Financing environmental policy in East Central Europe

The transition in East Central Europe created a general optimism which was reflected in a belief that a solution to the environmental problems faced by these countries would be found. There were great expectations regarding the blessings of the market economy, which would diminish state-guided waste and pollution, the political openness which would arise from democratisation, and the positive developments which would result from the inward flow of Western investments and aid funds. Although Western funding and the demise of central planning led to improvements, new problems emerged. Environmental aid has turned out to be much lower and subject to more complicated conditions than initially expected. Moreover, financing and implementing environmental policy in a market context, without a proper regulatory framework, has proved difficult. However, the past few years have also shown some positive experiences with market-oriented instruments as well as a strengthening of institutional capacity. In addition, Western countries have adopted a more flexible approach towards environmental assistance and increasing emphasis is placed on public participation. In this respect, the process set in motion by the Environmental Action Programme for Central and Eastern Europe has been important.This contribution examines Western financing of East Central Europe environmental management policy. It begins by outlining the initial optimism of transition countries concerning the benefits of marketisation and democratisation. In particular, it focuses on the perceived advantages of Western aid for environmental clean-up and management. It then charts the process through which countries realised that Western aid would be limited, requiring in turn greater domestic input into the management of the environment. The analysis then shows how this input had to take the form not only of greater financing of environmental projects but also the adoption of new managerial skills by administrators - including prioritisation of environmental goals, increased administrative efficiency, wider participation, and more effective coordination. The response to those challenges has been mixed and the article concludes by outlining those areas where need for change still exists. At the same time it points to the need for a donor learning curve, as the biases and limitations inherent in Western aid become evident and the danger involved in constructing an environmental policy around the need of donors, as opposed to those of the host, become apparent.