Viewing cable 06TALLINN644
Title: CREATION OF A BALTIC AMERICAN ENTERPRISE FUND

IdentifierCreatedReleasedClassificationOrigin
06TALLINN6442006-07-12 08:04:00 2011-08-30 01:44:00 UNCLASSIFIED//FOR OFFICIAL USE ONLY Embassy Tallinn
VZCZCXYZ0001
PP RUEHWEB

DE RUEHTL #0644 1930804
ZNR UUUUU ZZH
P 120804Z JUL 06
FM AMEMBASSY TALLINN
TO RUEHC/SECSTATE WASHDC PRIORITY 8822
INFO RUEHVL/AMEMBASSY VILNIUS 6512
RUEHRA/AMEMBASSY RIGA 2740
UNCLAS TALLINN 000644 
 
SIPDIS 
 
SENSITIVE 
 
SIPDIS 
 
STATE FOR EUR, EUR/NB, EUR/ACE, AND USAID 
 
E.O. 12958:  N/A 
TAGS: EAID ECON PGOV PREL EN LH LG
SUBJECT:  CREATION OF A BALTIC AMERICAN ENTERPRISE FUND 
LEGACY FOUNDATION 
 
 
¶1.  (SBU) Summary:  Since its launch in 1995, the Baltic 
American Enterprise Fund (BalAEF) has played an important 
role in promoting economic growth in the three Baltic 
states.  It is important for U.S. interests in the Baltics 
and beyond to create a successor institution that will be 
ready to start work at the very latest when BalAEF?s 
congressionally-mandated termination date arrives in 2009, 
perhaps sooner if the Fund identifies an appropriate exit 
opportunity.  We believe that a legacy foundation should 
focus on educational and exchange programs.  The foundation 
should be structured in a way that allows for private 
contributions from U.S. individuals and entities and 
preserves the American essence of the organization.  End 
Summary. 
 
¶2.  (SBU) The Baltic American Enterprise Fund was founded 
in 1995 as one of several private, non-profit enterprise 
entities funded by USAID through the Support for East 
European Democracy (SEED) Act of 1989.  BalAEF was 
capitalized at $50 million to support its role in 
strengthening and promoting private sector business growth 
in Estonia, Latvia and Lithuania.  Over the past ten years, 
BalAEF has actively engaged in a broad private investment 
program which has included residential mortgages, 
innovative commercial financing and technical assistance. 
In 2004 BalAEF made history by offering the first 
residential mortgage-backed securitization ever issued in 
Central and Eastern Europe. 
 
¶3.  (SBU)  While BalAEF continues to do good work, both 
economic conditions in the Baltics and U.S. policy 
priorities have changed radically since 1995.  We want to 
ensure that BalAEF is succeeded by a foundation designed to 
address this new situation.  We understand that the 
Department and USAID will work closely with the BalAEF 
board on the shape of a legacy foundation.  We believe that 
this foundation should focus on funding educational and 
exchange programs.  The new foundation should be able to 
receive private contributions from both U.S. and Baltic 
individuals and entities, and should be structured in such 
a way that the United States maintains a role in decision- 
making. 
 
 
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OUR PROPOSAL: FOCUSING ON THE NEXT GENERATION 
--------------------------------------------- 
 
¶4.  (SBU) For younger Estonians, historical memory of the 
Cold War, and the affinity it engenders for the United 
States, is fading away at the same time the country has 
become a member of the European Union.  Estonian students 
have easy access to cheap education in Europe through the 
Erasmus and other programs, and they can work legally in 
many EU countries.  As a result, we can no longer take it 
for granted that top young students from Estonia, or other 
countries in the region, will seriously consider the United 
States for work and educational opportunities.  Failure to 
engage the rising generation will hasten the gravitation of 
future leaders and business people towards Europe and away 
from the United States. A BalAEF legacy foundation could 
play an important role in reversing this trend by funding 
scholarships and exchange opportunities in the United 
States for students and scholars from the Baltic States, as 
well as programs to bring American experts, scholars and 
cultural figures to the Baltics. 
 
¶5.  (SBU)  Because we believe that the main goal of a 
legacy foundation should be to strengthen ties between the 
United States and the Baltic States, it will be essential 
that the board include strong U.S. representation. In 
addition, we recommend that the foundation be structured in 
a way that facilitates the acceptance of private 
contributions from U.S. and Baltic individuals and 
entities, which would lengthen the legacy foundation?s 
lifespan and create more opportunities for partnership 
between U.S. and Baltic institutions. 
 
¶6.  (SBU) We discussed these ideas during our meeting with 
the BalAEF Board in Tallinn last month.  We understand the 
Board has already begun to consider its recommendations on 
the shape and goals of a follow-on foundation.  We look 
forward to a continuing dialogue with the Department, USAID 
and the BalAEF Board as we work together to shape the BalAEF 
legacy foundation. 
 
WOS