State Department - 02.27.2002

Office of International Information Programs

U.S. State Department

World Bank Group

New Initiative to Help Poorest Countries of Former Soviet Union

(World Bank press release following London seminar)

Participants at a two-day seminar in London have reached agreement on a new initiative to help bolster economic growth and reduce poverty in seven countries of the former Soviet Union -- Armenia, Azerbaijan, Georgia, the Kyrgyz Republic, Moldova, Tajikistan, and Uzbekistan.

A World Bank press release said the international community had underestimated the complexity of transitioning to a free market system in these countries, and that overcoming the challenges was vital for international peace and security.

Delegates called for intensified action in a variety of areas including making governments more accountable; promoting regional cooperation in trade, transportation, water, and energy; improving the climate for private investment; resolving regional conflicts; and providing information to counter disease, drug trafficking, and abuse.

The seminar was hosted by the British government and sponsored by the World Bank, International Monetary Fund, Asian Development Bank, and European Bank for Reconstruction and Development.

Following is the text of the release:

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World Bank Group
Washington, D.C.

INITIATIVE TO ASSIST LOW-INCOME COUNTRIES OF THE COMMONWEALTH OF INDEPENDENT STATES

New international focus facilitates discussions on poverty reduction, growth and debt in poorest countries of the Former Soviet Union

LONDON, 22 February, 2002 -- A two-day seminar on the seven low-income countries of the Commonwealth of Independent States (CIS 7) concluded in London today having taken a first step in an Initiative to intensify reform efforts to address the poverty, growth and debt sustainability problems of the poorest countries of the former Soviet Union.

The seminar was hosted by the United Kingdom government and jointly sponsored by the World Bank, the International Monetary Fund, the Asian Development Bank, and the European Bank for Reconstruction and Development. Representatives of the CIS 7 (Armenia, Azerbaijan, Georgia, the Kyrgyz Republic, Moldova, Tajikistan and Uzbekistan), creditor countries and international agencies participated.

As a result of the meeting there is now greater understanding among participants of the triple challenge these countries face in building new states, democratic institutions and market economies. It is clear that the international community underestimated the complexity of the transition process in general, and particularly the challenges facing the poorer regions of the Former Soviet Union. Overcoming these challenges is vital both for the countries themselves, and for wider international peace and security.

While considerable progress has been made in most CIS 7 countries in recent years, reform strategies were not always appropriate or effectively implemented, and the unfinished agenda remains substantial. The urgency of taking action is shown by the large number of people living in extreme poverty across the group. They now number nearly 20 million, equivalent to about half the total population of the CIS 7.

While the specific problems facing each country differ, it was agreed at the London meeting that there are common objectives calling for intensified action. These include: strengthening the capacity of governments and making them more accountable to the public; deepening reforms in support of poverty reduction; promoting regional cooperation on issues like trade and transit, water and energy; improving the climate for private investment; and resolving conflicts across the region.

Participants also agreed on the need to provide adequate health and education services and to counter the problems of HIV/AIDS, tuberculosis, malaria, drug trafficking and abuse. Further, participants saw macro-economic stability and structural reforms as necessary to stimulate domestic and foreign investment and encourage the growth of small and medium enterprises. They also agreed on the urgency of action to bring external debt back to sustainable levels and to ensure that it remains sustainable in the future.

Primary responsibility to address these problems lies with the seven low-income CIS countries (CIS7). But under the Initiative, representatives of the international community would provide strong complementary support in helping to strengthen the conditions for growth, poverty reduction and debt sustainability in these countries both through international and regional institutions, and through governments acting bilaterally. The CIS 7 countries would take the lead by promoting policy and institutional reform more consistently and resolutely, within the framework of their own poverty reduction strategies. They should target their scarce resources to social services and safety nets, and measures to reduce corruption. The CIS 7 countries also need to work to resolve conflicts and to foster regional cooperation especially in trade, transport, water and energy.

Other trade partners, creditors and development partners need to provide greater access to their markets and more generous financial support, including debt relief where needed. In this context development agencies need to work together more effectively, within  the framework of country-led programs. International and regional institutions need to increase the attention and support they provide this group of countries through financial support, technical assistance and policy advice.

Participants called on governments to take account of the conclusions of the seminar, both in intergovernmental fora -- such as the Paris Club and Consultative Group meetings -- and in discussions on trade and political issues. Sub-regional conferences, such as the forthcoming ones on Central Asia being organized by UNDP and the Asian Development Bank, will provide other opportunities to pursue the conclusions of the London seminar. The international financial agencies will work with the CIS 7 countries and governments represented at the London meeting to prepare a framework for the Initiative, with the objective of convening a ministerial-level meeting at the time of the 2002 Spring Development Committee/IMFC meetings in Washington.

There will also be a conference later in the year involving NGOs and other analysts to collect ideas about solutions to the region's problems from the broadest possible constituency. The Initiative will be revisited in about one year to assess progress and consider ways to strengthen it.

A paper prepared for the seminar by the staffs of the World Bank and the IMF is available on the web at: www.worldbank.org/eca/cis

Contact Person: World Bank-Washington -- Gina Ciagne (202) 458 4166, e-mail: gciagne@worldbank.org