U.S. Department of State

The graph shows Moldova's democratic reform scores in 2004* (the gray shaded area) as compared to its democratic reform scores in 1999.  For example, the scores for this sector indicate that Moldova has regressed as compared to 1999.

*Actual 2005 scores not yet available.

Moldovan Economic Reform

The "radar" or "spider web" graphs below illustrate Moldova'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 Moldova's economic reform scores in 2004* (the gray shaded area) as compared to the average of Romania's and Bulgaria's economic reform scores in 2002 (the bold line) when they were invited to join NATO and received favorable indications of future EU membership.

*Actual 2005 scores not yet available.

The graph shows Moldova's economic reform scores in 2004* (the gray shaded area) as compared to its economic reform scores in 1999. For example, compared to 1999, Moldova's economic sector shows progress in four of the six indicators.

*Actual 2005 scores not yet available.

FY 2005 Country Program Performance

Democratic Reform

In the 15 years since independence, Moldova has made significant progress in establishing state institutions to manage the transition from Communism to democracy. Despite some reversion to old habits, successive governments have been elected in elections generally recognized to be free and fair. Moldova's transition has been difficult and uneven, however, and support for reform within the population is not unanimous. The political system is heavily centralized, a situation exacerbated by the fact that the Communist Party of President Vladimir Voronin has held an absolute majority in the unicameral parliament since 2001. Government is not fully transparent or accountable; corruption is endemic, and the judicial system is ineffective. In addition, Moldova is the western-most European country with a secessionist-controlled territory within its borders—an unresolved conflict that poses a major challenge to Moldovan statehood and the country's political and economic evolution.

U.S. ASSISTANCE PRIORITIES

In FY 2005, USG assistance in the area of democratic reform focused on promoting the conditions for free and fair parliamentary elections and helping Moldova to meet its commitments under its EU Action Plan and qualify for Millennium Challenge Account grants. Assistance priorities included: encouraging the development of broad-based democratic political parties; promoting the development of independent and objective media; developing the capacity of civil society institutions (particularly in the area of electoral law and election monitoring); advancing the rule of law by informing citizens of their legal rights and responsibilities; increasing the capacity of the legal system by improving the knowledge of judges, lawyers, and other legal professionals; and working with local governments to introduce community strategic planning and financial management techniques, improve services, and increase transparency and citizen participation.

PROGRAM PERFORMANCE

A major focus for USG assistance to Moldova was the March 2005 parliamentary elections. Nationwide local elections held in May 2003 had been a significant departure from Moldova's record of free and fair elections, and the USG had serious concerns that the parliamentary elections would be a continuation of this negative trend. USG assistance, focused in the areas of electoral administration, support for objective media, civic involvement, political party strengthening and election monitoring, totaled approximately $1.7 million. Projects included direct funding of local NGOs to monitor election administration and media coverage; study tours and exchange programs for politicians, election commission members, journalists, and NGO representatives; and development training for political parties. International coordination on this issue was exemplary, with regular coordination meetings held at both Ambassadorial and working levels.

The Strengthening Democratic Political Activism (SDPA) program, drawing on the expertise of the National Democratic Institute (NDI) and the International Republican Institute (IRI), provided technical assistance and facilitation in the organizational development of mainstream political parties including a coalition of centrist parties. Along with the Eurasia Foundation, SDPA provided training, technical assistance and grant support for Coalition 2005, the NGO coalition for free and fair elections. Coalition 2005 NGOs monitored local media coverage and other issues in the electoral process, made public reports on shortcomings and advocated for corrective action. On election day, the Coalition conducted independent election monitoring throughout the country. Rule of Law Program also provided election law seminars and roundtables for lawyers, media, and Central Election Commission members, as well as an international seminar on election monitoring. The "Election Day Lawyer" project trained and deployed 40 lawyers to every court of first instance in Moldova to handle requests for pro bono representation of citizens with complaints of electoral fraud or infringements.

Through the Embassy's Democracy Commission Small Grants program, the USG funded election-related assistance as well as projects to increase engagement of the new Parliament with civil society. Projects to monitor parliamentary performance and introduce public hearings to the decision-making process show particular promise. The projects funded through the Democracy Commission have been coordinated with other donors so as to be complementary. The United Nations Development Program (UNDP) has a major project working with the Moldovan parliament on procedures.

During FY 2005, the SDPA also began a joint effort to support reform of the Communist Party and its organizational structure in order to bring it more in line with the principles of Western social democracy. The program involves a series of exchanges with the leadership of the Lithuanian Social Democratic Party, under the leadership of Prime Minister (and former Soviet-era Lithuanian Communist Party Chairman) Algirdas Brazauskis. NDI and IRI also began a joint effort to support reform in the Moldovan Parliament by sponsoring a series of exchanges between senior staff of the parliaments of Lithuania and Latvia and the senior staff and leadership of the Moldovan Parliament.

At the local level, USAID's Citizen Participation (CPP) and Local Government Reform (LGRP) programs are successfully and tangibly reinventing the relationship between local governments and their constituent communities. CPP is building social capital and engaging citizens in associative and independent action to solve shared community problems. LGRP has introduced community strategic planning, measurably improved local government financial management, and implemented projects that have improved the quality and reliability of basic municipal utility services while increasing transparency and citizen participation in more than 91 communities.

In 2005 continuing pro-government bias in news coverage by the formerly state-owned broadcaster, Teleradio Moldova, was an area of concern. Monitoring by an international consortium showed conclusively that Teleradio's bias continued regardless of the fact that the broadcaster had been converted into a public corporation. The international consortium also monitored all media and trained journalists during the election period. After the election, the USG began implementation of a four-month project which has embedded a media consultant/trainer in the Teleradio Moldova TV news department. Initial results show increased professionalism among journalists and a more active watchdog role. However, it is increasingly clear that until senior GOM officials understand the role of the media in a functioning democracy and are willing to relinquish control over editorial policy, improvements to journalists' skills will not have a measurable impact on the quality of coverage of government activities.

Donor coordination in the democracy sector was very good, particularly on media issues and the election. The OSCE, EU, and individual European embassies were active. Western embassies coordinated particularly closely during the run-up to the parliamentary elections, using joint statements and demarches to press the GOM to address shortcomings. USG assistance in this sector is due to be phased out in 2011.

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 U.S. assistance programs. The "Rank" 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: Civil Society Rating. This indicator was drawn from Freedom House, Nations in Transit 2004 as modified by, "Monitoring Country Progress in Eastern Europe and Eurasia" USAID/E&E/PO, #9 January 6, 2005. (1=lowest, 5=highest; ranking based on 2004 data). Freedom House measures progress towards democratic freedoms by assessing a series of questions in six categories: electoral process; civil society; independent media; governance and public administration; rule of law; and, corruption. Progress towards each category is rated on a seven-category scale, 1 representing the most advanced and 7 the least advanced. In the MCP system, these scores are reversed and re-scaled to range from 1 to 5, with 5 being the most advanced. The Civil Society rating assess the growth of nongovernmental organizations (NGOs), their organizational capacity and financial sustainability, and the legal and political environment in which they function; the development of free trade unions; and interest group participation in the policy process. This ranking is based on 2004 data. Found online: www.usaid.gov/locations/europe_eurasia/country_progress/index.html.

USG assistance continued to enhance the capacity of Moldovan civil society in FY 2005, although the centralized nature of the Moldovan state and the one-party majority in parliament remained barriers to fuller civic participation. The Democracy Commission and SDPA supported Coalition 2005 and its constituent NGOs in performing invaluable service during the election campaign and have remained engaged. The same programs are building bridges between the new Parliament and civil society groups. Exchange programs supported NGOs in several sectors, while USAID's CPP and LGRP strengthened grassroots civil society by mobilizing citizens to engage with their elected representatives to identify and solve problems at the local level.

Performance Indicator: Electoral Process Rating. This indicator is drawn from Freedom House, Nations in Transit 2004 as modified by, "Monitoring Country Progress in Eastern Europe and Eurasia" USAID/E&E/PO, #9 January 6, 2005. (1-lowest, 5-highest). This ranking is based on 2004 data. Found online: www.usaid.gov/locations/europe_eurasia/country_progress/index.html.

Economic Reform

Moldova is, by most measures, the poorest country in Europe. GDP per capita is $860. Nearly 50 percent of Moldovan Gross Domestic Product (GDP), 40 percent of employment, and 65 percent of exports are related to agriculture and agribusiness. Since independence, an estimated 600,000 Moldovans (around 15 percent of the population) have left the country, most through illegal migration. Their remittances, estimated at well over $600 million per year, help maintain growth in an otherwise stagnant economy. Real GDP grew an estimated 7 percent in 2005.

Government interference in the economy continues to be a major concern. Despite significant achievements in regulatory reform, problems with the rule of law, transparency, corruption, and red tape discourage foreign investment. Moldova is heavily dependent on Russia and other former Soviet states as trading partners and sources of energy. Most of Moldova's heavy industry is located in the breakaway Transnistria region. Overall, progress is evident in the development of a market economy, but the private sector is not yet sufficiently dynamic or internationally competitive in many areas.

U.S. ASSISTANCE PRIORITIES

USG-funded economic programs in Moldova focused on creating jobs and economic opportunities through the development of small and medium-sized enterprises (SMEs), improving the investment climate by identifying and removing barriers to business, encouraging the consolidation of land holdings through market-driven mechanisms, assisting the Moldovan agribusiness sector in applying new technologies that can significantly increase the value and sales of Moldovan farm produce, and helping Moldova integrate its economy into the European and global system by increasing its competitiveness in international markets.

PROGRAM PERFORMANCE

Although it remains the poorest country in Europe, Moldova will record its sixth consecutive year of GDP growth in 2005, with year-end real GDP growth predicted at 7 percent. However, growth is largely and increasingly driven by remittances from Moldovans working abroad. The flow of foreign currency into Moldova results in an overvalued Moldovan leu, hurting exports and increasing demand for imported consumer goods. Inflation is estimated to be between 10 percent and 12 percent in 2005. Moldova's external debt in 2005 remained at the 2004 figure of $1.9 billion, but economic growth meant that debt as a percentage of GDP fell from 74 percent to 63 percent. Moldova became a member of the World Trade Organization in 2001. In 2003, the IMF suspended its Poverty Reduction and Growth Facility for Moldova, and the World Bank stopped its SAC-III program. The IMF is now "cautiously optimistic" about the prospects for resuming a program, and began discussions with the GOM on this in December 2005.

Agriculture and food processing are the most important economic sectors in Moldova. Although nearly 50 percent of GDP is related to agriculture and agricultural landowners represent more than a quarter of the population, the vast majority of rural residents are below the poverty level. During FY 2005, the USG-funded Agribusiness Development Project (ADP) introduced new technologies and processes which have significantly increased the sales and value of farm produce. ADP increased rural incomes and employment by improving the export competitiveness of Moldova's high-value agricultural sector. Specifically, ADP awarded 22 matching grants totaling $1.2 million, which leveraged over $2.5 million in investments by local partners. More grants are in the approval process. In order to design an effective grant program based on a sound understanding of Moldovan High Value Agriculture (HVA), ADP studied relevant issues including: infrastructure needs, market diversification, new varieties, modern technologies, etc. A technical assistance program is ongoing, with one international and four domestic study tours completed thus far. ADP conducted four company-specific market studies, identifying constraints and opportunities for Moldovan fresh tomatoes, table grapes, and strawberries in the Russian market, as well as for dried prunes in the German retail market. Four publications addressing key HVA production and value-adding technologies were developed and distributed to growers and academic networks. ADP's Policy Reform Unit is providing technical assistance to Moldova's Ministry of Agriculture (MOA) in adopting successful models from Central and Eastern European countries and developing a website for the MOA to facilitate communication.

Preliminary estimates indicate that there will be a significant increase in annual growth in the agriculture and agribusiness sector for the fourth consecutive year since the completion of USG-assisted agricultural land privatization. In 2004, the Moldovan agricultural sector registered a significant growth of 20.4 percent as compared to 2003 levels. Data for 2005 is not yet available as of the date of this report. In FY 2005, the Private Farmer Assistance Program (PFAP) completed its activities, leaving a legacy of 15 sustainable Agricultural Producers' Associations, a network of 28 Business Centers, and the Republican Union of Agricultural Producers' Associations.

In FY 2005, the Land Privatization Support Program (LPSP) focused on two major tasks: to correct survey and other errors that occurred during the initial land privatization and to provide information and assistance to agricultural land owners with land transactions. With LPSP assistance and training, over one million parcels have been reviewed, confirming 102,000 errors. Eighty percent of the survey work necessary to correct those errors has been completed. As of the second quarter of 2005, LPSP provided direct assistance to 36,000 landowners in private land transactions and provided guidance and counseling to an additional 51,000 landowners. LPSP also provided assistance in the successful completion of 12 market-based private land consolidations involving 1,700 landowners. In July 2005, LPSP, in collaboration with the MOA, organized the National Conference on Agriculture Land Consolidation to prepare and implement a National Land Consolidation Program based on private property and market principles, to establish a favorable investment environment, to promote the development of mortgage lending, and to expand the application of modern agricultural technologies. Over 200 participants attended the conference, including the President of Moldova.

In private enterprise development, USG assistance focused on expanding the role of small and medium enterprises (SMEs) in the Moldovan economy, and on improving the investment climate by identifying and removing barriers to business. During FY 2005, USAID's BIZPRO/Moldova project assisted the Ministry of Economy and Trade (MOE) in developing and implementing a "Guillotine Law," a powerful new tool to cut ambiguous, repetitive, and ineffective business regulations which encumber investment and enterprise development. The new law cancelled 99 regulations; reduced the number of required authorizations, permits, and certificates from over 400 to 129; and eliminated related fees on all but 49 certificates. A further 285 regulations were reserved for amendment or cancellation by the end of CY 2005.

This major initiative was supplemented by a MOE public awareness campaign calling for action to support reform at the grassroots level. The campaign included a series of motivational billboards and a full suite of information tools that showed how citizens, entrepreneurs, and public officials can get involved to support regulatory reform. Endorsed by the GOM and USG, the campaign conveyed a strong message that businesses are now operating in a new, more supportive, legal and regulatory environment. In part as a result of the success of such efforts, in November 2005 the Millennium Challenge Corporation offered Moldova Threshold Status.

The BIZPRO project also facilitated the successful introduction of innovative financial products such as domestic factoring, which assists SMEs in supplying products to major wholesale buyers such as the Metro Group, and equipment leasing, which is likely to result in the first investment by an international banking group in Moldova in a joint venture with a progressive Moldovan domestic bank. BIZPRO also made a notable contribution to the establishment of Moldova's first credit bureau, scheduled to open in January 2006.

Through USAID's Micro and Small Enterprise Development (MSED) and Development Credit Authority (DCA) Loan Portfolio Guarantee (LPG) projects, the USG helped the Moldovan banking sector to increase its lending activity to SMEs and agriculture entrepreneurs. More than 1,000 credits were granted to SME and agriculture entrepreneurs, totaling more than $17 million. According to the findings of the 2004 LPG Impact Assessment, the Moldova Guarantee program reached the target group and had a positive impact, mitigating lenders' perceptions of borrower's risk and establishing a sustainable bridge between financial sector institutions and SMEs and agriculture entrepreneurs. Sixty-eight percent of surveyed micro-enterprises and SMEs reported increases in their annual sales. With support from USAID's DCA LPG, Moldova Agroindbank developed a new program targeted at start-up SMEs and agriculture businesses. The bank is also hoping to actively attract youth into this program.

The Agribusiness Development Program (ADP), and the new Competitiveness Enhancement and Enterprise Development (CEED) Program, awarded in September 2005, represent the second generation of USAID Private Enterprise Growth assistance. These new programs will help Moldova integrate its economy more closely into the global economy by increasing its competitiveness in international markets.

Donor coordination in the economic sphere is good and is carried out through monthly meetings of the entire donor community (including representatives of Western embassies, the OSCE, UN agencies, international financial institutions and numerous NGOs) as well as through ad hoc meetings on specific topics. USG assistance in this sector is due to be phased out in 2011.

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 Economic 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 U.S. assistance programs. The "Percentage" 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: Agricultural Gross Output: Percent Change in Real Terms. Source: European Bank for Reconstruction and Development Transition Report 2004.

2005 data is not yet available for this indicator, but a significant increase was recorded in 2004. USG assistance, particularly the Agribusiness Development Project, helped the Moldovan agribusiness sector develop processes and apply new technologies which have significantly increased the value and sales of Moldovan farm produce. The Private Farmer Assistance Program completed its activities in FY 2005, leaving a legacy of 15 sustainable Agricultural Producers' Associations, a network of 28 Business Centers, and the Republican Union of Agricultural Producers' Associations.

Performance Indicator: Private Sector Share of GDP - In Percent. Source: European Bank for Reconstruction and Development Transition Report 2005.

USG assistance to Moldova in developing the private sector focuses on expanding the role of small and medium enterprises in the Moldovan economy; improving the investment climate, assisting the Moldovan agribusiness sector to increase the value and sales of Moldovan farm produce, and helping Moldova increase its competitiveness in international markets. The contributions of the ADP and PFAP programs in the agricultural sector are discussed above. The BIZPRO program facilitated the successful introduction of innovative financial products and supported the drafting and implementation of the "Guillotine Law" to cut unnecessary and obsolete business regulations that encumber investment and enterprise development.

Social Reform and Humanitarian Assistance

As the poorest country in Europe, Moldova requires assistance to move toward a European standard of living for its people. Weaknesses in health care are of particular concern in view of the potential for the spread of illnesses such as HIV/AIDS, hepatitis, and tuberculosis. The National AIDS Center estimates that the actual number of people living with HIV/AIDS could be as high as 7,400. The Moldovan Center for Preventive Medicine reports that 3,300-3,800 people die annually of chronic hepatitis and hepatic cirrhosis, with an additional 200-220 annual deaths as a result of hepatic cancer. More than 53,000 cases of chronic hepatitis and chronic cirrhosis were registered, with approximately 6,000 new cases of chronic hepatitis registered annually. The National Tuberculosis Institute noted that 2,553 new cases of tuberculosis were reported in Moldova during the first eight months of 2005, compared to 2,141 cases reported in the first eight months of 2004.

Due to large-scale emigration of working-age Moldovans, around 20,000 children have been left behind—either abandoned altogether or left with relatives (often elderly) who may not be able to care for them properly. Approximately 11,500 Moldovan children are institutionalized. Children leaving orphanages or state boarding schools ("internats") are at heightened risk of falling victim to poverty, drug abuse and trafficking in persons.

U.S. ASSISTANCE PRIORITIES

USG assistance in the social sector in FY 2005 focused on strengthening tuberculosis control, preventing the transmission of priority infectious diseases such as HIV/AIDS and Hepatitis B and C, and reducing trafficking in persons. USG anti-trafficking initiatives supported prevention through public awareness and information campaigns; assistance to potential and actual victims of trafficking through legal consultations, crisis prevention services, psychological rehabilitation and training programs in job skills and entrepreneurship; supporting communities in providing safe supervised learning and living environments for returning victims; and providing state boarding school or orphanage graduates access to life-skills, job and employment training, health services, counseling and work experience. USG-funded humanitarian assistance primarily provided renovation and refurbishment of critical infrastructure (hospitals, orphanages, etc.) and transportation of medical equipment and supplies, clothing, food, and emergency shelter items for the neediest populations in Moldova.

PROGRAM PERFORMANCE

USG interventions in the health sector were closely coordinated with the Global Fund and the Moldovan Ministry of Health. To combat tuberculosis (TB), the USG supported the implementation of the World Health Organization (WHO)-recommended Directly Observed Treatment Short-Course (DOTS) strategy for TB diagnosis, treatment, and care procedures. Proposed interventions for preventing the transmission of HIV/AIDS and hepatitis B and C were designed in collaboration with other donors and the Moldovan Ministry of Health.

During FY 2005, USG assistance enabled the renovation of Moldova's National Tuberculosis Reference Laboratory and three regional reference laboratories to support the nationwide implementation of DOTS and ensure that laboratory services and quality control procedures meet international standards. A facility was also renovated for multi-drug resistant (MDR) services in preparation for DOTS+ introduction to combat MDR TB.

During FY 2005, the USG's New Perspectives for Women program completed the establishment of five Regional Resource Centers around Moldova that provide comprehensive prevention and reintegration assistance to vulnerable girls and young women, particularly in remote rural areas. One national and five regional mobile outreach teams have also been established. The Better Opportunities for Youth and Women in Moldova program, part of President Bush's $50 million anti-trafficking initiative, completed the construction design of the first five buildings in which Social Reintegration Centers will be located. Rehabilitation work began on the first two Centers, in Ungheni and Carpineni.

In FY 2005, USG assistance implemented by the U.S. Department of Agriculture (USDA) provided approximately $4.6 million in food assistance to Moldova from the sale of approximately 5,320 metric tons of food commodities under the McGovern-Dole International Food for Education and Child Nutrition Program. Food was then distributed to approximately 200,000 schoolchildren in over 2,300 schools - one of the highest penetration rates for this program anywhere in the world. Carryover from FY04 for the discontinued Food for Progress Program was approximately $200,000 and was used to assist mid-sized farms which have limited access to capital, rather than as humanitarian food distribution. A food safety program was funded with $50,000 from the USDA Trade Issues Resolution Fund.

In FY 2005, the USG provided $4.1 million in humanitarian assistance to Moldova, including one airlift of medicines and surface delivery of 35 containers of medical equipment and supplies, clothing, food, and emergency shelter items. While the total value of these humanitarian commodities was over $4 million, the transportation/operation cost to the USG was just $410,000. These programs served the most needy and vulnerable populations throughout Moldova.

In FY 2005, the USG initiated a joint USG-GOM renovation of the Moldovan Republican Burn Treatment Center in Chisinau, the sole facility in the country dedicated to the treatment of severe burn victims. Renovation of the dilapidated and obsolete facility began on August 1. Other USG programs included an effort with the North Carolina National Guard to administer inoculations against Hepatitis A and provide dental fluoride applications to over three thousand Moldovan school children across the country.

Donor coordination on social and humanitarian needs is good and is carried out through monthly meetings of the entire donor community (including representatives of Western embassies, the OSCE, UN agencies, international financial institutions and numerous NGOs) as well as through ad hoc meetings on specific topics. USG assistance in this sector is due to be phased out in 2013.

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 having 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 Social Reform and Humanitarian Assistance. 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 U.S. assistance programs. The "Number" 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: Tuberculosis Incidence per 100,000. Number of newly diagnosed tuberculosis cases, all forms during the given calendar year. Source: World Health Organization, European Health For All Database, Found online: www.data.euro.who.int/hfadb/

2005 data is not yet available for this indicator. In the initial phase of assistance, higher numbers reflect better capacity for diagnosis. The USG-funded "Strengthening Tuberculosis Control Program" worked with the Ministry of Health and coordinated with other donors the provision of a specific set of measures to strengthen TB control, including renovation of one national and three regional TB laboratories as well as the multi-drug resistant (MDR) TB unit in Chisinau, and training of laboratory staff; development of software for a national electronic surveillance system and limited supply of computer equipment; training of more than 900 primary health care professionals; and awareness campaigns for the general public. In acknowledgement of increased its capacity to diagnose and treat TB, Moldova recently received approval from the Green Light Committee for a DOTS-Plus pilot project to treat MDR-TB. This allows Moldova to purchase, at prices below market rates, the second-line drugs needed to treat MDR-TB.

Performance Indicator: Primary Education Attendance (Net, as Percent of Relevant Population). Source: UNICEF.

Security, Regional Stability and Law Enforcement

Moldova has a small military that is not capable of meeting the basic defense needs of the country but does have some useful niche capabilities such as de-mining. The country faces a well-armed, Russian-backed secessionist movement that controls most of the territory east of the Dniester River. Despite Russia's commitment at the 1999 OSCE Istanbul Summit to withdraw its troops and munitions from Moldovan territory by the end of 2002 (a deadline extended to the end of 2003 but still unmet), no Russian arms were removed from Transnistria in 2005. Moldova is committed to European integration and is pursuing closer relations with the EU, NATO and other regional and sub-regional organizations such as SECI (Southeast European Cooperative Initiative) and the GUAM group (Georgia, Ukraine, Azerbaijan, Moldova).

Law enforcement agencies, like the judicial system as a whole, are generally ineffective and suffer from low pay and endemic corruption. Moldova is a major source country for victims of trafficking in persons, primarily for sexual exploitation but also for labor. The International Organization for Migration (IOM) estimates that every year approximately 10,000 women go abroad in search of work. Although no official statistics exist, IOM estimates that the majority of women trafficked come from rural areas. Most of them are between 15 and 30 years old; more than 10 percent are under the age of 18, and some are as young as 12.

U.S. ASSISTANCE PRIORITIES

In FY 2005, USG security assistance was focused on promoting Moldova's territorial integrity, fighting transnational crime by strengthening Moldovan law enforcement and border security, and redirecting weapons-of-mass-destruction (WMD)-related expertise towards sustainable peaceful research. In the law enforcement arena, the USG focused on enhancing Moldova's institutional capacity to combat corruption and trafficking in persons. These efforts included agreement to create a Center for Combating Trafficking in Persons as well as legislative drafting assistance, training and equipment donations, which improved Moldovan capabilities and will eventually help reduce reliance on foreign assistance.

PROGRAM PERFORMANCE

The Government of Moldova has developed a program to restructure and modernize its military forces; however, progress is slow due to chronic under-funding of the defense budget which is used primarily to pay salaries and maintain a large, deteriorating infrastructure. Despite these severe resource constraints, Moldova is a reliable and valuable defense partner and an active member of the Partnership for Peace. In 2005 the Government of Moldova requested an Individual Partnership Action Plan (IPAP) with NATO. U.S.-trained MOD personnel will participate in drafting the IPAP. In 2005 President Voronin agreed to send a third contingent of soldiers to Iraq, to be attached to a U.S. Army unit. Moldova has developed a fledgling Peacekeeping Battalion and is focusing its efforts to train and equip these forces with the goal of participating in United Nations and other international peacekeeping missions. USG-funded security assistance programs focused on helping Moldova to develop its peacekeeping capabilities along with other targeted military capabilities to facilitate the interoperability of Moldovan forces with Western forces.

Moldova received $446K in Foreign Military Financing (FMF) for FY 2005. This represented an overall allocation decrease of some $544K from FY 2004. Still, the Moldovan military made good use of the FMF allocation by requesting tactical communications equipment and barrier materials for peacekeeping training and deployment. United States European Command (EUCOM) is scheduled to conduct a Command, Control, Communications, Computers and Intelligence (C4I) assessment in early 2006. The assessment should provide a good indication of the Moldovan Armed Forces' capabilities with respect to C4I and afford the USG a better understanding of Moldovan needs. Moldova also received a one-time Coalition Solidarity Fund (CSF) grant of $1 million in recognition of its contribution to Coalition forces in Iraq. The MOD's request for communications equipment ($500,000) and automation equipment ($500,000) is pending the results of the upcoming EUCOM C4I assessment.

The International Military Education and Training (IMET) program plays an extremely important role in the professional development and education of Moldovan military personnel. The officers and enlisted soldiers that attend training in the United States are typically highly motivated and eager to improve their knowledge of the English language and western military concepts and methodologies. IMET-trained officers are normally assigned to positions of increased responsibility and influence within the various military organizations following their return from training. However, current indicators suggest that some returning officers are not being utilized to their maximum potential. Still, retention rates remain high: 89 percent. In FY 2005, 36 Moldovan officers trained in the United States and 35 more were educated and familiarized through Military Education Team (MET) visits to Moldova.

Transnistria remains a source of and transit point for contraband. A significant portion of USG assistance under the Export Control and Related Border Security (EXBS) assistance program was again used to monitor Transnistria. EXBS provided training and equipment (including specially-outfitted vans) to create 22 mobile inspection stations to monitor more closely the movement of contraband through the Transnistria region. USG support and World Bank assistance for the Trade and Transportation Facilitation in Southeast Europe (TTFSE) program enabled the Customs Service to complete implementation of the Automated System for Customs Data (ASYCUDA), resulting in a revenue increase of 36 percent in 2005 on top of a similar increase in 2004. USG assistance also enabled Moldovan officials to participate in meetings of regional groups including SECI, GUAM and the Stability Pact for Southeastern Europe.

Moldova's law enforcement and judicial institutions are plagued by low salaries, insufficient training and equipment, and widespread corruption. In FY 2005, the USG continued direct assistance to Moldovan law enforcement agencies in the form of training, protective equipment, computers and vehicles. The U.S. Department of Justice (DOJ) Resident Legal Advisor (RLA) continued to work closely with the Prosecutor General and the Center for Combating Economic Crimes and Corruption (CCECC) on anti-corruption initiatives. In 2003 there were 13 convictions for corruption crimes in Moldova; in 2004 there were 54, and in 2005 there were 152. Moldova's score on Transparency International's Corruption Perceptions Index improved significantly in 2005.

Moldova remains a source nation for trafficked persons and the USG is engaged on a number of fronts to assist the GOM in its fight against this problem. These include social interventions aimed at prevention and reintegration (discussed in the preceding section) and law enforcement efforts. In the latter category, USG efforts focused on establishing a dedicated Center for Combating Trafficking in Persons and ensuring the passage of a new and improved law against trafficking. An FBI Special Agent worked directly with the police anti-trafficking unit and provided training and equipment. The USG also provided victim/witness assistance through a grant to the Center for the Prevention of Trafficking in Women (CPTW) and support for legislative and legal reform through the efforts of the RLA and the American Bar Association (ABA/CEELI). At least partly as a result of these efforts, convictions for trafficking offenses increased from 34 in 2003 to 95 in 2004, with a further 56 convictions through the first eight months of 2005.

Looking to the future, USG law enforcement assistance initiatives will retain their focus on anti-trafficking and increase activity in the anti-corruption sphere. Mission anti-terrorism efforts will focus on enhancing Moldovan capabilities to combat terrorist financing and continuing the participation of Moldovan security officers at select Anti-Terrorism Assistance (ATA) courses to improve host nation anti-terrorist capabilities and increase regional cooperation.

Donor coordination on anti-trafficking efforts is close and regular, although various donors have different priorities. Donor coordination on other law enforcement issues is adequate, but could be improved; the Embassy has set this as an objective for 2006, particularly in regard to anti-corruption programs. USG law enforcement assistance is due to be phased out in 2013.

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 Security, Regional Stability and Law Enforcement. 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 U.S. assistance programs. The "Rank" 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: Corruption Perceptions Index. This indicator measures how experts view the state of corruption in a country. Because Transparency International uses a country ranking chart, we have used the raw score to better evaluate change. The CPI score relates to perceptions of the degree of corruption as seen by business people and country analysts and ranges between 10 (highly clean) and 0 (highly corrupt). Source: Transparency International This ranking is based on 2004 data. Found online: www.globalcorruptionreport.org/index.html.

In FY 2005 USG assistance increasingly targeted the culture of corruption. Support for regulatory reform, including the "guillotine law," improved the business climate and reduced opportunities for corruption. The DOJ Resident Legal Advisor worked closely with the Center for Combating Economic Crime and Corruption and the Office of the Prosecutor General to increase their capabilities and improve legislation. The Embassy's EXBS/Customs Advisor helped the Customs Service implement the ASYCUDA program and internal measures to reduce corruption. These efforts have begun to bear fruit although the problem remains acute. A Millennium Challenge Account Threshold Program anticipated in 2006 will target corruption.

Performance Indicator: Global Trafficking in Persons Report Country Rankings. Tier 1 countries are those whose governments fully comply with the minimum standards of the Trafficking Victims Protection Act of 2000. Tier 2 countries are those whose governments do not fully comply with the Act's minimum standards but are making significant efforts to bring themselves into compliance with those standards. Tier 3 countries are those countries whose governments do not fully comply with the minimum standards and are not making significant efforts to do so. Source: U.S. State Department Global Trafficking in Persons Annual Report. This ranking is based on 2004 data. Found online: www.state.gov/j/tip/rls/tiprpt/.

Trafficking will not be eradicated as long as many Moldovans remain impoverished. However, USG programs have helped to reduce the incidence of this crime. INL-funded training and equipment have enhanced law enforcement capabilities. An FBI special agent, the DOJ Resident Legal Advisor and the EXBS/Customs advisor, in addition to State Department officers, have worked with all relevant GOM agencies to increase attention to trafficking. Funds from President Bush's Anti-Trafficking Initiative and Freedom Support Act funds through USAID have been used to provide social support and better economic opportunities for vulnerable women and youths, thus helping them avoid victimization. A Center for Combating Trafficking in Persons will be opened in 2006.

Click for FY 2005 Funds Budgeted for U.S. Government Assistance to Moldova [PDF format]