georgia and New Economic School of Georgia
Improving the Business Climate and Information Flow
KAZAKHSTAN
Shanyrak
Reducing the Informal Sector and Strengthening Property Rights
KYRGYZSTAN
Civic Advocacy for Reform and Stabilization
Bishkek Business Club
Strengthening Coalition-Led Business Advocacy
Strengthening Private Sector Advocacy
RUSSIA
Building Capacities and Professional Skills of Business Associations
Building Public Dialogue on Administrative Barriers to Business Development
Building the Voice of Business in Russia
Establishing a Bilateral Working Group on Corruption
Small and Medium-Sized Enterprise Policy Advocacy
Vladikavkaz Institute of Management
Developing the Entrepreneurial and Leadership Skills of Youth in the North Caucasus
UKRAINE
International Institute of Business
Improving Governance in the Small and Medium-Sized Enterprise Sector
Property and Freedom Institute
Strengthening Business Associations’ Capacity as a Watchdog over International Commitments
Ukrainian Center for Independent Political Research
Political Party Training for Economic Reform
TURKMENISTAN
Union of Economists
Re-creating the Middle Class
REGIONAL
Improving Access to Information
Information and Values
Strengthening Business Support Organizations in Armenia and Azerbaijan
Twenty years After the Fall of the Berlin Wall: Lessons Learned and the Future of Reform
Kyrgyz Stock Exchange Press Club and Kazakhstan Institute of Directors
Strengthening Corporate Governance through Education and Dialogue
Strategic Overview
In 2009, CIPE worked across Eurasia to address widespread corruption and achieve a stronger voice for entrepreneurs in the policy process. In Russia, CIPE monitored the implementation of proposed reforms, increasing the role of business in the policy process and encouraging business efforts to fight corruption. CIPE’s focus in Ukraine moved from modest policy successes to more effective advocacy for business-friendly policies. In Central Asia, CIPE sought to counter declines in the rule of law, access to information, and protection of property rights, and to combat increasing authoritarianism by strengthening outreach to the business community and civil society. This outreach helped to increase support for reform. In Belarus, CIPE helped to strengthen its partners’ understanding of democratic values, including property rights, transparency, and public participation in fighting corruption. Lastly, in the Caucasus, CIPE focused on strengthening the business community’s capacity for advocacy to promote further democratic and economic development.
Corina Dragomirescu of the Advocacy Academy in Timisoara, Romania speaks at a CIPE conference, “20 Years After the Fall of the Berlin Wall: Lessons Learned and the Future of Reform” held in Kyiv, Ukraine. The conference provided current and former CIPE partners and reformers from Eastern Europe and Eurasia an opportunity to share experiences about challenges and successes in their countries since the fall of the Berlin Wall.
RUSSIA | SUPPORTING ADVOCACY FOR SMALL AND MEDIUM-SIZED ENTERPRISES
CIPE’s extensive work with regional coalitions of business associations in Russia has improved dialogue with the government and helped to protect thousands of small and medium-sized enterprises (SMEs) from the hardships of operating in an environment rife with corruption. In 2009, 10 regional coalitions received support from CIPE to conduct 103 regional advocacy campaigns and submit 160 regional policy recommendations that have led to the adoption of 11 regional legislative changes. The coalitions worked with CIPE partners at the federal level – OPORA (the Union of Business Associations of Russia) and the Russian Federation Chamber of Commerce and Industry – to conduct 77 advocacy campaigns leading to two national legislative changes in 2009. CIPE’s federal-level partners also participated in developing the Russia-U.S. Joint Working Group on Investment and Institutional Integrity report that was presented at an official event held in conjunction with the July 2009 summit between Presidents Medvedev and Obama.
CIPE WORKS IN 17 REGIONS WITH OVER 200 ORGANIZATIONS THAT REPRESENT NEARLY 19,000 FIRMS AND EMPLOY AN ESTIMATED 2 MILLION RUSSIANS.
Among the coalitions’ notable accomplishments are the following:
- With the passage of two key national anti-corruption laws, there is now an established procedure for independent organizations – such as chambers of commerce, business associations, and think tanks – to become officially accredited to review draft laws for their potential to generate corruption and to submit proposed legislative changes.
- The Primorsk coalition’s efforts to stop corrupt practices in the sale of government-owned real estate led to a suspension in the privatization of over 750 buildings until privatization statutory acts can be improved. These corrupt practices had previously led to the bankruptcy of more than 2,000 firms.
- The Krasnodar coalition successfully advocated for the abolishment of a mayoral decree in Sochi to dismantle 400 temporary retail locations, employing 1,150 individuals. The coalition’s work was able to save 320 of the sales outlets and 800 jobs.
- The Volgograd coalition successfully advocated for laws to reduce an increase on land rental rates, the income tax on advertising for small and medium-sized enterprises by 80 percent, and the cost of advertising on municipal buildings by 25 percent.
- Over 1,000 firms in Astrakhan won the option to buy the premises they rent from the government (the right to continue renting is also guaranteed). This is a result of the Astrakhan coalition’s advocacy efforts to change local implementation of federal rules on privatization of municipal property rented by SMEs.
Elena Panfilova, Director of Transparency International Russia and a member of the CIPE-supported Russia-U.S. Joint Working Group on Investment and Institutional Integrity, offers remarks on the working group’s report on good governance and anti-corruption in Russia to U.S. President Barack Obama. (Photo courtesy of the Eurasia Foundation.)
KYRGYZSTAN | BUILDING CONSENSUS FOR CHANGE
Dalil Batyrov of Jer Azygy, a Kyrgyz agricultural business association and a member of NABA, expresses his views at a monthly NABA meeting.
The Bishkek Business Club (BBC) demonstrates that transparent and democratic processes are critical to establishing legitimate governance. As a group of reform-oriented business leaders known for their independence and integrity, BBC has become Kyrgyzstan’s leading advocate for market-based, democratic reform. In 2009, the advocacy work of BBC and the National Alliance of Business Associations (NABA) – a coalition of business associations BBC helped to establish – has successfully pushed back anti-business legislation, gathered grassroots momentum for reform, and garnered wide-reaching media attention. This past year has also seen the unprecedented inclusion of BBC and NABA members in working groups with key federal agencies on business formalization, energy security, and property rights. Under BBC’s leadership, NABA grew from 19 to 27 business associations in 2009 and currently represents over 2,000 companies and 80,000 individual entrepreneurs. These members have created 400,000 jobs and represent over $2 billion in domestic investment.
Highlights of BBC and NABA’s work as a powerful coalition for reform include:
- Presidential decree Number 434 was adopted with more than 65 percent of NABA’s recommendations included. The decree strengthens private property protection through changes to the criminal code, civil code, and the laws on joint stock companies and on bankruptcy.
- For the first time, the term “raiding” – the illegal seizure of private property through legal means – was included in Kyrgyz legislation. By updating existing legislation, the government is recognizing this destructive process and taking action to protect property from raiding.
- 42 percent of patent-based small enterprises were saved by the repeal of a 2008 law, Regulation Number 733. This reversal also overturned a ruling that would have increased the cost of obtaining a patent by 5 to 7 times.
BELARUS | SUPPORTING A UNIFIED PRIVATE SECTOR
Under the Confederation of Entrepreneurship of Belarus (CEB), the Belarusian business community fought to protect entrepreneurship and advocate for economic prosperity through the National Business Platform (NBP). CEB, which grew to 34 member organizations by the end of 2009, represents a network of over 6,500 businesses – 8 percent of all small and medium-sized enterprises (SMEs) in Belarus. Its key priorities include addressing barriers to market reform and democratization, providing a forum for discussion, and increasing awareness of market-based and democratic principles. CEB works with local associations in all six Belarusian regions to raise awareness about the benefits of entrepreneurship. These advocacy successes have led to an established dialogue between public and private stakeholders through NBP working groups that monitor the adoption, implementation, and impact of NBP-based policy recommendations. CEB’s ability to mobilize its constituency on short notice and to transform the business community’s concerns into measurable action demonstrates how far this organization has come.
CEB’s advocacy efforts resulted in the following:
- Resolution #991, which would have eliminated over 30,000 SMEs (40 percent of all Belarusian SMEs) and caused 100,000 individual entrepreneurs to lose their jobs, was overturned. In addition, the resolution would have fostered corruption by forcing businesses to purchase directly from manufacturers, eliminating all intermediaries in trade.
- With the simplification of the single tax system, tax filing times were reduced by 15 percent and filing expenses by 7 to 10 percent. This simplification reduces opportunities for corruption and stabilizes the business operating environment. Consequently, 35 percent more individual entrepreneurs and 20 percent more SMEs have started using the single tax system.
- 20 to 25 percent more entrepreneurs are using loans to start businesses and increase their business activities. This increase was brought about by the simplification of mortgage requirements and the establishment of a new Government Fund for Entrepreneurship Support, providing a $50 million fund for SME loans.
Entrepreneurs vote to take a stand against Resolution #991 at an urgent CEB meeting. Their subsequent demands to the government resulted in the abolishment of the law, saving 30,000 small and medium-sized enterprises in Belarus from elimination.
ARMENIA AND AZERBAIJAN
IMPROVING BUSINESS ASSOCIATIONS
The CIPE Regional Office in Romania supports business associations in Armenia and Azerbaijan to sharpen their advocacy skills and engage in successful and productive dialogue with their governments. As part of a series of training seminars for the Caucasus region that began at the end of 2008 in Azerbaijan, CIPE provided tools and information to 27 association executives in Armenia for effective involvement in grassroots public policy advocacy. The 2008 and 2009 events prepared business organizations in Azerbaijan and Armenia to better represent their members in advocating for pro-business reforms in their respective countries. With their improved skills, these organizations were actively involved in advocacy initiatives in 2009 and helped to improve the business environment. They also provided guidance for other groups to undertake professional advocacy and democratic dialogue with their governments. Their efforts represent an important step in bolstering business sector participation in policymaking in Armenia and Azerbaijan.
Highlights of CIPE’s training efforts with business associations in Armenia and Azerbaijan include:
- The members of the Business Advocacy Network – comprising 16 member organizations that participated in the CIPE training program in Armenia – formalized their network. Similarly, seven organizations that participated in the Azerbaijan training program created the Alliance of Business Associations, dedicated to promoting the country’s National Business Agenda.
- The Armenian Association of Freight Forwarders, a member of the Business Advocacy Network, successfully reduced its freighters’ tax burden by advocating to change Armenian transportation regulations to allow freight companies to pay tax on their services rather than on the goods they ship.
Armenian business association representatives meet to discuss small and medium-sized enterprise advocacy issues and association membership.
Partner Spotlight
RUSSIA | NORTH OSSETIA CHAMBER OF COMMERCE
AND INDUSTRY
CIPE Russia Head of Representative Office Alexander Raevsky awards Mariam Khadzhieva, vice president of the Chamber of Commerce and Industry of the Chechen Republic, a certificate upon completing a four-day CIPE training and capacity-building program for business associations.
Formed in 1993 with just 31 members, the North Ossetia Chamber of Commerce and Industry (North Ossetia CCI) is the leading chamber in its region. It now represents more than 150 member firms in industries ranging from agriculture to metallurgy. Over 70 percent of its member companies are small and medium- sized enterprises. In 2009 alone, nearly a dozen new firms joined, exceeding the average annual increase in membership. The North Ossetia CCI takes part in a variety of efforts to improve the local business climate and lower administrative barriers, and shares its expertise by advising its members on legal and financial issues, trade and business opportunities, product certification, and marketing. The North Ossetia CCI also maintains a strong relationship with local authorities, engages in advocacy on behalf of its members, and issues expert opinions on draft laws and reforms to support entrepreneurship.
FUTURE OF REFORM
In 2010, CIPE will strengthen its existing initiatives in Eurasia, while building and expanding on its future goals and strategies. In Russia, CIPE will continue to emphasize moving regional anti-corruption models to the federal level and monitoring the implementation of federal anti-corruption laws while expanding its presence in the North Caucasus. In Ukraine, CIPE will launch a major initiative to build the capacity of business associations to combat corruption. In Central Asia, CIPE will work on strengthening the capacity of business associations to attract new members, build a strong and united voice, and advance reform in a hostile environment. In Belarus, CIPE will continue to assist its partners in building both public-private dialogue on legislative reform and grassroots support for democratic and market-oriented reform. In the Caucasus, CIPE will seek to strengthen coalitions of business associations to advance pro-reform policymaking.
The North Ossetia CCI achieved a number of key goals in 2009, including the development of a variety of tools and services: a local loan guarantee fund, a micro-lending agency for small firms, and a business entity to help new entrepreneurs access inexpensive office space, basic equipment, and expertise. These initiatives and resources – made available by an effective partnership with the government – have provided an important boost to local small businesses. The North Ossetia CCI also helped develop a regional strategy for entrepreneurship development for 2009-2012, advocated for more transparent procurement procedures for regional bids, and hosted a popular festival promoting social advertising.
To begin building capacity among business associations across the North Caucasus, CIPE and the North Ossetia CCI also organized a seminar for the leaders of organizations from seven regions. As a result of the seminar, participants signed a memorandum creating the North Caucasus Coalition of Business Associations, comprising 16 organizations and representing nearly 2,000 firms in a wide variety of sectors.
