U.S. Department of State

The graph shows Romania's economic reform scores in 2004* (the gray shaded area) as compared to its economic reform scores in 1999. For example, Romania has made progress in five of the six areas with the greatest in Private Sector Share and GDP as % 1989 GDP.

*Actual 2005 scores not yet available.

FY 2005 Country Program Performance

Democratic Reform

The 2005 Comprehensive Monitoring Report on Romania issued by the European Commission in October 2005, states that although there have been some democratic reforms in the past year regarding the independence of the judiciary, the Government of Romania (GOR) still needs to combat corruption, reform public administration, and implement key judicial reforms. USG-funded programs directly address several key challenges to democratic reform highlighted in the report.

The elections in November 2004 were pivotal for the further development of democracy in Romania. Despite more diverse political representation and a new government that took steps to become more inclusive of civil society, it remains to be seen whether the 2004 election cycle will usher in an era in which political institutions are more responsive to the citizenry. To consolidate the democratic gains and achieve EU membership as scheduled for 2007, Romania must still overcome numerous obstacles including organizational shortcomings in political parties, a relative lack of politically active civic groups, a robust systems of patronage, weak systems for government transparency and accountability, and a lack of capacity of local government. Newly elected officials continue to wrestle with legislation on judicial independence and other anti-corruption measures designed to ensure the country's accession.

Despite some irregularities, the 2004 elections were deemed fair and transparent. A more informed and invigorated electorate went to the polls to vote for reform. The victory of the "Justice and Truth" coalition ushered in new hopes for more rapid reform. The new president and cabinet pledged to root out corruption and promote bold judicial reforms. Despite some successes in both of those areas, confidence in democracy is still being hindered by corruption, high levels of poverty, and a lack of accountability in government. Judicial independence and integrity have improved but remain problematic, fueling public cynicism toward democratic institutions and discouraging some investors. Civil society, particularly civic watchdog organizations, lack sufficient resources and the organizational capacity to influence public policy or opinion. Responsibilities for services continue to be devolved to local governments without adequate federal funding.

Civil society has made important gains in recent years, but lacks the means to be self-sustaining over time. In particular, the long-term prospect for civic watch-dog groups, which have few opportunities to receive public or private funding, is not assured. While there are advocacy and service delivery groups that might occasionally assume watchdog or whistleblower functions for issues within their own sector, the number of organizations whose primary purpose is monitoring and advocating transparency is quite small. These groups face a number of challenges: they are less likely to receive government funding; less likely to be able to fundraise locally; and less likely to develop a strong membership. Additionally, corporate philanthropy, while growing steadily, is still more the exception than the rule in Romania.

U.S. ASSISTANCE PRIORITIES

To address these issues, USG assistance builds on successful projects in advocacy and citizen participation, civic education, political party strengthening, decentralization, social service delivery, alternative dispute resolution, judicial reform, parliamentary strengthening, assistance to the Romanian Office of the President and media education. All of these activities help increase citizen participation in local decisions and improve the responsiveness of local and national politicians.

USG democracy programs promote the rights of ethnic minorities, particularly the Hungarian and Roma communities, and help to ensure that the lessons of the Holocaust are not forgotten. USG programs also press for expanded opportunities for Romanian youth through active civic involvement. With the American Chamber of Commerce, the United States fosters corporate philanthropy to create a "culture of giving" and volunteerism, while at the same time encouraging companies to become more involved in solving local community problems. USG programs also address the legal framework pertaining to domestic violence and victim assistance, helping to improve a serious problem in Romania.

PROGRAM PERFORMANCE

President Traian Basescu faces significant challenges to furthering his agenda, which includes attaining EU membership, combating corruption, reforming the judiciary, improving governance, fostering social cohesion, and developing a sense of civic pride among citizens. U.S. advisors have been providing technical guidance and training to key members of the president's staff since July 2005. So far, USG assistance helped address organizational challenges in the Office of the President and improve the office's internal and external communication.

As most of Romania's political actors concentrated on the national elections, the USG expanded a program to increase interaction between local civic groups and party representatives during the pre-election and post-election periods in order to bring Romanian citizens into political processes. Party branch staff in 18 cities received nonpartisan training in managing electoral campaigns, developing coalitions, preparing candidate lists, and using polling data. USG assistance helped 45 candidates and five parties develop platforms that reflected the interests of both party members and constituents. Following the elections, the USG worked with political parties to improve their communication strategies with 16 local branches and to strengthen their constituent offices throughout the country.

With USG support, more than 20 non-governmental organizations (NGOs) identified community issues, built organizational capacity to address those issues, planned civic action campaigns, implemented campaign activities, and monitored national elections. Civic groups promoted public awareness about community issues including domestic violence and more transparent local budgeting. While the level of development varies across regions and among civic organizations, 16 civic partners implemented civic action campaigns to increase political participation among citizens, hold elected officials accountable for their election promises, and educate citizens and political leaders about political processes. As a result of a study of NGOs and the laws that govern them, funded by the Democracy Commission Small Grants (DCSG) program, all participating NGOs lobbied for cancellation of an ordinance that was undemocratic and too restrictive of their rights of free association. Their efforts were rewarded when the Chamber of Deputies voted to cancel the restrictive ordinance.

The Embassy administered two small grants related to the Holocaust in Romania. The first produced a history manual that was accredited by the Ministry of Education for use in high schools. The second project produced a film documenting the plight of the Roma during the Holocaust in Romania. This film is being distributed countrywide to teachers who must teach about the Holocaust in Romania. In the remote provincial town of Dej in Cluj County a small grant funded a series of interactive radio talk shows on human rights and provided an opportunity for Dej residents to raise their civic issues.

The newly-elected government has pledged its commitment to an independent media. The media continues to suffer from self censorship and intimidation from major business interests. USG public diplomacy programs emphasized the need for a responsible, professional media that functions as a check on government. In particular, small grants strengthen civic watchdog groups like the Center for Independent Journalists, the Center for Investigative Journalism and the Media Monitoring Agency.

As the Embassy plans for the phase out of SEED assistance and to establish a legacy in democratic reform, the mission redesigned local government assistance to focus on niche areas to maximize sustainable impact. During the summer of 2005, the new Cabinet began revising laws affecting the organization and function of local governments. For the first time in several years, the central government showed genuine interest in consulting with local government representatives on key legislative reforms. The USG facilitated this dialogue, while providing technical expertise. As a result of this series of technical consultations, the legislative framework that concerns all Romanian local governments was significantly improved. USG assistance in this area was effectively coordinated with the World Bank, as both donors share the same agenda of improving local governance and service delivery. The Embassy also funded a project that produced a code of ethics for public officials and organized public debates to introduce the code in nine counties. The final outcome was a highly public contribution to the fight against corruption in public administration.

One of the most significant assistance programs has established civics education in Romania. The project staff developed a basic civics curriculum for 11^th graders and trained teachers. The GOR has expressed interest in seeing the pilot course expanded throughout elementary and high schools, making it a required course for high school students. USG funding also supported the newly created Association of Civic Education Teachers.

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 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. "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: Media Sustainability Index 2005. The MSI assesses five "objectives" in shaping a successful media system: free speech; professional journalism; plurality of news sources; business management; supporting institutions. The MSI uses a four-point scale, with a 0-1 range indicating unsustainable, anti-free press, a 1-2 range indicating an unsustainable mixed system, a 2-3 range indicating near sustainability, and a 3-4 range indicating a sustainable, free media environment. Source: USAID/IREX, Media Sustainability Index 2005. CY 2005 rank based on data collected in CY 2005. Found online: www.irex.org/msi/index.asp.

Overall, the MSI panel concluded that the general situation for the media improved during 2005. New legislation and regulations in line with international standards governing public broadcasting have been adopted. The newly-elected government has pledged its commitment to an independent media. The media continues to suffer from self censorship and intimidation from major business interests. USG public diplomacy programs emphasized the need for a responsible, professional media that functions as a check on government. USG small grants strengthen civic watchdog groups like the Center for Independent Journalists, the Center for Investigative Journalism and the Media Monitoring Agency.

Performance Indicator: NGO Sustainability Index 2004. 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. Source: 2004 NGO Sustainability Index for Central and Eastern Europe and Eurasia. Found online: www.usaid.gov/locations/europe_eurasia/dem_gov/ngoindex/2004/.

Overall, the NGO Sustainability score improved slightly in 2004. The improvement is due in part to increased NGO advocacy and lobbying initiatives, as well as changes in the legal environment that may lead to greater financial stability of the NGO sector. In addition, NGOs helped shape public opinion by organizing debates and campaigns on issues concerning the 2004 elections and EU accession. USG support helped build civic organizational capacity to implement civic action campaigns that increase political participation among citizens, hold elected officials accountable, and educate citizens and political leaders about political processes. As a result of a study of NGOs and the laws that govern them, funded by the Democracy Commission Small Grants (DCSG) program, all participating NGOs lobbied for cancellation of an ordinance that was undemocratic and too restrictive of their rights of free association. Their efforts were rewarded when the Chamber of Deputies voted to cancel the restrictive ordinance.

Economic Reform

Since mid-2000, Romania has made key fiscal and monetary policy reforms that have had significant impact in improving its macroeconomic stability. Key indicators include: The economy has completed six years of solid growth, with around 4 percent growth expected in 2005; The annual inflation rate has dropped from a high of 40 percent in 2000 to an estimated 9 percent in 2005; Foreign currency reserves at the National Bank had increased to $19.5 billion by October 2005; Privatization of major portions of the energy industry took place in 2004 and continued in 2005.

Improvements in macroeconomic performance and growth over the past four years have contributed to a decline in poverty. However, in 2004, one in four Romanians still lived below the poverty line (those who cannot afford to buy food providing the equivalent of 2,550 calories/adult/day: FAO/OMS/UN Expert Group on Nutrition, 1985). Poverty in rural regions remains significantly higher, with four persons in ten living in poverty. Approximately 30 percent of the labor force is engaged in agriculture, most in small plot subsistence farming. Per capita GDP reached $3,400 in 2004, only one-third the EU average. Romania's ability to withstand competitive pressures after EU accession remains a concern.

The share of GDP generated by private businesses is still relatively low, at 71 percent of GDP, at the end of 2004, compared with an average of 76 percent of GDP for other countries in the region. Romania must continue to expand its market-based economy to provide meaningful jobs and reduce poverty.

Corruption, red tape, high labor taxes, and an uneven playing field limit both domestic and international investment. By August 2005, Romania had attracted $14.6 billion in foreign direct investment (FDI) since 1990. However, at about $700 per person, FDI is the lowest in the region, compared with approximately $1,400 in Bulgaria and $5,500 in Hungary. This low level of investment places Romania at a disadvantage in terms of its future development. Improving the business climate is essential to making the economy more competitive. Sustaining or increasing the economic growth of the past five years is a challenge that Romania must meet in order to reduce the high poverty rate and to increase the public's faith in the political and economic choices made in recent years.

U.S. ASSISTANCE PRIORITIES

Privatization of the Romanian economy is in its final stages. Economic reforms must prepare Romania for accession to the EU 2007, or 2008 if accession is delayed. Romania will have to increase its competitiveness if it is to prosper in a broader EU market. The key to competitiveness will be the GOR's ability to administer its judicial and regulatory systems so that a free market develops naturally, free of undue government red tape and corruption. Also important is the government's capacity to ensure proper fiscal oversight of complex EU-funded programs. The GOR must also maintain proper fiscal discipline to avoid economic imbalances.

PROGRAM PERFORMANCE

USG assistance programs addressed specifically three aspects of economic reform: improving economic policy and the business environment; increasing the competitiveness of the private sector; and improving the sustainable management of natural resources and conserving biodiversity. The USG is pushing for a better business climate, one with less red tape and corruption, and more legislative consultation and predictability. As investment, both local and foreign, accelerated in FY 2005, USG assistance continued to support the introduction of mortgage-backed securities and mortgage bonds, and the improvement of company listings and corporate governance rules for the stock exchanges. Anti-money-laundering and other fraud-detecting measures at the National Securities Commission, Prosecutor's Office, and the National Bank of Romania improved with USG assistance.

New financial instruments were developed to provide long-term capital and encourage new companies to list shares, issue bonds, and trade debt instruments. Business associations, chambers of commerce, and government agencies improved their services for small businesses. Micro-lending services were provided in 27 of 41 counties. Additional capital funds for micro-lending in these counties were leveraged from the GOR and the World Bank. In agriculture, USG-funded programs focused on improving the competitiveness of agri-businesses, increasing trade with the United States, and improving food sanitation standards.

In FY 2005, USG-funded programs assisted the business community to defeat many proposed negative changes in the Fiscal Code, including amendments that would have cost businesses at least $12 million each year. The microfinance law legitimized microfinance activities while saving borrowers more than $200,000 per year. The law has helped to increase lending to micro and small enterprises by non-bank, community financial institutions.

U.S. advisors helped to jumpstart the reform of Romania's chronically under-funded pension system. Their guidance to the "Pension Task Force" resulted in the completion of the Voluntary Private Pension Law, which the GOR approved in 2005 and will present to the Parliament in 2006. This advisor program also contributed to the successful appointment of an independent Private Pension Regulator who will supervise private pension funds in Romania.

Under another USG-funded activity, a training toolkit was introduced and distributed to central and local governments, with the aim of improving public servants' computer skills and their organizations' services to companies and citizens. With USG funding, the Ministry of Information Technology created a virtual regional network to share e-government best practices across ten countries in the region.

USG programs have contributed to the development of food safety regulations and practices that meet EU requirements. Advisors worked with the Romanian National Authority for Sanitary, Veterinary, and Food Safety to reform its management structure and improve its monitoring the sanitary and veterinary practices of various industries. They also helped an organization of meat, dairy, and fruit and vegetable processors, and designed a coherent strategy for them to meet food safety standards. This assistance provided an environment that enabled the USG to work quickly and effectively with officials upon the first outbreak of H5N1 avian influenza in Romania.

U.S. advisors continue to strengthen the energy sector's regulatory bodies. Market liberalization in 2004 exceeded targets and reached 83 percent for electricity and 50 percent for gas. At the same time, the USG provided assistance for the privatization of Romania's biggest energy complex in Turceni.

The USG continued to expand its small business loan program, bringing to 27 (out of 41) the number of counties where loans are available. This year 2,045 loans, totaling more than $10.5 million, have helped to create more than 575 jobs and retain another 8,375 jobs. U.S. advisors facilitated the financing of 20 agribusiness projects totaling $3.6 million for new farm equipment, bee-keeping operations, rural tourism, and produce processing. Through a partnership with the Romanian Orthodox Church, USG assistance supported the wide dissemination of credit information in villages. To date, this program has facilitated loans totaling $10.8 million.

A USG-funded tourism project for the Maramures region resulted in a 40 percent increase of tourists in guesthouses (B&Bs) in 2005 over 2004, well above the national average of 14 percent for non-hotel accommodation. The total days spent in Maramures B&Bs, by foreign visitors, increased by 34 percent, while the figure for Romania as a whole dropped by 3.4 percent.

A project to develop model Initial Public Offerings (IPOs) helped Romanian companies raise capital on the stock exchange. The first pilot IPO was successful with a leading computer and electronics retailer raising $15 million on the exchange. Eleven e-government and e-business pilot projects started under this program successfully leveraged $1.2 million from private companies and from local governments, and developed successful models for replication nationwide.

In agriculture, twenty meat processing companies met international food safety and sanitary-veterinary requirements. Ten of the firms implemented Hazard Analysis and Critical Control Point plans and are cleared to export to the United States and the EU. Additionally, the USG supported promotional and marketing activities that have lead to increased linkages between Romanian producers and international retailers. U.S. advisors also helped to establish the first Romanian biotech farmers association with linkages to American suppliers of genetically modified (GMO) seed, and assisted the GOR to advance EU approval for GMO soybean planting before 2007.

USG programs continued to enhance the GOR's capacity to manage floods, droughts, and accidental spills, and to manage water resources in a sustainable manner. The GOR's plan for the first phase of the integrated water management program, amounting to approximately $60 million, was developed with USG assistance, and is being circulated for clearance by responsible ministries. A Mayor's Manual on Environmental Management was included in the flood preparedness documents adopted by joint order of the Ministries of Environment and Water Management, and of Administration and Interior.

Following implementation of USG-funded Environmental Management Systems (EMS) and Pollution Prevention (P2) pilot programs, five Romanian companies reported more than $1.4 million in annual savings, thus becoming more viable, while reducing their pollution and improving their compliance with the new environmental standards.

MEASURES OF ECONOMIC 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 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" that they hope to achieve as a result of USG assistance programs. "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: GDP Real Growth Rate. GDP growth on an annual basis adjusted for inflation and expressed as a percent. Source: CIA World Fact Book 2005. Found online:
www.cia.gov/cia/publications/factbook.

As the indicator above shows, the GDP growth for 2005 is estimated at 5.2 percent. Foreign investment inflows have outpaced GDP growth, but foreign investment per capita remains below regional average. Privatization was virtually completed except for energy, mining, and transportation and banking privatization is nearing completion. Romania completed pre-accession negotiations with the EU and signed the Accession Treaty. Ratification by the EU-25 Member States is underway. Most recent figures show a steady decline in the poverty rate. Number of small businesses continues to grow. Mortgage lending rises. GOR shows little interest in establishing a Council of Economic Advisors. Overall, USG assistance has contributed Romania's GDP real growth rate. For example, the USG continued to expand its small business loan program, bringing to 27 (out of 41) the number of counties where loans are available. This year 2,045 loans, totaling more than $10.5 million, have helped to create more than 575 jobs and retain another 8,375 jobs. U.S. advisors facilitated the financing of 20 agribusiness projects totaling $3.6 million for new farm equipment, bee-keeping operations, rural tourism, and produce processing. Through a partnership with the Romanian Orthodox Church, USG assistance supported the wide dissemination of credit information in villages. To date, this program has facilitated loans totaling $10.8 million.

Performance Indicator: Private Sector Share in GDP (in per cent). Private sector share in GDP represents rough EBRD estimates, based on available statistics from both official and unofficial sources. The underlying concept of private sector value-added includes income generated by the activity of private registered companies, as well as by the private entities engaged in informal activity in those cases where reliable information on informal activity is available. Source: European Bank for Reconstruction and Development (EBRD), Transition Report 2005. The data that make up this indicator are as of September 2005. Found online: www.ebrd.com.

As indicated above, since 2004 the private share of GDP remains at a steady 70 percent. USG assistance programs specifically addressed three aspects of economic reform: improving economic policy and the business environment; increasing the competitiveness of the private sector; and improving the sustainable management of natural resources and conserving biodiversity. The USG is pushing for a better business climate - one with less red tape and corruption, and more legislative consultation and predictability. As investment, both local and foreign, accelerated in FY 2005, USG assistance continued to support the introduction of mortgage-backed securities and mortgage bonds, and the improvement of company listings and corporate governance rules for the stock exchanges. Anti-money-laundering and other fraud-detecting measures at the National Securities Commission, Prosecutor's Office, and the National Bank of Romania improved with USG assistance.

Social Reform and Humanitarian Assistance

The health and child welfare situation in Romania remains challenging. Infant mortality, under-five mortality, and maternal mortality are among the highest in Europe. The infant mortality rate of 16.8 deaths per 1000 live births is 25 percent higher than the Eastern European average, and four times the Western European average. Although the abortion rate is declining steadily, the number of abortions almost equaled the number of live births in 2004. Also, as recently as 2003, nearly half of all maternal deaths were from complications following abortions. In the early 1990s, Romania had the largest number of pediatric AIDS cases in Europe. Now more than 8,000 of these children are teenagers living with HIV/AIDS. Although Romania has low HIV/AIDS prevalence, without a sustained prevention program, the rate may accelerate as these adolescents become sexually active.

Romania's commitment to family planning and reproductive health reform increased steadily in recent years. The Ministry of Health's (MOH) allocation for contraceptives has risen from $100,000 in 2001 to more than $1 million in 2004 and 2005. Romania has made significant progress reforming its child welfare system, but during 2005, reform slowed and regressed in some areas. The child welfare and adoption law, enacted on January 1, 2005, included positive reforms such as the increased responsibility of families and communities for their children, planning for permanent placement of children in families, and a system for reporting and intervention for child abuse and neglect. However, most professionals argue that the legislation is too ambitious for Romania at this stage. International adoption of Romanian children was virtually eliminated, while domestic adoption has become more difficult, due to new legislative requirements. Changes in the management of county welfare services, coupled with the complex package of laws, have slowed the progress of reform. Thousands of children remain in temporary institutional arrangements, their cases stalled by bureaucratic procedures.

Beginning in late April and continuing into September 2005, heavy rains caused severe localized flooding in 38 of 41 counties. Total damage is estimated at over $2 billion. Farming areas suffered the worst damage with several counties experiencing multiple floods that affected both the spring cereal planting and the winter cereal planting season for the spring 2006 harvest. The floods destroyed or severely damaged thousands of houses and many community facilities. The GOR responded effectively and mobilized local authorities, agencies and the Romanian Orthodox Church to provide assistance. Then, in October, the Avian Flu virus (H5N1 strain) was found in domestic birds in the Danube Delta. These disasters required the GOR to reallocate its limited resources for expensive and unplanned activities such as vaccines, emergency medicines, water purification, and health education. Romania spent $6 million in October 2005 to isolate communities and protect people in areas with Avian Flu outbreaks.

U.S. ASSISTANCE PRIORITIES

U.S. social and humanitarian assistance programs seek to increase the use of modern family planning methods; reduce the transmission and impact of HIV/AIDS; reform the child welfare system; strengthen child welfare NGOs; and provide emergency and disaster preparedness assistance.

PROGRAM PERFORMANCE

The 2004 National Reproductive Health Survey contains some encouraging findings regarding contraceptive prevalence and abortion in Romania. The modern contraceptive prevalence rate increased from 14 percent in 1993 to 38 percent in 2004. During the same period, the lifetime abortion rate has dropped from 3.2 per woman in 1993 to 0.8 per woman in 2004. Data from a USG-funded program monitoring system shows that free or low cost contraceptives increased in 2005, but their use fell short of the 2005 target because of lower than expected distribution of contraceptives through social marketing channels.

Under a family planning project, 1,075 family doctors received family planning training in FY 2005, bringing the total of trained doctors to more than 4,000. Another group of nearly 500 physicians received prenatal care and/or cervical cancer detection training. Fifteen Roma health trainers-of-trainers were trained in reproductive health practices, and plans for the extension of the family planning program to 100 Roma communities were completed.

Based on data from the national child welfare monitoring and tracking information system, which was developed with USG assistance, there are 21,200 children in state-run institutions in Romania as of October 2005, a 20 percent decline since August 2004. The number of children in the tracking system receiving county services has decreased by 30 percent, from 78,000 to 60,000. This decrease is the result of the application of new legislation that requires children to be moved from county services to local service providers (where they are not included in the national tracking system). This has created a undesirable situation where the National Authority for Child Protection does not have a system to track all children in need of care and protection.

Standards for the child welfare services drafted with USG assistance and legislated by the GOR are currently being disseminated and implemented country-wide. A key achievement of the program is that the legislation calls for the permanent placement of children in families. During FY 2005, USG-funded activities continued to assist 50 NGOs to expand their existing community, child welfare services. Nearly 4,300 additional children and their families received direct support from USG programs since 2004. This direct assistance supported services that reunited children with their families, prevented new separations, provided rehabilitation services to disabled children, day care, and domestic adoption. Increasingly, these services are being taken over by the county and local child welfare departments. In FY 2005, the GOR committed to having, by 2008, 40 percent of all child welfare services provided by NGOs under contracts with local governments. USG advisors are helping to draft legislation that will allow local councils to contract with NGOs for social services, starting in January 2006.

Through a grant to the Special Olympics, the USG has been promoting the social integration of the mentally disabled. USG-sponsored programs also assisted the NGO Federation and the development of the social work profession. The Federation of Social Workers created a National College of Social Workers to ensure that professional standards of social work are maintained in Romania. The Community Consultative Boards (CCB) that empowered communities to take more responsibility for their children and other disadvantaged community members, were piloted successfully in two counties, with plan to expand these programs to all counties.

The USG was the first donor to respond to the disastrous floods in Western Romania in April 2005, by immediately releasing $50,000 to an NGO partner and reprogramming more than $700,000 of existing program funds for emergency supplies and assistance. When floods continued through the summer and spread across 38 of 41 counties, the Embassy obtained additional USG assistance through SEED and Office of Foreign Disaster Assistance funds and emergency supplies from European Command of the U.S. Army in Germany, bringing our total commitment to $5.7 million. All the additional funds were obligated to NGO partners already in Romania who provided assistance within the framework of their existing programs.

This response to the floods has been closely coordinated with national and local authorities and agencies to ensure impact and help to build local capacity to respond to similar emergencies. The early focus of USG assistance was on emergency commodities, food, bedding, temporary shelter, water purification, crop seeds for summer planting, and public health campaigns stressing safe health practices. As the "disaster season" wore on, assistance activities shifted to rebuilding destroyed houses and repairing severely damaged houses, providing loans for repairing damaged community schools and clinics and micro-loans to rehabilitate small businesses, and technical assistance to local agencies to strengthen their disaster preparedness.

In addition to the emergency assistance described above, the USG also provided, through its regular annual excess property, commodities such as, clothing, bedding, furniture, generators, and medical supplies to two NGOs. The supplies were valued at $1.25 million. The NGOs supervised the distribution of the items to homes for children and the elderly, health clinics, and local community projects

MEASURES OF HEALTH AND SOCIAL WELFARE 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 Social Reform and Humanitarian Assistance. 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" that they hope to achieve as a result of USG assistance programs. The "FY" stands for "fiscal year," the period of the U.S. budget that runs from October 1 - September 30 of the following year.

Performance Indicators: Indicators taken from the USAID Annual Report for FY2005.

Targets partially achieved. The Couple Years of Protection (CYP) provided through free and subsidized contraceptives are 10 percent lower than the target because of the decreased number of condoms distributed through social marketing channels. However the sale of contraceptives through private pharmacies (not monitored by the USG program directly) continued to increase and compensated for the decline through social marketing outlets. As mentioned in the report above, the modern contraceptive prevalence rate increased from 14 percent in 1993 to 38 percent in 2004. During the same period, the lifetime abortion rate has dropped from 3.2 per woman in 1993 to 0.8 per woman in 2004. Data from a USG-funded program monitoring system shows that free or low cost contraceptives increased in 2005, but their use fell short of the 2005 target because of lower than expected distribution of contraceptives through social marketing channels.

Security, Regional Stability and Law Enforcement

Romania's strategic location in the Black Sea region and in the Balkans, and its NATO membership make it a vital U.S. ally. Romania is an active partner for stability in the Balkans, with troops serving in Kosovo and Bosnia. It plays a key role in the global war on terrorism and its troops serve side-by-side with U.S. forces in Iraq and Afghanistan. In December 2005, Secretary of State Condoleezza Rice signed, with the Romanian Foreign Minister, an agreement that provides access for U.S. forces to a number of Romanian military facilities. Use of these facilities will help U.S. forces deploy more rapidly to confront 21st century security challenges and will provide enhanced training opportunities in the region for U.S., Romanian and other forces.

U.S. ASSISTANCE PRIORITIES

The USG is helping to restructure Romania's military and to develop their C-130 airlift and other "niche" capabilities that contribute to NATO's evolving new missions. GOR relations with neighboring states, particularly those along NATO's new frontier to the north and east, are improving. Apart from resolving outstanding disputes, improved relations will lead to increased success against cross-border criminal activity.

The USG is providing training and equipment to improve law enforcement and intergovernmental cooperation in the areas of cyber-crime investigations, prevention of human trafficking, and counter narcotics investigations. Cyber and drug crimes are the most significant trans-border problems facing Romania. The General Inspectorate of Romanian Police is embarking on a management training program for the Romanian National Police to decentralize the decision making process.

America's border security interests require that Romania strengthen its anti-terrorism capabilities. The USG must continue to fund the Southeast European Cooperative Initiative Regional Center for Combating Trans-border Crime (SECI Centre) in Bucharest, which focuses on improving coordination among law enforcement agencies both within Romania, and also among member states, to fight cyber crime, trafficking in humans, conventional weapons, and weapons of mass destruction.

To fight corruption, USG assistance supported Romanian institutions in drafting new laws that expand and clarify public financial disclosure requirements. USG-funded rule of law programs supported judicial independence and integrity, focusing on strengthening the Superior Council of Magistrates (SCM). In addition, the program helped improve the legal framework pertaining to domestic violence and victim assistance. An Alternate Dispute Resolution program provided the overburdened court system with an accepted legal alternative.

PROGRAM PERFORMANCE

USG assistance helped the GOR to implement military reforms to improve Romanian-U.S. interoperability and meet NATO force goals. Anti-terrorism training programs augmented the current capabilities of Special Forces and intelligence capabilities. Focused assistance supported the development of a non-commissioned officer (NCO) corps with tailored joint contact events, a Romanian NCO Academy partnership, and scholarships to U.S. NCO schools.

U.S. judicial ethics assistance to the SCM was completed in FY 2005. The SCM approved a revised code of ethics for magistrates and the first-ever code of ethics for court staff. With USG assistance, the National School of Clerks trained 212 clerks and 100 more judges, raising the total number of judges trained to 300. The National Institute of Magistrates and the National School of Clerks included ethics into their curricula, using training materials from the USG-sponsored program. The SCM assumed new responsibilities that were transferred from the Ministry of Justice by the reform legislation adopted in June 2004. USG advisors continued to help the council implement the 2005-2007 Judicial Reform Strategy, incorporating new regulations on judicial liability. This component of the rule of law program is coordinated closely with the EU and the World Bank.

Several USG-funded programs addressed the issue of domestic violence by coordinating efforts through a domestic violence coordinating committee. U.S. programs began to correct problems identified by judges and court staff, who have difficulties understanding the many pertinent laws.

The USG Alternative Dispute Resolution pilot program in Craiova became, with Ministry support, a training center for facilitators and trainers, training more than 250 Romanian mediators in FY 2005. The Center processed 505 cases in a little more than a year, and was cited as a model for the region by the American trainers. The USG judicial reform program continued to promote the expanded use of the Directorate for Victims' Assistance and the Social Reintegration of Offenders for pretrial services and sentencing to increase the efficiency of the criminal courts, add to the security of victims and witnesses, and reduce judicial error.

Computer crime has a direct impact on the business interests of the United States. Since the majority of cyber crimes investigated by Romanian authorities have a U.S. nexus, the USG provided training courses, computers, and forensic software to the Bucharest headquarters and Cluj cyber crime units. U.S. law enforcement agencies also provided advisory assistance, paving the way for an increase in joint operations between U.S. and Romanian authorities. Equipment and training support was also given to the General Inspectorate of Romanian Police Anti-Drug Unit to enhance its capabilities in undercover operations and analysis of law enforcement intelligence. This training and equipment was used in more than 100 police operations and has increased the success rate, according to police sources.

Similarly, intellectual property theft continues to affect U.S. businesses, and Romania remains on the U.S. watch list for intellectual property rights (IPR) infringement. A USG-funded program supported six seminars on IPR enforcement, in partnership with private industry, in vulnerable regions of the country. These seminars reached over 300 people from 33 counties, including 136 prosecutors and 84 judges

U.S. advisors became increasingly involved with the Inter-Ministerial Group on Trafficking in Persons, encouraging policy makers to address concerns about the identification and referral of victims of trafficking offenses. The advisors encouraged the development of more accurate statistics on trafficking-in-person's offenses and enforcement. USG assistance supported an increase in the number of state shelters for victims from two to seven. The General Prosecutor's Office obtained legislative and budgetary approval for the creation of a victim and witness coordination unit and a facility to conduct operationally based training for task forces on organized crime and terrorism. The Ministry of Justice also promoted legislation to make video testimony more accessible to victims of trafficking in persons offenses. The USG program also focused on the creation of a victim's assessment fee to provide sustainable support for victim's services.

The USG anti-corruption strategy dovetails with the initiatives of the Basescu government. The USG program donated equipment to the National Anti-Corruption Department that brought it up to the standards of similar U.S. task forces. USG funds also facilitated and improved the bi-lateral relationship between the Romanian and U.S. financial intelligence units (FIU), by increasing the profile of the FIU among Romanian institutions and supporting the adoption of legislation to expand the FIU's jurisdiction to terrorist financing.

SEED programs in this sector will come to an end when FY 2006 program spending is completed. However, given the slow and erratic progress in improving security and the rule of law, Romania will not complete its transition in these areas before SEED funding is exhausted. Assisting Romania with continued reform is in the U.S.'s long-term strategic interests in the region

MEASURES OF PROGRAM EFFECTIVENESS

In order to determine how USG 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 USG assistance programs. "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: Judicial Framework and Independence Rating. This indicator 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-point scale: 1 is the highest, 7 is the lowest). Source: Freedom House, Nations in Transit 2005. This volume covers events from January December 2004. Found online: www.freedomhouse.org/research/nattransit.htm.

The Romanian judiciary is improving. Essential legislation to improve the judiciary was set in motion 2005. USG assistance helped expand the Alternative Dispute Resolution program with 250 mediators trained. The adoption of the legislation is expected in early FY2006. The Ministry of Justice took greater control over the General Prosecutor's Office while giving individual prosecutors greater independence from their supervisors. The Clerk's Code of Conduct was adopted and is being enforced. With USG assistance, the National School of Clerks trained 212 clerks and 100 more judges, raising the total number of judges trained to 300. The National Institute of Magistrates and the National School of Clerks included ethics into their curricula, using training materials from the USG-sponsored program.

Performance Indicator: Corruption Rating. This indicator assesses the implementation of anticorruption initiatives; the government's freedom from excessive bureaucratic regulations and other controls that increase opportunities for corruption; public perceptions of corruption; the business interests of top policy makers; laws on financial disclosure and conflict of interest; audit and investigative rules for executive and legislative bodies; protections for whistleblowers, anticorruption activists and others who report corruption; and the media's coverage of public sector corruption. (7-point scale: 1 is the highest, 7 is the lowest). Source: Freedom House, Nations in Transit 2005. This volume covers events from January through December 2004. Found online: www.freedomhouse.org/research/nattransit.htm.

Both legislative improvements and actions taken by the GOR and civil society contributed to an improvement in the corruption rating from 4.50 to 4.25. The GOR developed a legislative proposal for a mechanism for systematic review of asset disclosure statements. The GOR National Anti-Corruption Prosecutor's Office (PNA) has used the techniques of financial investigation to initiate investigations of corruption by high officials. The PNA is fully equipped for undercover investigations and surveillance of suspects. Five hundred and five cases have been mediated in the pilot program and more and more cases are being referred by the courts. The USG program donated equipment to the National Anti-Corruption Department that brought it up to the standards of similar U.S. task forces. USG funds also facilitated and improved the bi-lateral relationship between the Romanian and U.S. financial intelligence units (FIU), by increasing the profile of the FIU among Romanian institutions and supporting the adoption of legislation to expand the FIU's jurisdiction to terrorist financing.

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