Country Overview
Country Facts
Overview of U.S. Government Assistance
In FY 2005, the USG allocated an estimated $102.91 million in assistance to Armenia, including:
In FY 2005, a total of 263 Armenians traveled to the United States on USG-funded exchange programs.
FY 2005 Assistance Overview
U.S. STRATEGIC INTERESTS
Strong relations with a stable and democratic Armenia allow the U.S. Government (USG) to pursue its policy goal of regional stability in the Caucasus. Given its proximity to the Middle East and the energy-rich countries of the Caspian Basin, Armenia is an important ally in the Global War on Terrorism. Resolution of the Nagorno-Karabakh conflict with neighboring Azerbaijan and improved relations with Turkey will enhance the movement of goods and people throughout the region and create a better trade and investment environment. Armenia's progress on democratic and social reforms will enhance political stability in the region and could offer a positive example for the region.
KEY ISSUES
Armenia has made significant, albeit uneven, progress in political and economic reform over the past decade. Armenia's eligibility to receive grants from the Millennium Challenge Account is evidence of the country's overall commitment to democracy and economic freedom.
2005 provided numerous examples, however, of Armenia's sometimes contradictory approach to reform. Despite public assurances by the government and civil society of long-term institutional reform, little progress materialized to change the relatively stagnant political situation. Serious problems remain regarding the independence of the judiciary, police treatment of detainees, the Government of Armenia's (GOAM) commitment to fighting corruption, and extra-official censorship in the media. The seriously flawed referendum that led to the ratification of new constitutional amendments in November 2005 sent a confusing message to Armenians: it instituted Western-leaning reforms, including limits to the broad powers of the executive, while calling the integrity of Armenia's electoral processes into serious question.
Democratic institutions in Armenia are still relatively young. While there have been many developments that suggest reforms are taking hold, a relatively weak judiciary, dominant executive, and inexperienced legislature require deeper reforms and high-level political commitment to democratization.
Impressive macroeconomic indicators suggest that Armenia's economic reforms continue to yield results. Strong economic growth in certain sectors, however, has yet to provide significant benefit to the vast majority of the country's population. Economic growth in rural Armenia has not materialized as quickly as growth in Yerevan, despite significant innovations in the country's agricultural sector. The U.S. shares concerns with international donors that poverty rates remain high in rural Armenia.
The ongoing conflict with Azerbaijan over the Nagorno-Karabakh region continues to dominate Armenia's foreign policy and places significant impediments on the country's long-term economic growth and social development. Closed borders with two of its neighbors and unpredictable transport costs for transit through Georgia and Iran complicate the flow of goods and people to and from Armenia. Energy independence remains a significant challenge and the Government of Armenia must face the reality of closing its aging nuclear power plant and finding safe alternative sources of energy.
Corruption remains a major problem at all levels and in all sectors of Armenian society. From law enforcement to regulatory bodies to healthcare, government officials are easily susceptible to corruption, adding to a general mistrust of government and exacerbating political apathy among many Armenians.
While the humanitarian crisis of the 1980s has passed, many Armenians still lack basic essentials such as adequate food, shelter, and access to good quality healthcare services. High unemployment rates exacerbate the lingering impacts of the 1988 earthquake and the economic dislocation that accompanied the collapse of the Soviet Union.
The education sector still presents significant challenges. Deterioration of physical infrastructure, inadequate teacher training and materials, stagnant curriculum development, low teacher salaries, and corruption are some of the issues that act as barriers to the quality and relevance of education at all levels, and to social and economic development in general.
COUNTRY PERFORMANCE MEASURES
Armenian Democratic Reform
The "radar" or "spider web" graphs below illustrate Armenia's democratic performance during 2004. Ratings are based on a 1 to 5 scale, with 5 representing the greatest advancement. These charts provide a disaggregated look at each of the indices and are reported to Congress on a regular basis. The gray shaded area represents 2004 performance levels, while the two dark lines indicate how each country compares in its progress vis-�-vis two standards: (1) the average of Romania's and Bulgaria's performance in each indicator as of 2002 (2002 was the year that Romania and Bulgaria - the "threshold countries" - were invited to join NATO and received favorable indications of future EU membership); and, (2) where the country stood in each indicator in 1999. Together, these charts provide a broad picture of where remaining gaps are in a country's performance, and to what extent these gaps are being filled. For more information, including a detailed explanation of each indicator shown in the graph, see USAID/E&E/PO, "Monitoring Country Progress in Central and Eastern Europe & Eurasia," No. 9 (April 2005), found online: www.usaid.gov/locations/europe_eurasia/country_progress/.
The graph shows
*Actual 2005 scores not yet available.
The graph shows
*Actual 2005 scores not yet available.
Armenian Economic Reform
The "radar" or "spider web" graphs below illustrate Armenia's economic performance during 2004. Ratings are based on a 1 to 5 scale, with 5 representing the greatest advancement. These charts provide a disaggregated look at each of the indices and are reported to Congress on a regular basis. The gray shaded area represents 2004 performance levels, while the two dark line indicates how each country compares in its progress vis-�-vis two standards: (1) the average of Romania's and Bulgaria's performance in each indicator as of 2002 (2002 was the year that Romania and Bulgaria - the "threshold countries" - were invited to join NATO and received favorable indications of future EU membership); and (2) where the country stood in each indicator in 1999. Together, these charts provide a broad picture of where remaining gaps are in a country's performance, and to what extent these gaps are being filled. For more information, including a detailed explanation of each indicator shown in the graph, see USAID/E&E/PO, "Monitoring Country Progress in Central and Eastern Europe & Eurasia," No. 9 (April 2005), found online: www.usaid.gov/locations/europe_eurasia/country_progress/.
The graph shows
*Actual 2005 scores not yet available.
The graph shows
*Actual 2005 scores not yet available.
FY 2005 Country Program Performance
Democratic Reform
During the past year, democratic reform in Armenia has progressed at an uneven pace. Overall, the political environment remains restrictive, particularly in light of the 2004 government crackdown against demonstrators and the seriously flawed November 2005 referendum that led to the ratification of constitutional amendments. While these amendments were designed to strengthen democracy, executive branch dominance of the political system continues to pose a significant challenge to Armenia's transition to democracy, resulting in reduced political and economic competition and providing little recourse for citizens to challenge the use of public office for personal gain. Political relationships between disorganized opposition parties and the ruling government can be characterized as less than cordial and, at times, hostile. Due largely to self-censorship, the media does not provide a dependable portrayal of the local situation. While there have been noticeable gains on several fronts, such as reforms in the National Assembly and a mandatory code of conduct for judges, impediments to democratic development remain systemic. While the GOAM has demonstrated tangible commitment to long-term institutional reform, considerable room for improvement remains. The country's anti-corruption strategy and action plan have yielded little evidence that the GOAM has the sufficient will or capacity to tackle the problem. Lack of transparency and accountability in the public sector has created an environment in which corruption flourishes and public confidence in democratic institutions suffers. Entrenched state bodies and business interests show little will or incentive to change the status quo. Corruption in Armenia includes bribery, illegitimate acquisition of assets, and clientism, as well as political corruption and conflicts of interest in the judicial and law enforcement sectors.
U.S. ASSISTANCE PRIORITIES
In FY 2005, USG democratic reform assistance focused on top-down and bottom-up programs designed to develop a more transparent, accountable and democratic government. USG assistance was designed to expand civic participation while strengthening governance at the local and national level. Programs targeted local governance, anti-corruption, legislative strengthening, rule of law, independent media, and civic participation. Assistance enhanced the ability of the National Assembly to perform economic and legal analysis, conduct constituent outreach, and expand its accessibility to the media and citizens. A full program of USG assistance to the judiciary focused on enhancing judicial independence. Civic participation programs emphasized women's participation and leadership. Academic exchange programs, professional exchange programs, support for educational reform (especially in the areas of civic education, curriculum development and teacher training), and small grants for non-governmental organizations (NGOs) continued to strengthen Armenian civil society.
PROGRAM PERFORMANCE
The U.S. Government's approach to democratic reform in Armenia has focused on overcoming challenges that stem from a strong executive branch and relatively unresponsive and inefficient governing institutions. In FY 2005, USG assistance sought to enhance the capacity of Armenians to participate in the decision-making process at both the local and national level. For example, the Civic Advocacy Support Program established two Armenian intermediate service organizations to provide technical services and grants to local NGOs. The program played an instrumental role in coordinating the civil society sector's response to a problematic draft law on lobbying. Additionally, a new community and youth activism project proved successful in implementing several small local advocacy and community projects. These projects were particularly effective in lobbying local government to improve access to potable water and institute regular trash collection.
Support for local government and decentralization included building administrative capacity through twelve pilot programs in municipalities outside Yerevan. These cities were provided with new computer systems designed to better manage budgets and track performance on service provision. Selected municipalities also received training on developing mechanisms for increasing communication between community councils, local officials, and citizens. Notice boards posted information on council meetings, public auctions, fee schedules and available employment while comment boxes were made available for anonymous comments and complaints about local government.
USG grants and technical assistance to advocacy NGOs continued to foster citizen participation at the grassroots level. The USG supported public awareness campaigns to address the societal costs of corruption and the shared responsibility for combating it.
Small grants to dozens of NGOs and independent media outlets in 2005 helped strengthen democratic institutions in Armenia and promote civil society. Democracy Commission grants addressed issues such as youth civic education, public awareness of proposed constitutional amendments, environmental and legal education, promotion of volunteerism, citizen participation in the local decision making process, integration of disabled into society, and support of regional cooperation and stability. Peace Corps projects focused on multi-sectoral capacity building in small cities and villages. Projects included infrastructure rehabilitation, public health and environmental awareness activities, educational resource and community centers, information technology strengthening, support for regional media, NGO capacity building and small business development.
In conjunction with efforts to improve governance and strengthen civil society, the USG is helping to bolster independent, self-sustaining media outlets. In FY 2005, an innovative program was launched to assist media outlets to utilize professional business practices, thus reducing their dependence on political sponsorship. The program provided loans as well as technical assistance to develop the business management capacity of media. It also created a ratings system that will allow media outlets to develop audience-based programming. Results include the establishment of a new national television network comprised of seven stations across the country, with two additional stations expected to join the network sometime during 2006.
Through the Armenia School Connectivity network, over 320 schools have been provided with computer classrooms and Internet connectivity, giving students, educators, and community members free access to outside information and computer training. In 2005, a mobile computer laboratory traveled from village to village in areas where there is no possibility for Internet connectivity. Exchange programs gave hundreds of Armenians a first-hand look at American democracy and civil society.
USG assistance also targeted judicial and legal reform by strengthening the lawyers' and judges' associations in Armenia, helping them become more responsive to member needs, and enhancing the ability of the bar and judiciary to act as an independent and impartial participant in, and commentator on, the legal reform process. One of the program's significant accomplishments was the development and adoption of a mandatory code of ethics for judges. The USG will expand its efforts in this sector in 2006. The planned arrival of a U.S. Department of Justice legal advisor will help the GOAM integrate programs that have an impact in multiple sectors so that efforts to assist the judiciary are focused and meet Armenia's needs in a targeted fashion.
Regrettably, the November 2005 constitutional referendum was marred by widespread fraud, underscoring the need for improvement in electoral administration. In late 2005, the USG unveiled a comprehensive program of electoral assistance designed to help increase transparency and efficiency in advance of the 2007 and 2008 parliamentary and presidential elections. These programs will include an overhaul of the nationwide voter registry, political party development, increased voter participation, improved systems for voter registration, increased provision of voter information, improved election administration, and the training of new skills in polling and election monitoring.
In order to ensure a strong collaborative effort at democratic reform in Armenia, the USG works closely with several other donors, including the World Bank's public sector modernization project, the Open Society Institute (OSI), the United Kingdom's Department for International Development (DFID), the European Union's TACIS Program for Armenia, and the United Nations Development Program (UNDP). The USG also actively participates in the Organization for Security and Cooperation in Europe (OSCE)-led international working group on elections.
MEASURES OF PROGRAM EFFECTIVENESS
In order to determine how U.S. Government assistance affects a country, U.S. embassies set targets for improvement called "performance indicators." Data for these indicators are collected by research institutes, embassies and international organizations. By examining data over time, U.S. policymakers better understand whether specific assistance programs are making their intended impact and, if necessary, how to adjust these programs to improve the impact.
Please find below two important indicators in the area of Democratic Reform. In the charts, the "Baseline" refers to a starting point from which to measure progress or regression over time. The embassy and its partner organizations then agree on a "Target" figure that they hope to achieve as a result of USG assistance programs. The "Actual" figure is the resulting measurement. "CY" stands for "calendar year," or January 1 to December 31, while "FY" stands for "fiscal year," the period of the U.S. budget that runs from October 1 to September 30 of the following year.
Performance Indicator: USAID NGO Sustainability Index. Seven different dimensions of the NGO sector are analyzed each year in the NGO Sustainability Index: legal environment, organizational capacity, financial viability, advocacy, service provision, NGO infrastructure, and public image. The NGO Sustainability Index uses a seven-point scale, to facilitate comparisons to the Freedom House indices, with 7 indicating a low or poor level of development and 1 indicating a very advanced NGO sector. The data upon which this ranking is based comes from the previous calendar year. Source: USAID, The 2004 NGO Sustainability Index for Central and Eastern Europe and Eurasia. Found online: www.usaid.gov/locations/europe_eurasia/dem_gov/ngoindex/2004/.
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CY 2002 Baseline |
CY 2004 Rank |
CY 2005 Target |
CY 2005 Rank |
|
4.4 |
4.1 |
3.7 |
4.09 (Yerevan Data) |
Despite some positive developments, Armenia's overall NGO Sustainability Index score for 2005 did not show marked improvement, in part because of the government's proposed draft law on lobbying. This bill, if adopted, would significantly curtail the ability of Armenian NGOs to operate and advocate for specific measures or causes. By the end of 2005, the National Assembly tabled the draft, partly in response to effective lobbying by local and international NGOs, many of whom the USG supported through civil society and other projects. USG assistance will continue to support a Youth Community Action Program that works with youth in village communities to form, activate and develop informal Youth Action Clubs (YACs) to increase the level and impact of civic activism among young men and women, a Civil Advocacy Support Program that builds the institutional capacity of NGOs and service organizations, and a USG-funded Eurasia Foundation grant-making program which supported NGO projects promoting increased citizen participation in the political and economic decision-making processes
Performance Indicator: Political Rights Index. Four different dimensions of political rights are analyzed each year in the Political Rights Index: electoral process; political pluralism and participation; functioning of government; and additional discretionary political rights issues. The Political Rights Index uses a seven-point scale, to facilitate comparisons to the Freedom House indices, with 7 indicating least free and 1 indicating most free. Source: Freedom House Annual Report Freedom in the World as adapted for "Monitoring Country Progress in Central and Eastern Europe & Eurasia," USAID/E&E/PO, No. 9 (April 2005). The data upon which this ranking is based comes from the previous calendar year. Found online: www.usaid.gov/locations/europe_eurasia/country_progress/.
|
CY 2002 Baseline |
CY 2004 Rank |
CY 2005 Target |
CY 2005 Rank |
|
4 |
5 |
3 |
5 |
Armenia's political rights index reflects no change from CY 2003 to CY 2004. Freedom House derived Armenia's 2005 Political Rights Index score from events in 2004, a year which included GOAM crackdowns against political protesters and reports of violence against journalists. USG assistance in FY 2005 worked to slow this trend by strengthening public participation and democratic processes.
Economic Reform
Armenia's economy continues to perform strongly, despite the challenges of closed borders with Turkey and Azerbaijan and high transportation costs for imported and exported goods. Double-digit growth, low inflation, declining poverty rates, and increased private sector credit were evidence of Armenia's economic progress in 2005. Real GDP grew by approximately 10 percent in 2004 and by approximately 13.5 percent in the first eleven months of 2005. The GOAM maintains the local currency, the dram, on a managed float. As important tradable sectors have become more productive in recent years, the dram's recent appreciation has not had a significant negative impact on Armenian exports. Economic growth in 2005 was lead by the construction and agricultural sectors, as well as by significant growth in the mining sector. Armenia continues to be import dependent, with the value of imports almost double that of exports ($1,351 million vs. $715 million, in 2004). Approximately 46 percent of exports are precious stones and metals, a sector which only employs approximately 12,000 people and pays little to no taxes.
U.S. ASSISTANCE PRIORITIES
FY 2005 USG assistance programs emphasized job creation, an improvement in the legal and regulatory environment, poverty reduction and income generation. Stimulating growth and competition in the private sector and increased public and private investment remained top priorities as well. Particular emphasis was given to the promotion of public-private partnerships, projects benefiting micro-, small- and medium-sized enterprises (MSMEs), and the development of agribusinesses. A new USG activity focused on the promotion of competitiveness of MSMEs in the Armenian economy through a "cluster development" approach. At the policy level, assistance targeted improvement of tax administration, bank supervision, and the development of investment-friendly commercial laws and economic regulations.
PROGRAM PERFORMANCE
USG assistance programs enabled numerous economic successes in 2005. Enterprises cooperating with USG programs registered multi-million dollar revenue growth and assistance greatly improved the financial situation and market reach of MSMEs.
The USG provided significant assistance to strengthen key regulatory agencies such as the State Committee for the Protection of Economic Competition (SCPEC) and the Public Services Regulatory Commission (PSRC). Thanks in part to USG-funded training, the SCPEC is now better able to safeguard the public's interest in promoting competition. For example, the committee took action against two major companies in 2005 for violating competition rules. Public confidence in the institution has increased as demonstrated by the fact that the 26 cases presented to the SCPEC exceeded the target of 20 for FY 2005.
USG assistance also supported the establishment of self-regulatory associations such as the Armenian Association of Accountants and Auditors (AAAA). The AAAA is well positioned to advocate for further implementation of International Financial Reporting Standards and International Accounting and Auditing Standards. As a result of USG assistance, the AAAA was able to join the International Federation of Accountants (IFAC), a highly respected organization of accounting associations from around the world.
In its efforts to promote private sector development in Armenia through support to MSMEs, the USG provided key firms with technical assistance to upgrade their marketing, management, financing, and production capabilities. In the marketing sector, for example, technical assistance was provided in product branding, packaging, advertising, and integrating marketing strategies within an overall business strategy. Assistance provided during FY 2005 resulted in increased access of Armenian MSMEs to finance, extended market opportunities, and further improvement of the business environment. MSME assistance programs resulted in the creation of over 5,000 full-time equivalent jobs and $17.35 million in sales.
The USG continued to devote significant attention and resources to the strengthening of Armenia's fragile financial sector. USG programs helped four microfinance institutions (MFIs) develop business plans that will lead them to financial sustainability. The USG organized a regional microfinance investors conference which attracted five major institutional investors and is likely to result in follow-on debt or equity financing. Regarding access to capital, the USG trained eight Armenian banks on documentary-based lending techniques (e.g. purchase order financing).
With respect to non-bank financing, the USG provided assistance in developing bond and private placement markets in Armenia to enhance product innovation at the Armenia Stock Exchange (ARMEX). As part of this effort, the USG and Cascade Credit signed a Development Credit Agreement in August 2005 to provide a partial guarantee for bonds to be issued by Cascade Credit. The bonds, which are scheduled to be issued in January 2006, will be available for secondary trading on the ARMEX. Funds obtained from issuance of the bond will be used for export promotion.
In FY 2005, the U.S. Department of Agriculture established the Caucasus Agricultural Development Initiative (CADI), which promoted agribusiness development, built trade and regulatory capacity, and supported market-based agricultural policy and institutions. Working with the GOAM, the CADI-Armenia project assisted farmers, agribusinesses and rural communities in producing, processing and marketing food and other farm-related products that will generate increased income for rural households and facilitate economic development of Armenia's rural sectors. USG programs helped local farmers and processors by enhancing the quality of goods and services produced. Consultants from U.S. Land-Grant Universities (on short- and long-term assignments) provided technical assistance to local Armenian farmers and processors together with specialists from other USG agencies. Through this program, the USG completed 124 local water projects that provide reliable sources of irrigation water in rural communities.
On energy issues, the USG played a key role in the development of Armenia's first long-term (2005-2025) comprehensive energy strategy. This process brought together all energy-related authorities to understand and commit to future joint actions. The strategy includes the decommissioning of the existing nuclear power plant by 2016 and the commissioning of a new one by 2017-2025. The USG also completed rehabilitation of the heating systems of 20 elementary schools and trained 16 energy service companies in the installation of energy efficient and sustainable heating solutions at orphanages, welfare centers and hospitals.
In its efforts to spur economic reform, the USG is collaborating with the Ministries of Agriculture, Health and Trade and Economic Development as well as the United Nations Food and Agricultural Organization (FAO), the World Bank, the Children of Armenia Foundation, the Armenian Development Agency (ADA), the UNDP, the International Monetary Fund (IMF), EU TACIS, and the European Bank for Reconstruction and Development (EBRD).
MEASURES OF PROGRAM EFFECTIVENESS
In order to determine how USG assistance affects a country, U.S. embassies set targets for improvement called "performance indicators." Data for these indicators are collected by research institutes, embassies and international organizations. By examining data over time, U.S. policymakers better understand whether specific assistance programs are making their intended impact and, if necessary, how to adjust these programs to improve the impact.
Please find below an important indicator in the area of Economic Reform. In the chart, the "Baseline" refers to a starting point from which to measure progress or regression over time. The embassy and its partner organizations then agree on a "Target" figure that they hope to achieve as a result of USG assistance programs. The "Actual" figure is the resulting measurement. "FY" stands for "fiscal year," the period of the U.S. budget that runs from October 1 - September 30 of the following year.
Performance Indicator: Days to Start a New Business This indicator, which is used by the Millennium Challenge Corporation (MCC) and addresses bureaucratic efficiency as well as transparent implementation of business regulation, provides a quick and cost effective way of gauging the ease of establishing a new business, a critical factor for continued economic growth. Improvements in this indicator, which is at 25 days in 2004, support broad-based growth on the macroeconomic level. Source: World Bank.
|
CY 2004 Baseline |
CY 2005 Target |
CY 2005 Rank |
|
25 |
23 |
25 |
Although this particular indicator has not changed in three years, Armenia's growth rate has maintained at a brisk pace and the World Bank's September 2005 release of its Doing Business report (from which this indicator is drawn) lauded the pace of Armenia's reforms.
Social Reform and Humanitarian Assistance
While the emphasis of USG assistance has shifted towards sustainable development programs in the last few years, humanitarian support still plays an important role in assistance efforts. Many Armenians still lack basic essentials such as adequate food, shelter, and access to good quality healthcare services. High unemployment rates exacerbate the lingering impacts of the 1988 earthquake and the economic dislocation that accompanied the collapse of the Soviet Union. A substantial portion of the country's rural population lives in poverty and cannot easily afford food, clothing, pharmaceuticals, or hygienic supplies.
Armenia's social reform activities have evolved since the 1990s. In the health sector, the GOAM Ministry of Health has pursued an ambitious primary healthcare (PHC) reform agenda designed to transform the country's vertical, overly specialized care system into integrated service delivery centers that rely on family medicine practitioners to diagnose and treat up to 80 percent of healthcare conditions. Reforms included open enrollment in which clients freely choose a provider instead of being assigned one, automated financial accounting systems, quality of care, clinical and management training, anti-corruption, and public health education. The GOAM's commitment to improved PHC is reflected in the increased proportion of state funds allocated to healthcare each year. The Ministry of Labor and Social Issues worked to reform outdated and nearly bankrupt social insurance programs by refining, through better targeting and means testing, the Poverty Family Benefits and other social welfare programs. Pension reform efforts were accelerated as evidenced by the formation of a Presidential Working Group on Pension Reform and the elaboration of a pension reform concept paper that proposed the adoption of a multi-pillar pension system for Armenia. Actuarial estimations were conducted for different reform scenarios and additional actuarial analyses are currently underway. The Government of Armenia will continue to discuss and widen the debate concerning different reform options in public fora, informing a comprehensive pension reform strategy expected to be completed around mid-2006. A Labor Inspectorate was created to address issues such as occupational safety and compliance and enforcement of payroll taxes. The GOAM drafted several laws related to social reform, including a law to facilitate greater involvement of NGOs in the provision of vital social services and a law protecting the rights of children and disabled persons living in state institutions. A new client-friendly model for the delivery of basic social services was developed and implemented in two of Armenia's ten regions.
Armenia's public education system continued its struggle to reverse the trend of more than a decade of deterioration that followed the collapse of the Soviet Union. Assistance by the World Bank and other donors has resulted in policy reform, upgrades of some infrastructure and resources, and other targeted improvements. The education sector still presents significant challenges. Deterioration of physical infrastructure, inadequate teacher training and materials, low teacher salaries, and corruption are some of the issues that act as barriers to the quality and relevance of education at all levels, and to social and economic development in general.
U.S.ASSISTANCE PRIORITIES
USG social reform programs sought to improve the country's social safety net and primary healthcare services by strengthening key national systems, while at the same time providing urgently needed services to the most vulnerable sectors of the population. Assistance programs employed a two-pronged strategy that simultaneously addressed long-term systemic reforms in social programs as well as urgent humanitarian needs.
PROGRAM PERFORMANCE
USG technical assistance, training and material support built institutional capacity to address PHC, social insurance, social assistance, and employment services. Direct USG humanitarian assistance included the rehabilitation of select social infrastructure such as schools and community centers, temporary job generation for the unemployed, soup kitchens for the indigent elderly, and support for orphans or abandoned children living in institutions. Other programs included the donation of medicine, pharmaceuticals, medical equipment, clothing, and school supplies to the neediest Armenians in the country's rural towns and villages. The USG is currently conducting a feasibility study to address future education sector programming in Armenia. The findings of the feasibility study are expected to be available by the beginning of the second quarter of 2006, and may result in a proposal to create new assistance programming in education.
The USG's social sector assistance programs complemented health and other social reform activities in Armenia. The USG's five-year flagship Armenian Social Transition Program (ASTP) ended in October 2005. During its final year of implementation, ASTP continued its successful collaboration with the Employment Services Agency, the Labor Inspectorate, the State Social Insurance Fund, the Nork Center for Information and Analysis, and other key government institutions in setting up legal, regulatory and operational frameworks to reform key social services and programs. ASTP provided intensive technical assistance and material to support GOAM efforts to institutionalize a nationwide social security card system for all citizens. As of September 2005, 81 percent of citizens had a social security card, the use of which allows for a high level of transparency, accountability and accuracy in the collection of contributions (taxes) and the payment of state benefits to citizens. During the year, ASTP worked with government officials to ensure that only the neediest Armenians receive state-financed poverty family benefits (PFB) and related assistance, with priority given to poor families with children. These two interventions reduced the overall number of people on welfare rolls (134,000 in 2004 vs. 128,000 in 2005) and continued to increase the number of poor families with children receiving PFB (in 2001, 54.4 percent of beneficiaries represented families with children; cf. 2002: 60.7 percent; 2003: 63.5 percent; 2004: 65.5 percent; and 2005: 69.2 percent).
USG grassroots community development included renovation of infrastructure through works initiated by local governments and/or communities, training for social workers, and assistance for the elderly and children in especially difficult circumstances. USG assistance provided daily meals and social-health services to over 8,300 elderly beneficiaries (representing one-third of the country's indigent elderly), trained 242 staffers in social work, and initiated six community partnerships for sustainable social service provision. Seven schools, six kindergartens, two health facilities, four special institutions, and two other public buildings were refurbished through USG programs.
The USG expanded a pilot PHC model to seven additional sites in 2005, raising the total to thirteen sites. The model included open enrollment, performance-based remuneration of providers, health information systems, and continuous quality improvement programs. This program led to the enrollment of 211,900 people, nearly 10 percent of the country's population.
Through a reproductive health (RH) and maternal and child health program, the USG established four new RH clinical training sites, increasing the total to six, and creating training opportunities for regional practitioners. The USG created a national training network that gave 257 nurses and midwives and 106 physicians instruction in key RH and PHC clinical competencies, which led to improved care for rural populations.
The Ministry of Health's commitment in developing a long-term national health policy, a comprehensive law on healthcare, which has been approved, and law on pharmaceuticals, which is currently in the National Assembly, is a testament to the wide-scale institutional changes occurring in PHC in Armenia. The USG, the World Health Organization (WHO) and the World Bank provided technical assistance and logistical support to the continued development of national health accounts in Armenia.
The USG also supported medical outreach teams improved access to basic health services by establishing revolving drug funds in 62 remote communities and provided over 37,400 PHC consultations to vulnerable rural populations. USG-supported programs renovated and provided equipment and supplies to 45 rural health posts and provided practitioners at these locations the means to perform basic procedures and diagnostic tests.
In its efforts in health and social reform, the USG has been working closely with the WHO, the UNDP, the World Bank, the Swedish International Development Authority (SIDA), the EU, the Japan International Cooperation Agency (JICA), and the United Nations Children's Fund (UNICEF).
Security, Regional Stability and Law Enforcement
Regional stability and security remain two of Armenia's greatest challenges. The OSCE Minsk Group process continued in 2005 with the ultimate goal of moving Armenia and Azerbaijan toward peaceful resolution of the conflict over Nagorno-Karabakh. Closed borders with Turkey and Azerbaijan, often undependable transportation corridors through Georgia and Iran, and energy dependence on countries like Russia continued to put Armenia in a tenuous position in 2005. Armenia registered some progress in its ability to control its borders and prevent the movement of illicit goods and people, but problems remained. The capacity of local law enforcement agencies to effectively combat crime according to international professional standards posed significant challenges. While the problem of corruption has negative effects on all sectors, corrupt practices continue to have notably damaging impacts in the area of law enforcement. Armenia supported the Global War on Terrorism by granting overflight rights and providing forces in support of ongoing operations. Armenia has also demonstrated a willingness to participate in selected international peacekeeping activities, including deploying a contingent to Iraq. In the U.S. State Department's 2005 Global Trafficking in Persons Report, Armenia was demoted to the Tier 2 watch list because it failed to effectively enforce anti-trafficking laws, implement the National Action Plan, and investigate allegations of government officials' complicity in trafficking.
U.S. ASSISTANCE PRIORITIES
In FY 2005, USG assistance strengthened Armenia's capacity to control its borders, prevent proliferation of weapons of mass destruction (WMD), train its law enforcement personnel, and combat trafficking in persons. Military-to-military assistance sought to improve the interoperability of Armenian forces in international peacekeeping operations, and to enhance communications and training capabilities. USG assistance improved the GOAM's ability to detect, deter and react to acts of terrorism, and encouraged the adoption of legislation to track, freeze and seize terrorist assets. USG assistance enabled former weapons scientists to conduct peaceful research with commercial, public health, and other social benefits. Specialized law enforcement assistance was provided at both the national and local levels. The Department of Energy (DOE)/National Nuclear Safety Administration (NNSA) provided equipment and training to assist the GOAM in radioactive source control and management. Finally, USG assistance strengthened Armenia's anti-trafficking legislative framework and provided victim assistance.
PROGRAM PERFORMANCE
Preventing the spread of WMD, as well as related expertise and delivery systems, remained one of the highest USG foreign policy and national security priorities for Armenia in FY 2005. The USG has been working with the GOAM to develop a strategy to address the need for strong export control laws and regulations, and in 2005 the USG supported the GOAM's efforts to implement regulations that bolster its recently passed export control law. The USG continued to provide specialized training and equipment for detection of WMD and related materials to customs, border guards, and investigators from the National Security Service. In FY 2005, inspection and detection training were areas of particular emphasis.
USG military assistance focused on increasing the interoperability of Armenian personnel, equipment, and systems with those of Euro-Atlantic forces, enhancing regional stability and fostering military cooperation between the United States and Armenia. The USG provided the Armenian Ministry of Defense with Foreign Military Financing (FMF) grants, which provide individual equipment for peacekeeping troops and develop a deployable, mobile medical capability that can be used in military operations as well as natural disasters. The USG also supported Armenia's increased participation in Partnership for Peace (PfP) activities. The USG continued to support Armenian involvement in the International Military Education and Training (IMET) Program, which funded professional military courses and English language training for Armenian military personnel in the United States. In addition, Armenian officers participated in programs at the George C. Marshall European Center for Strategic Studies focusing on civilian control of the military.
The GOAM committed to justice sector reform when it acceded to the Council of Europe in 2002. After more than five years of work, the GOAM adopted a new Criminal Code in April 2003, which entered into force in August 2003. As a result, for the first time terrorist acts are defined by law, and a number of offenses, such as trafficking in persons, are criminalized. The USG continued to provide criminal law reform assistance, concentrating on Criminal Code reform training for advocates, judges, prosecutors, and police, as well as, skills training for the defense bar. Nevertheless, Armenia still falls short of having a comprehensive legal framework to effectively combat serious crime. Armenia has not yet fully implemented a comprehensive anti-money laundering regime, and while mechanisms are in place to identify and freeze terrorist assets, laws directly addressing the issue of terrorist financing or fundraising need to be supported by concrete measures with full government support. A financial intelligence unit called the Financial Monitoring Center became operational with USG assistance in FY 2005. Additional USG assistance will be provided in FY 2006 to develop the full capacity of the Center. Armenia is currently a party to only nine of the twelve international counter-terrorism conventions. Assistance efforts in FY 2005 complemented policy initiatives to encourage Armenia's signing and ratification of the remaining three conventions.
The USG continues to provide assistance to increase Armenia's capacity to eliminate trafficking in persons. In addition to assistance to strengthen laws against trafficking, research the causes and extent of the problem, and support NGO assistance to victims, USG assistance focused on investigation and prosecution of traffickers, as well as more detailed monitoring of immigration and migration.
The USG also initiated renovations to the Police Induction Training Center and the buildings that will house an independent forensic laboratory. The second phase of renovations of the Border Guard Training Center also began in 2005. Evidence collection supplies and equipment were provided to the police to complement crime scene management training implemented by Glendale, California police. Computers were provided to the Juvenile Division of the Police and the Special Human Trafficking Unit of the Procuracy. Intellectual Properties Rights (IPR) Protection training was presented to the newly established Police IPR Enforcement Unit and officers from the regions. Armenia has signed international treaties on protection of copyright and passed the law on protection of IPR and Neighboring Rights bringing if further in-line with international community standards. Police and teachers continued to work together in Armenian public schools to inform students of their rights and responsibilities under the law and to break down barriers between the public and the police.
In FY 2005, USG assistance continued to promote nuclear reactor safety, establish emergency response procedures, and secure nuclear material against misuse. In the energy sector, the DOE is implementing joint projects with the Armenian Ministry of Energy to improve near-term safety at the Armenian Nuclear Power Plant (ANPP), and to provide support in emergency management. In addition the DOE provided technical and operational training to improve the capability of training plant operators.
USG assistance to former weapons scientists encourages their transition to sustainable peaceful research activities and their cooperation with partners throughout the Caucasus region. The forensic lab will begin full operations as renovations are completed and equipment and training for lab staff are provided. Physical techniques training equipment will be provided in FY 2006 to the Police Academy and Training Center to improve that training. Work will continue on the development of a law enforcement computer network to improve records collection and access as well as real-time communication. The USG pilot expansion of the Border Management Information System has been successful and will be expanded to other border crossings. Development of a nationwide computer network for the police will be completed in FY 2006.
MEASURES OF PROGRAM EFFECTIVENESS
In order to determine how USG assistance affects a country, U.S. embassies set targets for improvement called "performance indicators." Data for these indicators are collected by research institutes, embassies and international organizations. By examining data over time, U.S. policymakers better understand whether specific assistance programs are making their intended impact and, if necessary, how to adjust these programs to improve the impact.
Please find below an important indicator in the area of Security, Regional Stability and Law Enforcement. In the chart, the "Baseline" refers to a starting point from which to measure progress or regression over time. The embassy and its partner organizations then agree on a "Target" figure that they hope to achieve as a result of USG assistance programs. The "Actual" figure is the resulting measurement. "FY" stands for "fiscal year," the period of the U.S. budget that runs from October 1 - September 30 of the following year.
Performance Indicator: Rule of Law - Constitutional, Legislative, and Judicial Framework Rating. Source: Freedom House. The Rule of Law rating highlights constitutional reform, human rights protections, criminal code reform, judicial independence, the status of ethnic minority rights, guarantees of equality before the law, treatment of suspects and prisoners, and compliance with judicial decisions. (7=lowest, 1=highest) Source: Freedom House Nations in Transit. The data upon which this ranking is based comes from the previous calendar year. Found online: www.freedomhouse.org/research/nattransit.htm.
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CY 1999 Baseline |
CY 2004 Rank |
CY 2005 Target |
CY 2005 Rank |
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5.0 |
5.0 |
5.0 |
5.0 |
The USG-funded ABA/CEELI Criminal Law Reform Program worked to guarantee equality before the law by strengthening advocates and the defense bar in Armenia. That program also works to reform the Criminal Code, particularly in the areas of anti-money laundering and bail reform.
Click for FY 2005 Funds Budgeted for U.S. Government Assistance to Armenia [PDF format]
