Young European democracies.

As Central and Eastern European nations give new life to their governments and economies, U.S. associations lend a hand - and receive much in return.

Call these countries the comeback kids.

"They're making up for 50 years of lost time," explains U.S. State Department official James Holmes in describing the current democratization efforts of Central and Eastern European nations. In 1989, with the disintegration of the Soviet empire, the region began to reform its governments, economies, and ways of life, positioning itself to take advantage of opportunities enjoyed by the Western world. The reborn nations now form "the most dynamic part of Europe," points out Holmes, "in terms of where they have been and where they're headed."

The "most remarkable progress" in this region has been made by Poland, Hungary, and the Czech Republic, says Holmes, who serves as coordinator for U.S. assistance to Central and Eastern Europe. "The economies of these countries have recovered very nicely - dramatically - over the last five years, and these countries have all gone through a process of democratic, clean, fair elections."

Holmes emphasizes the strong support that the United States has given to these democratization efforts. The assistance of associations, he points out, has played a significant role. "One of the things which is lacking [in Central and Eastern Europe] is what we now call a civil society, and that is the ability of persons to engage with groups and institutions of their own device and creation," says Holmes. "There was no habit of groups interested in a common objective coming together and addressing their interest to the government. So by bringing to the people of Central and Eastern Europe this notion of freely associating and bringing the interests of associations forward, I think you're contributing a great deal to the creation of a civil society."

Holmes acknowledges, too, the interests of U.S. associations that want to turn these new societies into trading partners. He sees Central and Eastern Europeans as eager to learn about the promotion of open markets and the notion - new to them - of making profits.

Advancing the business of democracy

One organization that is notable for its efforts in assisting emerging democracies is the Center for International Private Enterprise, located in Washington, D.C. CIPE was established as a foundation in 1983 by the U.S. Chamber of Commerce in response to urging by the U.S. government that private institutions replicate themselves and spread free enterprise around the globe. CIPE's mission of building private enterprise and promoting market-oriented economic reform to create and sustain democratic development worldwide has led the organization to approximately 50 countries, says Executive Director John Sullivan, "with the Czech Republic, Poland, and Hungary as three of our priority countries."

Priority is based on CIPE's estimation of where the most progress is obtainable and where lies the greatest need. Sullivan reports that the Czech Republic will soon "graduate" from needing assistance and will help CIPE in other countries. Poland has made impressive democratization advances, as has Hungary, but both will rely for some time on U.S. assistance, including the projects sponsored by CIPE with funding from the National Endowment for Democracy and some grant money from the U.S. Agency for International Development.

The factors involved in the speed of progress include not only the starting position of each nation as it embarked on reform but strokes of luck, Sullivan says. "Poland, although it is doing extraordinarily well, started from a much lower level because of the repression that had gone on there. Hungarians are at a somewhat more advanced level, even though they haven't made the progress in recent years that they had for a long period of time. The Czech Republic - the reason they're graduating so much faster is because they have had the good luck to have a very strong economic reform team. Also, the previous regime hadn't bankrupted the country the way that the regime had in Poland."

CIPE projects. CIPE, which maintains an office in Budapest, is "supporting a regional development center in northeastern Hungary," points out Sullivan, "and we're involved in a large-scale program of advocacy for regulatory reform. We're also setting as a priority for next year pension reform."

The variety of these projects is mirrored in Poland, where CIPE began its work in 1989. "The elections were being contested, and there was a real opportunity to become involved and make a difference," says Sullivan. "As with Hungary in 1989, we began to support the first emerging entrepreneurship associations; these were small-business, private-enterprise associations, as opposed to the old Communist organizations, which were really set up by the state to help control the state firms. As the private-sector associations started to form, we began providing grants and technical assistance to help them promote market economics and free enterprise."

One of CIPE's early initiatives was a project with Poland's first private business association, the Krakow Industrial Society, to encourage business formation and train future entrepreneurs. CIPE set up seminars, which drew more than 500 trainees, 60 of whom are documented as having started their own businesses.

Similar training was conducted in 1989 and 1990 in the Czech Republic through grants to the Association of Czech Entrepreneurs. CIPE funded this association's management education for small, emerging firms.

As management training continued throughout the region, in 1993, CIPE turned attention toward the operations of the business associations themselves, holding its first management training sessions for the Polish Chamber of Commerce. Through education in management, administration, and delivery of membership services, CIPE aimed to help association executives strengthen their professionalism and better represent the interests of their members.

These objectives were jeopardized in 1995, when the Polish Chamber of Commerce proposed a system of mandatory membership. Sullivan explains: "In Europe, the German tradition is that if you're in business, you have to by law join the chamber of commerce. You have to get your license from them, and then you have to pay the membership dues. Although the Polish chamber had recreated itself in 1989 and had become very much a free-market organization, its current leadership decided that they really would like to adopt the German system."

Eager to preserve the spirit of free enterprise, CIPE supported a public opinion poll on the issue by the private firm Demoskop. Demoskop conducted a study and then held a conference enabling Polish business community members to voice their opinions. The study results showed that 73 percent of the businesspeople polled were opposed to mandatory membership. "They saw it as a return to central government control," Sullivan says. "They indicated that they much preferred to have voluntary, free organizations. As a result of this study and conference, the president of the country decided he would veto the draft legislation in its current form."

The mandatory-membership bill is still unresolved, having been reported back to committees, where more than 200 amendments are pending. Whatever the legislative outcome, however, success can be celebrated from the Demoskop study, for its implementation further entrenched the Poles in the principles of democracy.

U.S. chambers and members realize direct benefits. Of course, not only the young businesses and chambers of commerce overseas have benefited from CIPE's involvement there. The two-way gain comes into play as U.S. chamber executives interact with their overseas counterparts. CIPE brings executives from the United States to Central and Eastern Europe to conduct training, and the contact often stimulates business opportunities. As the managers of the forming firms and chambers learn the ropes of free enterprise, they develop into potential trading partners for the member companies of the U.S.-based chambers of commerce.

Sullivan sees the entire region as a considerable market waiting to be tapped. "If you look at Poland alone, you've got 40 million people there. Poland's economy is now growing at between 6 and 7 percent and could continue to do that for some time. [The population of the Czech Republic is 10.3 million; Hungary's is 10.2 million. The Czech Republic's gross domestic product growth rate is 4.8 percent; Hungary's is 2 percent.] The economies of this region have the potential to become the new 'tiger' economies," forecasts Sullivan, "coming up behind Thailand, Malaysia, and Taiwan."

State official Holmes, too, expresses enthusiasm for the trade potential with Central and Eastern Europe. Emphasizing that particularly Poland, Hungary, and the Czech Republic are "resurgent and buoyant," he notes that private capital is being raised for investment in all three countries. "The capital is coming from not only the United States but from lots of other countries as well. They all see the opportunity. We would expect that U.S. trade with this region would continue to grow over the next decade."

Advice for the eager. Before attempting to gain access to these markets through trade or democracy-building efforts, "learn the countries," advises Sullivan. "It's tempting to go in and look at things through the U.S. perspective. You really have to understand what's been going on in those countries before you form too many conclusions. It's really easy to make a lot of fundamental mistakes in judgment." For example: "You can make all these assumptions based on things like bankruptcy laws, which aren't really there, or collateral law, which is only now being debated in Poland. So when you say to somebody, 'Take a risk' - well, taking a risk has a whole different meaning in the U.S., where you've got protection from bankruptcy procedures and a whole bunch of other institutions that aren't in place in Poland."

Enhancing infrastructure and trade

The activities of the Arlington, Virginia-based Telecommunications Industry Association also illustrate how the processes of building a modern society and boosting trade are intertwined. Kathryn von Forell, manager for Europe and the NIS (Newly Independent States), talks about the establishment of TIA's office in the Czech Republic capital, Prague, in 1992 through a Consortium of American Business grant from the Department of Commerce. The office provided TIA member telecommunication companies with local representation and facilitated contact with Central and Eastern European business entrepreneurs seeking U.S. joint-venture partners. "American companies looking for new market opportunities brought in state-of-the-art technology and management expertise," says von Forell. "They demonstrated to businesspeople in other countries the advantages our technology can offer in building their telecommunications infrastructure."

Von Forell mentions how much these countries want to "leap from antiquated systems to the best that the Information Age now offers. There is a high demand for basic telecommunication services. The American companies are currently big players in helping these countries enhance residential phone service and provide businesses with advanced service options."

TIA builds ties with governments. Key in this U.S.-European exchange has been TIA's relationship building with the appropriate local government officials. The association has set up meetings offering opportunities for U.S. companies to network with Central and Eastern Europe government officials and explain concepts critical to business expansion: destruction of monopolies, privatization of state entities, liberalization of markets. It takes time and education to show that this is in everyone's best interest, von Forell says.

A TIA conference funded by the U.S. Trade and Development Agency last May provided a prime educational forum. The event was held in Warsaw, Poland, and hosted delegates of 14 countries in the region, many of whom were ministerial officials with a lead role in developing policy and awarding contracts. "We talked about [market] liberalization in those countries," von Forell says, "and American companies gave technology demonstrations and talked about how [their technology] was applicable to those markets."

Insights from involvement. From her involvement in these varied projects with Central and Eastern Europe, von Forell formed these insights: "The American understanding of standard business practice is not necessarily the same overseas. A lot of these governments don't look at business in a Western way. For instance, one company is still having problems with the Polish government over a contract that was negotiated and what was actually delivered to this company."

TIA's response to these challenges has been continued efforts at education and relationship building - in other words, long-haul investing. In tallying the dividends thus far from TIA's investment, Von Forell reports tremendous development in the infrastructure of this region and impressive gains realized by U.S. companies that have expended time and resources there. But the thrill of exploration in Central and Eastern Europe still exists: "It's still a frontier atmosphere," assures von Forell.

Strengthening professionalism by organizing

With no other objective than the noble one of strengthening the professionalism of overseas peers and thus enhancing the worldwide status of their field, members and staff of the Denver-based Association of Operating Room Nurses (AORN) stimulated their colleagues in Poland to form their own association. The Polish Operating Room Nurses Association was the result in 1995 of an informal partnership between the founders of this group and their U.S. counterparts.

Members of AORN's leadership and the association's director of member services, Jody Foss, CAE, began work in Poland in 1994 with a health care professional, Grazyna Wojcik, who now serves as chief nursing officer in the Ministry of Health and Social Welfare, Division of Nursing, in Warsaw. Wojcik was keenly interested in enhancing the skill level and the social status of Polish operating room nurses and believed that AORN could contribute greatly to this effort. But, as Foss recalls, Wojcik hesitated at first, afraid that the Americans would push their concepts on the Polish nurses. Wojcik and Foss agreed that the host country needed to be a full partner in the professionalization efforts.

AORN spreads the association message. The two groups worked together in developing training for the Polish nurses and in organizing the new association. Foss reports that the education left the nurses feeling empowered, newly able to pin worth to their profession. "Then when I discussed the concept of associations," she continues, "they saw that I as an individual can make a difference, but I can make a bigger difference if I band together with people of a like profession."

Foss's main lesson learned through her experiences in Poland was that "trust must be earned." Proceed carefully when in this country, she advises; "trust doesn't just come because you're an American" - even if you're there with good intentions to help enhance the society.

"The Polish are very proud people," Foss emphasizes; "that's why they survived. They were occupied or under someone else's rule for much of their history, and they still managed to survive with their culture intact - and that's just an amazing thing."

HIGHLIGHTS

* Of all the emerging European democracies, Poland, Hungary, and the Czech Republic have made the most progress.

* Key in the exchanges between U.S. association representatives and Central and Eastern Europeans are partnership and patience: Forget about pushing anything - especially The American Way.

* These countries are eager to enhance their economies along with their governments through trade.

Resources

The U.S. Department of State and the Central Intelligence Agency provide extensive information on the Internet regarding the Czech Republic, Hungary, and Poland: geography, population, ethnic divisions, languages, history, foreign relations, government structure, political parties and leaders, legal systems, diplomatic contacts, economy, trade, transportation, communication, and more.

* Access the CIA Web site at http://www.odci.gov/cia and click on the World Fact Book.

* Access the State Department home page at http://www.state.gov and click on Background Notes. You can also call State at [phone] and ask for the Bureau of European Affairs.

The U.S. Agency for International Development, which falls under the direction of the Secretary of State, describes its activities in promoting democracy around the world at its Web site: www.info.usaid.gov; click on Democracy and on Regions and Countries. You can also contact USAID by calling State's main number: [phone].

The U.S. Department of Commerce offers related information for organizations interested in doing business outside the United States. Two resources:

* The Trade Information Center - Use the center's automated fax retrieval system to get information on regional markets and international trade agreements; call (800) USA-TRADE.

* The Global Export Market Information System - Access its Web site at http://www.iep.doc.gov and click on the Central and Eastern Europe Business Information Center, or call [phone].

The Foundation for a Civil Society, New York City, sponsors projects aimed at strengthening democracy in Central and Eastern Europe and other regions. Call [phone].

The Partnership for Peace, an initiative by the International Association of Convention and Visitors Bureaus, Boston, provides information about meeting in Poland, Hungary, the Czech Republic, and other countries. Call [phone].

Gerry Romano, CAE, is senior editor of ASSOCIATION MANAGEMENT.