BULGARIA: AID'S POST-GRADUATION PARTNERSHIP:

UNCLAS SECTION 01 OF 02 SOFIA 000312 SIPDIS E.O. 12958: N/A TAGS: PREL EAID BU EU SUBJECT: BULGARIA: AID'S POST-GRADUATION PARTNERSHIP: USING IT SECTOR TO BOOST ECONOMY, DRIVE TRANSPARENCY ¶1. Summary: When AID formally closed its mission to Bulgaria in 2008 after 17 years of operation and 650 million dollars of aid, many Bulgarians assumed that the assistance relationship had come to an end. However, the continuing need for engagement to help address domestic priorities and to prepare for a future role as an EU donor country resulted in an AID pilot program focused on the establishment of public-private partnerships. Under the stewardship of a Development Counselor, we have successfully launched this partnership program and have garnered both enthusiastic support and financial assistance from Bulgarian government authorities and the private sector. ¶2. We chose the IT sector as the initial target for the partnership program for several reasons: Bulgaria has a history of IT development and several major American IT companies (including IBM, Microsoft, HP and Cisco) are currently operating here. The IT sector offers relatively quick opportunities for economic growth via start-ups and incubators. And over the long term, greater IT penetration offers the prospect of boosting transparency and combating corruption throughout government and the economy. ¶3. Government funds ($500,000 each from the USG and GOB) will be matched and exceeded by companies and private foundations. Our hope is that proposals in the IT sector will be funded at the level of approximately $4-5 million in the first phase. Public profile and corporate support for the partnership were boosted by the personal endorsement of Wikipedia co-founder Jimmy Wales, who attended our launch. ¶4. The challenge now is to solicit top caliber proposals and to match them with adequate funding. Having used IT to prove that the partnership concept can succeed here, we will also turn to development of the next phase and identify other sectors that will attract private funding and produce concrete results. End Summary. ¶5. After laying the groundwork through nation-wide consultations, we launched on June 5 the first of a series of public/private partnership activities under the direction of the USAID Development Counselor. This pilot program, established in late 2008, picks up from the successful USAID program that ended last year. The focus of the first partnership -- Information Technology and Innovation -- builds on the existing strengths and prior investments of the IT industry in Bulgaria and the reputed excellence in academic institutions. That said, there is much room to grow and an economy that is in desperate need of competitive new jobs. The focus of the Partnership is on building human capital, stimulating and nurturing new ideas/applications, and strengthening the policy environment for new businesses. ¶6. The June 5 event brought together the four arms of the IT sector: government, represented by Minister of State Administration Nikolay Vassilev and Deputy Minister of Economy and Energy Nina Radeva; academia, represented by 15 of the top-rated universities and technical institutes throughout the country; industry, represented by a wide range of Bulgarian and international IT companies; and NGOs who work with youth and policy. Others included interested local foundations and international organizations. ¶7. The Partnership launch calls for proposals to be submitted over the summer; not "business as usual," but jointly funded by private sources with cost leveraging of at least two to one. The U.S. and Bulgarian governments have each committed $500,000 this fiscal year and there is a commitment on the part of several private foundations to co-fund some proposals, details to be decided at a later date. To kick off the process, six small grants were announced at the event funded through USAID by the Bulgaria Fund (German Marshall Fund),all directly addressing the IT sector. ¶8. Wikipedia co-founder Jimmy Wales was a special guest at the launch and served as the example to which Bulgarians can aspire in technology innovation. In his remarks, he noted the importance of a transparent and supportive business climate to unleash the creativity that leads to ideas like Wikipedia, and praised the Partnership as one concrete step to achieve that. ¶8. The next step is to assure that solid proposals with adequate leveraging of funds are received and new sources of funding are identified to support the Partnership. As the Bulgarian government slogs through the summer election campaign and the process of creating a workable coalition government, we will take advantage of this interregnum to help consolidate our contacts to create new partnership opportunities in a sector that offers promise. This engagement with the IT sector in Bulgaria that includes the SOFIA 00000312 002 OF 002 recent establishment of IBM's Nanotechnology Center, the Gates Foundation's $50 million program to network the country's libraries, and a $5 million grant from the American for Bulgaria Foundation (ABF) to digitize library holdings. McEldowney