Janine Wedel - Collision and Collusion - The Strange Case of Western Aid to Eastern Europe

  14. United States Agency for International Development, Action Plan for U.S. Assistance to Central and Eastern Europe, 1991, Washington, D.C.: USAID, p. 12.

  15. United States General Accounting Office, Poland: Economic Restructuring and Donor Assistance, Washington, D.C.: GAO, August 1995, p. 57.

  16. Ibid.

  17. On July 1, 1998, long after the period of intense aid efforts in Central and Eastern Europe, two of the Big Six accounting firms merged: Price Waterhouse and Coopers & Lybrand became PriceWaterhouseCoopers.

  18. Interview with David Thomas (director), January 13, 1992, and interview with David Thomas and George Zielinski (deputy director), January 27, 1992.

  19. Ibid.

  20. Ibid.

  21. This pattern challenges a claim often made about government outsourcing and competitive bidding. Although competitive bidding was believed to provide flexibility because the government could easily terminate contractors if dissatisfied, this was truer in theory than in practice. Contractors often gained access to information and contacts and acquired expertise that made them valuable to government and much more likely to continue to win contracts. In contrast to the flexibility that outsourcing was supposed to provide, the consultants came to be seen as indispensable, and often became attached to a particular portfolio for the duration of its existence. Thus, under the banner of competition, the Big Six and the Washington “Beltway Bandits” often became entrenched. Further, although contractors were perceived as outsiders who could be used as levers against bureaucracy, they quickly became part of the system of supporting aid programs from which they benefited. (Daniel Guttman, Contracting for Government, Washington, D.C.: distributed by the National Academy of Public Administration, January 1997; and numerous conversations with Daniel Guttman, an expert on government contracting for the performance of public functions, 1998-2000.) The EU’s Alan Mayhew recounts how, as head of the PHARE program, he tried to press for more investment, only to encounter resistance from British and Irish providers of technical assistance who had done well in contract competitions and expected to continue to do so. (Interview with Alan Mayhew, May 15, 1996.)

  22. Conversation with U.S. procurement officer Steve Dean, January 7, 1998. Some details of “notwithstanding authority” are presented in chapter 1.

  23. According to USAID, its purpose in setting up the IQC structure was to develop a rapid-response capability to handle requests from recipients. Although it took an estimated 8 to 18 months from the time the IQC mechanism was conceived in 1990 to the actual placing of consultants in the field (one source within USAID estimated the period between conceptualization of the program to be 12 to 18 months; another source estimated the same period to be 8 months), once the mechanism was in place projects could get under way more quickly than they could under some other USAID contracting mechanisms. The idea was that time-consuming RFPs (requests for proposals) and open competitive bidding would be conducted only once. Once the firms had won IQCs, they did not have to go through the process of open competitive bidding again. A work order could simply be completed for individual projects, short-term assignments set up, and personnel dispatched to the field. (Conversations with Scott Thomas, former USAID official, May 2, June 3, and June 6, 1994; and with USAID official Mark Karns, June 7, 1994.) Indeed, the IQC mechanism typically enabled consultants to be sent to the field more quickly than under the EU’s PHARE program.

  24. Information provided by USAID procurement officer Steve Dean, November 7, 1996.

  25. Talk before the American Committee for Aid to Poland (ACAP), Washington, D.C., March 12, 1992.

  26. United States General Accounting Office, Poland and Hungary: Economic Transition and U.S. Assistance, Washington, D.C.: GAO, 1992, especially pp. 31-36.

  27. Interview with Marek Krawczuk, January 31, 1992.

  28. Interview with Jeffry Baldwin, January 14 1992.

  29. Interview with Marek Krawczuk, April 8, 1994.

  30. Development Economics Group/Louis Berger International, Inc., and Checci and Company Consulting, Inc., Final Report: Privatization Phase II Program Evaluation, submitted to USAID, Washington, D.C., July 30, 1993, p. 11.

  31. There were ways of skirting this. For instance, in the Czech Republic, a non-IQC firm that wanted to receive funding from USAID to advise Czech privatization bodies was hired as a subcontractor to a firm that already had obtained an IQC contract. (Interview with Michael N. Gold, managing director of the Crimson Capital project in the Ministry of Privatization, July 8, 1994.)

  32. Interviews with and documents provided by Slovak officials and American consultants, summer and fall 1994.

  33. Interview with Stefan Kawalec, October 28, 1991.

  34. United States General Accounting Office, Poland: Economic Restructuring and Donor Assistance, Washington, D.C.: GAO, August 1995, p. 66.

  35. Ibid., pp. 43-44.

  36. Of course, the economic histories of the countries of Central and Eastern Europe under communism, as well as the economic reform and privatization strategies undertaken after 1989, were diverse. For a comprehensive analysis of economic reforms, performance, policies, and outcomes in Central and Eastern Europe and the former Soviet Union, see Valerie Bunce, “The Political Economy of Postsocialism,” Slavic Review, vol. 58, no. 4, Winter 1999, especially pp. 763-772. With regard to privatization, see, for example, David Stark, “Path Dependence and Privatization Strategies in East Central Europe,” East European Politics and Societies, vol. 6, no. 1, Winter 1992, pp. 17-54; and Katharina Pistor and Joel Turkewitz, “Coping with Hydra-State Ownership after Privatization,” Corporate Governance in Central Europe and Russia, Transitions Economics Division, Policy Research Department, The World Bank: A Joint Conference of the World Bank and the Central European University Privatization Project, December 15-16, 1994. Stark identifies the property forms resulting from Hungarian privatization as neither private nor collective but “recombinant” property.

  37. Interview with Stefan Kawalec, March 8, 1990, and April 16, 1990. This quote is from April 16, 1990. (For details, see Janine R. Wedel, “The Economist Heard ’Round the World, Part II,” World Monitor, October 1990, pp. 33-40.)

  38. Central and Eastern European participants at the working conference co-organized by the author further confirmed this point. See John Harper and Janine R. Wedel, Western Aid to Central and Eastern Europe: What We Are Doing Right, What We Are Doing Wrong, and How We Can Do It Better, East European Studies Occasional Paper no. 41: Woodrow Wilson International Center for Scholars, September 1995, p. 25.

  39. Interview with Grzegorz Kołodko, March 13, 1990.

  40. Interview with Jacek Saryusz-Wolski cited in Janine R. Wedel, “Beware Western Governments Bearing Gifts,” Wall Street Journal Europe, January 14, 1992.

  41. Letter from Pavel Rozsypal, director of the Centre for Foreign Assistance of the Ministry of the Economy, Czech Republic, August 2, 1994.

  42. Interview with Péter Kazár cited in Janine R. Wedel, “Beware Western Governments Bearing Gifts,” Wall Street Journal Europe, January 14, 1992.

  43. Interview with Marek Kozak cited in Janine R. Wedel, “The Unintended Consequences of Western Aid to Post-Communist Europe,” Telos, no. 92, summer 1992, p. 133.