IV. Assessments of Progress in Meeting the Standards of Section 498A of the Foreign Assistance Act of 1961

The Armenian government has stated its commitment to building a parliamentary democracy based on rule of law and civil society. However, serious problems remain. The Armenian constitution was adopted by referendum in July 1995, coincident with the election of a transitional 190-member legislature. The parliamentary elections and constitutional referendum were called "generally free but not fair" by international observers. Presidential elections were held in 1996 and 1998. Fraud in the 1996 vote tabulation process allowed then-incumbent President Ter-Petrossian to avoid a run-off election he might have lost. In February 1998, Ter-Petrossian was forced to resign. Current President Kocharian took office in April 1998, following elections that were marred by numerous irregularities, including block voting by the military and ballot box stuffing, which cast doubt on the voting and vote-counting processes. Nevertheless, the 1998 elections were an improvement over those of 1996 in that a pluralistic group of candidates was able to campaign more freely, and with access to the media. Elections in May 1999 for a restructured 131-member Parliament demonstrated some areas of improvement over previous elections as well as continuing serious shortcomings. Improvements included the authorities' respect for freedom of speech and assembly, parties' and candidates' ability to enter the race and campaign freely, the neutrality of media coverage, and the functioning of domestic election observers. Notable shortcomings were the poor state of voter lists (which kept many people from casting ballots), problems with military voting, insufficiently independent election commissions, and problems with the tabulation and publication of vote counts. On October 27, 1999, five gunmen murdered the Prime Minister, the Speaker of the National Assembly, and six other officials in the parliament chamber. Selection of successors followed constitutional requirements and several by-elections since that time showed further improvement in electoral procedures and fairness. Accuracy of voter lists continued to be a problem in the October 2002 local and municipal elections, although legal procedures for election-day additions to the list have been made simpler and faster. In looking toward the February 2003 presidential elections, at least 15 of the opposition parties in Armenia have signed a Memorandum of Understanding in which they pledge to do what is in their power to promote free and fair elections.

The constitution provides for freedom of the press, but the government exercises some restrictions on the media. Official censorship is not practiced, but journalists appear to engage in self-censorship to avoid problems with authorities. Many subjects considered sensitive for national security reasons receive circumscribed coverage. The government maintains the dominant role in nationwide television and radio broadcasting, and national TV provides very favorable coverage to the President and Government, with limited access to and coverage of the political opposition. Non-governmental media by contrast often criticize the country's leaders and government policies. A media law passed in November 2000 substantially reduces government control over the media, but still left some loopholes that are cause for concern. In a step back from the development of independent media, in September 2001 and again in April 2002, two prominent independent television stations lost their licenses in a tendering process required by the new media law.

Fourteen laws designed to improve the legal and judicial systems took effect in January 1999 but have not completely remedied judicial shortcomings. Even though the prosecutors' supervision of cases has been significantly reduced, prosecutors still greatly overshadow defense lawyers and judges during trials. In addition, serious concerns remain regarding the independence of the judiciary, the functioning of the legal system, and police treatment of detainees. The beating of pretrial detainees remains a routine part of criminal investigations. The government has not conducted investigations of abuse by security forces, except in rare cases where death has resulted and under pressure from human rights groups. The Government of Armenia, with the help of the World Bank and an international working group chaired by the OSCE, is developing a comprehensive anti-corruption strategy. Upon its adoption, the U.S. Government and other donors will consider contributions to the effort.

Some public demonstrations occur without government interference. However, the government detained about 80 people at a rally in May 2002 protesting closure of an independent television station.

Section 498A(a)(2): "make significant progress in, and is committed to the comprehensive implementation of, economic reform based on market principles, private ownership, and integration into the world economy, including implementation of the legal and policy frameworks necessary for such reform (including protection of intellectual property and respect for contracts)."

Since 1994, Armenia has pursued macroeconomic stability and structural reform, with the support of international financial institutions and donors. Growth was strong in 2001, at 9.6 percent, while inflation was moderate at 3.0 percent for the year. Armenia has succeeded in privatizing almost all agricultural land and housing stock. An aggressive voucher privatization program placed approximately 70 percent of Armenia's enterprises in private hands by 1997. The Government of Armenia estimates that 80 percent of output the economy is now produced by the private sector. The electrical power distribution net was privatized by sale to a Channel Islands-registered company in September 2002 in a non-transparent process .Most of the thermal power company was turned over to Russian control as part of a debt-for-equity swap aimed at paying off Armenia's large remaining debt payments to Russia, some of which dated to the break-up of the USSR.

Armenia is working to establish legal and institutional frameworks that will facilitate further economic development and foster an environment attractive to foreign investment. A liberal foreign investment law was approved in 1994. Armenia has a bilateral trade agreement providing for reciprocal Normal Trade Relations with the U.S. and has been determined to be compliant with the freedom of emigration provisions of the Jackson-Vanik amendment (subject to a semi-annual reporting requirement on its continued compliance with these provisions. Armenia also has an OPIC agreement, and a bilateral investment treaty with the United States. After long negotiations and hard work, Armenia acceded to the WTO in December 2002. Compliance with WTO obligations required that the Government of Armenia adopt extensive legislation changes (including amendments to the customs code and copyright law). Armenia has also expressed interest in negotiating a bilateral tax treaty with the United States, and is receiving U.S. technical assistance in revising its tax structure. Armenia belongs to the International Monetary Fund, the World Bank, and the European Bank for Reconstruction and Development.

Section 498A(a)(3): "respect internationally recognized human rights, including the rights of minorities and the rights to freedom of religion and emigration."

Armenia's 1995 constitution contains broad human rights protections. Implementation, however, has been inconsistent and serious problems persist in several important areas. The constitution grants national minorities the right to preserve their cultural traditions and languages, and current law specifically provides linguistic minorities the right to publish and study in their native tongues. Armenia has ratified important international human rights treaties and shown a willingness to engage in international and bilateral discussions regarding human rights.

The constitution provides for the right to practice the religion of one's choice, but current laws grant special status to the Armenian Apostolic Church, which has legal status as the national church. All other religious denominations and organizations must register with the state Council on Religious Affairs. Although only the Armenian Apostolic Church may by law proselytize, in practice, there have been no restrictions imposed on most other religious bodies. Funding from sources outside Armenia is prohibited for non-apostolic faiths. The State Council on Religions, which from 1996 on regulated the relations of religious denominations with the Government, was abolished by presidential decree in March 2002 and was replaced in August 2002 by a committee attached to the Prime Minister's office. As of November 2002, registered religious groups had reported neither adverse consequences from the law nor denial of re-registration under the amended law. Although Jehovah's Witnesses have not been allowed to register as a religious denomination, the group operates in a fairly open manner. Despite being harassed by local officials and denied access to their religious publications, they report gains in converts. In 2002, several Jehovah's Witnesses were in jail charged with draft evasion or desertion. In June 2001, President Kocharian granted amnesty to 38, but around 30 remain detained in November 2002. The Council of Europe maintains that those imprisoned for conscientious objection must be released immediately as part of a government undertaking to join the Council of Europe, committing to enact legislation to provide alternative military service within the next two years. The Government maintains that those presently in prison do not have to be released until the new laws are passed. Two different drafts are currently circulating in Parliament. In September 2001, an Armenian court found a senior Jehovah�s Witness official innocent of all charges brought against him under a Soviet-era anti-religion law, and appeals of the case by the Prosecutor General's office to an appeals court and to the Court of Cassation, Armenia's highest appeals court, were dismissed in 2002, allowing the Jehovah's Witnesses official to be freed.

The constitution provides for freedom of foreign travel and emigration, and these rights are generally recognized in practice. A 1997 law mandates that representatives of religious organizations other than the Armenian Apostolic Church must obtain prior permission from the State Council on Religions to travel abroad. However, this requirement has not been enforced since the initial year of its enactment. Since independence in 1991, upwards of one million Armenian citizens, approximately one-fourth of the population at independence, have emigrated or reside semi-permanently outside the Republic of Armenia.

Discrimination based on race, sex, religion, disability, language, or social status is prohibited by the Constitution, but cultural and economic factors prevent women, persons with disabilities, and some ethnic and religious minorities from participating fully in public life.

Section 498A(a)(4): "respect international law and obligations and adhere to the Helsinki Final Act of the Conference on Security and Cooperation in Europe and the Charter of Paris, including the obligations to refrain from the threat or use of force and to settle disputes peacefully."

In November 1999, Armenia joined the other OSCE states in signing the Charter for European Security, which reaffirms full adherence to all OSCE documents already in force. However, Armenia does not recognize the borders of Azerbaijan as defined in OSCE documents at the time of accession. Armenia facilitated the opening of an OSCE office in Yerevan in 2000. As a result of the continuing conflict over Nagorno-Karabakh, Armenian military forces occupy a portion of the territory of Azerbaijan. Both Armenia and Azerbaijan periodically violate the cease-fire that has been in effect since May 1994; both countries participate actively within the OSCE Minsk Process, an initiative aimed at resolving the conflict. President Kocharian and Azerbaijani President Aliyev have engaged in bilateral talks for several years whose goal is a negotiated settlement of the conflict. In 2002, they met in Sadarak, Azerbaijan, in August; in Chisinau, Moldova, in October; and in Prague in November. Their foreign and defense ministers also have met several times to discuss aspects of a settlement, and in 2002, special representatives of the two Presidents met several times, opening yet another negotiating track. Through the auspices of the OSCE, Armenia and Azerbaijan continued in 2002 to exchange POWs.

Section 498A(a)(5): "cooperate in seeking peaceful resolution of ethnic and regional conflicts."

The OSCE created the Minsk Group in spring 1992 as the forum for a peaceful, negotiated resolution to the conflict over Nagorno-Karabakh. The Government of Armenia continues its participation in the OSCE peace process. There has also been intermittent direct dialogue between the Armenian and Azerbaijani governments. This dialogue and the Minsk Group process continue to hold the promise of achieving comprehensive settlement of the conflict.

Armenia ratified the Conventional Forces in Europe (CFE) Treaty in October 1992 and the 1996 CFE flank agreement in May 1996. Armenia participated actively in negotiations to adapt the Treaty and, along with the other 29 CFE states, its representatives signed the Adapted CFE Treaty at the Istanbul Summit in 1999. Armenia has provided data on equipment as required by the Treaty. Armenia also has hosted on-site inspections, as provided for in the Treaty, and participates in the CFE Joint Consultative Group, the Treaty's implementation body, which meets in Vienna. Armenian compliance with CFE has been uneven. In addition to Armenia's longstanding failure to properly notify or carry out reductions required by the Treaty, there have been technical concerns about the completeness of Armenia's data on equipment holdings. Also of concern are: evidence that Armenia may have failed to notify increases in unit holdings involving CFE Treaty limited equipment transferred from Russia, the fact that Armenia continues to station troops and CFE limited equipment on the territory of Azerbaijan without Azerbaijani permission, and evidence that Armenia made a late notification of the entry into service of multiple rocket launchers purchased from China. Another area of concern is possible transfers in the mid-1990s of CFE-type military equipment to separatist forces in Nagorno-Karabakh. Both Armenia and Azerbaijan have maintained that it is impossible for them to meet certain Treaty obligations because of security concerns associated with the Nagorno-Karabakh conflict. This said, Armenia is engaged in discussions both in the CFE context and in the context of the Minsk Group process which may help to address certain of these issues.

Armenia is a participating State to the OSCE Vienna Document 1999 and its predecessor Vienna Document 1994. The Vienna Document is an OSCE regime of confidence and security building measures. Armenia submitted CSBM annual data declarations for 1996-2000 and has willingly undergone CSBM inspections and evaluation visits in accordance with the OSCE Vienna Document (1994 and 1999). In August 2000, Armenia hosted an air base visit and visit to a military facility in accordance with Vienna Document 1999 provisions. In September 2002 it hosted a joint exercise in mountain rescue techniques with the U.S., Georgia and Russia, to which Turkey and Azerbaijan were also invited, and in spring 2003 will host a PFP ground forces exercise.

Armenia acceded to the Nuclear Nonproliferation Treaty (NPT) as a non-nuclear-weapons state on July 15, 1993. It has had a full-scope safeguards agreement in force with the International Atomic Energy Agency since May 5, 1994. The United States and other Western governments have discussed efforts to establish effective export control systems with Armenia. Armenia is a State Party to the Chemical Weapons Convention (CWC) and the Biological Weapons Convention (BWC), which seek to eliminate chemical and biological weapons, respectively. Armenia provided an annual voluntary BWC-related CBM Data Declaration the past four out of five years, including in 2001. Armenia also signed a bilateral nonproliferation and export control agreement with the United States in July 2000. It has approved the agreement and exchanged formal notifications with the United States to bring the agreement into force. Additionally, Armenia has acknowledged it is a successor to the former Soviet Union�s obligations under the Immediate Range Nuclear Forces (INF) Treaty and continues to observe the Treaty�s obligations.

We have received occasional reports of transfers from Armenia potentially related to proliferation of weapons of mass destruction technology or equipment, which we carefully review and pursue in light of the global war on terror, our efforts on Iraq/other states that sponsor terrorism and our legal obligations under the various nonproliferation sanctions laws. Based on U.S. diplomatic efforts in 2002, Armenia worked cooperatively with the United States Government to stop and detain a shipment of dual-use equipment originating in Armenia that was destined for Iran. On May 9, 2002, the U.S. imposed sanctions on two Armenian entities � Lizin Open Joint Stock Company and Armenian national Armen Sargasian � pursuant to the Iran Nonproliferation Act for the transfer of Australia Group-controlled items to Iran in the second half of 2001. The Armenian government also worked with the USG to ensure transparency regarding this matter. Armenia is in the process of establishing a WMD-related export control system based on international standards and has worked with the United States and other countries toward this goal.

Armenia is not a significant exporter of conventional weapons, but has provided substantial support, including materiel, to separatists in the Nagorno-Karabakh region of Azerbaijan. It provided both ammunition and weapons to support the U.S. led effort train and equip the new Afghan National Army as part of Armenia's participation in Operation Enduring Freedom.

Section 498A(a)(7): "take constructive actions to protect the international environment, prevent significant transborder pollution, and promote sustainable use of natural resources."

Armenia faces serious environmental problems. Water pollution caused by industrial wastes discharged into rivers has contributed to a serious decline in public health. Armenia's major freshwater lake, Lake Sevan, has a declining water level due to use of its water for irrigation and hydroelectric generation. Overuse of the country's forests and poor irrigation and water management practices have led to increased soil erosion and loss of arable land. The Government of Armenia, however, has taken some steps to establish public policy mechanisms to address environmental issues, including the establishment of a Ministry of Environment. Environmental action plans are being developed with the assistance of the World Bank. National environmental NGOs are gaining access to the policy-making process on environmental issues. Armenia has shown an interest in regional cooperation on environmental issues, and has agreed to the establishment of a coordination and information-sharing mechanism as a first step toward fuller cooperation on transborder and international environmental issues.

In 2000, Armenia joined Georgia in signing the charter for and establishing the Regional Environmental Center in the Caucasus, located in Tbilisi, Georgia. The United States and the European Union are supporting and co-financing the establishment of this independent, non-profit, and non-political organization, the mission of which will be to strengthen civil society and support sustainable development by promoting public awareness and participation in regional environmental decision-making.

The Government of Armenia does not grant sanctuary from prosecution to individuals or groups that have committed acts of international terrorism or otherwise support international terrorism. Armenia is party to two of the twelve UN International Terrorism Conventions and signed one more. In November 2002, Armenia introduced a terrorist financing law that allows Armenian banks to question the source of cash deposits and to freeze accounts of individuals and organizations suspected of terrorist financing. Allegations in the Turkish and Azeri media that the government of Armenia supports anti-Turkish Armenian and Kurdish terrorist groups remain unsubstantiated. The PKK (now Kadek) however, does have a presence in Armenia. In October 2001, several hundred PKK supporters attempted to demonstrate in front of the U.S. Embassy but were prevented from doing so by local authorities.

Armenian President Kocharian has pledged full support for the United States' efforts against terrorism and has offered intelligence support, overflight and landing rights, additional security support to U.S. facilities in Armenia during times of terrorist alert, and emergency medical assistance to U.S. troops that operate in Armenia. Armenia also offered weapons and ammunition to the new Afghan National Army.

Section 498A(a)(9): "accept responsibility for paying an equitable portion of the indebtedness to United States firms incurred by the former Soviet Union."

In October 1991, shortly before the Soviet Union dissolved, Russia and nine other Soviet republics signed a Memorandum of Understanding declaring themselves jointly and severally liable for the foreign debts of the former Soviet Union (FSU). In December 1991, Russia and seven other republics, including Armenia, signed an agreement which assigned to each of the newly independent states a share of all the external assets and foreign debt of the former Soviet Union. Beginning in 1992, Russia sought to replace the joint and several liability principle by seeking full liability for the debt in return for all the external assets. In September 1993, Armenia signed a "double zero option" agreement with Russia under which Russia agreed to assume Armenia's share of the former Soviet Union's foreign debts in exchange for Armenia's share of the FSU's external assets.

Please see section 498A(a)(9) of the Russia FSA report regarding indebtedness to the United States incurred by the former Soviet Union.

Section 498A(a)(10): "cooperate with the United States Government in uncovering all evidence regarding Americans listed as prisoners-of-war, or otherwise missing during American operations, who were detained in the former Soviet Union during the Cold War."

The U.S. effort to uncover evidence of American POWs and MIAs in the former Soviet Union is being conducted through the U.S. - Russia Joint Commission on POWs/MIAs which was established in March 1992. The U.S. side of the Commission visited Armenia in August 1993 to expand contacts with Armenian officials and to visit the crash site of a C-130 that was shot down over Armenia in 1958. The delegation received much support from the people and officials of Armenia, who cooperated during the investigation.

Section 498A(a)(11): "terminate support for the communist regime in Cuba, including removal of troops, closing military and intelligence facilities, including the military and intelligence facilities at Lourdes and Cienfuegos, and ceasing trade subsidies and economic, nuclear, and other assistance."

We have no evidence from which to conclude that the Government of Armenia is providing military, intelligence, economic, nuclear, or other assistance to the Government of Cuba.

CHECKLIST FOR GROUNDS OF INELIGIBILITY UNDER SECTION 498A(b) OF THE FOREIGN ASSISTANCE ACT OF 1961

No. While there have been shortcomings in human rights observance (as discussed above), we do not believe that the government of Armenia is engaged in such a pattern.

Section 498A(b)(2): Has the President determined that the Government of Armenia "has failed to take constructive actions to facilitate the effective implementation of applicable arms control obligations derived from agreements signed by the former Soviet Union"?

No. We do not believe that the government of Armenia has failed to take such actions.

Section 498A(b)(3): Has the President determined that, after October 24, 1992, the Government of Armenia "knowingly transferred to another country --

Section 498A(b)(4): Is the Government of Armenia "prohibited from receiving such assistance by section 101 or 102 of the Arms Export Control Act or sections 306(a)(1) and 307 of the Chemical and Biological Weapons Control and Warfare Elimination Act of 1991"?

No. We do not have information from which to conclude that the government of Armenia is prohibited from receiving assistance under these sections.

Section 498A(b)(5): Has the President determined and certified to the appropriate congressional committees that the Government of Armenia "is providing assistance for, or engaging in non-market-based trade (as defined in section 498B(k)(3)) with the Cuban Government? If so, has the President taken action to withhold assistance from Armenia under the Foreign Assistance Act within 30 days of such a determination, or has Congress enacted legislation disapproving the determination within that 30-day period?"

No. The President has not determined that the Government of Armenia is providing assistance for, or engaging in any non-market-based trade with, the Cuban government.

CRITERIA FOR U.S. ASSISTANCE UNDER SECTION 498A(a)OF THE FOREIGN ASSISTANCE ACT OF 1961

Section 201 of the FREEDOM Support Act amended Section 498A of the Foreign Assistance Act of 1961 to require that the President "take into account not only relative need but also the extent to which that independent state is acting to:"

Section 498A(a)(1): "make significant progress toward, and is committed to the comprehensive implementation of, a democratic system based on principles of the rule of law, individual freedoms, and representative government determined by free and fair elections."

Azerbaijan�s efforts toward integration with the West have brought it into NATO's Euro-Atlantic Partnership Council and engagement with the European Union. Significant problems remain, however. A parliamentary republic, Azerbaijan�s politics is dominated by incumbent President Heydar Aliyev. Parliament has been dominated by the ruling New Azerbaijan Party since Aliyev came to power in 1993 and opposition parties make up only a small minority of its members. Elections since 1993 have not met OSCE standards. The Constitution provides for an independent judiciary, but in practice judges do not function independently of the executive branch.

In August of 2002 Azerbaijan conducted a referendum on constitutional amendments proposed by the Government. The vote was marred by serious and widespread irregularities. These included instances of voter list fraud, multiple voting, voter intimidation and ballot box stuffing. Furthermore, at least in some precincts where U.S. and other international monitors were present, the vote totals greatly exceeded the level of participation actually observed. Fifty percent turn-out was needed to validate the referendum results. The Central Election Commission�s assertions that turnout was at eighty-four percent, and that from ninety-five to ninety-six percent of the voters approved each of the eight items on the ballot, do not appear to be credible.

An active and independent media exists and press censorship was officially abolished in 1998. Nevertheless, government harassment continues and increased in 2002, including the arrest of journalists, libel suits and questionable tax inspections. Two regional stations remain closed due to their lack of licensing. The Government tightly controls official radio and television, the primary source of information for most of the population.

There are several major opposition parties, which are allowed to operate although members are subject to harassment by the authorities. Opposition parties are routinely harassed by the authorities. Some domestic human rights NGOs have reported that the Government holds between 200-300 political prisoners. Other groups claimed the number to be much higher. Presidential pardons in 2002 resulted in the release of some of these prisoners.

Since gaining independence, Azerbaijan has made important progress in the transition to a market economy. Outdated Soviet laws have been replaced with modern legislation to encourage foreign investment, to protect intellectual property, to permit bankruptcies, and to rationalize the government's revenue collection policies. Azerbaijan is a member of the International Bank for Reconstruction and Development (IBRD), European Bank for Reconstruction and Development (EBRD), International Monetary Fund (IMF) and the Asian Development Bank. The U.S. government's business promotion agencies � TDA, EXIM and OPIC � are active in Azerbaijan. Azerbaijan is making modest progress in preparing for WTO membership. Azerbaijan has a bilateral trade agreement with the U.S., providing for reciprocal Normal Trade Relations, and has been determined to be compliant with the freedom of emigration provisions of the Jackson-Vanik amendment (subject to a semi-annual reporting requirement on its continued compliance with these provisions). The U.S.-Azerbaijan bilateral investment treaty (BIT) entered into force in August 2001. Azerbaijan also has an OPIC agreement.

The oil industry is Azerbaijan's financial lifeline. Twenty-one signed Production Sharing Agreements (PSAs) with 33 international companies attest to the rapid development of Azerbaijan's energy sector, which has attracted 75-80 percent of the more than $5 billion in foreign direct investment (FDI) made through 2000. Progress continues on key regional energy transportation projects such as the Baku-Tbilisi-Ceyhan oil pipeline and the Baku-Tbilisi-Erzerum gas pipeline. These projects will form the backbone of an East-West transportation corridor that will carry Caspian energy resources to western markets and help insure the independence of participating states. However, the Government of Azerbaijan has had a mixed record on implementing structural reforms, especially in the oil sector.

Economic development outside the energy sector has been incremental. In the area of land reform, the Government of Azerbaijan succeeded in implementing a land privatization program and placed 97.2 percent of agricultural lands into private hands, which helped reverse the collapse in agricultural production and contributed to growth in the agricultural sector in each of the past 5 years. The private sector now generates 99 percent of total agricultural production, a huge transformation from the previous collectivized approach to agriculture.

Privatization of industry has been less successful. Although Azerbaijan privatized more than 22,000 small state enterprises and reorganized 996 larger enterprises as stock organizations as part of a first privatization program begun in 1996, the lack of adequate preparation and a reluctance to accept worker dislocation has hampered attempts to privatize larger state enterprises. After receiving poor marks for earlier privatization of large enterprises, Azerbaijan undertook in August 2000 a second privatization program focused on privatizing larger state enterprises. The results thus far have not been encouraging. Until restructuring and privatization of many large state-owned enterprises occurs, Azerbaijan will continue to be saddled with a largely obsolete and inefficient (non-energy) industrial base.

In contrast to its track record on microeconomic reform, Azerbaijan has received praise from the IMF for achieving macroeconomic stability. Under the Aliyev administration, Azerbaijan adopted a conservative stance on the assumption of debt, rather than engaging in the spending sprees that often follow natural resource booms. This conservative attitude resulted in a public debt/GDP ratio of about 25 percent in 2002 and, combined with tight monetary policies, helped the Government of Azerbaijan rein in inflation from 1,664 percent in 1994 to 2.5 percent in 2001.

In July 2001, the Government of Azerbaijan reached agreement with the IMF on a three-year, $100 million Poverty Reduction and Growth Facility. At the urging of the international financial institutions, the Government of Azerbaijan established a State Oil Fund to save and manage its growing energy revenues. The fund, which began operating in January 2001, should have approximately $ 480 million in assets by year's end. Planned initial expenditures of approximately $18 million have been directed at construction of homes for internally displaced persons and refugees. Prudent and transparent management of the Oil Fund remains a key issue between the IMF and GOA.

Section 498A(a)(3): "respect for internationally recognized human rights, including the rights of minorities and the rights to freedom of religion and emigration."

The Government�s human rights record remains poor. As part of its application to join the Council of Europe, Azerbaijan passed several progressive acts of legislation to replace outdated Soviet legal codes. The institutions required to implement these new laws, however, are weak, and implementation has faced difficulties. The new criminal code bans torture but local human rights NGOs credibly report that authorities have tortured suspects to extract confessions. Perpetrators often go unpunished although there were a handful of prosecutions and reprimands over the past year. Local and international human rights groups continue to visit prisons and meet regularly with some political prisoners. However, some domestic human rights organizations complained that the authorities restricted their access to prisons during the year.

One area where Azerbaijan had made significant progress until 2002 was in the sphere of religious freedom.
Although "traditional" religious groups � Muslims, Russian Orthodox Christians and Jews -- are respected, harassment of other, "non-traditional" groups by lower-level officials occurs from time to time. Following President Aliyev's public commitment to religious freedom in late 1999, the government redressed most individual cases of harassment and registered several non-traditional religious groups. The establishment of a state commission regulating religious associations in June 2001, however, has required that all religious groups re-submit their registration documents. There have been considerable delays in registration and some denials. Several Protestant congregations of separate churches were denied registration when they refused to accept the State's plan for organizing themselves into a common union with a particular church at the head. Although most religious groups have continued to operate while their re-registration is pending, at least one of the churches told to organize along such lines has been closed. There have also been problems with importing religious materials. Some Muslim groups have reported government interference in their affairs. Some Muslim communities have complained of authorities denying permission for female students and teachers to wear Muslim head coverings. A troubling development for which government officials must share some responsibility, is continuing television broadcasts defaming several Christian religious groups.

The government respects the right of freedom of emigration, including Jewish emigration. The remaining Armenian population in Azerbaijan is approximately 10,000-30,000, almost exclusively persons of mixed descent or mixed marriages. While official government policy is that ethnic Armenians are free to travel, low-level officials seeking bribes have harassed citizens of Armenian ethnicity who sought to obtain passports. There are approximately 800,000 Azerbaijani refugees and IDPs from the war with Armenia. Armenians have settled in parts of Azerbaijan they occupy and Azerbaijanis are unable to return.

Azerbaijan has reiterated its commitment to the observance of international legal obligations and OSCE commitments in the area of human rights. It has also reiterated its commitment to seek a peaceful resolution of the Nagorno-Karabakh conflict. At the same time, the Nagorno-Karabakh conflict remains unresolved, and both sides have committed violations of international humanitarian laws. The parties to the conflict observe a cease-fire that has been in effect since May 1994, although violations by both sides are common. In 2002 the Presidents of Azerbaijan and Armenia met several times in an effort to resolve their differences and bring about a resolution of the conflict. 2002 also saw the opening of a new, additional negotiating track of meetings by special representatives of the two presidents. Through the auspices of the OSCE, Armenia and Azerbaijan continued in 2002 to exchange POWs. In November 1999, Azerbaijan joined the other OSCE states in signing the Charter for European Security, which reaffirms full adherence to all OSCE documents already in force.

Section 498A(a)(5): "cooperate in seeking peaceful resolution of ethnic and regional conflicts."

The OSCE created the Minsk Group in the spring of 1992 as the forum for a peaceful, negotiated resolution to the conflict over Nagorno-Karabakh. The government of Azerbaijan participates fully in the OSCE peace process. In 2002, the Presidents of Azerbaijan and Armenia continued to engage in a series of private meetings in an effort to resolve their differences and help bring about a resolution of the conflict. Both Azerbaijan and Armenia have also expressed a commitment to continue working with the OSCE Minsk Group Co-Chairs to achieve a resolution of the conflict.

Azerbaijan has declared its acceptance of all of the relevant arms control obligations of the former Soviet Union. Azerbaijani actions to support this commitment include accession, as a non-nuclear weapons state weapons state, to the Nuclear Non-Proliferation Treaty. Azerbaijan�s NPT safeguards agreement with the International Atomic Energy Agency has been in force since April 29, 1999. Azerbaijan was one of the original signatories of the Convention on the Prohibition of the Development, Production, Stockpiling and Use of Chemical Weapons and on Their Destruction and deposited its instrument of ratification of Convention on February 29, 2000. Azerbaijan has not acceded to the Convention on the Prohibition of the Development, Production and Stockpiling of Bacteriological (Biological) and Toxic Weapons and on Their Destruction. The United States considers Azerbaijan to be a party to the INF Treaty as a successor state to the Soviet Union. Although Azerbaijani officials have questioned that conclusion, they have taken no steps inconsistent with their obligations under INF.

The Conventional Armed Forces in Europe (CFE) Treaty was approved by Azerbaijan's Parliament in July 1992. Until late in 1999, Azerbaijan had significant overages above its Treaty limits in equipment, but by a series of notifications of reduction events, and decommissioning, Azerbaijan stated they had been eliminated. Azerbaijan's data as of November 27, 2001 showed compliance with all limits. Two inspections (one in 1999 and one in 2000), however, have raised questions about the accuracy of specific points in Azerbaijan's data. Azerbaijan's compliance with other CFE obligations has been uneven. Azerbaijan participates in the CFE Joint Consultative Group, the Treaty's implementation body, which meets in Vienna. Azerbaijan has hosted on-site inspections as provided for in the Treaty and has provided data on equipment as required by the Treaty. However, since 1997 Azerbaijan has continued a unilateral suspension of certain notification provisions, although such a suspension is not allowed under CFE, citing the exigencies of the conflict in Nagorno-Karabakh. Although Azerbaijan has not properly completed the reductions required by the Treaty, it has continued to periodically notify and carry out reduction events, completing the reduction of over 400 TLE out of a putative liability of over 1000. Azerbaijan continues to insist that it cannot complete required reductions -- or fulfill certain Treaty obligations -- as long as the dispute over Nagorno-Karabakh continues with Armenian troops and equipment in occupied Azerbaijani territory. Azerbaijan is engaged in discussions both in the CFE context and in the context of the Minsk process, which may help lay the basis for improved Treaty compliance.

Azerbaijan has submitted Confidence and Security Building Measures (CSBM) annual data declaration for 1996-2001 and has willingly undergone CSBM inspections and evaluation visits in accordance with the OSCE Vienna Document 1994 and its successor Vienna Document 1999.

We have no evidence that the government of Azerbaijan has engaged in the proliferation of nuclear, chemical, or biological weapons, their delivery systems, or related technology. Azerbaijan has made progress in establishing a system of nonproliferation export controls and has actively moved to thwart transit of controlled items to countries of concern. In September 1999, the USG and the Government of Azerbaijan signed an agreement "Concerning Cooperation in the Area of Counterproliferation of Weapons of Mass Destruction and Defense Activities." The agreement, however, has yet to enter into force. Azerbaijan supports the worldwide moratorium on nuclear testing, and was an original subscribing state to the November 22 2002 International Code of Conduct Against Ballistic Missile Proliferation. Azerbaijan is not a significant exporter of conventional weapons.

Section 498A(a)(7): "take constructive actions to protect the international environment, prevent significant transborder pollution, and promote sustainable use of natural resources."

Soviet era oil development, air and water pollution, and urban industrial pressure on the land have created serious environmental challenges. Deterioration and erosion of soil and salination of agricultural lands contribute to extensive soil loss. Poor air and water quality contribute to increasing public health risks. The rising level of the Caspian Sea and the prospective development of Caspian energy resources have brought serious new environmental challenges. Azerbaijan acceded to the Convention on International Trade in Endangered Species on November 23, 1998; to the Basel Convention (on transboundary movement of hazardous waste) on June 1, 2001; and to the Kyoto Protocol on September 28, 2000.

Legislation to address environmental problems and the use of natural resources, based on modern Western practice, has been enacted, but funding remains inadequate to meet the breadth of existing problems. International consortia currently drilling for oil and gas in the Caspian Sea are following international industry-wide environmental practices.

The government draws attention to environmental issues through its support of an annual International Environmental Congress that brings together government officials, scientists, politicians, international oil companies, and private organizations to address Caspian region development issues. Azerbaijan also participates in the Caspian Environmental Program, a five-nation project supported by UNDP and the IBRD. Under this project, Azerbaijan has established a pollution abatement research center and a database management center to help the littoral states protect the sensitive Caspian Sea environment. In November 2001 the Caspian Environment Program sponsored a series of workshops on oil spill contingency planning which many hope will be a building block for Azerbaijan in a regional contingency plan for the littoral states.

In October 2001 the government combined five agencies into a new Ministry of Ecology and National Resources which is responsible for implementing the government's ecology policy. In December 2000 Azerbaijan joined co-founders Georgia and Armenia in a Regional Environmental Center for the Caucasus. The United States and the European Union are supporting and co-financing this independent, non-profit, and non-political organization, the mission of which is to strengthen civil society and support sustainable development by promoting public awareness and participation in regional environmental decision-making. In November of 2001, the Ministry of Ecology advised that Azerbaijan had completed a national sustainable development plan. Azerbaijan is participating in a three country USAID project on management of the Kura/Aras River, a river basin that encompasses Georgia, Azerbaijan and Armenia.

Azerbaijan is a staunch partner in the U.S.-led global war on terrorism. It is a signatory to several major international anti-terrorism conventions and has cooperated with the U.S. and other countries on anti-terrorism efforts.

U.S.-Azerbaijan counterterrorism cooperation predates the September 11 attacks. Azerbaijan provided evidence to U.S. authorities which contributed directly to the conviction of the 1998 East Africa Embassy bombers, and cooperates with the U.S. Embassy in Baku against terrorist threats to the mission. In the wake of the September 11 attacks, the Government of Azerbaijan expressed unqualified support for the U.S. and offered �whatever means necessary� to the U.S.-led antiterrorism coalition. To date, Azerbaijan has granted blanket overflight clearance, offered the use of bases, and engaged in information sharing and law enforcement cooperation. In November of 2002 a platoon of Azerbaijani soldiers was deployed to the international peacekeeping force in Afghanistan.

Azerbaijan has taken steps to combat terrorist financing, making a concerted effort to identify and shut down groups engaged in terrorist-related funding. Azerbaijan closed three Islamic organizations that were suspected of supporting terrorist groups. It has taken steps to prevent the use of Azerbaijani territory by Chechen militants and those seeking to aid them. Azerbaijan has also detained several persons crossing the Iran-Azerbaijan border illegally. Azerbaijan�s Department of Aviation Security increased security at Baku's Bina Airport and has implemented International Civil Aviation Organization (ICAO) recommendations on aviation security. Azerbaijan has turned over 30 foreign citizens with suspected ties to terrorists, including eight to Egypt and three to Saudi Arabia. The government of Azerbaijan does not grant sanctuary from prosecution to individuals or groups that have committed actions of international terrorism or otherwise support international terrorism.

Section 498A(a)(9): "accept responsibility for paying an equitable portion of the indebtedness to United States firms incurred by the former Soviet Union."

In October 1991, shortly before the Soviet Union dissolved, Russia and nine other Soviet republics signed a Memorandum of Understanding declaring themselves jointly and severally liable for the foreign debts of the Soviet Union. In December 1991, Russia and seven other republics signed an agreement that assigned to each of the newly independent states a share of all the external assets and foreign debt of the former Soviet Union (FSU). Beginning in 1992, Russia sought to replace the joint and several liability principle by seeking full liability for the foreign debt of the FSU in return for all the external assets of the FSU. In September 1993 Azerbaijan signed a "double zero option" agreement with Russia under which Russia agreed to pay Azerbaijan�s share of the foreign debt of the FSU in return for Azerbaijan's share of the external assets of the FSU.

Please see section 498A(a)(9) of the Russia FSA report regarding indebtedness to the United States incurred by the former Soviet Union.

Section 498A(a)(10): "cooperate with the United States government in uncovering all evidence regarding Americans listed as prisoners-of-war, or otherwise missing during American operations, who were detained in the former Soviet Union during the Cold War."

The U.S. effort to uncover evidence of American POWs and MIAs in the former Soviet Union is being conducted through the U.S.-Russian Joint Commission on POWs/MIAs, which was established in March 1992. The Commission met with Azerbaijani officials in June 1996, and the Azerbaijani government pledged its cooperation with the Commission's efforts.

Section 498A(a)(11): "terminate support for the communist regime in Cuba, including removal of troops, closing of military and intelligence facilities, including the military and intelligence facilities at Lourdes and Cienfuegos, and ceasing trade subsidies and economic, nuclear, and other assistance."

We do not have information from which to conclude that the Government of Azerbaijan is providing military, intelligence, economic, nuclear, or other assistance to the Government of Cuba.

No. While there have been serious shortcomings in human rights observance, we do not believe that the government of Azerbaijan is engaged in a pattern of gross violations of human rights or of international law. Nonetheless, we will work to better address existing problems not only through our diplomatic efforts but also through our assistance programs.

Section 498A(b)(2): Has the President determined that the Government of Azerbaijan "has failed to take constructive actions to facilitate the effective implementation of applicable arms control obligations derived from agreements signed by the former Soviet Union"?

No. We do not believe that the Government of Azerbaijan has failed to take such actions.

Section 498A(b)(3): Has the President determined that, after October 24, 1992, the Government of Azerbaijan "knowingly transferred to another country --

Section 498A(b)(4): Is the Government of Azerbaijan "prohibited from receiving such assistance by section 101 or 102 of the Arms Export Control Act or sections 306(a)(1) and 307 of the Chemical and Biological Weapons Control and Warfare Elimination Act of 1991"?

Section 498A(b)(5): Has the President determined and certified to the appropriate congressional committees that the Government of Azerbaijan "is providing assistance for, or engaging in non-market-based trade (as defined in section 498B(k)(3)) with the Cuban Government? If so, has the President taken action to withhold assistance from Azerbaijan under the Foreign Assistance Act within 30 days of such a determination, or has Congress enacted legislation disapproving the determination within that 30-day period?"

No. The President has not determined that the Government of Azerbaijan is providing assistance for, or engaging in any non-market-based trade with, the Cuban government.

Belarus has an authoritarian regime in which nearly all power is concentrated in the hands of the President and a small circle of advisors. After his election in July 1994 to a 5-year term as the country�s first president, Aleksandr Lukashenko consolidated power steadily in the executive branch. He used a November 1996 referendum to amend the 1994 Constitution in order to broaden his powers and extend his term in office. Lukashenko ignored the then Constitutional Court�s ruling that the Constitution could not be amended by referendum. As a result, the current political system is based on the 1996 Constitution, which was adopted in an unconstitutional manner. Most members of the international community reject that flawed referendum and do not recognize the legitimacy of the 1996 Constitution, or the bicameral legislature that it introduced.

Parliamentary elections took place in October 2000, the first since the 1996 referendum. The Organization for Security and Cooperation in Europe (OSCE)/Office of Democratic Institution and Human Rights (ODIHR) concluded that the elections fell short of international standards and were neither free nor fair. Lukashenko renewed his term of office in Presidential elections held on September 9, 2001. OSCE/ODIHR concluded that the election process failed to meet OSCE criteria for free, fair, transparent and accountable democratic elections. OSCE/ODIHR singled out as serious problems: restrictions on campaigning and election observation, the opposition's lack of access to state media, government censorship of independent media, lack of independence of electoral commissions, and arbitrary changing of the electoral environment by the government. Although the amended Constitution provides for a formal separation of powers, the President dominates all branches of Government. The Constitution limits the legislature to meeting twice a year for no more than a total of 170 days. Presidential decrees made when the legislature is out of session have the force of law, except�in theory�in those cases restricted by the 1996 Constitution. The 1996 Constitution also allows the President to issue decrees having the force of law in circumstances of �specific necessity and urgency,� a provision that Lukashenko has interpreted broadly. The judiciary is not independent.

Despite some limited improvement in the past two years, Belarus still has one of the most state-dominated economies in the former Soviet Union. The private sector share of GDP is only some 20 percent. Only Turkmenistan ranks lower in the EBRD transition rankings. Both the banking and manufacturing sectors are still government-controlled. Price liberalization is incomplete. The government sets wages. Although Belarus made some progress in achieving a convertible currency last year as part of a Staff-Monitored Program with the International Monetary Fund (IMF), the government failed to undertake the structural reforms that would have led to negotiations on a Stand-by Agreement. Growth was about 4 percent in 2001, and inflation stood at about 60 percent.

The Government of Belarus does not maintain a policy of support for a market economy; indeed, it continues to harass the limited private business that is able to operate. Private market vendors have been a particular target, especially those organized in the Belarusian Union of Entrepreneurs. The privatization that exists has been limited to small enterprises and mostly benefited a small elite. The World Bank has prepared a Country Assistance Strategy but will not implement it until the Belarusian Government has agreed to a TB/AIDS project submitted earlier. The European Bank for Reconstruction and Development is not currently pursuing any new public sector projects in Belarus and a new Country Assistance Strategy for Belarus has not yet been approved. Belarus has applied for WTO membership but has made little tangible progress toward meeting the requirements of WTO accession.

A 1993 trade agreement between Belarus and the United States provides reciprocal Normal Trade Relations (formerly MFN) benefits and contains intellectual property rights provisions. Belarus is the recipient of a waiver -- that was extended for an additional 12 month period on June 3, 2002 -- under the Jackson-Vanik Amendment of the Trade Act of 1974, as amended. A Bilateral Investment Treaty (BIT) was ratified by the Belarusian Parliament in October 1995 and received U.S. Senate approval in June 1996. But as the political situation deteriorated in late 1996, the United States decided to delay indefinitely its entry into force pending improvement of the political and economic climate. In 1997, the Overseas Private Investment Corporation (OPIC) paid its first claim in the NIS in Belarus. OPIC has engaged unsuccessfully in efforts to obtain compensation from the Government of Belarus after paying U.S. company Alliant Techsystems, Inc. for the expropriation of its investment in the Belconvers joint venture. OPIC�s programs in Belarus are suspended because of an adverse labor rights determination made by the U.S. Government.

EXIM and TDA activity in Belarus remain suspended due to the poor investment and political climate.

Section 498A(a)(3): "respect internationally recognized human rights, including the rights of minorities and the rights to freedom of religion and emigration."

The Belarusian government�s human rights record further deteriorated in 2002. Restrictions on freedoms of speech, press and peaceful assembly continued, and the government did not respect freedom of association. There have been no meaningful developments in investigating the disappearances of prominent opposition figures Victor Gonchar, Anatoly Krasovsky, Yuriy Zakharenko, nor that of journalist Dmitry Zavadsky. Chairman of the pre-1996 parliament Semyon Sharetsky, opposition figure Zianon Pazniak, and former national bank chairperson Tamara Vinnikova remain in exile out of fear for their safety. Prolonged detention on political grounds and delays in trials are common. Arrests or beatings are common responses to peaceful protests. The security services infringe the privacy rights of citizens and closely monitor the activities of opposition politicians and other segments of the population. Government security agents frequently harass human rights advocates. Worker rights continue to be restricted by government authorities, who stepped up the harassment of independent trade unions during the 2001 presidential campaign and its aftermath.

According to official data, the state did not deny any citizens permission to emigrate in 2002. Significant ethnic tensions do not appear to exist in Belarus.

The constitution provides for freedom of religion. However, the government restricts this right in practice. The government accords preferential treatment to the part of the Russian Orthodox Church loyal to the Moscow Patriarch, while harassing adherents of the Belarusian Autocephalous Orthodox Church (BOAC). The authorities continued to refuse to register the BOAC, demolishing a church building while under construction in the summer of 2002. On October 31, 2002, Lukashenko signed a new Religion Law which further confirms the Russian Orthodox Church's preferential status and disadvantages "non-traditional" religions. The new law requires that all religious groups re-register, or risk engaging in outlawed religious activity. Only registered religious organizations may publish materials and engage in education, but such organizations are restricted to those which consist of at least ten groups, one of which must have been present in Belarus for 20 years. Unregistered groups will not be able to worship in public or own, lease, or occupy property. The law also provides the Government with the implicit right to censor religious publications, bans foreign citizens from leading religious organizations, and bans all but occasional, small religious meetings in private homes.

Respect for the rights of minorities may erode with enforcement of the new law. Pentecostals and some members of the Jewish community have complained of harassment and state-sponsored anti-Semitic publications and television programs, although societal anti-Semitism is not usually manifested openly. Senior government officials and the state media have occasionally used coded anti-Semitism in attacking political opponents. There is no legal basis for restitution of property that was seized during the Soviet and Nazi occupation. Many former synagogues, churches and mosques in Belarus are used as theaters, museums, and sports complexes. One former synagogue is now a German-owned beer hall. The Jewish community's requests to have these synagogues returned have been refused. Despite these difficulties, several local Jewish communities have successfully reclaimed synagogues and other properties.

As a result of the Belarusian government's failure to adhere to its human rights commitments under the Helsinki Final Act, the OSCE undertook to establish an Advisory and Monitoring Group (AMG) in Minsk to assist the government in fulfilling these commitments. After much resistance, the government of Belarus permitted the AMG to open in February 1998 with a mandate to monitor the human rights situation and advise the government. The Lukashenko regime subsequently succeeded in forcing the AMG's closure in country by refusing to issue visas, renew visas, or extend diplomatic accreditation. The last professional staff member left Belarus on October 29, 2002.

Fourteen member countries of the European Union reacted to the forced AMG closure by exercising their rights under the Schengen Treaty to not allow Lukashenko and seven high-ranking officials to travel to or through their territories. The United States announced on November 26, 2002 that it would institute a ban on travel to the U.S. for the same officials.

In June 1998, the Belarusian authorities violated the principle of inviolability of diplomatic missions under the Vienna Convention on Diplomatic Relations by evicting the U.S. and other countries' ambassadors from their diplomatic residences, terminating all access to the properties and declaring the area a "presidential territory." The United States, the European Union and other countries recalled their ambassadors, sent their Belarusian counterparts home and took other measures in protest. In September 1999 this dispute was resolved, the Government of Belarus paid compensation for taking the U.S. residence, and the U.S. ambassador returned to Minsk. In November 1999, Belarus joined the other OSCE states in signing the Charter for European Security that reaffirms full adherence to all OSCE documents already in force.

The Belarusian government's military doctrine is in accord with the OSCE principles on the inviolability of borders and non-interference in the internal affairs of other states. Belarus rejects war as a means of settling disputes. Its constitution declares Belarus a non-nuclear and neutral state.

Section 498A(a)(5): "cooperate in seeking peaceful resolution of ethnic and regional conflicts."

Belarusian leader Lukashenko was an outspoken supporter of Serbian ethnic cleansing in Kosovo. As a result of this, Belarus broke relations with NATO during the bombing campaign against Serbia. Lukashenko also supports Russia's military actions in Chechnya. Other than this, Belarus is not involved directly in ethnic or regional conflicts and has supported the Commonwealth of Independent States and OSCE as conflict-resolving mechanisms. Belarus is only a conditional member of the CIS Collective Security Agreement; its constitution prohibits the stationing of foreign troops in Belarus and the deployment of Belarusian troops abroad.

In late 1997, after Belarus failed to utilize Cooperative Threat Reduction Act (CTR) assistance for destruction of its SS-25 launch pads, that assistance project was terminated. The launch sites will remain START-accountable until they are destroyed although Belarus does not possess any SS-25 missiles. Other CTR assistance was suspended in 1997 because of concerns about Belarus� commitment to observing human rights. President Lukashenko has publicly expressed regret over the removal of nuclear weapons from Belarus.

Belarus has reduced the size of its armed forces and related expenditures. Belarus has stated its intention to convert its defense industry to civilian production but lacks the funds to do so quickly. The Belarusian authorities have also made declarations of their intent to form a single military district with Russia, which at one point they claimed would contain 300,000 soldiers.

Belarus is a State Party to the 1993 Convention on the Prohibition of the Development, Production, Stockpiling and Use of Chemical Weapons and on Their Destruction, and to the 1972 Convention on the Prohibition of the Development, Production and Stockpiling of Bacteriological (Biological) and Toxin Weapons and on Their Destruction and, with two exceptions, has submitted voluntary annual BWC-related CBM Data Declarations regularly since 1991. Belarus ratified the comprehensive Nuclear Test Ban Treaty (CTBT) in September 2000.

We are not aware that Belarus has engaged in the proliferation of nuclear, biological, or chemical weapons or related technology. We continue to enlist the cooperation of the GOB to investigate reports and stop sales of dual-use items for potential use in programs of concern. Belarus became a member of the Nuclear Suppliers Group on May 19, 2000 and as such adheres to adopted current international export standards on nuclear and nuclear-related items, including the NSG commitment to require full scope safeguards as a condition of nuclear supply. We have blocked Belarus membership in the NPT Exporters Committee (Zangger Committee) because of human rights concerns.

Belarus is a party to the START and INF Treaties and is an active participant in the Joint Compliance and Inspection Commission and the Special Verification Commission of the START and INF Treaties, respectively. Belarus is a party to the CFE Treaty, participates in the Treaty�s implementation forum, the CFE Joint Consultative Group, and signed both the CFE Flank Agreement in 1996 (ratified in 1997) and the adapted CFE Treaty in 1999. Belarus ratified the adapted CFE Treaty in 2001. Although there have been some continuing concerns about Belarus compliance with individual CFE provisions, generally speaking Belarus has fulfilled its obligations under this Treaty.

Belarus has submitted Confidence- and Security-Building Measures (CSBM) annual data declarations for 1991-2001 and has willingly undergone CSBM inspections and evaluation visits in accordance with the OSCE Vienna Document.

In 2002, Belarus continued to be a leading conventional arms exporter as it sold off excess Soviet-era equipment. Moreover, an increasing number of reports of Belarusian transfers or potential transfers of conventional weapons to state-sponsors of terrorism have been received, especially to Iraq. There are also reports of arms retransfers from Belarus to countries of concern (armaments originating in Russia and other former Soviet states). In addition, credible allegations that the Belarusian government was offering training in advanced anti-aircraft systems (S-200 and S-300) to Iraqi military personnel surfaced in October 2001. The U.S. Government continues to monitor Belarus' relationship with Iraq and other nations of concern closely.

By a presidential decree on December 4, 1997, Belarus formalized its Moratorium on the Export of Anti-Personnel Landmines, which it had observed in practice since August 1995. Belarus was one of the original Subscribing States to the International Code of Conduct Against Ballistic Missile Proliferation (ICOC) that officially entered into effect on November 25, 2002. Belarus acceded to the NPT in 1993 as a non-nuclear weapons state.

Section 498A(a)(7): "take constructive actions to protect the international environment, prevent significant transborder pollution, and promote sustainable use of natural resources."

Belarus has taken positive steps to address international environmental concerns by establishing ministries of energy, forestry and water resources, and land reclamation. It has also established state committees on the consequences of the Chornobyl accident, the ecology, and the supervision of safety procedures in industry and the nuclear power industry. Belarus suffered considerably from the effects of the Chornobyl disaster and has actively sought U.S. assistance in cleaning up areas contaminated by radiation.

Air and water pollution problems of varying degrees of seriousness plague Belarus. Rivers are considered "moderately polluted" from industrial and agricultural sources. Some land reclamation efforts, undertaken in the name of economic development, have contributed to severe ecological problems in the Polesye region. Belarus has set up a Committee of the Council of Ministers on Emergency Situations, on the Consequences of the Chornobyl Disaster, and the Environment to oversee and coordinate environmental protection efforts undertaken by individual ministries.

Several non-governmental organizations (NGOs) and foundations continue to deal with the Chornobyl aftermath. The authorities have harassed and closed many of the programs of these NGOs. Belarus possesses the human and natural resources to gradually address the environmental challenges facing the country. Sufficient political will and a willingness to take the steps necessary to facilitate international funding would help to sustain progress in environmental restoration and protection.

There is no compelling evidence that Belarus has granted sanctuary from prosecution to individuals or groups that have committed acts of international terrorism or otherwise support international terrorism, although there are unconfirmed reports that Belarus may have aided terrorists from the Caucasus region in the past. Belarus has signed all twelve international counter-terrorism conventions and is party to nine of them.

Section 498A(a)(9): "accept responsibility for paying an equitable portion of the indebtedness to United States firms incurred by the former Soviet Union."

In October 1991, shortly before the Soviet Union dissolved, Russia and nine other Soviet republics, including Belarus, signed a Memorandum of Understanding declaring that they were jointly and severally liable for the pre-October 1991 debt to foreign creditors of the Soviet Union. In December 1991, Russia and seven other republics, including Belarus, signed an agreement which assigned to each of the newly independent states a share of all the external assets and foreign debt of the former Soviet Union (FSU). The December 1991 agreement provided that Belarus' share of the debt of the former Soviet Union would be 4.13 percent. In 1992, Russia sought to replace the "joint and several liability" principle by seeking full liability for the foreign debt of the FSU in return for all the external assets of the FSU. In July 1992, Belarus signed a "double-zero option" agreement with Russia under which Russia agreed to pay Belarus' share of the foreign debt of the FSU in return for Belarus' share of the external assets of the FSU.

Please see section 498A(a)(9) of the Russia FSA report regarding indebtedness to the United States incurred by the former Soviet Union.

The U.S. effort to uncover evidence of American POWs and MIAs in Belarus is conducted through the U.S.-Russian Joint Commission on POWs/MIAs established in March 1992. Beginning in 1997, however, U.S. officials held several meetings directly with Belarusian officials toward establishing a bilateral agreement. Meetings have continued, although due to the poor state of relations conclusion of an agreement has been delayed.

Section 498A(a)(11): 'terminate support for the communist regime in Cuba, including removal of troops, closing of military and intelligence facilities, including the military and intelligence facilities at Lourdes and Cienfuegos, and ceasing trade subsidies and economic, nuclear, and other assistance.

We have no evidence from which to conclude that the Government of Belarus is currently providing military, intelligence, economic, nuclear, or other assistance to the Government of Cuba. Given all information at hand, all trade is believed to occur on market terms.

Section 498A(b)(1): Has the President determined that the Government of Belarus has "engaged in a consistent pattern of gross violations of internationally recognized human rights or of international law?"

No. The President has not made such a determination at this time. However, as discussed above, we continue to have serious and increasing concerns about the Lukashenko regime's human rights record.

Section 498A(b)(2): Has the President determined that the Government of Belarus "has failed to take constructive actions to facilitate the effective implementation of applicable arms control obligations derived from agreements signed by the former Soviet Union?"

No. We do not believe that the Government of Belarus has failed to take such actions. However, we are very concerned about the Belarusian government's decision not to destroy the SS-25 launch pads, despite offers of USG assistance. Even though the Start I final implementation deadline of December 5, 2001, has passed, we continue to press the Belarusian government to destroy the launch pads.

Section 498A(b)(3): Has the President determined that, after October 24, 1992, the Government of Belarus knowingly transferred to another country:

Section 498A(b)(4): Is the Government of Belarus "prohibited from receiving such assistance by section 101 or 102 of the Arms Export Control Act or sections 306(a)(1) and 307 of the Chemical and Biological Weapons Control and Warfare Elimination Act of 1991?"

Section 498A(b)(5): Has the President determined and certified within 30 days to the appropriate congressional committees that the Government of Belarus "is providing assistance for, or engaging in, non-market-based trade (as defined in section 498B(k)(3)) with the Cuban government?" If so, has the President taken action to withhold assistance from the Government of Belarus under the Foreign Assistance Act within 30 days of such a determination, or has Congress enacted legislation disapproving the determination within that 30-day period?"

No. The President has not determined that the Government of Belarus is providing assistance for, or engaging in any non-market-based trade with, the Cuban government.

Since 1991 Georgia has made uneven progress toward the implementation of a democratic system based on principles of the rule of law, individual freedoms, and representative government determined by free and fair elections. The Georgian parliament adopted a new constitution in August 1995. Presidential and parliamentary elections were held for the first time under the new constitution on November 5, 1995. Local elections were held for the first time in November 1998, although the central government continues to appoint key local officials. Parliamentary elections were held for the second time on October 31, 1999; the OSCE stated that the election constituted a step toward compliance with OSCE commitments. However, in a presidential election held on April 9, 2000, the OSCE and other international observers determined that the elections were marred by several serious irregularities, and therefore did not meet international standards. Problems included interference by state authorities in the election process; deficient election legislation; not fully representative election administration; and unreliable voter registers. Local elections scheduled for fall 2001 were postponed until 2002. Parliamentary by-elections held October 21, 2001 in two districts were considered an improvement by international observers. Local elections in June 2002 were marred by irregularities. Parliamentary by-elections on November 30, 2002 failed in 2 of 4 districts due to low voter turnout.

Parliament passed significant legislation instituting legal, institutional and procedural reforms supportive of rule of law, individual freedoms and representative government. However, Parliament amended the Criminal Procedures Code in 1999, and several amendments substantially weakened protections against arbitrary arrest and detention. Law enforcement agencies have made little progress in adapting their practices to democratic norms. Although the 1995 Constitution provides for an independent judiciary, the judiciary is subject to executive pressure.

Section 498A(a)(2): "make significant progress in, and is committed to the comprehensive implementation of, economic reform based on market principles, private ownership, and integration into the world economy, including implementation of the legal and policy frameworks necessary for such reform (including protection of intellectual property and respect for contracts)."

Economic growth is slow, hampered by a poor harvest in 2002 and ongoing poor economic management. In 2002, Georgia continued to make progress in the area of revenue collection, although shortfalls persist. Sequestration of the budget is expected, after the Autonomous Republic of Ajara failed to remit revenues, and disbursements from the EU were delayed as a result of the kidnapping of an EU advisor. Georgia is applying for an extension of debt rescheduling terms with Paris Club creditors, in order to continue cash flow relief for the government.

The national bank has allowed the national currency, the lari, to float since 1998. The currency depreciated steeply at that time, but remained relatively stable through 2002. Inflation remains stable. The national bank continues to improve banking supervision and to meet International Monetary Fund (IMF) targets on reserves. Banking consolidation continues as well, and amendments to the law on the National Bank of Georgia were passed.

Georgia began to privatize its energy distribution system in 1998: the Telasi electricity distribution company was privatized in January 1999, and the thermal power plant at Gardabani was privatized in January 2000. The Wholesale Energy Market privatization was completed in 2001. Parliament passed legislation on the privatization of the state telecommunications monopoly in 2000, but when the tender closed in November 2000, there were no bidders. Small-scale privatization is virtually complete and 76 percent of medium- and large-scale enterprises have been privatized. With U.S. assistance, a land-titling program helped to implement low-cost, transparent titling and registration processes for approximately 1.5 million agricultural parcels out of a total of 2.4 million parcels surveyed and identified.

Georgia is a member of the International Monetary Fund, World Bank and European Bank for Reconstruction and Development. Georgia acceded to the World Trade Organization (WTO) on June 14, 2000. Georgia has enacted some legislation on protection of intellectual property rights (IPR), but there are still shortcomings and further steps need to be taken to meet all of Georgia's international IPR obligations. Enforcement of intellectual property regulations is weak due to lack of resources and expertise. A bilateral investment treaty entered into force in August 1997. On November 9, 2000, Congress authorized the President to determine that the provisions of Title IV of the 1974 Trade Act (which includes the Jackson-Vanik Amendment) should no longer apply to Georgia. Pursuant to this authorization, on December 29, 2000, the President extended normal trade relations to Georgia. However, foreign direct investment is not increasing, due largely to a non-transparent business environment. An Overseas Private Investment Corporation agreement has been in force since 1992, and in 2001 Georgia received designation from the United States Trade Representative as a beneficiary under the Generalized System of Preferences (GSP).

Section 498A(a)(3): "respect internationally recognized human rights, including the rights of minorities and the rights to freedom of religion and emigration."

The constitution incorporates human rights protections, however, the government's human rights record remains poor. In 1995, the constitutionally mandated office of the Public Defender, or ombudsman was created. The National Security Council's human rights advisor, which has a mandate to investigate claims of abuse, as well as the Public Defender were active in several individual cases involving police misconduct. While government representatives have been effective in specific cases, neither they nor NGOs have been successful in prompting systemic reform.

The 1995 Constitution provides for an independent judiciary, delineates the authorities of individual courts, and sets forth principles to safeguard citizens� rights. Significant problems remain, however, because the judiciary has not yet developed sufficiently to carry out the responsibilities set forth in the Constitution and does not exercise much independence from the executive branch. Judicial corruption and denial of fair and expeditious trials continue. A judicial reform law resulted in the removal of many corrupt and incompetent judges. They were replaced with judges who had passed a qualifying exam and vetting process. However, failure to pay judges in a timely manner has undermined reform efforts.

Prolonged pre-trial detention is a problem. Impunity and corruption in law enforcement are widespread. Torture is illegal; however, detainees continue to be beaten and tortured, usually to extract money or confessions. In 2001 the Ministry of Justice instituted some reforms after taking over responsibility for the prison system from the Ministry of Internal Affairs. The Justice Minister attempted to address overcrowding in the country's prisons by accelerating the construction of a new prison near Tbilisi. While the new prison will help to alleviate overcrowding, conditions in other facilities have not significantly improved. The Justice Minister also fired some corrupt administrators, released inmates to reduce overcrowding, and took steps toward creating a prison inspection system that would include NGO participation. However, the Justice Minister resigned in September 2001 and in October 2001 was elected to Parliament.

The ICRC had full access to detention facilities, including those in Abkhazia, and access included private meetings with detainees and regular visits. However, local human rights groups reported increasing difficulty in visiting detainees, especially in cases with political overtones. International and local human rights groups agree that there are several political prisoners, but disagree on the number.

Freedom to travel and emigrate is generally respected, as is freedom of the press, although independent media have on occasion been subject to harassment and intimidation by government officials. Georgi Sanaia, a local journalist, and host of a nightly political talk show on the independent Rustavi-2 television station was murdered under suspicious circumstances in July 2001.

In 2002, the status of religious freedom continued to deteriorate, attacks by orthodox extremists against religious minorities increased in frequency, and these acts of violence occurred with impunity during the period covered by this report. Police and other officials at times have harassed members of some religious groups and foreign missionaries. Police have remained passive when faced with - and at times even participated in - a growing number of violent attacks on religious minorities, particularly Jehovah's Witnesses. Assembly of God, Baptists, Pentecostals, evangelicals, and Hare Krishnas have also experienced difficulties. Parliament passed a resolution condemning religious violence and some investigations have been opened to look into the attacks. However, the Ministry of Interior (including the police) and Procuracy generally have failed to pursue criminal cases against extremists for their attacks against religious minorities. In March 2002, Father Basili Mkalavishvili, an excommunicated Orthodox priest who has incited a number of violent attacks on religious minorities, was brought to court, but was acquitted that same month. After a brief period of relative calm, attacks by Mkalavishvili and others resumed. In 2002, the Basilists also turned their attacks against television stations broadcasting non-Orthodox religious programming, as well as against the Liberty Institute which advocates on behalf of religious freedom. After many months of delay, the trial against Basili Mkalavishvili and several of his supporters resumed in November 2002. The trial is currently being conducted with continuing delays, which both sides seem to feel are justified. Security in the courtroom, however, has been an issue, as a reporter for RFE/RL was forced to leave by an angry mob during the recess and one of the defendants was armed and chastised by the bench.

While progress has been made toward the observance of international legal obligations and OSCE commitments in the area of human rights, the status of Abkhazia and South Ossetia, two separatist regions within Georgian territory, remain unresolved. The United States continues to work bilaterally and with the UN, the OSCE and other nations to encourage all parties to pursue a peaceful resolution of both conflicts in a manner that safeguards both the territorial integrity of Georgia and the rights of individuals belonging to ethnic minorities. In November 1999, Georgia joined the other OSCE states in signing the Charter for European Security, which reaffirms full adherence to all OSCE documents already in force.

Section 498A(a)(5): "cooperate in seeking peaceful resolution of ethnic and regional conflicts."

President Shevardnadze has consistently stressed Georgia's commitment to negotiate a peaceful settlement to the conflict in Abkhazia. He has pledged to continue this approach despite Abkhazia's unilateral declaration of independence in November 1994, its adoption of a constitution, its holding of presidential elections in October 1999 and 2001, and its demand that any settlement grant the region equal status with the government in Tbilisi. Negotiations under the auspices of the UN remain ongoing. Special Representative of the UN Secretary General (SRSG) Heidi Tagliavini continued to press for adoption of a UN draft proposal on the distribution of constitutional competencies between Georgia and Abkhazia. Since 1992, an OSCE mission has been working in Georgia to facilitate a political settlement of the South Ossetia dispute. The Georgian government has fully supported the mandate of the OSCE mission, which includes developing democratic institutions and encouraging respect for human rights throughout Georgia.

The Georgian government and representatives of the Abkhaz separatist regime have cooperated with the UN and OSCE, which established a human rights office in Sukhumi, the capital of Abkhazia's separatist regime. The office monitors the human rights situation in the region and encourages practices consistent with international human rights standards.

Georgia has acknowledged it is a successor to the former Soviet Union�s obligations under the INF Treaty. Although it does not actively participate in the Treaty�s Special Verification Commission, Georgia continues to observe the Treaty�s obligations.

Georgia ratified the CFE Treaty in 1992 and the 1996 Flank Agreement in 1997. Thereafter, Georgia participated actively in negotiations to adapt the CFE Treaty, which culminated at the November 1999 OSCE Summit in Istanbul with signature by all 30 CFE states of an agreement on CFE adaptation. The Government of Georgia has consistently made clear its commitment to achieving full implementation of the CFE Treaty. Georgia is in full compliance under CFE and has accepted CFE inspections of forces on its territory.

At the Istanbul Summit, Russia and Georgia agreed to a series of steps that were subsequently incorporated into the Final Act of the Conventional Forces in Europe (CFE) Treaty. In the Joint Statement of the Russian Federation and Georgia (Annex 14 of the Final Act), Russia agreed to reduce by no later than December 31, 2000 its Treaty-Limited Equipment (TLE) located within the territory of Georgia so as not to exceed 153 tanks, 241 ACVs and 140 artillery systems. Russia met this obligation on time. Russia also agreed to disband two of its bases in Georgia (Gudauta in separatist Abkhazia, and Vaziani near Tbilisi) by July 1, 2001. The Vaziani base withdrawal was completed according to the schedule, and equipment was removed from Gudauta in October 2001. However, Russia did not fulfill CFE transparency requirements during withdrawal from Gudauta, nor has it legally transferred the base to the Georgian side. The two sides have not yet agreed on the status of Gudauta as a CIS PKF facility. Additionally, Georgia and Russia have not yet reached agreement on the duration of the remaining Russian presence at bases at Batumi and Akhalkalaki. Following the OSCE�s Porto Ministerial in December, Russia and Georgia resumed discussions of withdrawal issues at the expert level. The United States has offered to assist with the withdrawal of Russian forces from Georgia via financial contributions to the OSCE�s Voluntary Fund for Georgia and reimbursement of costs associated with the implementation of the Russian withdrawal. While substantial funds were committed in 2000 to support the costs of observing the Russian withdrawal of TLE equipment and to reimburse Georgia's implementation costs, Russia's TLE withdrawal costs have not yet been reimbursed because the Russian Federation has not yet provided the documentation of costs needed to complete the reimbursement. Other countries have also offered to support aspects of the withdrawal and base closure process through the OSCE Voluntary Fund. Russia has signaled that it may seek assistance with the costs of closing the remaining two bases.

Georgia has submitted Confidence- and Security-Building Measures (CSBM) annual data declarations for years1996 to present and has willingly undergone CSBM inspections and evaluation visits in accordance with the OSCE Vienna Document.

Georgia subscribed to the International Code of Conduct Against Ballistic Missile Proliferation in November 2002.

The United States is helping to enhance Georgia's security through the U.S.-Georgian Border Security and Law Enforcement (Border Guards) Program, Foreign Military Financing (FMF), International Military Education and Training (IMET), and Excess Defense Article (EDA) programs. Other countries have also provided some military assistance, but the Georgian military remains ill-equipped. The $64 million Georgia Train and Equip Program seeks to accomplish our broader goals of military reform, while enhancing Georgia's capability to secure control of its territory and combat terrorism.

We are not aware that Georgia has engaged in the proliferation of any nuclear, biological, or chemical weapons, their delivery systems, or related technology. Georgia acceded to the Nuclear Non-Proliferation Treaty as a non-nuclear-weapons state on March 7, 1994. Georgia signed its NPT safeguards agreement with the International Atomic Energy Agency on September 29, but this has not yet entered into force. Georgia is a state party to both the multilateral Chemical Weapons Convention and the Biological Weapons Convention, which call for the elimination of chemical, bacteriological and toxin weapons and prohibit their development, production, and stockpiling. Georgia provided its annual voluntary BWC-related CBM Data Declaration only once in 2000. We do not believe that Georgia has engaged in significant transfers of conventional weapons. In addition to contacts with other western governments, Georgia has closely engaged with the United States on cooperative efforts to establish an effective export control system and works with the United States closely under the Cooperative Threat Reduction program. In 1999 Georgia adopted a new law on export controls and recently reorganized its export control structure, placing the Ministry of Economics and Trade as the lead agency. The only control list in use is that of the CIS, but Georgia committed during the 1999 Caucasus and Central Asia Regional export Control Forum to adopt the EU List. The Government of Georgia hosted the 1999 conference, and export controllers used the attention it attracted to strengthen its export control system internally.

Section 498A(a)(7): "take constructive actions to protect the international environment, prevent significant transborder pollution, and promote sustainable use of natural resources."

Georgia faces an array of environmental problems ranging from air and water pollution to deterioration of soils as a result of inefficient agricultural practices. Deforestation and the illegal export of timber remain serious problems.

The government of Georgia has taken some steps to put in place public policy mechanisms to address environmental issues, including the establishment of a ministry of environment. National environmental NGOs continue to gain access to the policy-making process on environmental issues. Georgian interest in regional cooperation on environmental issues also continues, but effective coordination and information sharing on transborder issues is progressing slowly. The Georgian government is committed to meeting its requirements in environmental monitoring and evaluation capabilities as outlined in the Host Government Agreements for the Baku-Tbilisi-Ceyhan oil pipeline and the Shah Deniz gas pipeline. Evidence of the priority placed on the environment is exhibited by the resolution in November 2002 of concerns expressed by the Georgian government and environmental NGOs over the environmental impact of the chosen pipeline route for BTC. The Regional Environmental Center (REC) located in Tbilisi, which was established in 2000 with the cooperation of the United States, is focused on implementing its needs assessment plan from 2001. The United States and the European Union are supporting and co-financing the establishment of this independent, non-profit and non-political organization, the mission of which is to strengthen civil society and support sustainable development by promoting public awareness and participation in regional environmental decision-making. The World Bank has also undertaken a program, administered in cooperation with the National Park Service of the U.S. Department of the Interior, to help Georgia protect habitats, promote biological diversity and environmental protection, and develop management of park and natural areas. The Government of Georgia in 2002 issued a decree aimed at protecting the water systems in the National Parks. The World Bank is also focused on rehabilitation of the irrigation systems in Western Georgia.

The Government of Georgia does not officially grant sanctuary from prosecution to individuals or groups that have committed acts of international terrorism or otherwise support international terrorism.

Beginning in autumn 1999, Russia has charged Georgia with allowing Islamic fundamentalists providing support to the Chechen insurgents to use Georgia as a staging area and transit point for fighters and materiel. Georgia has made efforts to close its border with Chechnya to fighters and those who wish to smuggle money, weapons and supplies to them, but has been hindered by lack of resources and internal corruption. In 2002, Georgian internal troops carried out operations to rid the Pankisi Gorge of terrorists. The U.S. provided USD 17.3 million in FY 2002 to enhance Georgia's ability to control its borders. Georgia is a party to six of the twelve international terrorism conventions; the remaining six are being considered in Parliament.

Section 498A(a)(9): "accept responsibility for paying an equitable portion of the indebtedness to United States firms incurred by the former Soviet Union."

In October 1991, shortly before the Soviet Union dissolved, Russia and nine other Soviet republics signed a Memorandum of Understanding declaring themselves jointly and severally liable for the pre-October 1991 debt to foreign creditors of the Soviet Union. In December 1991, Russia and seven other republics signed an agreement that assigned to each of the newly independent states a share of all the external assets and foreign debt of the former Soviet Union (FSU). Georgia signed both the October and December 1991 agreements. The December 1991 agreement provided that Georgia's share of the FSU debt would be 1.62 percent. In 1992, Russia sought to replace the joint and several liability principles by seeking full liability for the debt in return for all the external assets. On September 14, 1993, Georgia signed a �double-zero option� agreement with Russia transferring Georgia's share of the FSU debt to Russia in exchange for its share of FSU assets. The Georgian Parliament ratified the "zero option" agreement in March 2001, thereby entering it into force.

Please see section 498A(a)(9) of the Russia FSA report regarding indebtedness to the United States incurred by the former Soviet Union.

The U.S. effort to uncover evidence of American POWs and MIAs in the former Soviet Union is being conducted through the U.S.-Russian Joint Commission on POWs/MIAs that was established in March 1992. The Commission visited Georgia in May 1996 and met with President Shevardnadze and other high level officials who promised cooperation.

We have no evidence from which to conclude that the Government of Georgia is providing military and intelligence, economic, nuclear, or other assistance to the Government of Cuba.

CHECKLIST FOR GROUNDS OF INELIGIBILITY UNDER SECTION 498A(b) OF THE FOREIGN ASSISTANCE ACT OF 1961

No such pattern exists. However, there are continuing serious shortcomings in a number of areas. We remain committed to addressing these problems not only through diplomatic efforts but also through assistance programs.

Section 498A(b)(2): Has the President determined that the Government of Georgia "has failed to take constructive actions to facilitate the effective implementation of applicable arms control obligations derived from agreements signed by the former Soviet Union"?

No. While there were minor flaws in its implementation record in the first years after independence, Georgia has been a constructive and responsible participant in arms control undertakings.

Section 498A(b)(3): Has the President determined that, after October 24, 1992, the Government of Georgia "knowingly transferred to another country --