Multinational (international) projects in Eastern Europe with the special focus on the South Balkans

Abstract

Most stories about multinational project management talk about cultural differences, economic and political specifics and all other aspects that influence project realization. This document is by no means an exception. Based on the presumption that readers of the document will be people with a very limited Eastern European (EE) experience, the text below gives an overview of geographical, political, economic, cultural and other Eastern-European aspects that could be very important pieces in someone's project management puzzle. Most of the information provided in this document has been collected during the author's involvement in the Project Management Institute (PMI®) EU Task Force.

Introduction

Eastern Europe has been going through turbulent times for the last 15 years. Many new countries have been established after the disintegration of USSR, Yugoslavia, Czechoslovakia, etc. Someone without EE experience may easily have a broad spectrum of questions, ranging from the geographical, cultural and political questions to the simple daily dilemmas related to daily social situations.

This document consists of three major parts. The first part will give an overview of the EE as a whole, including political, economic, cultural and travel (money, visas, etc) facts. The second part will focus on the South Balkans providing more information on the countries belonging to this region. The third part will talk about the big EE programmes sponsored by the EU. The goal of these programmes is to prepare the EE countries for their accession to the EU and they, as such, influence all areas of public life. For someone being a Project manager it is not only important to be aware of these programmes, but, also, to be aware of the principles and standards proclaimed by them.

What a Project manager should know before starting a project in Eastern Europe

Overview of Eastern Europe

Geopolitical and geographical terms

European Union (EU): Belgium, Germany, France, Italy, Luxembourg, the Netherlands. Denmark, Ireland, the United Kingdom, Greece, Spain, Portugal, Austria, Finland and Sweden

Acceding countries - the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, the Slovak Republic, and Slovenia are set to join EU on 1st May 2004.

Visegrad group – Hungary, Slovakia, Poland and the Czech Republic

The Commonwealth of Independent States (CIS): an alliance of 12 of the 15 former Republics of the Soviet Union (Armenia, Azerbaijan, Belarus, Georgia, Kazakhstan, Kyrgyz Republic, Moldova, Russia, Tajikistan, Turkmenistan, Ukraine, and Uzbekistan). The headquarters of the organization is in Minsk, Belarus. The three non-members are Estonia, Latvia, and Lithuania

Baltic countries: Estonia, Latvia and Lithuania

Former Yugoslavian countries: Slovenia, Croatia, Bosnia and Herzegovina, Serbia and Montenegro and Macedonia. South Balkans: Albania, Bosnia and Herzegovina, Macedonia and Serbia and Montenegro. These countries together with Croatia are usually called Western Balkans.

Cultural quiz about the EE
Cultural questions Answers
To kiss, bow or shake hands… or, to do it all!? In most EE countries shaking hands is an acceptable gesture upon greeting (and also upon departure)
To tip or not!? In most EE countries rounding up restaurant bills and taxi fares to the next whole figure is a usual way of tipping. However, if the tip given this way happens to be less than 5%, additional tip should be considered
To deal with facts or with emotions!? It is recommendable to deal with facts whenever possible – however, once emotions have come into a conversation they should not be brushed aside (it could be consider as inflexibility, arrogance, etc)
Women approaching unknown men!? Women should stick to the official contact with unknown men - otherwise, their approach could be easily considered as flirting
To ask for a word or for a signature? The EE is going through a rapid transition – it is the fast growing, unstable business environment and one should try to get written commitments whenever possible. However, sometimes a given word may prove to be a stronger commitment than any signature on a paper and one should recognize this kind of situation – insisting on written commitments with certain people can damage a business relationship
To discuss history and politics? Talking about history can be a sensitive subject in the EE. This differs from country to country but it is definitely better to talk about contemporary and future themes. Also, quite often, people in the EE are interested in literature, art and, of course, sport, food, etc.
Travel tips

Visas – Visa regime is getting steadily more liberal and there are many countries whose citizens can travel to the EE without a visa. Furthermore, some countries issue a visa at the entry point. Something to be aware of is the rule that in some EE countries visitors must report to police within 48 hours upon arrival. This can be taken care of by the hotel or travel agency that organized the trip.

Money – Only a few of the EE currencies are fully convertible and can be easily exchanged abroad. A Black exchange market has practically disappeared in the EE countries. Money can be exchanged in banks. Travellers checks can be exchanged in hotels with the commission varying between 1% - 5%. Furthermore, ATM machines are becoming widespread in the EE countries, especially in the Baltic, Visegrad and Balkan countries. Credit cards are gaining on popularity but they are yet not as popular as in the western countries.

Electricity and video standards – Before setting out for the EE, it is good to know that 220V, 50Hz, AC is used in the region with the standard round two-pin “europlug”. Video standard is PAL (very rarely French SECAM) that is incompatible with North American and Japanese NTSC.

Time zones – Baltic countries, Visegrad countries and former Yugoslavian countries belong to the GMT+1 time zone, just like the large majority of the EU countries (with the exception of the UK and Portugal). Belarus, Bulgaria, Estonia, Latvia, Lithuania, Moldova, Romania and Ukraine are all in the GMT+2 zone. Moscow, St Petersburg are in the GMT+3 time zone. Some CIS countries are positioned more eastward, some of them (Kazakhstan) belong the GMT+6 zone.

Communications: Telephones and faxes can be sent from post offices and better hotels. Internet cafes are quickly gaining on popularity

Driving in the EE: the road rules are rather similar to the ones from the EU and the traffic signs are pretty standard. It is recommendable to have an IDP (International Driving Permit) when driving as a foreigner in the EE. Many EE countries apply zero-tolerance rule regarding the blood-alcohol concentration (which means no alcohol is allowed).

Religions

The Baltic countries, Visegrad group, Slovenia and Croatia are predominantly Roman Catholics. Russia, Belarus, Ukraine, Georgia, Armenia, Moldova, Romania, Serbia and Montenegro, Bulgaria and Macedonia are predominantly Orthodox Christian. The other countries (Albania, Bosnia and Herzegovina, some CIS countries) are predominantly Muslim. A Jewish population is present in most EE countries.

Common cultural traits

Eastern Europe is a large region that goes through a rapid transition. For this reason it is very difficult to talk about the common delimiters, especially about the cultural ones. However, a couple of things are worth mentioning:

1)    The EE society is getting to be very individualistic – this is a normal reaction to the years of the suppressed individualism, plus it is characteristic for the countries in economic and politic transition.

2)    Many people are turning to religion and it is becoming very important part of society.

3)    Large majority of the EE population have Slavic origins (there are exceptions like Albania, Hungary, etc). Consequently, most of the languages spoken in the EE have Slavic origins and there are certain similarities among them.

Common political traits

The EE is moving toward Western-type democracy and the process seems to be unstoppable. Even the political parties from the communistic era has been evolved in recent years and do not resemble “old garnitures” anymore. The first group of 8 countries to join the EU on 1st May 2004 are called acceding countries (see above). Romania, Bulgaria and Turkey are lining up for the future terms.

Economic overview

The graph below compares the GDP growth in the coming years in the USA, Japan, the EU and the EE. It is noticeable that the EE region will be growing much faster than the others, but one should be aware of the current low GDP level in the EE that is used as a basis of the growth (see the next exhibit).

GDP growth in different parts of the world (the figures are provided by the Economist Intelligence Unit)

Exhibit 1 – GDP growth in different parts of the world (the figures are provided by the Economist Intelligence Unit)

The following graph compares the GDP index per head in the acceding countries and in the EU. The index value of 100 has been assigned to the EU as a reference. What is obvious from the picture is that the EU index is much higher than the ones of the acceding countries, indicating much higher GDP/heard (despite the large EU population).

The other thing worth mentioning is the fact that the smaller EE countries have higher index than the bigger ones. This implies that bigger countries have more difficulties during the transition period than the smaller ones (higher jobless rate, uneven wealth distribution, etc)

GDP/head index in the EU and acceding countries (the figures are provided by the Economist Intelligence Unit)

Exhibit 2 – GDP/head index in the EU and acceding countries (the figures are provided by the Economist Intelligence Unit)

The graph below gives a comparison of the GDP (in US$ bill) and population (in mill) in different EE (sub)regions. The blue line shows the GDP value, while the histogram reflects the population. It is apparent that the Visegrad countries contribute significantly to the total EE GDP despite the small population, while the situation with the CIS countries is pretty much opposite. Russia and the Balkans are approximately at the same level ranked between the Visegrad and CIS countries.

comparison of the GDP and population in different EE (sub)regions (the figures are provided by the Economist Intelligence Unit)

Exhibit 3 – comparison of the GDP and population in different EE (sub)regions (the figures are provided by the Economist Intelligence Unit)

The following graph shows the overall risk measured by the Economist Intelligence Group for some Eastern European countries (for some countries it was not possible to measure due to the lack of reliable data). The overall risk is an amalgamate of the political, economic policy, economic structure and liquidity risks.

Overall risk in the EE countries where it was measured (the figures provided by the Economist Intelligence Unit)

Exhibit 4 – Overall risk in the EE countries where it was measured (the figures provided by the Economist Intelligence Unit)

Personal touch

As someone with the working experience in Eastern Europe and The Netherlands, I have tried to make a brief comparison of several business cultural aspects between these two working environments.

The Netherlands Eastern Europe
Persistent, continuous progress (not necessarily in big steps, but constant) Huge progress can be made quickly, but long-term approach is lacking
Direct, to the point talk focusing on the current problem and solution Tends to provide background story related to the current situation before focusing on the current situation
Work and private life are in principle kept separate Work and private life get quickly interconnected
Planning in advance, good organization Short-term planning, good in improvisation
Trying to get a buy-in within a team, organization and to make a decision collectively The small numbers of people make decision and enforce it within an organization, team etc.

South Balkans

As already mentioned, the South Balkans in this document refer to Albania, Bosnia & Herzegovina, Macedonia and Serbia and Montenegro. One may ask why Greece is not on the list – the answer would be that Greece is geographically in the very South Balkans, but politically it belongs to the EU and, as such, it is distinguished from the countries mentioned above. Furthermore, Greece is very well documented country, while the major reason for focusing on the South Balkans was the relative lack of information about this area. The information provided for the South Balkans is very much of the same type as the one provided for the EE as whole, only there will be more details per country.

Albania

The population of Albania is 3.1 million people. The capital city is Tirana. The language is Albanian, an Indo-European dialect of ancient Illyrian. The major religious groups are 70% Muslims, 20% Orthodox and 10% Roman Catholics. No visa is required for the citizens of EU, USA, Australia and New Zealand. Money can be exchanged in banks, but also on the street for, usually, better rates. Traveller checks can be exchanged in some banks in Tirana. The use of credit cards and availability of ATMs is still rather limited. Faxes can be sent from the main post office in Tirana and from major hotels. Internet connections can be found in Tirana and other big cities. Cultural touch: Albanians, just like Bulgarians, shake their heads to say yes and usually node to say no.

With respect to international relations, Albania will be focusing on closer integration with the West, especially with the USA, where a lot of progress has been made in the previous years. Domestically, there are a lot tensions within the ruling Socialist Party of Albania (SPA).

The country GDP (US$ bill) in 2003 was: 6.2

The projected GDP growth in 2004 is: 6.5%

Bosnia and Herzegovina (BiH)

The population of BiH is 4.2 million people. The capital city is Sarajevo.

The state of BiH exists within the boundaries of the former Yugoslav republic of the same name. It includes two entities: the Federation of Bosnia and Herzegovina (which is often referred to simply as the Federation) and Republika Srpska (RS). It also includes a self-governing district, Brcko, under the authority of the central state. People of BiH speak the same language with different dialects, only it is called Bosnian in the Muslim parts of the country, Croatian in the Croat-controlled parts and Serbian in the RS. The language belongs to the South Slavic group of languages. The major religious groups are 40% Muslims, 31% Orthodox, 15% Roman Catholics and 14% other religions. Most Serbs are Orthodox and most Croats are Catholic. No visa is required for the citizens of the USA, Canada and most of the EU countries. Money can be exchanged in banks. Traveller checks can be exchanged in banks in big cities only with the usual commission of 1.5%. ATMs are available in Sarajevo and there is a couple of them in other big cities. Visa and Master credit cards are accepted by major hotels, rental-car agencies and airlines. Faxes can be sent from the most post offices. Internet cafes are available in Sarajevo and to a limited extent in other big cities.

Regarding the international relations, the relationship with neighbouring countries steadily improves, but there are still a lot of challenges due to the fact that the nationalistic parties recaptured power in BiH. Domestically, there are still tensions between the two entities, although many responsibilities has been transferred to the central state ruled by the rotating, collective three-member presidency (Muslim, Serb, Croat) and supervised by the Office of the High Representative (Paddy Ashdown) established by the Dayton agreement. The country GDP (US$ bill) in 2003 was: 7.0 The projected GDP growth in 2004 is: 4.0%

Macedonia

The population of Macedonia is 2.0 million people. The capital city is Skopje. The language is Macedonian, belonging to the South Slavic group of languages. The alphabet in use is Cyrillic. Speaking of religion, most of the Slavs (69%) are Orthodox, while most of Albanians and Turks (27%) are Muslim. No visa is required for the citizens of EU and New Zealand, while the citizens of the USA and Australia can get a visa free of charge at the entry point. Money can be exchanged in small private exchange offices. The use of credit cards is still limited while ATMs can be found in Skopje. Faxes can be sent from the main post offices in Skopje and Ohrid. Numerous Internet cafes can be found in Skopje and Ohrid.

There is a continuous engagement of international organizations in Macedonia in order to reduce a risk of a backslide into ethnic conflict. However, despite the progress in implementing the Ohrid agreement there are still many open questions in the relation between Slavic and Albanian ethic groups. The recent death of the President of Macedonia, Boris Trajkovski, in the plane crash brings new concerns to the domestic politic arena. The country GDP (US$ bill) in 2003 was: 4.6 The projected GDP growth in 2004 is: 4.0%

Serbia and Montenegro (S&M)

The population of S&M is 10.7 million people. The capital city is Belgrade. The language is Serbian, with Albanian spoken in the larger part of Kosovo. The alphabets in use are Latin and Cyrillic. With regard to religion, most of the Slavs are Orthodox Christian (70%), while most of Albanians, Turks and Slavic Muslims (20%) are Muslim. The other religious groups to be mentioned are Roman Catholic and Jewish. The citizens of more than 50 countries can enter S&M without visa, including the EU, USA, Australian, New Zealand, Canadian and most of the EE citizens. Money can be exchanged in banks. The traveller checks can be exchanged in most Belgrade banks. ATM machines are available in all bigger cities. Although not as popular as in the Western countries, Visa and Diners Club cards are the most widely accepted cards in S&M, followed closely by Mastercard. Faxes can be sent from the post offices and bigger hotels. Internet cafes are widespread throughout the country and have fast connections.

In international relations the EU has yet to give S&M even an indicative timetable for accession, because there is still the number of requirements to be fulfilled by S&M. The last parliamentary elections in Serbia and the relative success of the right-wing Radical party, has caused some additional concerns in the outside word. However, the ruling coalition still stems from the democratic block and it will try to deal with numerous political and economic issues. The situation in Kosovo remains unstable, due to the lack of final resolution on the Kosovo status. The country GDP (US$ bill) in 2003 was: 19.6 The projected GDP growth in 2004 is: 4.0%

Economic summary of the South Balkans

The picture below compares the population and GDP in the South Balkans countries. It is apparent that all the countries are at the approximately same level, with S&M and BiH having slightly lower GDP/head (quite in line with above mentioned observation that is more difficult for the bigger EE countries to keep up with the smaller ones in the GDP/head race)

Comparison of the GDP and population in the South Balkans countries (the figures provided by the Economist Intelligence Unit)

Exhibit 5 – Comparison of the GDP and population in the South Balkans countries (the figures provided by the Economist Intelligence Unit)

Project management organizations in the South Balkans

The project management organizations present in the South Balkans include a PMI Chapter in Serbia and Montenegro and IPMA organizations in Serbia and Montenegro (YUPMA) and Macedonia (MAPM). Currently, the project management profession is getting a significant boost from the international development programmes initiated in the region (the following chapter will provide more information on the development programmes in the EE that are sponsored by the EU).

The major EU-sponsored development programmes in the EE

Introduction

There are several ongoing EE programmes that are sponsored by the EU. The common goal of these programmes is to prepare the EE countries for the accession to the EU. Different programmes are deployed in different countries, based on their geographical, political and economic specifics, depending on how far they are with the accession process. All these programmes have been aligned with the financial regulations of the European Commission that is considered an ultimate “bible”. Project cycle management practices have been applied to these programmes since the beginning of the 90s.

Phare, ISPA, Sapard

During the period 2000-2006 financial assistance from the European Communities to the candidate countries of Central and Eastern Europe will be provided through three instruments: the Phare programme, ISPA and Sapard. The ten countries that have applied to become members of the EU are Bulgaria, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Romania, Slovakia and Slovenia. The year 2000 marked the coming into effect of the two new financial pre-accession instruments: ISPA and Sapard. The overall pre-accession assistance is € 3 billion per year (1997 figures) during the 2000-2006 period, half of which is allocated to Phare. The precise appropriations for 2001 are € 540 million for Sapard, 1,080 million for ISPA, and 1,620 for Phare, amounting to an overall budget of 3,240 million.

Phare is basically the instrument to provide pre-accession support for Institution Building in all acquis-related areas. ISPA supports large-scale infrastructure projects in the fields of transport and environment, in a 50-50 proportion, and Sapard helps to prepare the countries for taking on the acquis in the fields of agriculture and rural development.

Tacis

Launched by the EC in 1991, the Tacis Programme provides grant-financed technical assistance to 12 countries of Eastern Europe and Central Asia (Armenia, Azerbaijan, Belarus, Georgia, Kazakhstan, Kyrgyzstan, Moldova, Russia, Tajikistan, Turkmenistan, Ukraine and Uzbekistan), and mainly aims at enhancing the transition process in these countries.

CARDS

CARDS is an European Community's assistance programme for the western Balkans in the period 2002-2006. CARDS supports the participation of Albania, Bosnia and Herzegovina, Croatia, the Federal Republic of Yugoslavia and the Former Yugoslav Republic of Macedonia in the Stabilization and Association process (SAp) which is the cornerstone of the EU's policy in the region. The SAp is an ambitious strategy that helps the region to secure political and economic stabilization while also developing a closer association with the EU, opening a road towards eventual EU membership once the conditions have been met. The CARDS regulation provides some € 4.65 billion for this purpose in the period 2000 to 2006.

Useful links related to the European programmes in Eastern Europe

European Union: http://europa.eu.int/

European Commission: http://europa.eu.int/comm/index_en.htm

European bank for reconstruction and development: http://www.ebrd.com/

European Investment Bank: www.eib.org

European Agency for reconstruction: http://www.ear.eu.int/

References

Economic figures used in the text are retrieved from www.viewswire.com (Economist Intelligence Unit site) The information on the European programmes in Eastern Europe collected from the sites listed in the section “Useful links related to the European programmes in Eastern Europe”

This material has been reproduced with the permission of the copyright owner. Unauthorized reproduction of this material is strictly prohibited. For permission to reproduce this material, please contact PMI or any listed author.

©Zoran Ljubicic
Originally published as part of the 2004 PMI Global Congress Proceedings – Prague

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