Coalitions are inevitable

Romanian politics since 1989 has been marked by the failure to develop a genuine political dialogue or create a consensus on the need for economic reconstruction. The political elite is divided between the traditional, predominantly center-right, "historical" parties, the left and the center-left parties with a largely former communist background, the nationalist parties and the party representing the Hungarian minority. None of these groupings is capable of winning enough support to form a government on its own, thus coalitions are inevitable. The problem of forming stable, lasting coalitions has been greatly complicated not only by economic group interests but also by the deep personal animosities that run through the political scene.

The ruling coalition and the President are loosing ground

The high expectations after the 1996 elections are already history and a general disappointment seems to affect the whole country. It is the kind of context where extremist discourses are likely to flourish and to be welcome by a significant segment of the population. The opinion poll conducted by Metro-Media for the Open Society Foundation Romania in November 1998, showed that support for the ruling Democratic Coalition (DC) had fallen by 22% over the previous 18 months. Support for DC fell from 51% in the spring of 1997 to 29% in November 1998. Support for the leading opposition party, the Party for Social Democracy in Romania (PSDR), also fell from 29% to 26% over the same period, while that from Great Romania Party (GRP) rose from 6% to 16% although decreased during the last months to 11%. Popular confidence in the president, Emil Constantinescu, had fallen from 55% to 34% during the same 18 months and to less than 30 during the last three months, while the former president, Ion Iliescu recovered from an outsider at the beginning of 1997 to a second position in the November poll and to the first most popular candidate in an early spring 1999 poll.

Nationalist and leftist have good chances to form the next government

The elections are expected to take place as scheduled towards the end of 2000 unless a major crisis would force an early election. The prolonged recession over which the Ciorbea and Vasile governments have presided as a result of delaying structural reforms during their first two years in office is likely to cost the coalition in the next election. Support for the opposition especially PSDR but also and GRP is growing, and a coalition of nationalist and leftist parties has to be taken into account as having good chance of forming the next government. A coalition involving the nationalist parties would inflame inter-ethnic relations, alienate the country’s ethnic Hungarian minority and strain relations with Hungary.

Discrimination against Roma is a major concern

The EU issued an interim report in November 1998 on Romania’s progress in meeting its political obligations under its Europe Agreement. The report findings are very relevant to our work and mission, and emphasize some major shortcomings that we need to address. The overall conclusion is that Romania meets the broad political criteria specified by the Copenhagen agreement, but noted critical weaknesses in rooting out corruption, improving the workings of the courts and protecting individual liberties. The report specifically criticized:

• The rejection by parliament of the reform of the Penal Code, which would have liberalized legislation relating to homosexuality and the libel laws;
• The prosecution of journalists who have caused offence to the authorities;
• Excessive use of pre-trial detention and excessive delay in bringing trials to court;
• Reports to inhumane and degrading treatment by the police of Gypsies, street children and homosexuals;
• Difficulties faced by people with physical or mental handicaps;
• Widespread discrimination against Gypsies;
• Inadequate procedures and legislation for eliminating corruption.

The economic situation is worse than ever

From an economic perspective one may say that the current situation is worse than ever. However it must be recognized that a few signs on the economic reform have appeared in 1998. Unfortunately it is a very difficult social moment as the vast majority of the population is now in a very bad shape. Obviously such reforms should have happened nine years ago where they would have been easier accepted.

The government finally took decisive action to accelerate economic reforms

Following sharp criticism of the slow progress of reform in Romania by IMF and the EU, and a succession of credit risk downgrades, the government finally took decisive action to accelerate economic reform. The "anti-crisis" program launched by the government in December 1998 begun to address the structural problems that have contributed to the mounting losses in the state sector and the rapid deterioration in economic performance in 1997-98. The government must avoid a large budget deficit since it will not only undo the limited policy achievements of the past two years, but could generate hyperinflation in 2000.

OSF is committed to support reforms even in a less friendly environment

Various public authorities and institutions have become eager to work with the Foundation, an approach which is not likely to change in the future although results of 2000 elections should not be disregarded. However, there are several autonomous institutions, which would be willing to continue their co-operation with the Foundation, even in a less friendly environment.

OSF is focusing to achieve systemic impact

The mission of the Romanian Foundation is now different compared to what it has been since the establishment. There are several reasons for this among which:

• the general political and social context, namely the lack of capacity of the Romanian society to reform itself in several important domains;
• the level of expertise achieved by the Foundation, mainly through the mega-projects.

It is no longer the role of the Foundation to support various disparate initiatives which although important would not lead to a systemic change. Rather, in the years to come the Foundation has to play a crucial role in reforming the Romanian society in those areas which will have a systemic impact over the evolution of the country influencing in their turns other actors.

Reinforcement is the key word for the next couple of years

Since 2000 will be an electoral year, the government will spend more time on doing not the right things but those that could please the electorate. Such an approach would concern not only the economic reform, but also the essential changes in the education system, in public health, in the prison system, and in several other fields. On the other hand, year 2000 being an electoral year implies that the results of the elections will be extremely important as it is quite uncertain if afterwards the reforms that have been started will be continued and concluded.

In this context, the OSF main goal for 2000-2001 seems to be the consolidation of the reforms in those domains for which the mega-projects have been designed to an extent where it will become irreversible.

Support the reforms initiated by the government

- To support the reforms that have already been initiated by various ministries or governmental agencies - whose implementation will take several years and where there is a tremendous need of know how - this implying that the Foundation should continue some of its programs where consolidation is necessary and the impact on the long run visible (i.e. this would be the case of the education program, of the public health program) or start new programs in the area of economic development;

- To determine the Government to begin the reform in other areas that are ignored at this moment (i.e. the issue of prevention of victimization and protection of victims)

- To start new programs in the area of economic development - where it could play an important role merely through its involvement and know how rather than spending a lot of money;

- To explore new areas which although are extremely important for the society are either disregarded (i.e. the issue of persons with disabilities) or for which there is the danger of a political misuse (i.e. ethnic minorities)

Alternative strategies are built-in

1. The strategy for the implementation of its programs:

Having in view that the results of the 2000 elections may bring new political actors, the Foundation should be prepared to implement its programs aiming to reform several domains either through a co-operation with the Government, if this is possible, or without it, in the case of a hostile one, but achieving the same results;

 

OSF policy to sustain integration of its programs

At this stage the Foundation has great achievements through its mega-projects which must be valued and considered in any of its further programs; this means that in the future a program developed by the Foundation in a specific area must include actors and procedures from other areas as well (i.e. a program on community development must necessarily bear in mind and involve what has already been achieved in education, administration, public health, etc; or a program on prevention of victimization will not address only legal issues and will not be implemented only by the legal sector - police, courts - but will also be realized in co-operation with local authorities, with schools and also with medical assistance, etc.)

Expand the funding sources outside Soros

Currently OSF is almost entirely dependent on Soros funding. The Foundation policy for the years to come is oriented towards achieving flexibility and an important degree of independence from Soros funding by:

• complementing and co-funding major initiatives with strategic partners;
• fund raising;
• grant seeking;
• income generating;

In order to achieve these desiderates OSF will pass through a major structural adaptation by turning the Foundation into an open network (see chapter 3.3. Management Plans for Downsizing, page 18).

The overall aim of the "Education Development Project (EDP) - Education 2000+" planned to be implemented in 1999 - 2001 is to create models for local implementation of education reform that: (a) connects the "top down" reform with "bottom up" efforts, makes the reform "practical" and can be replicated nationwide; (b) promotes horizontal communication and coordination among the key institutions responsible for local implementation of the educational reform; (c) demonstrates good practice and persuade the government to spread efficient models and approaches system-wide; (d) addresses the educational needs of Roma population by: facilitating institutional change; building the capacity of Roma people to participate in education and the education reform. The Strategy intends to help education reform implementation at three levels:

• Systemic level - undertaking institutional development and capacity building that enables local key institutions to support schools;
• School level - empowering school directors, teachers, students and parents to take more responsibility in improving the quality of education;
• Community level - community development and closer involvement of community in school life.

The strategy envisages the following program areas: school improvement, links between school and community, teacher training, key institutions network development, Roma capacity building in education and public information. It will integrate the outcomes of the Step by Step, Critical Thinking, Street Law and other educational programs. The Strategy will have a three to four-year implementation period with the following outcomes:

• A replicable model of local educational reform implementation that: (a) has reformed pre-service and in-service teacher training through restructured institutions and programs; (b) shows how to improve education quality from the school level; (c) has developed models of multicultural coexistence and mechanisms of school and community cooperation; (d) established network and linkages among key institutions that redefines control of education;
• Institutional change that improves the systems’ responsiveness to educational needs of Roma.
• Increased capacity of Roma to participate in education.
• Accurate information about these models shared widely in Romania.

heading towards self-sustainability

Step by Step has developed strong working relationships with both central Ministry of Education and with local governments in 23 counties of the 41 in the country.

The main objective is to develop plans which will assure the self-sustainability of the Step by Step NGO making it able to:

1. keep and promote Step by Step methodology as an officially recognized educational alternative based on child centered educational model;
2. continue the development of partnerships with central and local authorities;
3. implement and help promote Step by Step principles in creches, preschools, schools, initial and further teacher training;
4. promote equal opportunities for minorities and disabled children encouraging respect for other languages, religion and ethnicity;
5. ensure the quality and methodology of the program in all existing sites using the methodology when OSI funding ends.

By the end of 1998 the contributions Step by Step received from other sources than Foundation for an Open Society and OSI NY were:

• Ministry of Education: - 218.160 $ salaries of teachers, plus maintenance related expenses;
• Procter & Gamble : - in kind donation ( soap and detergent which was distributed directly to schools) with a total value of 100.000 $
• Parent Associations: - 7.500 $
• Other sources: in kind donations with a total value of 18.000 $

A two million EU project is still on hold

In the last years, several isolated initiatives targeting Roma have been developed by different Romanian and international non-governmental organizations. The 2 million ECU committed in 1998 by EU to the "Romanian Government - The Department for Protection of National Minorities" for the development and implementation of a national strategy to address the needs of the Roma population is still not granted and the whole project is in the process of organization.

Roma programs are integrated in OSF major initiatives…

The positive experiences of 1997, the first year of a Roma Program in OSF, led to the development, in partnership with Roma activists and public institutions representatives, of a two-years ('98-'99) Roma strategy, focused on Support for Roma NGOs, Professional Qualification for Roma, School Development in Roma Communities, Scholarships for Roma Students, Health Improvement in Roma Communities, Improvement of Local Government Attitudes towards Roma Communities, Legal Clinic in Roma Communities and creating Equal Chances for Disadvantaged Communities. The Roma program for 2000 and 2001 will be connected with other programs of Open Society Foundation, namely the Mega-Projects on Educational Reform, Public Administration, Legal Reform and Medical Programs. But more than other programs, this one will aim at empowering Roma individuals and groups.

…, but there is still a need for a more focused approach

Although the Roma specific needs are addressed in all other programs of the Foundation, it is extremely important for the Foundation to have a program which will be continued and developed during 2000 and 2001, oriented to support the efforts of Roma to:

• improve the condition of Roma communities;
• have a positive influence on the Romanian society in order to reduce the negative stereotypes and prejudices towards Roma;
• provide effective models to be generalized/developed on a systemic scale in the context of the reforms going on in Romania.

The initiation, implementation, monitoring and evaluation of the programs will be a cooperative effort of Roma communities, Roma and Non-Roma NGOs, State Institutions and Open Society Foundation Romania.

Influencing the governmental strategy for Roma

The implementation of the future Governmental Strategy for Roma will benefit from the OSF experience and we expect that successful projects will be taken over and will integrate permanently functional and procedural elements, ensuring their availability at the national level developed on a larger scale, by these institutions. The development of skills and experience within the Roma community, at the individual and NGO level, will contribute to the sustainability of the interventions, as Roma will get more access to different resources, public services, policy-making bodies and to a larger spectrum of founders.

The ethnic issue is still a key-problem for the transition period

Due to the difficulty of the economic reform and the problems encountered in the transition process of the Romanian society, the whole population of the country is showing clear signs of disappointment and dissatisfaction. At the same time, in a larger international context, the country seems to have lost for the moment the opportunity for integration into the European Union and NATO, while neighboring Hungary - the "traditional enemy" in the nationalist rhetoric - has been admitted to NATO, and the time when it will become a member of the EU is also approaching. The present situation is very likely to be speculated by nationalist forces. Consequently, the democratic evolution of the country is in jeopardy as long as the Romanian population - living in a difficult financial situation, feeling itself excluded, shut out of the "civilized Western world" - can still be easily manipulated and trapped by xenophobic ideology. In fact, the ethnic issue will continue to be one of the key-problems of the whole Romanian transition process.

OSF supports initiatives within a coherent strategy

In order to have a successful contribution to the appropriate development of inter-ethnic relations, OSF should support a series of initiatives that form a coherent strategy. The main aims are the following:

• contribution in outlining public policies for ethnic minorities, offering a framework for their public debate and helping in their implementation;
• strengthening communication and contacts between different ethnic groups within the country;
• promotion of tolerance by sustained public information campaigns designed to help mutual understanding and acknowledgment of the culture and values of ethnic groups, with the aim of preventing misinformation, harmful nationalist and sometimes openly anti-Semitic propaganda;
• supporting the activities and programs of institutions that aim at increasing the awareness of opinion-leaders, media and community representatives;
• encouraging alternative solutions in the field of education, school activities, etc.

Implementation will be done by an independent organization

As for the methods of implementation one must take into consideration on the one hand the delicate nature of the issue and on the other hand the difficulties emerging from the application of a new, more direct approach. Therefore, the methods and tools should be considered and dealt with as most flexible ones, they should be characterized by professionalism, involving also foreign experts in conflict mediation and management. Being aware of the fact that none of the envisaged programs can work without local participation, the assistance of local partners is utterly important.

The mentioned goals are envisaged to be attained within the institutional framework of an independent organization.

The Center for Legal Resources proves to be a successful endeavor

The implementation of the mega-project in 1998 was done mainly through very active NGOs. Only by the end of last year has the Romanian Ministry of Justice become more energetic. The achievements of last year, although important, could not lead to a systemic change of any domains in the legal sphere. The establishment of the Center for Legal Resources has overcome this situation as the Center successfully conceived some strategic partnership with key actors in reforming the legal system such as: the Ministry of Justice, The National Institute for the Magistracy, the General Directorate for Penitentiaries, the Ministry of Interior and the Directorate for the Prevention of Criminality, the Constitutional Court . As a result, these institutions not only decided to financially contribute to several projects, but also accepted the Center requirement to have a substantial co-operation with NGOs and scholars.

Several projects have been designed aiming to:

• reform the legislation, i.e. amending the Penal and the Penal Procedure Codes, the law on contravention, the law on judicial review of administrative acts; new laws will be issued on prison system, on probation, anti-discrimination, etc. some activities already started, others will continue during the whole year of 1999 and will be finalized in 2000
• reform of the prison system - the Center has been asked by the General Directorate of Penitentiaries to assist in the elaboration of some basic legal acts, such as the law on execution of sentences, the Internal Statute of the prisons and to co-operate in reforming the prisons staff; several training courses will be initiated on prison management, on staff interaction with inmates, etc. They will address more than 300 of prison staff and will take place in 1999 and in 2000
• police training - the Ministry of Interior has also asked the Center to prepare training courses for all police sections in the counties;
• training for magistrates - three separate courses have been elaborated separately for judges, prosecutors and the auditors for justice. A total of 500 magistrates will thus benefit by the end of 2000

Key institutions capacity building are essential for the success of the reforms

In year 2000 other activities will relate to the capacity building of several institutions playing an important role in reforming the legal system and the protection of human rights, such as the Ombudsman, the Constitutional Court, the Department for National Minorities. In addition the Foundation will continue to support - although at a smaller scale - those NGOs which have developed an important expertise and areas such as human rights, minority rights, be it related to advocacy, public awareness or providing services. In this context, the role of legal clinic will increase and the similar projects will be supported in other law schools.

Prevention of victimization and protection of victims

Another area which will be tackled starting with year 2000 and continued in 2001 and most probably in 2002 is "Prevention of victimization and protection of victims". This program will have a multi-sector approach since it will be realized not only by those working in the legal sphere but also in co-operation with the local public administration, schools, women shelters, physicians of general practice, thus involving almost all the program where the Foundation has worked so far. The need of the program is rooted in the current situation of Romania where the justice system is conceived in such a way that every person is a potential victim and moreover once a victim he/she has good chances to preserve this statute for the entire life. The sources of such victimization are multiple:

• one of the biggest problem of the Romanian justice system is the non-observance of court decisions. Not only that the judicial trials last for up to five-seven years, but the Romanian State authorities - including the judiciary - view the justice activity as ending once the court decision is issued without paying any attention to what happens afterwards. This approach has perverted the sense of justice: the enforcement of a court decision as a regular subseqent activity has become the exception, while non enforcement of a court decision - thus implying the necessity of a coerced enforcement - has become the rule. To this one should add the fact that the enforcement of court decisions through courts and other state authorities which should assist the judiciary is very rare: incompetence, negligence, indiferrence or even corruption play a very important role
• the non-existence of a legislative and institutional system which could eliminate as much as possible the causes of victimization (i.e. there is no efficient insurance system for goods or health in case of lost or damage following an activity with legal repercussions; there is no system for early discovery of child abuse and no appropriate legislation to punish such behaviour; there is neither appropriate legislation and institutions concerning domestic violence nor appropriate remedis in such cases; there is a lack of minimum appropriate measures to prevent street violence - from street lights and accessible public phones to the exsistence of an emergency service which may be called and which should react promptly
• the non-involvement or the lack of cooperation between local authorities, police, schools, social services, courts in aspects related to child abuse. Although some changes have taken place, families are still perceived as closed spaces where a lot of things may take place without any interference. Only when the situation is extremely bad the authorities will intervene. Most often when it is too late and serious injuries have already occured and the marks on the children are for their entire life.

Systemic change is envisaged

The Foundation will be active in several activities which - in the end - will change this system:

• a new legislation is necessary for the protection of victims as well as to enforce the court decisions
• a separate institution must be established (as annexes to courts) for those in charge with the enforcement of court decisions, including for their training as at this moment they are recruited from persons without any knowledge on legal or psychological aspects
• a close co-operation must be realized between the local authorities and police for the prevention of street violence - at this moment the local authorities themselves have no idea on their potential related to this aspect
• para-medical services should be set-up at the community level for victims of violent crimes
• insurance companies should be set- up for victims of violent crimes - the Foundation will design the legal frames and provide know how for those interested to invest

OSF initiatives in reforming public administration started to bear fruits

In the Public Administration field there is a tremendous need for the reform continuation by stressing the responsibility in the decision making process (stimulating the competence with the view of ending the corruption). Therefore, the risk of compromising the values of real democracy will be constantly diminished, preparing the conditions for the EU access. The few projects supported by OSF Romania in the Public Administration domain, are the only initiatives of this kind, and have generated important changes at local level. This has created an expectation frame among the local and central Public Administration.

The objectives for the third year of the mega-project has been revised and adjusted

The Public Administration Reform Megaproject will continue in 2000 by being adjusted to the new objectives identified during its implementation:

• supporting the decentralization of public administration by creating a favorable environment for the elaboration and implementation of local and regional policies, focusing on delegation of responsibilities and institutional reform;
• improving communication within public administration structures and between these structures and the citizens;
• stimulating public participation in the decision-making process, in order to promote the values of the participatory democracy;
• developing the capacity of public administration to deal with the specific problems of the disadvantaged communities and of the minorities;
• developing the public servants abilities to responde to the changes imposed by the reform process.

In 2001 Public Administration initiatives will be embedded in most of the new initiatives

For 2001, the strategy of the Public Administration Program is based on its integration into the other major initiatives and it is not likely to stand as an initiative on its own. However, the focus of the initiatives embedded into the other domains will be primarily on:

• meeting the requirement of the EU accession by attracting the largest public participation to understanding and adopting the EU standards;

• supporting the regional development by encouraging the intra- and inter- regional cooperation and by promoting best practices that will secure the regional governance, according to the democratic experience;
• encouraging those initiatives focused on fighting against the fundamentalist frames of mind and the corruption in public administration structures.

The reforms are well underway through the establishment of the Health Insurance System

Health status of the Romanian population is characterized by the worsening of the health indicators, aging of the population and the increasing of the diseases’ burden, including the avoidable ones. In the same time, the Romanian Health Care System is engaged in important structural changes. The current strongly centralized Health System, financed exclusively by the state, is being replaced by a Social Health Insurance System, financed by mandatory specific contributions of the employees and employers (insurance premium), to which a state budget contribution is added, for non-paying persons and for national public health programs. The difficulty to absorb the estimated structural changes is reflected in the quality and efficiency of the health services and leads to discontent both of the consumers and providers.

A new network initiative on Harm Reduction is being taken into consideration

In order to respond to these problems and to improve the efficiency in using financial resources, and the satisfaction of both providers and recipients for medical services, the Open Society Foundation Romania has initiated in 1998 the Health Megaproject, with a total budget of 2,000,000 USD for three years. Its major objective is the improvement of Primary Health Care, and the expected outcomes are:

1. Establishing of a network of Training Centers for GPs.
2. Elaborating of a General Practice Handbook
3. Creating New Models of PHC
4. Support for Development of the Pediatric PHC
5. Quality Health Assistance for Disadvantaged Groups
6. Quality Health Assistance for Rroma Communities
7. Improving the Communication between GPs, organizational support for the National Society of GPs.
8. Supporting the privatisation in medicine through giving access to Loans for medical proffessionals.

For the year 2000 the activities of the Health Megaproject will go on with a budget of 500 000 USD, after that the projects will have to become self sustainable. Apart from this program, there will be another 200 000 USD, constituted on a matching basis (100 000 USD - OSFR, 100 000 - OSI NY), to finance a Harm Reduction project for Romania. See annexes for the details related to specific projects.

OSF adheres to the OSI network policy and make strategic commitments

Starting from the year 2000 OSFR will adopte a strategy in line with the new public health approach of the OSI Network. This strategy is aiming to develop programs that address public health needs and support health interventions that are:

1. cost effective;
2. address conditions that account for a large share of the burden of disease and avoidable deaths;
3. have low consumer demand;
4. and promote community participation.

By tackling a major public health issue, OSF aims at leveraging change in the way health policy is being designed

Having these criteria in the background, OSFR proposes a major project to support the development of a public health intervention program aiming to reduce the consequences of one of the major public health problems in Romania, namely the genital cancer. Our proposal is well in line with OSI policy through a preventive, health education and promotion approach. The project will support public advocacy for screening genital cancer in target population especially from under-served communities(i.e. rural areas) and will promote a multidisciplinary approach. In order to inform and educate the target population, OSF is planning mass media campaigns, leaflets, brochures, meetings and conferences as a distinctive part of the project. In the same time the medical staff from the multidisciplinary teamwork will be trained in the needed relevant areas. Till the end of the year 2001 the project will support the development of 48 reference centers, one for each county. Thus an integrated network for prevention, health promotion and education for the genital cancer screening activities will be created as a basis for a national preventive network in cancer area. The estimated budget is 875,000 USD. This project will be developed together with the Romanian Health Authorities, which will finance in the first year costs related to wages of medical personnel, administrative costs for reference centers. From 2002 the whole project will be taken over by the Romanian authorities from central and local levels.

As rural development is increasingly an area of public concern, it is important to help create a discussion/debate among researchers, practitioners and policy makers concerned about rural areas. Projects included in this area will help local decision-makers improve their managerial skills, develop income generation techniques, advocacy capacities and lobbying techniques. The mission of the program for rural development is to initiate, facilitate co-ordinate and support rural development research, education and implementation projects in order to improve the social and economic well being of rural people in the medium developed rural areas.

OSF priority areas are developed in correspondence to our strategic plan and the evolution of needs and opportunities in rural areas. The priority program areas are:

1. Assessing and building community capacity
2. Increasing economic viability
3. Increasing social viability
4. Agriculture, natural resources and community
5. Rural development policy

OSF programs will address complex issues

The aim of the Program is to reverse rural-out migration, combat poverty, stimulate employment and equal opportunity and to respond to a growing request for more quality, health services, safety, personal development, and to improve the rural well being. There must be a fairer balance of public spending, infrastructure investments and educational, health and communication services between rural and urban areas.

The creation of regional centers for local development is designed to be locally sustained

In order to achieve its objectives the program will assess the capacity of the community, as to enter with projects the community is ready to deal with. Building local action-groups based on the local pro-motor (community entrepreneur) activity and establish regional Centers for Rural Development will be the Foundation's high priority. The Centers and the local pro-motors work with local action-groups on strategic planning, business retention and expansion, micro enterprises and home-based businesses, tourism, enterprise development and flexible manufacturing networks. The Centers are designed to be locally sustained. The program focuses on locally owned, value-added alternatives, as well as on the intersection between agriculture, community and quality of life.

OSF’s policy for a multi-sector approach is being implemented

The main goal in increasing social viability is facilitating improvement in level of living including income, employment, education, health and nutrition, housing and a variety of related social services. In achieving the objectives The Foundation program develop and support projects that help to improve the health of the rural people by integrating healthcare services in the programs as well as institution building of basic healthcare services, particularly for mothers and children.

The budget of the program for three years is 950,000 USD. (2000=$ 250,000; 2001=$ 400,000; 2002=$ 300,000).

Despite the lack of "official" articulated strategies, OSF programs were well perceived by state authorities

Despite the growing interest and action plans targeting gender and women’s issues in the international community, Romania still lacks an articulated strategy in this field. The involvement of the Foundation in supporting projects in this area has been very well received not only by the Romanian NGOs but also by some State authorities such as the police at the local and central level. There are already some important achievements of the 1998 program - which benefited from a very small amount of money - less than $ 25,000 - and the existing strategy and projects prove that 1999 will have several successes which could be replicated afterwards with less costs.

In 2000, in accordance to its mission, the Women’s Program within OSF Romania will aim to increase women’s access to resources and benefits from resources, and to increase equality of opportunity for women perceived in relation to men.

OSF’s policy of program area integration is embedded in the women programs as well

From practical needs to strategic interests, through capacity-building as an approach to change and development, the Women’s Program identified as strategic action areas the following:

• Gender and development - women and development; awareness training; micro-finances projects for women
• Violence against women - the projects started in 1999 will continue, both at the legislative level as there are good chances in 1999 to amend the Penal Code; a special attention will be given to institution building and training for law enforcement officials; training techniques for abusers will be for the first time done in Romania
• Empowering Roma women - education for Roma women (including literacy courses) and vocational training
• Women and health - a special focus of the program will concern sexual and reproductive rights with an emphasis on legal aspects related to work condition, leave of absence for parents, etc
• Women’s rights advocacy - public awareness supporting legislative changes, equal opportunities and equity for women, etc.

Government needs to give priority to macroeconomic stability and credibility in financial markets

The international financial institutions advised the government to give urgent priority to restore macroeconomic stability and establishing credibility in financial markets. They listed the major shortcomings of economic policy over the year 1998:

- uneven progress in creating the legislative framework for a market economy

- insufficient progress in restructuring public corporations

• failure to improve the corporate governance of the banking sector
• inconsistent formulation of economic reform, absence of proper coordination of economic policy, incoherence in implementing reform

The weakness of the financial sector has been a major factor inhibiting economic reforms and the development of small businesses (SME).

The macroeconomic framework is not supportive for SMEs

Taking into account the macroeconomic framework in Romania, the SMEs are facing several problems related to the following issues: high fiscality, legal and fiscal instability, high inflation rate, lack of available financing instruments, an inefficient banking system, competitive advantages for the state companies (benefiting of a wide range of funding opportunities, rescheduling of debts), long term sectorial development policies not yet in place, bureaucracy regarding SMEs establishing and liquidation process, low access to domestic and international business information

The new challenges and opportunities require a new class of managers

Due to the last 50 years of centralized economy and the lack of effective training programs on business development issues, Romanian managers are not well prepared on effective management (including financial management, understanding the impact of the marketing function on competitive business strategy, accounting, human resources development). The coming years promise to usher in a variety of new challenges and opportunities that will require a new class of managers. Factors which signal these changes are: a shift to a highly competitive and interdependent global economy, the challenges of managing technological change and the knowledge explosion that is occurring across all fields. As the result of these changes there is an increase in demand, coming from business community for well educated managerial personnel, especially on the capacity to integrate concepts and communicate them.

OSF’s overall goal is to promote the SMEs development

The overall goal of the Open Society Foundation Romania in economic development is to promote the small and medium sized enterprises development as job creation strategy leveraging funds from income generating activities together with foreign and local financial resources.

OSF plans to address issues related to policy formulation, training and access to financial resources

OSF plans to design and implement the following three type of programs:

• programs providing technical assistance for the key structural reform policy formulation;
• programs providing training in business planning and effective management
• programs providing entrepreneurs with access to financial resources including loans, guarantees and equity (venture capital fund - funding early stage, more risk oriented business endeavors.

Banking policies do not encourage agricultural investments

There are certain fields in which an investment orientation is preferable to charity. Independently responsible borrowers perform better when there is risk involved. Enough is known about markets, self-interest, incentives and disciplined structures to create systems that maximize borrower behavior. Romanian banking policy does not encourage agricultural investments, which are considered as very risky enterprises. The applied high rate of interest makes the credits unaffordable for most of the farmers.

Farmers lack starting capital

The majority of farmers have very limited development possibilities (due to the lack of resources for investment, lack of equipment, inflation) and might have to sell their land in near future. Due to the high living expenses in the cities, young families start to come back to their parental households (located in rural areas) where they initially left from. The lack of starting capital makes them to depend on the help of close relatives, becoming real social cases.

A comprehensive program to address accessibility to financial sources

In this context a sustainable micro-finance scheme accessible to small farmers appears to be the central issue for future development. Access to financial services could reverse present development tendencies and create immediate impact on revenues and capitalization.

The Rural Micro-finance program’s objectives are:

• To improve the economic situation of small private farmers and rural entrepreneurs;

• To develop a village-based system of farmers’ associations based on mutual trust and local cooperation;
• To facilitate access to micro-credits;
• To train the farmers in effective investment decisions;
• To help farmers to develop working relations with banks;
• To develop relations of mutual responsibility and peer support to ensure repayment and access to credit on the future;
• To promote the establishment of appropriate legal framework for micro-finance institutions.

Agreement with BANC POST that regulates the terms of disbursement and repayment

The Rural Micro-finance Program has started in October 1998, when an Agreement was concluded between Open Society Foundation - Romania and BANC POST (Romanian privatized bank). This agreement regulates the terms of credit disbursement and repayment. The program focuses on expanding the creation process - started in November 1998 - of retail intermediaries on village level to disburse small amounts of credit, in the form of "Credit Associations" (CAs). These entities will evolve in time to become local self-sustaining financial institutions that will be linked with local banks. In an early stage and in absence of a law recognising CAs as financial intermediaries, CAs will screen the loan applications, make credit decisions and provide mutual guarantees, organising social pressure on repayment. The loans will be channelled through the co-operating bank (BANC POST) which will accept the applications and make individual loan contracts. The granted loans will be guaranteed by the Open Society Foundation - Romania.

It is common knowledge that it takes 3 - 7 years for micro-finance institutions to become self-sustainable. Due to the Romanian macro-economic environment, we expect the program to become self-sustainable no later than 5 years after the starting date, through a constant increase in number of CAs established and consequently, in number of borrowers and credit disbursement.

The program mechanism is based on accountability between the borrower and lender. By trusting group members to manage their credit, meeting the client’s real business needs and competently conducting the loan transaction, our program call on the group borrowers to fulfill their commitments. Over time, an atmosphere of mutual trust and respect emerges, which enables these programs to meet their goals.

An effective matrix organization

OSF Romania is an effective matrix organization, involving key players in all four offices. Despite physical separation, there are several effective teams, especially in the four mega-projects that are involving persons from all offices. In the short run this network is essential to the implementation of those mega-projects with a significant sub-national orientation, particularly of Education, Public Administration, and Health.

The key asset of OSF Romania is its decentralized structure

Despite the recent decision to centralize the coordination of the mega-projects in Bucharest, one of the Foundation key assets is its decentralized structure, and its ability to work effectively at a sub-national level. No other donor in Romania has this capacity. Nor has the Foundation adopted a program strategy that reduces the importance of this structure. All four mega-projects have significant local dimensions.

A Task Force is developing detailed plans for downsizing

At the OSFR Annual Meeting and National Board Meeting, on 13-16 April 1999, there have been tremendous discussions about the future of the Foundation. Although, there have been some agreements within the National Board the whole concept of transforming OSF Romania is still under development and needs further thinking. A Task Force has been nominated to take over this responsibility, and to further develop the concept. The task-force is composed of Renate Weber, Iolanda Staniloiu, Gabor Kolumban and Gabriel Petrescu.

NB and senior management are committed to reduce administrative spending

The National Board and senior management is committed to the cost-cutting required and started to identify solutions to spend the reduced budget more strategically. No matter what solution will be adopted for OSF downsizing, it will include a major reduction of administrative spending by spinning-off viable entities, closing non-viable programs or entities, reducing staff and consolidating functions.

The Foundation has four options by which it can reduce costs and increase efficiency:

Keeping the current branch structure and reduce costs

A first option would be to keep the existing organizational structure with the four branches in Bucharest, Cluj, iasi and Timisoara and reducing program and administrative costs through:

• Ending smaller programs or the ones that are no longer a priority (and terminating their staff);
• Administrative consolidation, by spinning off Financial services and support functions into independent service providers;
• Reducing supervision by eliminating mid-layer managers and empowering program coordinators.

Main advantage: Conserving OSF’s main asset - its ability to work effectively at sub-national level.

Main disadvantage: Due to the focus on mega-projects there are several cases of double subordination that may lead to lack of accountability and coherence.

If closing one or two offices does not represent in itself a major source for cost reduction, closing all three regional offices and selling the buildings or leasing them on a commercial basis might yield more significant savings. That would also require a dramatic change in the Foundation’s programs, as it would be obliged to discontinue its locally focused activities. The closing of the branch offices will be a difficult and very painful process, since it requires to fire people that we hired not longer than November 1997 when there were no prospects for such a radical downsizing - on the contrary.

Main advantage: Although administrative costs in the branches are not very high compared to Bucharest, there will be obvious reductions. Iasi and Timisoara offices cost somewhat under $200,000 each per year in administrative costs - including administrative salaries, to which we add the program staff salaries. Based on the total budget of this year ($14,483,000), this represents total savings of less then 1.4% per branch. It would also weaken a key asset of the Foundation. In Cluj the administrative costs are around $250,000 a year, which represent 1.7% of the total budget.

Main disadvantage: Will loose OSF’s main asset - its ability to work effectively at sub-national level. Existing real estate assets in Iasi and Cluj, and even to a limited degree in Timisoara, represent potential sources of revenue in the long run.

Transform Cluj, Iasi and Timisoara branches into independent institutions

An alternative to this option is to create independent institutions out of the branches. However, apart from the Cluj Branch that may be considered as a center of expertise in Ethnic Minorities issues, the Iasi and Timisoara branches are rather smaller copies of the Bucharest branch. The program staff in all three branches is very valuable and represents a key asset in which the Foundation has invested a lot in 1998. The branches will not be viable institutions unless they will acquire expertise in certain fields. Under this prospect, the branches need either to engage in a major re-training exercise for a large proportion of their staff, or to replace some of the existing staff with people that have the necessary expertise. This is again a painful process with a lot of shortcomings in the prospect.

Main advantage: It will be a significant reduction of administrative costs only if OSF decides to donate the buildings to the newly established institutions. The implementation of OSF’s programs may continue to be performed at sub-national levels by contacting out (to the new organizations) some of the programs. However, there is no guarantee, other than contractual, that this will be the case.

Main disadvantage: The current structure of the branches’ staff is too broad in terms of different areas of expertise. Their sustainability as independent institutions is doubtful. It is not clear whether OSF is willing to donate the existing real estate to the new institutions. And even if it will do so, it will be an overwhelming cost to be taken over by the new organizations.

In order to achieve the desideratum of reduced administrative spending OSF Romania may achieve this through its transformation into a more flexible open network in which a reasonably small number of carefully constructed viable entities work with and independently of each other in a highly cost-effective way. Although this may be taken as a program of disintegration of OSF Romania, it really isn’t. It is rather a conscious program for a dramatic extension of the integration on a much larger scale, which may be called the Soros Open Network - Romania (SON-Romania).

The basic concept is to replace the National Foundation with an Adaptable Network (SON-Romania) composed of legally independent Mini-Organizations with specific functions and roles. The adaptable network will be an open system, which is liberated from the bureaucratic constraints and explores randomly the possibilities offered by the dynamic environment in which it functions. This type of organization offers a large variety of possibilities, a fortune of options and an abundance of opportunities.

OSF aims in the end at its own demise

Although it sounds strange, OSF Romania will aim at its own demise. At the end of its life, whether 2010 or even earlier, the Foundation will leave behind a "constellation" of organizations that will disseminate and de-multiply the OSF ideas, concepts and values in small organizations that have better chances to continue and extend its mission.

The Mini-Organizations guiding principles

A difficult but immediate task is to divide the OSFR operations into appropriate chunks, called Mini-Organizations and to transform the current Foundation into a small organization (the Core-Organization) with specific functions within SON-Romania. It would be a mistake to assume that this has to be on existing departmental lines. Service departments in general will be split among Mini-Organizations or will form organizations on their own - the Financial Services, for example will become a for-profit company.

The guiding principles for dividing OSFR are the following:

• a Mini-Organization should be small enough for everyone to work effectively with the others so that the outcome they produce involves the work of everyone. The creation of deep hierarchies in the mini-organizations should be avoided;
• a Mini-Organization should have a clearly identifiable role, one that its staff can understand and buy into, one that would work (and may well work in the future) for an independent small organization, one that is "fashionable" for other donors as well, or may be suitable for fundraising;
• the mission of the Mini-Organizations need NOT to be identical with the mission of the network, but the values promoted by the Mini-Organization should be the same. Moreover, the mission of the Network should encompass the missions of the individual mini-organization;
• there may be several Mini-Organizations undertaking the same activity in parallel;
• if new areas are to be tackled and there is no built in capacity that can be pulled off as a separate Mini-Organization, the forced-creation of Mini-Organization should be totally forbidden. There should be an investigation on the market whether there is any existing Mini-Organization that is willing to take over the new task and become a member of the network.

OSF will become smaller

The Core Organization - OSF Romania - will become smaller, and will perform a series of specific functions among which a very important one is to be the liaison between SON-Romania, and the Soros Foundations Network. It will still have to report financially to OSI and will continue to set the strategy, oversee, and make grants in areas that cannot be covered by the mini-organizations.

1. Setting direction for the whole network;
2. Providing excellent information flows between Mini-Organizations.

The transition phase will last until the end of 2001

OSF-Romania as the Core-Organization will gradually decrease the number of its staff according to the creation of the mini-organization. In the transition phase one of the most important roles of OSFR will be to assist the existing staff in their endeavor to create mini-organizations. It is expected that several such mini-organizations will be set-up during the second half of 1999. By the end of 2001 OSFR will have a small number of employees on its pay roll. The role of the OSFR staff will no longer be to run or coordinate programs but to run and coordinate the network of mini-organizations.

SON Romania will have no legal financial responsibilities

Threats and opportunities

Added Value

There are a number of important areas where SON-Romania will bring clear added value:

• by having clear and precise goals, the mini-organizations will increase the focus and priority given to their particular field of expertise, improving the transparency and dissemination of best practices, and preparing the circumstances for a systemic change;

• by developing expertise, the mini-organizations will be able to fund-rise, co-fund and reinforce the coordination of multi lateral supported projects. This will ensure the prospect of becoming less dependent on Soros funding. Therefore the burden on administrative spending on Soros funding will be diminished;

• the mini-organizations will provide a source of expertise in their particular fields of activity, and will be capable of delivering targeted, tailor made information, advice and experience transfer to other interested NGOs or institutions;

• focusing on the systemic reforms in the field of their operations, the mini-organizations will become important partners both for the state institutions as well for international organizations and donors;

• although the mini-organizations will create the opportunities for a more integrated and coherent approach to activities in their particular fields of expertise, the Foundation will develop a synergy and complementarity between the different fields;

• analyzing needs and problems and supporting the development of policy analysis, the mini-organizations will increase the capacity to influence decision makers;

• by being able to catalyze additional human resources (people working in the particular fields in ministries, agencies or NGOs) and sector specific expertise, the mini-organizations will assure a better targeting of the available funds to achieve the optimum impact and a systemic reform;

• by being smaller and non-bureaucratic, the mini-organizations will be in a better position in identifying and focusing on change and multiplier agents in order to attain optimum effect;

• provide up to date databases on individuals and organizations with expertise in their fields. The information will be gathered and shared throughout SON-Romania with the assistance of the Foundation.

The Core-Organization has the responsibility of pulling together the Open Network. In such a structure, directives can no longer be dispatched from top, there is more need for communication. The managers are expected to stay more on their feet, going out to the Mini-Organizations and engaging in a face-to face communication.

A real fear at the prospect of the move towards Mini-Organizations is the loosing of coherence and the synergy. The Mini-Organization structure depends on something much more important to keep them on track: real support for what the Mini-Organization is out to achieve; understanding and commitment to the principles that drives it.

Let them go away or close them down

If the Mini-Organization really wants to go alone, it will operate un-appropriately if it is forced to remain part of the Soros Open Network. In such circumstances the Core-Organization must ensure that appropriate contracts keep the Mini-Organization part of the whole. With time, it is likely that many of the Mini-Organizations will want to become really independent. This is healthy for all concerned.

Not all Mini-Organizations will succeed. This should be a given and not regarded as a problem. The Core-Organization should ensure that appropriate measures will be taken if mini-organization prove to be non-viable entities.

Financial independence will determine income generation

Program costs

40,000 $

Set up two new centers

15,000 $

Set up the network

5,000 $

Grants –orientation visit for high-school students

6,000 $