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. Last Updated: 07/27/2016

EU Review May Revive TACIS Funds

The European Union has approved cutbacks of over 100 million euros ($95.13 million) in its technical support program for Russia this year because of EU sanctions against the military crackdown in Chechnya, a top official said Monday.

But the EU's general affairs office is due to reexamine Russia's funding status as early as next week - a move that could mean the program, known as TACIS, is soon back to full strength.

"We'll see what the decision is and then we'll work on it," said Jean-Pierre Reymondep-Commoy, the head of the TACIS program in Russia. "The program is due to be reconsidered next week."

TACIS economists have said the EU's stance against Russia appears to have softened in recent weeks. Funding was allocated for programs approved last year, but it is only now that the EU has met again to consider funding following the Chechen campaign.

Reymondep-Commoy said Monday in a telephone interview that a return to a fuller program would mean TACIS could fulfill its mandate to concentrate its activities in two more areas: aiding economic development and easing the social impact of transition.

For this year, the TACIS program is largely limited to its third core area of operation - to developing the rule of law by providing support to administrative and legal reforms.

The EU signed off on a 34 million euro, five-point program for 2000 late last week. It included projects to improve defense of citizens' legal rights and to boost tolerance and improve interethnic relations. A third project is targeted at supporting regional mass media to help boost their independence through a scheme of cooperation with the Union of Journalists. Other projects are aimed at developing local governance and self-determination.

"The cutbacks have had the biggest impact on the TACIS action program," Reymondep-Commoy said. He said that program, which usually received funding of over 100 million euros, had been frozen completely. That means funding for annual TACIS projects targeted at sectors of the economy such as the energy sector and the environment, as well as addressing social needs, have so far been cut off.

But the agency has also begun two programs for developing small and medium enterprises this year that were held over from the 1999 budget and one held over from 1998's budget. A 5.9 million euro project for developing enterprises and protecting the environment in the Baltic region has also been approved for 2000.

Supporting small businesses is seen as a key direction of TACIS's activity. Boosting growth in the sector is seen as one of the main ways to raise living standards and create jobs. One project started this year is a 1.9 million euro plan to support a new federal program for developing the sector.

However, another TACIS scheme headed by French banker Pierre-Yves Divisi? to devise and implement a credit guarantee plan for small businesses is still under negotiation and its future will not be decided until next week.

Credit guarantee schemes have been widely used across Europe as a way of rebuilding war-torn economies after World War I and World War II by sharing the risk of lending to enterprises through several agencies.