1. (C) Summary: The Czech MFA's Director for Transformation
Cooperation believes that many international efforts to
foster democratic change -- including in particular those of
the EU -- suffer because the funding mechanisms chosen impede
the chances for success. She believes that donors need to be
prepared to fund very small projects, be more flexible, more
creative, and prepared to take risks. She suggested that a
workshop to discuss best practices in doing this could be
useful. End summary.



2. (U) Visiting EUR/ERA director Peter Chase met with
Gabriela Dlouha, MFA Director for Transformation Cooperation,
Oct 26 to discuss GOCR experiences in fostering democratic
change in oppressive or transformative regimes. A full
description of the work of the Transformation Cooperation
Office can be found in Ref A.



3. (C) Director Dlouha described her current priorities as
falling into two parts. Targeted "States in Transition"
comprised Ukraine, Georgia, Moldova, Serbia and Montenegro,
Bosnia Herzegovina, and Iraq. Targeted dictatorships were
Belarus, Cuba, and Burma.



4. (C) Dlouha described the types of activities which
appeared to have the greatest impact, especially in
authoritarian regimes. She believed programs should not be
dependent on authorization from authoritarian host-government
regimes, as is now the case for EU programs. Targeted,
short-term projects were best, because NGO partners were
small and did not have a large absorbtive capacity. Small
project budgets also had the advantage of being harder for
the host government to track and impede. In such cases, host
government changing of rules governing international
assistance might not necessarily kill a project, because
alternative "under-the-radar" ways could be found to get the
financing to the implementing partner. A small project also
meant that quick implementation was possible, thus providing
a quick impact. Large-scale development assistance projects
such as those the European Commission can do were a poor
model for fostering transitional democratic change. Effective
grassroots implementers often did not have the capacity to
absorb millions of dollars in grants, and the rules
surrounding large development assistance grants prevented the
recipient from acting with the necessary flexibility. Donors
would also have to be prepared to occasionally take some
risks. The control and auditing mechanisms used for
traditional development assistance were not appropriate to
the situation where an implementing partner was executing a
program that had the disapproval of the authoritarian host
government. There were other ways of exercising financial
control than paper-based accounting.



5. (SBU) In addition to programs in targeted countries,
Dlouha said the Czechs were focused on exchanges of people,
and sharing lessons-learned from the Czech transition
experience. She cautioned that international visits to the
U.S. would show activists a country that is too far down the
road to democracy. Dlouha thought visits by activists from
targeted countries to newly-transitioned states would be more
useful, as they would demonstrate the steps necessary towards
an attainable goal.



6. (SBU) Dlouha indicated that it might be extremely useful
for key donors to get together in an informal workshop to
discuss best practices in promoting democratic change under
repressive regimes. She said there is a lack of such
discussion now in part because various donors have different
mechanisms for this. In some cases the mechanisms may be in
the foreign office; in others, combined with development
assistance; and in still others (Germany), in private
foundations. She thought such an exchange could be
particularly useful as the EU considers changes to its own
democracy promotion programs.



7. (U) This cable has been cleared by Mr. Chase.
CABANISS