Regional Differences and Challenges

ECA countries can be classified into four main groups: Eastern Europe, Western Former Soviet Union, Caucasus and Central Asia, and Turkey.

Eastern Europe. This group of countries includes eight recent entrants to the European Union (Poland, Czech Republic, Slovenia, Slovakia, Hungary, Estonia, Latvia and Lithuania); three prospective entrants (Romania, Bulgaria, Croatia); Albania; and the remainder of the former Yugoslavia (Serbia and Montenegro, Bosnia, Macedonia, and Kosovo). Preparation to meet EU standards and European standards generally, and specifically to meet criteria governing access to pre-accession and post-accession rural and environmental funding programs, which none of the eight EU entrants have fully accomplished, is the key note here, both for simple fiscal reasons and for more profound reasons of cultural identity. In various ways, the Bank has helped formulate rural development programs in countries such as Poland, Latvia, Estonia, and Romania which have helped build both the local government and governance infrastructure necessary to access EU funding. It is now negotiating a loan to Slovakia, entirely for technical assistance and training, to prepare large cadres of ministerial and local government staff as well as civil society, who will propose and implement EU-funded rural development programs. In Croatia, a project is being initiated to help the country meet numerous technical parameters mandated by the EU Acquis, a thrust we will try in other countries as well. Because poor manure management is a threat to meeting these standards, both for agriculture and for the environment, the Bank has financed both project components as well as stand-alone projects in this field in several countries.

Land administration in most of these countries is largely built on restitution to heirs of former owners, and countries have often followed the Austro-Hungarian system of separating land cadastre and property registration systems. This approach often does not work efficiently in Eastern Europe, and is one of the main challenges we face in land registration programs, which now cover every former Yugoslav state as well as Romania, Bulgaria, Croatia, and Albania. These programs help the borrowers prepare for the farm, farmer, and animal registry developments required to access EU subsidies, and more broadly to facilitate development of modern land markets and property taxation systems.

Where irrigation and drainage are important (e.g. Albania, Macedonia, Romania, Estonia, Serbia), the Bank is deeply involved in that subsector, as is also the case in rural finance. A challenging area where we have perhaps been too slow to respond, has been the creation of farmers’ marketing organizations, or cooperatives, where we have been most focused in Bosnia, and are now starting up in Serbia. If the borrowers are willing, this should be a continuing focus for World Bank involvement in the future.

Western FSY. This group of countries include Russia, Ukraine, Belarus, and Moldova. Outside of land registration and cadastre, the Bank has little recent lending activity in agriculture and rural development in these countries. Our micro and small credit operation in Moldova has been successful enough to warrant a repeat, while Ukraine has requested a rural development project which may help open its rural areas both to markets and agribusiness recovery and development. In the Krasnodar region of the Russian Caucasus, the Bank plans to initiate a GEF-funded operation to mitigate environmental pollution by wineries and other plants. Both projects and studies in these countries are largely demand-driven, while meeting our standard requirements for cost benefit analysis. In Russia, the Bank also supports a substantial program aimed at improving forest management.

Caucasus and Central Asia. In this grouping of countries - Armenia, Georgia, Azerbaijan, Uzbekistan, Kazakhstan, Kyrgyz Republic, Tajikistan, and when active, Turkmenistan - large scale water management, including irrigation and drainage, is a key element of our agriculture and rural development program. In many parts of these countries, without irrigation there is no farming, indeed no drinking water for many rural and even urban residents, because aquifer recharge depends on percolation from irrigated fields. Due to the extreme shortage of both IDA and even IBRD funds for all of these countries other than Kazakhstan, ECSSD has had to impose a degree of economy and austerity on irrigation and drainage rehabilitation investments, with parameters as low as $100 per hectare, never attempted in other Bank regions, where 10 to 100 times that amount is typically invested. This requires much more reliance on farmer participation, contribution, and work, than in the past. 

In many of these countries, we also support watershed management programs in upland areas, and agricultural services projects. The latter try to supply services such as technical agricultural and business extension, market information, rural credit and credit worthiness assistance, animal health services, market places and organizations, and land titling assistance for the first time to new smallholders as they replace the former collective farms. Also in these countries, ECSSD has helped design GEF components and projects aimed at creating more sustainable agriculture that is based on accommodating natural wetlands, drylands and ranges, high mountain areas, and other exotic habitats, rather than approaching such places with the simple brute force of engineering often employed in the Soviet era.

Turkey. In Turkey, the country not formally communist in the past, ECSSD’s approach to modernizing agriculture supported structural and sectoral adjustment in the early 1990s. These initiatives aimed at reducing government subsidies and introducing more efficient and less distorting social assistance programs, accompanied by various types of physical investment programs for irrigation as well as agricultural research and cooperatives development and restructuring. In Turkey’s poorer eastern and northern watersheds, small-scale development programs at the village level have demonstrated feasible and replicable approaches which can be scaled up within Turkey’s constrained budgetary resources. A third major thrust has been to raise agricultural production standards towards EU levels, preparing for the time when Turkey will be asked to join Europe. Even before then, meeting EU standards will be immeasurably helpful for expanding exports to this lucrative market, as well as others worldwide. ECSSD’s next challenge is to assist the country in improving irrigation and water resource management, further modernizing Turkish agricultural institutions, and extending the outreach of financial services to rural areas.