Environmental Assistance to Eastern Europe

3. Danish Environmental Assistance to Eastern Europe 1994-96

3. Danish environmental assistance to Eastern Europe 1994-96
3.1 Introduction
3.2 Projects in the individual co-operating countries
3.2.1 Estonia
3.2.2 Latvia
3.2.3 Lithuania
3.2.4 Poland
3.2.5 Czech Republic
3.2.6 Slovakia
3.2.7 Hungary
3.2.8 Romania
3.2.9 Bulgaria
3.2.10 Belarus
3.2.11 Ukraine
3.2.12 Russia
3.3 Regional assistance, special themes, analyses, etc.
3.4 Danish environmental assistance 1994-96
3.5 Co-financing
3.6 Environmental effects
3.7 International co-operation
3.8 Administrative organisation of environmental assistance
3.8.1 Legislative basis and the original organisation of the assistance
3.8.2 The Office of the Auditor General's review of the administration in the first five years
3.8.3 The Office of the Auditor General's review of the administration of the Environment and Disaster Relief Facility
3.8.4 Changes based on the programme's progress to date
3.8.5 Preparation of division guidelines
3.9 Concluding comments
3.9.1 Summary
3.9.2 Assessment of the assistance so far
3.9.3 Experience gained

3.1 Introduction

Background

In April 1991, Act No. 223 on Subsidies for Environmental Activities in Eastern European Countries was adopted by the Danish Parliament, and the Danish Environmental Support Fund for Eastern Europe (DESF) was established.

EDRF

The Danish Parliament then decided to establish a special environment and disaster relief facility (EDRF). As a result, Part VI of White Paper No. 1252 (June 1993) on Denmark's International support, "International Environment and Disaster Relief. An Action Plan" was drawn up. Later, the "Strategy for Environmental Activities in Eastern Europe" (October 1993) was drawn up for the EDRF as the basis for environmental assistance to Central and Eastern Europe.

Since 1994, Danish environmental assistance in Central and Eastern Europe has thus consisted of both the DESF facility and environment-related sectoral programmes, which are implemented in selected sectors, such as energy, nuclear safety, agriculture etc. With the repeal of Act No. 223 at the end of 1995, authority for the activities has since been based on a note to the Appropriation Act.

In the period 1994-96, an appropriation of DKK 734.5 million was made for DESF assistance. Of this, DKK 53.7 million was earmarked for six tender projects in 1996, but the final contracts were not signed until 1997.

The table below shows the total budget for environmental activities in CEEC in each of the years 1994-1996, and the amounts used. The total budget should be understood to mean the year's actual appropriation, interest from available funds, transfers of unused funds, etc. In the individual years, all but some few hundred thousand kroner of the total budget were used. Not included is the above-mentioned DKK 53.7 million earmarked in 1996 but not finally used until 1997.

Table showing the total budget for the years 1994-1996 and the amounts used:

Overall objectives

Originally, an application model was used. The DESF required an application from a partnership between a Danish applicant and a partner in the recipient country. The project proposal had to be approved by the recipient country's authorities. These applications formed the basis for discussions on priorities between Denmark and the recipient countries. In 1995, this model was supplemented by a tender model, with tendering for projects jointly prioritised by Denmark and the recipient country[4].

Co-operation

Under the DESF, Denmark has entered into co-operation agreements with 12 Central and Eastern European countries: Estonia, Latvia, Lithuania, Poland, Russia, the Czech Republic, Slovakia, Hungary, Romania, Bulgaria, Ukraine, and Belarus. In each of these countries, a country programme has been drawn up for the environmental activities, which is usually updated every other year. The activities are mainly country specific but are also of a distinctly regional nature with implementation of cross-border sectoral strategies such as action to preserve the ozone layer and to protect the Baltic Sea, and strategies concerning climate change, biodiversity, unleaded petrol, combating oil pollution at sea, preventing acidification, etc.

An example of a formulated strategy is the "green" strategy of 1997 on biodiversity and sustainable management of nature and forest resources. The objective is to give higher priority to assistance on nature protection because relatively few funds were allocated to this area earlier.

The assistance targets mainly global or regional environmental problems and is often related to the CEEC's fulfilment of international environmental conventions or other relevant, international activities such as EU pre-accession. For procedures etc., see the section on administrative planning.

DEPA's role in the activities

Denmark's environmental assistance under the Environment and Disaster Relief Facility for Eastern Europe (EDRF) comprises not only the Danish Environmental Support Fund for Eastern Europe (DESF), but also - in 1994-96 - environment-related sectoral assistance and the Green Investment Facility under the Investment Fund for Central and Eastern Europe (the IØ Fund), as mentioned above. From 1998, the environment-related sectoral assistance will be designated sector-integrated environmental assistance and is an element of the Government's Baltic Sea Initiative in the environment sector.

Denmark's assistance in the environment sector is co-ordinated by the Danish Environmental Protection Agency (DEPA), in that DEPA discusses the sectoral programmes with the ministries and agencies implementing them and makes recommendations to the Committee on International Expenditure. DEPA is also the consultation party on the environmental aspects of projects under the IØ Fund's Green Investment Facility. Lastly, DEPA has a seat on the board of Nordic Environmental Finance Corporation (NEFCO). Many Danish players with different expertise thus work together and supplement each other's environmental activities.

The activities in the 12 co-operating countries are briefly summarised below as an introduction to the projects on which Denmark and the respective countries co-operated from 1994-96.

For amplification of some of the themes mentioned in the following, readers are referred to various DEPA publications on environmental assistance to Central and Eastern Europe and particularly to the annual reports on the assistance.

3.2 Projects in the individual co-operating countries

Introduction

The figures used in the country review and under regional assistance etc. are based on statistics from a database covering all projects under DESF. These figures deviate slightly from the total budget mentioned above. The two sets of figures are not directly comparable because the database is adjusted with accounting figures for completed projects, i.e. the original budget is written down, while in the financial control system, this is recorded as a write-back to the budget with a view to reallocation. There are also accrual differences with respect to the time of recording write-backs and cancelled sums. These factors explain the difference between the DKK 735 million and the DKK 741 million at present appearing in the statistics.

It should also be noted that there can be minimal differences between the tables and the database figures due to rounding up or down of decimals.

For each country, a table shows the size of the grant and the number of projects. The projects are broken down into TA projects, which are technical assistance projects, and IN projects, which are investment projects. The category "Other" includes institutional strengthening and nuclear safety.

3.2.1 Estonia

Danish assistance to Estonia started in 1991, and first mainly as technical assistance projects. In the first few years, Estonia did not have the funds to make any significant environmental investments.

Primary sectors

Generally speaking, Danish assistance has been concentrated mainly in the water and waste sectors, accounting for 90 per cent of the Danish assistance. Within the water sector, most of the investment projects have been in the water supply sector. Denmark has co-operated with EBRD on the programme "Small Municipalities Environmental Programme", which focuses on water supply and waste water in 13 cities. Denmark has supported projects in three of the cities. The total costs of the programme is DKK 350 million and the programme is being carried out in a co-operation between Estonia, EBRD, NEFCO, EU-PHARE, Finland, Sweden, Norway, Switzerland and Denmark.

Within the waste sector, Denmark is co-operating with Estonia and EU-PHARE on the establishment of a national system for handling hazardous waste. The first phase of the project cost DKK 36 million, of which each partner contributed one third. The other investment project in the waste sector involves implementing a waste action plan in Järva County, including establishment of a landfill and a waste collection system.

In 1996, tenders were invited for waste water treatment in the run-off area of the Matsalu Bay, which is a sensitive natural area. In 1996, DKK 5.6 million was allocated for this project, but the final allocation has been increased to DKK 7 million. The project is part of a World Bank project costing DKK 40 million. However, the World Bank itself is only contributing DKK 13 million of this in the form of loans; the remainder is in the form of co-financing by Estonia itself and contributions from other donors.

Total environmental investments

Through co-financing with Estonia itself, other donors and the European Union, the Danish assistance has contributed to total environmental investments of DKK 76.6 million from 1994 to 1996. Co-financing of projects with international banks amounted to DKK 390 million and, here, the Danish funds acted as a catalyst. Today, Denmark is the second largest donor of environmental projects in Estonia, estimated by Estonian authorities at 18 per cent of total foreign assistance (1996). Finland is the largest donor, accounting for 46 per cent (1996).

Table 1: Total assistance to Estonia divided into project type and amount granted in million DKK in 1994-96

3.2.2 Latvia

State of the environment

The environmental problems in Latvia concern mainly waste water, waste and contaminated sites, caused by "past sins". For years, waste water both from households and industry has been discharged with no treatment. There are only a few waste water treatment plants of Western standard and they have been built for donor financed projects. As regards waste, unnecessarily large amounts of waste are produced by industry and regulation of domestic waste is very inadequate. All types of waste from most towns and villages are disposed of at landfills without special pollution prevention measures, giving rise to pollution of soil, surface water and groundwater.

The large number of contaminated areas are largely due to uncontrolled contamination from former military installations, including airports, ship yards, barracks and workshops. Added to this, the country's drinking water pipes and sewerage systems are worn out, environmental regulation of agriculture is no more than sporadic, general environmental legislation is lacking, and the environmental authorities are understaffed and poorly organised.

Danish assistance - primary sectors

Most of the Danish environmental assistance in the period in question - 60 per cent - consisted of activities in the water sector. The category "other", which accounted for approx. 10 per cent, covers projects related to physical planning and institutional strengthening of the environmental administration. Denmark used to be the largest donor in Latvia, but has been overtaken in the last year by Sweden, which has initiated some large-scale waste water treatment and water supply projects.

In 1996, the Governments of Sweden and Denmark invited tenders for a waste water treatment plant in Latvia's second largest city, Daugavpils. Sweden provided DKK 18 million, and Denmark DKK 12 million, for this project, which is part of a DKK 290 million project covering both waste water treatment and water supply. The World Bank is helping to finance this project by means of a small loan.

Danish assistance through co-financing with Latvia and other donors has contributed to total environmental investments of DKK 100 million. These include a soft loan of DKK 18 million from the Danish State Export Credit Agency (EKF). Denmark has also participated in international bank financing providing an additional DKK 450 million.

Table 2: Total assistance to Latvia divided into project type and amount granted in million DKK in 1994-96

3.2.3 Lithuania

Environmental problems

The principal environmental problems in Lithuania concern waste water treatment, hazardous and household waste, contaminated areas such as landfills, old industrial sites and former military installations. Air pollution is only seen as a problem in certain areas because most of the country's electricity supply comes from a nuclear power plant in Ignalina. This, however, constitutes a very serious risk. Furthermore, the Lithuanian authorities have experienced great difficulties in protecting natural amenities and in establishing an effective environmental administration.

Danish assistance

Initially, Danish efforts were directed towards defining the nature and extent of Lithuania's environmental problems in order to set the priorities for both Danish and Lithuanian action.

Primary sectors

The primary sectors - water, air and waste - accounted for more than 80 per cent of the Danish assistance. As the table below shows, waste water treatment has been the predominant sector. Through co-financing with recipient country sources and/or other donors or international financial institutions, Danish investments contributed to total environmental spending of DKK 535 million in 1994-1996. This figure includes a World Bank project. To this should be added another World Bank project costing of DKK 155 million, of which the Danish assistance amounted to DKK 6 million but cannot be said to have triggered the project. In this connection, soft loans from EKF are being used to pay the interest on 10-year loans for 12 waste water treatment plants, the largest of which is Vilnius Waste Water Treatment Plant.

Today, Denmark is the biggest donor of funds for environment projects in Lithuania, and the Lithuanian authorities have estimated that Denmark accounts for 43 per cent of all foreign environmental assistance.

Table 3: Total assistance to Lithuania divided into project type and amount granted in million DKK in 1994-96

The category "other" covers mainly projects on institutional strengthening of environmental administration, primarily concerning approximation to EU legislative requirements, and activities relating to the Ignalina power plant.

EU approximation

Lithuania was the first of the CEEC to receive Danish assistance for EU approximation. In 1996, grants totalling DKK 12.5 million were made for two EU approximation projects.

3.2.4 Poland

Danish assistance

Owing to Poland's size, proximity to Denmark and relatively fast political and economic restructuring, it has received support for a large number of projects. The following target areas have been given priority: waste water treatment, water supply, air pollution, nature protection and cleaner technology.

From 1991 to 1998, 46 projects have been carried out at a total cost of DKK 153.5 million, see Table 4. Investment projects have accounted for 86 per cent of the Danish assistance. Altogether, the Danish assistance generated DKK 1,580 million in the form of co-financing trough funds, banks, international financial institutions and co-financing by Poland itself.

Primary sectors

Water and air sector projects account for 86 per cent of the Danish assistance. The remaining 24 per cent was divided equally between projects in the waste sector, agricultural pollution and nature protection. Two thirds of all projects focus on the waste water sector, primarily waste water treatment. Although the whole of Poland is a run-off area to the Baltic, efforts have primarily been concentrated on selected regional river basins.

Table 4: Total assistance to Poland divided into project type and amount granted in million DKK in 1994-1996

3.2.5 Czech Republic

Environmental problems - primary sectors

The main environmental problems in the Czech Republic are air pollution from the energy and transport sectors and industry. The Czech Republic has given priority to: 1) reducing air pollution, 2) improving water quality, including establishing purifying plants, and 3) reducing waste and hazardous waste volumes. Danish assistance in the years 1994-96 was divided equally between technical assistance and investments.

Danish assistance

It has not been possible to include project financing by international donors in the current co-operation because the Czech Republic does not wish to raise international loans for environment projects. Despite this policy, several investment projects have been co-financed by the State Environmental Fund (supports projects by granting aid or soft loans within the areas: water supply, waste water treatment and reduction of atmospheric emissions) and the National Property Fund (clean-up operations at former state-owned undertakings). The Danish assistance to the Czech Republic during the period has triggered financing to the tune of DKK 210 million.

Table 5: Total assistance to the Czech Republic divided into project type and amount granted in million DKK in 1994-96

3.2.6 Slovakia

In the early phase of Danish environmental assistance to the federal state of Czechoslovakia, only 10 per cent of the projects supported by the DESF facility were in the area that became Slovakia. Immediately after the division of Czechoslovakia in 1993, only a very limited number of projects were initiated in Slovakia. However, this has changed in recent years, and there is now considerably greater focus on Slovakia.

Primary sectors

Co-operation with Slovakia is concentrated on air, water, waste and institutions. In terms of funds allocated, IN projects account for approx. 75 per cent of the environmental projects.

Financing

Danish assistance to environmental projects in Slovakia has generated total financing of DKK 160 million. We have only succeeded in doing the preparatory work for one World Bank loan to Slovakia for a DKK 650 million project. The loan has not yet been raised.

Table 6: Total assistance to Slovakia divided into project type and amount granted in million DKK in 1994-96

3.2.7 Hungary

Danish assistance

Danish assistance to Hungary from 1994-96 declined compared with the first years of co-operation 1991-93, due primarily to organisational changes in the Hungarian Ministry of the Environment.

Danish assistance, through co-financing with other donors, primarily Hungarian, contributed to total environmental investments of DKK 21 million.

Table 7: Total assistance to Hungary divided into project type and amount granted in million DKK in 1994-1996

3.2.8 Romania

Danish assistance

Co-operation with Romania was initiated in 1993 with a project to help phase out ozone-depleting substances. The second project - preparing a Romanian national environmental action programme (NEAP) - commenced in April 1995. This Danish assistance was part of international assistance to Central and Eastern Europe, with each donor country undertaking to draw up such a national environmental action programme. In 1996, Danish assistance increased significantly with the allocation of DKK 27.5 million to 8 new projects. Altogether 11 projects have been initiated in Romania at a cost of DKK 38.9 million. Only few projects have been completed in Romania so far. Danish environmental assistance to Romania including co-financing totalled DKK 63.4 million in the period 1994-96.

In 1996, tenders were called for renovating a waste water treatment plant in Arad. The Danish grant amounts to DKK 9.5 million, including approx. DKK 8 million for equipment.

Table 8: Total assistance to Romania divided into project type and amount granted in million DKK in 1994-96

3.2.9 Bulgaria

Danish assistance

In 1996, Danish assistance to Bulgaria increased significantly with a DKK 16 million grant for 6 projects. Since 1994, a total of DKK 22.3 million has been allocated to 9 projects. Nearly DKK 20 million has been allocated to IN projects. Total project costs amount just under DKK 30 million.

Table 9: Total assistance to Bulgaria divided into project type and amount granted in million DKK in 1994-96

3.2.10 Belarus

Danish assistance

Negotiations on environmental co-operation with Belarus were initiated in 1992 along with the first DESF projects. However, co-operation did not get properly off the ground until 1994 when an agreement on environmental protection between Denmark and Belarus was signed.

Project distribution

In 1994-96, a total of approx. DKK 13 million was granted for seven projects (see Table 10). Total co-financing from other sources amounted to approx. DKK 50 million, of which a project on phasing out ozone-depleting substances accounted for approx. DKK 40 million. Part of Belarus is a run-off area to the Baltic Sea and environmental efforts have been concentrated in areas such as water and air. From the very start, however, nature protection has also been given priority in Belarus.

Danish environmental assistance to Belarus has, among others, facilitated DKK 300 million in co-financing by international financial institutions, with a further DKK 285 million still to come.

Table 10: Total assistance to Belarus divided into project type and amount granted in million DKK in 1994-96

3.2.11 Ukraine

Danish assistance

Negotiations with Ukraine on environmental co-operation were initiated in 1992. The first environmental project commenced in 1993, and in June 1994, co-operation between Ukraine and Denmark was formally established when an agreement on environmental co-operation was signed.

Primary sectors

In Ukraine, Danish assistance has focused on air pollution, safeguarding nuclear power stations, and waste water treatment. Protecting the Black Sea against pollution has been given even higher priority.

Danish support to overcome the aftermath of the Chernobyl disaster and to ensure the decommissioning of the remaining reactors at Chernobyl Nuclear Power Station is channelled multilaterally through support to the Nuclear Safety Account (under EBRD) and EU support schemes.

There is great technical potential for significant environmental projects in Ukraine because the entire public environmental sector, i.e. water supply, waste water and waste management, has been severely neglected. Furthermore, Ukrainian industry shows almost no regard for resource conservation, i.e. raw materials and energy, leading to wasteful utilisation of resources.

Project distribution

Due to the poor economy of both the Ukrainian State and Ukrainian enterprises as well as inadequate legislation and organisation, even obviously needed projects (for instance, water supply projects in areas with cholera and hepatitis) are difficult to carry out. That is why four projects worth DKK 22 million have not yet been initiated, are only being carried out to a very limited extent, or are awaiting necessary amendment to Ukrainian legislation. In view of the potentially big environmental improvements connected with these projects, DEPA has had funds set aside for them for a considerable period of time. In the years 1994-96, DESF provided DKK 45 million of a total of DKK 319 million earmarked for environmental projects in Ukraine.

Table 11: Total assistance to Ukraine divided into project type and amount granted in million DKK in 1994-96

In 1996, tenders were invited for two water projects in Ukraine for a total grant of DKK 14 million. One of these projects, combined with a preliminary project started earlier, will result in two World Bank projects to a total value of DKK 375 million.

3.2.12 Russia

Danish assistance

Due to the political situation in Russia, co-operation with Russia was not initiated until 1992. In January 1993, an agreement was signed by Denmark and Russia on environmental co-operation.

Project distribution

Efforts have concentrated around the Russian Baltic Sea run-off area and Moscow. From 1994 to 1996, 26 projects received DKK 109 million (see Table 12). Total co-financing from other sources amounted to approx. DKK 265 million.

Around 50 per cent of the Danish assistance was allocated to projects in the water sector of the Russian Baltic Sea run-off area. Furthermore, most of the investment projects (IN), which account for more than 80 per cent of the total Danish assistance to Russia, are water projects.

Primary sectors

In the waste water sector, the DESF facility thus supported renovation and improvement of several of the large waste water treatment plants, for instance in the cities of Pskov, Novgorod and Kaliningrad. In the two largest cities, St. Petersburg and Moscow, the DESF supported a large water investment programme under EBRD and the renovation of the Kuryanovo waste water treatment plant which is the world's biggest plant with a capacity of more than 3 million m3 a day. In Kaliningrad and St. Petersburg, projects are expected to be established using loans from international banks for a total value of approx. DKK 1,500 million.

Another important target area is air pollution control, accounting for approx. 20 per cent of the total Danish assistance. Other target areas have been given priority, too, such as disposal of domestic as well as hazardous waste, nature protection and environmental problems in agriculture.

Table 12: Total assistance to Russia divided into project type and amount granted in million DKK in 1994-96

3.3 Regional assistance, special themes, analyses, etc.

Projects covering several countries or with a specifically regional objective are carried out, as well as projects designed for one particular country. As an element of these projects, or independently of them, a range of analyses are made as a basis for implementing the entire environment assistance programme. This work is categorised as "Miscellaneous activities" or "Other activities".

"Hot Spots"

Analyses have been carried out on the most serious environmental Hot Spots burdening the Baltic Sea and reception facilities for waste from ships etc. in Eastern Europe's Baltic ports. On a regional basis, operating manuals have been prepared in case of oil pollution. For these Baltic Sea activities, a grant of DKK 8.1 million has been made to four projects.

In one project costing DKK 3.5 million, nuclear cells on lightships, which present a serious radiation risk in the Baltic Sea, have been removed.

Forestry and biodiversity

Four projects in the form of analyses and assistance have been carried out in Latvia and Lithuania to promote sustainable forestry and biodiversity. Together, these projects received a grant of DKK 3.8 million.

NEFCO

In each of the years 1994-96, Denmark transferred DKK 11.8 million as its contribution to the Nordic Environmental Finance Corporation NEFCO. However, only in 1997 did the contribution to NEFCO come from the Danish Environmental Support Fund for Eastern Europe (DESF). NEFCO uses the funds to invest in or make loans for environmental investments in Central and Eastern Europe, mainly involving Nordic firms.

Environment and health plans

In co-operation with WHO, Environment and Health Plans have been implemented in Latvia and Hungary. The project benefited from a grant of DKK 2.3 million and co-financing amounting to DKK 2.5 million.

Institutional strengthening

A group of 13 projects can be described as general institutional strengthening. The projects, which include analyses and general assistance, concern strategy plans for phasing out leaded petrol in the region, clarifying the countries' environment tasks for admission to the European Union, work for soft loans for environmental projects, analysis of selected countries' environmental investments, co-operation on regional action on phasing out ozone-depleting substances and a study of air pollution in selected regions as an element of a project pipeline, and - lastly - collaboration with OECD on, e.g. a review of the environmental performance of several countries - the "Country Environmental Performance Reviews". In all, these 13 projects have received grants of DKK 16.0 million.

Grants amounting to DKK 0.8 million have also been made for conferences and travel for Central and East Europeans, and a sum of DKK 0.6 million has been used for collating data for the coming evaluation.

Lastly, a grant of DKK 3.8 million has been made for preliminary work on a major water and waste water project in Chisenau, the capital of Moldova. EBRD has agreed with Moldova that a large environmental loan shall be made for the project, the total cost of which is estimated at around DKK 400 million.

Altogether, DKK 50.6 million has been allocated to 28 projects of varying size that cannot be termed country-specific. The co-financing in these projects has been minimal - just under DKK 5 million, due to the special nature of the projects. Only one of the projects has been categorised as an investment project.

3.4 Danish environmental assistance during 1994-96

On the basis of the above-mentioned review, a breakdown can be made of Denmark's environmental assistance to Central and Eastern Europe during 1994-96, thereby giving a complete picture of the assistance.

Table 13: Total Danish environmental assistance in million DKK in the period 1994-1996, with a breakdown into target areas and project types

Water

Support in the water sector area, which concerns mainly run-off to the Baltic Sea, accounts for slightly more than half the total support. There are two reasons for this: firstly, the CEEC themselves want many waste water treatment plants renovated and new ones built and, secondly, waste water treatment is a Danish stronghold. Only a few water supply projects have been carried out. In addition, most of the environmental projects for which the international financial institutions provide funding are waste water treatment projects.

Air

Action against air pollution accounts for around 22 per cent of the total support provided, for treating flue gas from the energy sector, renewable energy projects, reduction of air pollution from industrial plants and reduction of ozone-depleting substances. This area covers a range of very large investments. It must also be seen in the light of the Danish Energy Agency's environment-related energy sector programmes in the period in question since the Agency's work to improve energy efficiency also helps to reduce air pollution. For the division between DESF and the environment-related energy sector programmes, readers are referred to the guide mentioned in note 4. "Guide to preparation of project proposals for environmental activities in Central and Eastern Europe (Projektforslag til miljøaktiviteter i Øst- og Centraleuropa)".

Soil

In 1993, it was decided internationally that lowest priority should be given to averting soil contamination unless there was a direct risk of contamination of drinking water. For this reason, not many projects have been initiated in this area.

Waste

More action might have been expected with respect to waste, but the CEEC themselves do not give the area very high priority and have therefore not been interested in strengthening action in it. However, changes are on the way, especially in those countries seeking admission to the EU.

Other

The category "Other" covers primarily a range of support measures to strengthen the institutional structure of the environment sector in Central and Eastern Europe. This area accounts for almost 75 per cent of the "Other" category. The nuclear area accounts for about DKK 8 million of the almost DKK 80 million, while a residual category, including a DKK 12 million contribution to NEFCO, accounts for the rest.

Table 14: Danish environmental support by country and in total granted in million DKK during 1994-1996

Poland received most - DKK 153.5 million, constituting about 20 per cent of the Danish environmental assistance. Lithuania followed with DKK 126 million, then Russia, primarily the areas nearest to Denmark, with DKK 109.4 million. The Baltic States received by far the largest amount per inhabitant, although Latvia received less than the other two. Belarus and Hungary received least in the period - DKK 13 million and DKK 11 million, respectively.

The assistance was in accordance with Danish government strategy on environmental assistance to Central and Eastern Europe: to prioritise the Baltic region. Around 75 per cent of the assistance went to that region, which - environmentally - encompasses a larger area than normally thought of geographically because there are sources of Baltic Sea pollution in Belarus and Ukraine.

3.5 Co-financing

Since its establishment, DESF has regarded co-financing as important on the grounds that, Danish-supported projects are taken more seriously if the recipients of the projects have to make a substantial contribution themselves.

It is becoming clear that co-financing by the countries themselves is best achieved in investment projects. For technical assistance projects, the same degree of co-financing cannot be obtained from the countries themselves, apart from making manpower and premises available for the projects. Co-financing expresses high prioritisation of environmental projects.

Financial gearing 1:4

In the period 1994-96, DESF contributed DKK 735 million of the total environmental expenditure of DKK 3.75 billion, most of it in the form of environmental investments. In other words, every DKK 1 from the DESF attracted DKK 4 in the form of co-financing amounting to DKK 3 billion. That represents a financial gearing of 1:4, which must be regarded as a satisfactory result.

Soft loans

Co-financing comes primarily from the recipients themselves, using money from local or national environmental funds. This applies primarily to Poland and the Czech Republic, which have very strong environmental funds. Co-financing also takes place in the form of soft loans from Eksportkreditfonden (EKF) (the Danish State Export Credit Agency) to the Baltic States, which is a temporary scheme. Most of the soft loans have gone to Lithuania, which has wanted to make full use of the scheme, whereas Latvia has only taken one soft loan for a single, large project.

PHARE

Denmark also co-finances projects together with other donors - primarily Sweden and Finland - and extensively with the EU PHARE programme. However, the co-financing with PHARE is not arranged via Brussels because the EU Commission does not involve itself directly in bilateral financing arrangements. These are primarily tied to the donor country and are determined in the recipient country, which co-ordinates the co-financing with Brussels.

World Bank and EBRD

One particular area is co-financing with the international financial institutions, primarily the World Bank and EBRD. DESF has helped to initiate no fewer than 11 projects amounting to slightly more than DKK 3 billion. Of these, only two projects, at DKK 216 million, are included in DESF's statement of co-financing because DESF is deemed to have been the main trigger for the loans, whereas, in the case of the other projects, DESF made a substantial, but not critical, contribution.

International financial institutions

DESF has also started up seven projects at slightly more than DKK 3.1 billion with the international financial institutions. None of the loans for these projects has been used yet, so the projects must be categorised as not yet under implementation. Even so, it must be only a question of time, since a very substantial part of the preliminary work has already been done in most cases. Only one of these projects is included in DESF's statement of co-financing because this project has already been implemented for DKK 75 million, although as yet without using the loan. Concerning projects under the international financial institutions, readers are referred to material from the Project Preparation Committee (PPC), see below.

GEF and NEFCO

Co-financing also comes from other sources, such as the Global Environment Facility (GEF, which provides international grants for global action) and such Nordic sources as NEFCO. Almost ten projects have been implemented in co-operation with NEFCO. Some projects also qualify for co-financing by the IØ Fund and EKF.

Focus on environmental investments

Since 1993, when Denmark discussed financing for the Baltic Sea Initiative with the international financial institutions at a Meeting of Ministers in Gdansk, DESF has focused particularly on financing environmental investments. In June 1994, Denmark held an international conference on softening loans for environmental investments, and material has been prepared on financing environmental projects with the international financial institutions.

Strengthening of environmental funds

DESF has also co-operated with the recipient countries on strengthening environmental funds in Central and Eastern Europe - particularly in Russia, where a major Dano-Russian project aimed at strengthening the Russian environmental funds has been carried out. In the international debate on financing for environmental projects, it has been stressed time and again that the CEEC must procure most of the funds themselves from domestic sources.

Denmark has managed to make the financing of environmental investments a central theme in the co-operation between East and West on the environmental restructuring of Central and Eastern Europe.

3.6 Environmental effects

Calculation of environmental effects

Information on the environmental effect of individual projects helps to provide a complete picture of the importance of DESF.

Use of environmental indicators

Environmental indicators are used to describe the environmental effects of the TA and IN projects carried out. Wherever possible, the environmental effects are calculated quantitatively, but some can only be described qualitatively. When approving projects, the environmental effect of the completed project is estimated on the basis of specific environmental indicators.

For data processing reasons, DEPA has selected 50 environmental indicators, distributed over the target areas: air pollution, water pollution, waste, institutional strengthening, nature protection, agricultural pollution, and nuclear issues. Project-specific environmental effects can also be described. Examples of quantitative environmental indicators are: reduction in emissions (e.g. tons nitrogen per year) and established handling capacity (e.g. tons waste per year). The environmental effects estimated at the start of a project are asses-sed at the end of it. In many cases, the environmental effect can be verified by measurements. This is typically the case for investment projects involving construction, operation and supply of equipment.

Actual and estimated environmental effects

The environmental effects are stated as "actual" or "estimated" effects. "Actual" environmental effects are the actually achieved or calculated effects of the project in question. "Estimated" environmental effects are effects that have not yet been achieved with the project, but that are expected to result from it.

Environmental effects

The environmental effects are assessed when considering projects. However, judging whether the reported environmental effects are realistic can be very difficult.

Despite systematic collection and processing of environmental-effect data, DEPA believes the stated environmental effects to be encum-bered with considerable uncertainty, depending on the target area. DEPA therefore intends to continue developing the use of environ-mental indicators and the calculation of environmental effects.

It should also be noted that the environmental effects of most of the projects implemented under the auspices of the international financial institutions do not figure in the statistics because DESF "only" supplies technical assistance for the start-up of the projects. If these projects were included, the figures would be considerably higher, but that can only be done over a longer time horizon and with a number of reservations.

The following results of investment projects to reduce air pollution and waste water contamination show how environmental effects are assessed on the basis of selected environmental indicators. The projects, which include both completed and uncompleted projects, are from the period 1994-1996.

Emissions of polluted air to the atmosphere from Central and Eastern Europe and discharge of totally or partially untreated waste water in the Baltic Sea's run-off area cause serious transboundary pollution in the Baltic Sea region. The pollution also has serious local effects.

Air pollution

Air pollution in Central and Eastern Europe leads to ozone depletion, and increase in the greenhouse effect and acidification, and increased eutrophication of the water sector. Local impacts are mainly harmful effects on animals and people.

Table 15 shows the reduction in emissions of carbon dioxide (CO2), nitrogen oxides (NOx), sulphur dioxide (SO2) and particles. The total support for the 31 air projects implemented in the period 1994-96 was DKK 132 million. A particularly big reduction of SO2 was achieved. The expected result corresponds to 90 per cent of the total Danish emission (1995: approx. 150,000 tons SO2). It should be noted, however, that this sulphur account includes a project that only received a grant in 1997. The administrative procedure for the project commenced in 1993. The reduction was achieved primarily by establishing desulphurisation plants at power stations in Poland and, secondarily, through air treatment in industry.

Table 15: Sum of actual and estimated environmental effects of investment projects to reduce air pollution in the period 1994-1996

In the case of NOx emissions, the reduction corresponds to 2.6% of the total Danish emission in 1995. The establishment of a flue-gas treatment system at a Russian power station is expected to result in a reduction of 4,000 tons NOx per year. The reduction of CO2 emissions corresponds to 0.7% of Danish emission in 1996. About half of the reduction in CO2 emissions is due to a project in Poland involving the use of geothermal energy.

Incidentally, one very new and exciting project on reduction of ozone-depleting substances (ODS) has not been estimated in this connection. A grant of around DKK 10 million has been made for implementing country strategies to phase out ozone-depleting substances in 8 co-operating countries. The Global Environment Facility (GEF) has provided co-financing of DKK 680 million for investments. DEPA has not yet estimated the reduction targets.

Waste water contamination

Waste water contamination causes eutrophication of the water sector. Today, the Baltic Sea receives large quantities of untreated or only partially treated waste water from the CEEC.

Investment projects regarding waste water treatment have produced substantial environmental effects, cf. table 16. The 39 waste water projects concerning establishing sewerage and waste water treatment plants received DKK 179 million in grants in the period 1994-96. The total treatment capacity corresponds to treating the waste water from about 1.8 million PE (Person Equivalents), based on an estimate of organic substances (BOD). Based on nitrogen (N) and phosphorus (P), the treatment capacity corresponds to around 2.5 and 0.8 million PE, respectively. For comparison, the total quantity of waste water in Denmark corresponds to the contamination from around 9 million PE.

Table 16: Sum of actual and estimated environmental effects of investment projects to reduce waste water contami- nation (urban waste water) in the period 1994-1996

Note: 21.6 kg BOD/PE/year; 4.4 kg N/PE/year; 1.5 kg P/PE/year

The environmental effects achieved by constructing waste water treatment plants in Central and Eastern Europe in the period 1994-96 are substantial, as is also clearly shown by comparing these effects with the total Danish urban waste water discharges in 1996 of 5,000 tons BOD, 6,400 tons N and 900 tons P.

3.7 International co-operation

The international environmental co-operation between Central and Eastern Europe and the Western countries that wish to help has been developing since the start of the system changes in Central and Eastern Europe. The focal point of the co-operation has been regular conferences of environment ministers, at which the form of the co-operation has been planned. The first conference was held in Dobris outside Prague in 1991 at the instance of what was then Czechoslovakia. The second Pan-European Conference of Environment Ministers was held in Lucerne in Switzerland in April 1993.

In Lucerne, a decision was made to end the ordinary G 24 co-ordination of the assistance since this was deemed a fiasco. Instead, it was decided that the assistance should be co-ordinated by the recipient countries.

Task Force and PPC

A task force was created under the leadership of OECD to act as the liaison body on action plans in the environment sector in Central and Eastern Europe. The main tasks of the task force were to be policy formulation and institutional strengthening of the environmental assistance. As a supplement to this body, a committee - called the Project Preparation Committee, PPC - was appointed to co-ordinate large projects involving several donors or international financial institutions. PPC acts a forum for co-financing between banks and donors. In fact, DESF has financed a Danish PPC officer at EBRD to improve liaison with the donor countries, primarily Denmark.

This liaison system has worked very satisfactory and was confirmed during the Sofia Conference in October 1995, at which those present decided that it should continue. The system was reviewed at the Århus Conference in June 1998. It is now focused more on the Russian-speaking countries, whose environmental problems have been receiving far too little attention.

NEFCO and EU

Parallel with this action, DEPA has been active in the Nordic co-operation in NEFCO and the informal Nordic co-ordination group for environmental work in Central and Eastern Europe. In addition, regular co-ordination meetings have been held under the auspices of the European Union, chaired by the EU Commission.

Thanks to this close environmental co-operation, far more has been achieved, environmentally, in the CEEC than could otherwise have been expected. The Western assistance is closely co-ordinated, but on the CEEC's terms and conditions. The co-ordination must be regarded as sufficient for carrying out the necessary tasks. There has, however, been some over-co-ordination, with individual donors with a relatively low level of assistance attempting to control the assistance provided by others.

3.8 Administrative organisation of environmental assistance

3.8.1 Legislative basis and the original organisation of the assistance

The original Act on Subsidies for Environmental Activities in Eastern Europe (No. 223 of 10 April 1991) is a broadly formulated framework act; the Act and its explanatory notes set out the general framework for subsidies, purposes and recipient countries, and the composition of the Advisory Committee. The Act thus establishes the basis for the administration and leaves the detailed formulation and prioritisation of technical and geographical target areas to DEPA and the Advisory Committee. An amplifying executive order (No. 225 of 10 April 1991) prescribes rules for preparation of applications, granting of funds, requirements for project implementation and other conditions for individual projects. A guide to applying for grants was also prepared. A new guide was issued in the form of "DEPA's Guidelines No. 14 of 1995". The guide informs applicants about the conditions and procedure for obtaining a grant and includes, as an annex, a model for project proposals.

The Advisory Committee

The Advisory Committee is composed of representatives from business organisations, professional organisations and environmental and nature organisations, together with the Ministry of Foreign Affairs and the Ministry of Environment and Energy. In the explana-tory notes, the Committee's tasks are described as assisting DEPA with the formulation of the purpose of the grant scheme, guidelines for its administration, prioritisation of recipient countries and target areas, and participation in assessing the completed projects.

Division for Environmental Assistance to Eastern Europe

A small unit, the Eastern Europe Secretariat - now DANCEE (Danish Cooperation for Environment in Eastern Europe) - was established under DEPA. From the start, this unit was manned with a head of division and a staff of four graduates. In the period 1991 - 1994, grants were given only to incoming applications based on information about the scheme.

From the very start in 1991, DEPA's administration of the funds for environmental assistance to Central and Eastern Europe has been subjected to review by the Office of the Auditor General and the Agency for Financial Management and Administrative Affairs (AFMAA), which comes under the Danish Ministry of Finance. These reviews are reported briefly below.

3.8.2 The Office of the Auditor General's review of the administration in the first five years

In January 1995, the Office of the Auditor General presented a report to the Public Accounts Committee on the assistance to Central and Eastern Europe, including environmental assistance, in the period 1990-93. In the report, DESF was criticised for allocating too few resources for administration. In the view of the Office of the Auditor General, this resulted in an "informal procedure", characterised by a lack of project documentation.

3.8.3 The Office of the Auditor General's review of the administration of the Environment and Disaster Relief Facility

In March 1997, the Office of the Auditor General delivered a memorandum to the Public Accounts Committee on the administration of the Environment and Disaster Relief Facility, including the environmental assistance to Central and Eastern Europe. The memorandum was the result of a communication from the Office of the Auditor General to DEPA with questions concerning DEPA's administration of the funds for environmental activities in Central and Eastern Europe. The memorandum refers back to the above-mentioned report.

Increased resources

As mentioned, the administration of environmental support funds is now much better resourced, although the available funds have admittedly also increased - from DKK 100 million per year in the first few years to DKK 295 million in 1996 and to DKK 420 million in 1997. Even so, the introduction of a wide range of standardised procedures means that there is a real increase in resources.

Local project co-ordinators

Parallel with the increase in resources at DEPA, institutional support has been provided since 1995 for attaching local project co-ordinators (LPC) to the environment ministries in six of the recipient countries, and there are plans to use this model in more countries. With their local knowledge, including language skills, these project co-ordinators are both helping to improve the competence of the recipient countries' environmental authorities and keeping DEPA up to date on the general development in the environment sector in the respective countries and, specifically, the progress of current projects. As they live in the recipient countries, the project co-ordinators will also be able to help increase the frequency of supervision and inspection.

Involvement of DEPA's specialised divisions

Another factor that has improved the resource situation is steadily growing involvement of experts in DEPA's specialised divisions when planning and implementing activities.

Improved documentation

As this report shows, the quality of the documentation has improved and the handling of applications has been harmonised. Recommendations used to be discussed at meetings in which all the case officers participated. As the division has grown larger, this procedure has become unwieldy and has been replaced by a system with quality assurance of the individual recommendations before approval by the head of division and DEPA management.

Country programmes

The co-operation with the recipient countries has been systematised through the preparation of country programmes as a basis for discussing assistance. The relationship with relevant authorities is handled by the country co-ordinator in each co-operating country. Guidelines for this co-operation will be further systematised in the guidelines for the division's work currently being prepared, cf. below.

Tender model

Since 1996, the application model has been supplemented by a tender model. Now that the scheme is well into its stride, the co-operation with the recipient countries is growing, and far more is known about the environmental situation in each of the countries, there is a far greater possibility of more active prioritisation of environmental projects. As an element of the general country programming, tender projects are expected to make up a larger part of the total project portfolio. This opens the way for prioritised, coherent activities, sectorally and geographically. Identifying projects together with the recipient countries also, in most cases, increases the countries' commitment to the work. Furthermore, country programming enables better planning and thus better utilisation of resources.

DEPA has better possibilities of controlling tender-based projects. However, the application model will continue to be used since not all projects are suitable for tendering and Danish businesses are identifying a number of exciting projects.

The same rules apply to tender-based projects as to projects carried out under the auspices of Danida and Danced. Whereas a scoring system is used to assess application-based projects, the criteria for assessing tender-based projects depend on the individual project.

It should also be noted that tender-based projects are more suitable for co-operation with other sources of finance, primarily the international banks. This means that a larger part of the Danish environmental support funds can act as a catalyst for large, loan-financed investment projects, which considerably enhances the environmental effect of the assistance.

Rules for handling cases

As mentioned earlier, AFMAA, working on the basis of the Ministry of Finance's report on the administration of grants from May 1996, has made a number of recommendations about DESF's administration in a pilot project carried out in co-operation with DEPA. One of the main recommendations is to supplement the concept for the recommendation memorandum with written case-handling rules. This would formalise case procedures and provide further assurance of uniformity when handling projects. The case-handling rules would also be a good tool for new employees and thus a good supplement to a monitoring scheme that has been established at the office, in which a new employee shadows a more experienced member of staff for a certain period of time.

Accounting rules

AFMAA also recommends drawing up accounting rules for use in all support schemes for Central and Eastern Europe, cf. above, the Ministry of Finance has begun preparing such rules. Such accounting rules are to replace/supplement the internal accounting instruction for DESF.

With respect to auditing, AFMAA refers to the fact that DEPA is planning to expand the auditing rules and, therefore, lists a number of relevant minimum requirements for auditing that should be included.

Inspection of projects

As far as supervision and inspection are concerned, DEPA wants to see all investment projects inspected at least once. When setting the inspection frequency, it will be relevant to assess the project's economic and technological importance, the risks involved in applying the funds, etc. For this reason, AFMAA recommends drawing up a plan for supervision together with standard conditions for the content and reporting of inspection visits.

3.8.5 Preparation of division guidelines

With a view to collecting material on the measures already taken to improve the administration of the scheme and material relating to the implementation of AFMAA's recommendations etc., DEPA is now preparing internal guidelines. Each case officer will have a hard copy of the rules in a ring binder and there will also be an electronic version. The internal guidelines are expected to help considerably towards systematising the work in an office with growing resources and a rapidly rising number of projects.

3.9 Concluding comments

3.9.1 Summary

In the years 1994-96, DESF spent DKK 735 million on 259 projects.

Poland received 20 per cent, Lithuania 17 per cent, and Russia - primarily the Russian regions closest to Denmark - received just under 15 per cent.

The assistance is considered in accordance with the political intentions, since more than 75 per cent has gone on projects in the Baltic Sea region.

Goal achievement

As an indicator of goal achievement, one can use the degree of investment in the activities, calculated on the basis of the size of the grants, which total DKK 505 million, or almost 70 per cent of the support. Some of the technical assistance went on preparing this investment activity.

The activities relating to the water sector, 90 per cent of which concern the region with run-off to the Baltic Sea, account for just over half of the assistance. The activities to combat air pollution account for around 22 per cent.

It must be said that the activities carried out match the priorities indicated very well.

Environmental effects

The completed projects and projects in progress are producing some good environmental effects, although there are a few projects that are not managing to achieve the promised results. That can only be determined by a subsequent assessment of the actual environmental effects. One can to some extent add the results from the projects which the World Bank and EBRD are carrying out, and in which DESF has participated. This has only been done, however, in the case of three loan projects.

The assistance has been planned with a view to achieving a substantial effect on the CEEC's fulfilment of international environmental conventions and other international co-operation, such as EU pre-accession. Here, we can mention the activities relating to the Baltic Sea, action to protect the ozone layer, reduction of acidification, reduction of climatic effects, etc.

Co-financing

Co-financing is a good indicator of a serious attitude of the CEEC to environmental issues, in that DKK 735 million provided in grants has triggered additional funding amounting to DKK 3.75 billion, most of which has gone on environmental investments.

In addition, DESF is helping to finance 18 projects with loans of around DKK 6 billion from international financial institutions. There is a slight overlap with the above-mentioned DKK 3.75 billion, as three projects totalling DKK 800 million are included in the above-mentioned figures because DESF played a critical role of catalyst for the projects.

The Office of the Auditor General's assessment of the assistance so far

DESF has been reviewed by the Office of the Auditor General twice, once together with other assistance schemes for Central and Eastern Europe in 1994 and again in March 1997. DEPA has tried to solve the problems identified by the Office of the Auditor General.

3.9.2 Assessment of the assistance so far

Assessment of the assistance so far

A number of questions are asked concerning assessment of the degree to which the programme achieves its goals, i.e. by DESF. In the following, an attempt is made to take stock of this. In other words, the degree of goal achievement has been assessed internally and not externally.

The assistance provided must be deemed to fulfil the Danish Government's policy, goals and strategies as formulated in general terms and more specifically in the Act on Subsidies for Environmental Activities in Eastern European Countries and the strategy for environmental assistance to Central and Eastern Europe under the Environment and Disaster Relief Facility. The extent to which it has done so will emerge later on from the external review.

The activities give every indication of fulfilling the recipient countries' wishes in the form of the environmental needs and priorities discussed at regular intervals between Denmark and the countries in question. The details will only emerge at the end of the external review.

Quantitative data from the 259 projects are provided as a measure of goal achievement. These data draw a picture of reasonable success, but only the external review can give a more differentiated picture at a detailed level. There are some projects - perhaps up to 20 - for which support was promised, but which never got off the ground because one or more of the conditions for them - typically co-financing - was not fulfilled. No funds have been used on these projects, and the funds set aside for them have been returned to the pool. It is more difficult to assess the success rate of individual projects, and this internal assessment does not do that. There are some projects that do not achieve a satisfactory success rate. That may be due to players in the recipient country, the Danish project holders' lack of competence or other factors in the projects. Generally, however, DEPA believes that only a small number of projects do not achieve an expected, reasonable success rate.

Long-term effects

The activities should have a good chance of producing the expected long-term effects since the investment projects supported are ex-tremely concrete. There is therefore a high degree of expectation that at least the investment projects will be continued when the Danish assistance comes to an end. As far as DEPA knows, investments have not been made in "white elephants". The Danish support is too small for that and is only helping the countries to help themselves.

The question of whether the investments and operating costs resulting from the Danish assistance are warranted should probably be answered in the affirmative. The Danish environmental assistance may focus on better and thus more costly solutions than a recipient country would itself choose with full self-financing. However, nine of the co-operating countries are seeking admission to the European Union and must therefore in future fulfil the EU environmental directives. This in itself warrants investments that are better and thus often more costly, but that also fulfil the directives. In a few projects, however, the same results might have been achieved for less money. The external review will give a better picture of this.

Programming

It is too early to say anything definite about whether the program-ming has been as good as it could be. However, it must be borne in mind that the goal is environmental action in Central and Eastern Europe, primarily in relation to international agreements, but involving Danish resources - for which reason, Danish solutions are often preferred.

Transfer of Danish technology and know-how

In many cases, the Danish technology and know-how transferred are expected to be used after the conclusion of the individual projects as well. A final assessment of this will be carried out during the external review.

Knock-on effect

Little can be said about the knock-on effect at the present time. Investment projects often take such a long time that it will be years before their knock-on effect can be properly assessed.

A number of quantitative environment effects and co-financing figures have been mentioned as indicators of goal achievement and these show that the programme has to some extent achieved its goals. The external review will provide more detailed information on the actual extent.

3.9.3 Experience gained

Experience gained from a wide range of projects shows what typically goes wrong and the best way of solving such problems.

Weak environment ministries

The environment ministries in Central and Eastern Europe are generally very weak with respect to both personnel and other resources. They still have many employees from the time before the system changed - especially in those countries that have implemented fewest reforms, such as Romania, Bulgaria and Ukraine. Young, able employees with language skills leave the ministries for higher pay elsewhere.

The strength of the co-operation and the assessment of projects depend greatly on continuity in the recipient country. When personnel leave and are replaced, a lot of knowledge is lost because most of the material disappears. That is also the case when ministries are split up. It is certainly the case when countries split up, as in the division of Czechoslovakia into the Czech Republic and Slovakia, when almost all material disappeared when the federal environment ministry was closed down.

Differences between countries

Generally speaking, very big differences exist in our experience of working in the different countries. In Central European countries such as Poland, the Czech Republic and Hungary, things run quite smoothly because these countries are reasonably well organised. However, in the Baltic countries, the first few years were very difficult because of their organisational structure as Soviet republics oriented towards Moscow and had little central administration. There, it took a long time to get investments going. That also applies to some extent to Belarus and Ukraine.

Co-financing

Co-financing is usually easier to achieve in countries that are enjoying economic growth and that have the strength to combine different forms of finance. The economically better situated countries often choose not to raise many international bank loans, while economically weaker countries can only carry out large projects by involving international financial institutions. That is why, for projects in the weaker countries, DESF has chosen greater co-operation with international financial institutions.

A lot of the same problems occur in many projects. Customs problems in connection with equipment are one very serious barrier - particularly in Russia and Ukraine. The recipients of the projects, including people paid by the recipients, often have difficulty in supplying the agreed services because they cannot keep the financial agreements they have entered into.

Language problems make working in Russian-speaking areas difficult because foreign language skills are very rare there. Interpretation causes major problems because the interpreters are rarely conversant with technical terminology.

Experience of Danish companies

The best projects must be said to be projects in which Danes are co-operating with very qualified people in the recipient country - either experts or local contractors. Danish firms generally achieve better results when they hire local people or when they have established a permanent base in the country. Only a few Danish firms are able to work in the Russian-speaking areas. Those that can are the big consulting firms and a small number of industrial companies. Over time, the Danish resource base has improved considerably. When a Danish form has had a success, the success can be copied relatively easily. However, some Danish firms have given up due to lack of strength.

Notes:

4. For amplification of the prioritised target areas, readers are referred to the Danish Environmental Protection Agency's Guidelines No. 14 of 1995 on Suggested Projects for environmental activities in Central and Eastern European Countries and the Annual Report of the Danish Environmental Protection Agency 1995.