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U.S. Department of State

Diplomacy in Action

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


U.S. Government Assistance to and Cooperative Activities with Eurasia
Bureau of European and Eurasian Affairs
January 2003
Report
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CRITERIA FOR U.S. ASSISTANCE UNDER SECTION 498A a) OF THE FOREIGN ASSISTANCE ACT OF 1961
 
ARMENIA

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."

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.

Section 498A(a)(6): "implement responsible security policies, including--

(A) adhering to arms control obligations derived from agreements signed by the former Soviet Union;

(B) reducing military forces and expenditures to a level consistent with legitimate defense requirements;

(C) not proliferating nuclear, biological, or chemical weapons, their delivery systems, or related technologies; and

(D) restraining conventional weapons transfers."

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.

Section 498A(a)(8): "deny support for acts of international terrorism."

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

ARMENIA

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

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 --

(A) missiles or missile technology inconsistent with the guidelines and parameters of the Missile Technology Control Regime; or

(B) any material, equipment, or technology that would contribute significantly to the ability of such country to manufacture any weapon of mass destruction (including nuclear, chemical, and biological weapons) if the President determine[d] that the material, equipment, or technology was to be used by such country in the manufacture of such weapon"?

No such determinations have been made during the reporting period.

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

AZERBAIJAN

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.

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 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.

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."

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.

Section 498A(a)(6): "implement responsible security policies, including--

(A) adhering to arms control obligations derived from agreements signed by the former Soviet Union;

(B) reducing military forces and expenditures to a level consistent with legitimate defense requirements;

(C) not proliferating nuclear, biological, or chemical weapons, their delivery systems, or related technologies; and

(D) restraining conventional weapons transfers."

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.

Section 498A(a)(8): "deny support for acts of international terrorism."

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.


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

AZERBAIJAN

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

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 --

(A) missiles or missile technology inconsistent with the guidelines and parameters of the Missile Technology Control Regime; or

(B) any material, equipment, or technology that would contribute significantly to the ability of such country to manufacture any weapon of mass destruction (including nuclear, chemical, and biological weapons) if the President determine[d] that the material, equipment, or technology was to be used by such country in the manufacture of such weapon"?

No such determinations have been made during the reporting period.

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"?

No.

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.

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

BELARUS

Section 201 of the FREEDOM Support Act amended Section 498A of the Foreign Assistance Act of 1961 to provide that, "In providing assistance under (Chapter 11 of the FSA) for the government of any independent state of the former Soviet Union, 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."

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.

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)."

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.

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."

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.

Section 498A(a)(6): "implement responsible security policies, including--

(A) adhering to arms control obligations derived from agreements signed by the former Soviet Union;

(B) reducing military forces and expenditures to a level consistent with legitimate defense requirements;

(C) not proliferating nuclear, biological, or chemical weapons, their delivery systems, or related technologies; and

(D) restraining conventional weapons transfers."

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.

Section 498A(a)(8): "deny support for acts of international terrorism."

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.

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 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.

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

BELARUS

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:

(A) missiles or missile technology inconsistent with the guidelines and parameters of the Missile Technology Control Regime; or

(B) any material, equipment, or technology that would contribute significantly to the ability of such country to manufacture any weapon of mass destruction (including nuclear, chemical, and biological weapons) if the President determined that the material, equipment, or technology was to be used by such country in the manufacture of such weapon?"

No such determinations have been made.

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?"

No.

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.

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

GEORGIA

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."

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.

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."

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.

Section 498A(a)(6): "implement responsible security policies, including --

(A) adhering to arms control obligations derived from agreements signed by the former Soviet Union;

(B) reducing military forces and expenditures to a level consistent with legitimate defense requirements;

(C) nonproliferation of nuclear, biological, or chemical weapons, their delivery systems, or related technologies; and

(D) restraining conventional weapons transfers."

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.

Section 498A(a)(8): "deny support for acts of international terrorism."

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.

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 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.

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 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

GEORGIA

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

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 --

(A) missiles or missile technology inconsistent with the guidelines and parameters of the Missile Technology Control Regime; or

(B) any material, equipment, or technology that would contribute significantly to the ability of such country to manufacture any weapon of mass destruction (including nuclear, chemical, and biological weapons) if the President determine[d] that the material, equipment, or technology was to be used by such country in the manufacture of such weapon"?

No such determinations have been made during the reporting period.

Section 498A(b)(4): Is the Government of Georgia "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.

Section 498A(b)(5): Has the President determined and certified to the appropriate congressional committees that the Government of Georgia "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 Georgia 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 Georgia is providing assistance for, or engaging in non-market-based trade with, the Cuban government.

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

KAZAKHSTAN

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."

Kazakhstan has expressed a commitment to the protection of human rights, democracy and the rule of law. However, the Constitution concentrates power in the presidency, granting the President considerable control over the legislature, judiciary, and local government. President Nursultan Nazarbayev has been his nation's only leader since the break-up of the Soviet Union. He was elected to a new seven-year term in a 1999 election. He extended his previous term in office via a deeply flawed 1995 referendum without a contested presidential election (which, according to the Constitution then in force, should have been held in 1996). A law passed in 2000 allows President Nazarbayev, as the country's first President, to maintain certain policy prerogatives and a seat on the Security Council after he leaves office.

The 1999 Presidential election was held nearly two years earlier than previously scheduled. The government used a restrictive electoral law to limit the field of serious candidates, based on convictions for political offenses. Candidates received unequal access to the media, and there were numerous instances of intimidation of voters and the opposition prior to the election. The Organization on Security and Cooperation in Europe (OSCE) determined that the process in this referendum fell far short of its standards for open, free, and fair elections.

Although an improvement in many ways over the 1999 presidential election, the 1999 Parliamentary elections were marred by election law deficiencies, executive branch interference in the electoral process, and a lack of government openness about vote tabulations. There was convincing evidence of government manipulation of results in some cases. The OSCE mission sent to observe the elections concluded that the elections were "a tentative step toward democracy" but "fell short of (Kazakhstan's) OSCE commitments."

In 2000, the GOK and OSCE Office for Democratic Institutions and Human Rights (ODIHR) agreed to launch a series of broadly inclusive roundtables to review OSCE recommendations for electoral reform. In 2001, three political opposition parties (Azamat, People's National Congress, and Republican National People's Party) withdrew from the process citing the government as unresponsive to their suggestions. The roundtable process concluded in January 2002 and a report delivered to the Government and Parliament. Unfortunately, the OSCE's final report was a catalogue of diverse and often conflicting suggestions to current electoral law. Local NGOs were also given the opportunity to submit electoral reform recommendations. By the end of 2002, however, the Government had yet to produce a new Election Law draft. Nevertheless, the absence of new legislation gave the Central Election Commission latitude to revise its own technical instructions, and it had made a number of improvements to them after the 1999 elections. They will be put to the test in a December 2002 special election for three vacant parliamentary seats.

Experimental local district akim (mayor) elections were held in October 2001. In each oblast, elections were held to fill akim positions. Candidates were chosen by the Oblast Administration. The local akims were elected by secret ballots cast by a group of "electors," who were chosen by a public show of hands vote. The OSCE noted that these legal provisions represented a first step toward local self-determination. While this represented a first tentative movement away from appointment of local District Akims, President Nazarbayev, in statements throughout 2002, appeared to not support the continuation of the experiment. It remains to be seen whether the local level elections will be repeated in the near future, as many opposition political movements have publicly advocated.

In Kazakhstan, the executive branch dominates political institutions and the Parliament. The President has the power to appoint local governors and the cabinet. Currently, the Parliament cannot initiate changes to the Constitution or allocate funds without the approval of the executive branch. It has, with minor exceptions, toed the Executive's line. However, Members of Parliament (MPs) have the right to introduce legislation, and some bills introduced by MPs have become laws. In 2002, the Parliament continued its increasing responsiveness to NGOs and interest groups. The Parliament has developed into a forum for policy debate, though it continues to lack the authority to take action on its own recommendations. In August 2002, a group of 24 Parliamentarians forwarded an objection to passed legislation to the Constitutional Council; some MPs are outspoken members of opposition political groups.

The court system's independence is compromised by constitutional, legislative and administrative arrangements that subjugate the judiciary to the executive branch. A presidential decree signed in 2000 modestly reduced executive branch control of the judiciary by moving responsibility for the courts' administration from the Justice Ministry to the Supreme Court. The president has the power to appoint judges. Judges are beholden to the executive branch and susceptible to corruption. Though sill modest, their salaries have increased several times in recent years. There is no tradition of judicial independence. The constitution establishes the necessary procedures for a fair trial. Trials are public, defendants have the right to be present, the right to counsel, and the right to be heard in court and call witnesses for the defense. There is also a presumption of innocence and the right of appeal. However, a gap exists between these principles and actual practice. In a reform this year, the government lowered minimum criminal punishment requirements and implemented international standards in prisons.

In 2002, the Government prosecuted two leaders of a prominent opposition political movement for abuse of power during their tenures as public officials. Although corruption is endemic in the government, there were widespread charges that the timing of the arrests was politically motivated. Embassy observers at the trials noted that in both cases the prosecution failed to present evidence that the defendants had committed crimes, yet the judges sentenced them to 6 and 7 years in prison.

As the trials of the two opposition leaders proceeded over the summer, a new Law on Political Parties went into effect that required parties to have almost 10 times the number of members as under previous legislation. The prosecutions and the new law appeared designed to put a brake on expanding political expression; however, there were other signs that significant dissent remained. In spite of the restrictive new law, at least two opposition parties have conducted successful nationwide membership campaigns and one has been given temporary registration.

Although Kazakhstan is politically stable, concerns remain that political authoritarianism and corruption undermine its ability to pursue broad and lasting democratic reforms. The Constitution and laws generally provide for basic freedoms; however, the government restricts these in practice, and democratic institutions remain weak.

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 its independence in 1991, Kazakhstan has taken major steps toward developing a market-based economy and, as a result, has attracted over $18.4 billion in gross foreign direct investment, over half of it in the oil and gas sectors. A bilateral investment treaty between the U.S. and Kazakhstan entered into force in January 1994. A bilateral trade agreement has been in force since 1993 providing reciprocal Normal Trade Relations (NTR). It has also been determined that Kazakhstan is 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). A U.S.-Kazakhstan Treaty on the Avoidance of Double Taxation also is in force. Laws providing fair treatment for foreign investors are in place, although in practice they are not always fully implemented. The American Chamber of Commerce is active in Almaty and the U.S.-Kazakhstan Business Association was created in 1999 in Washington, D.C.

The bulk of Kazakhstan's economy is owned by private companies, including over 84% of small and medium enterprises. 68% of large firms are entirely or partially privatized (almost 50% are entirely privatized). Private companies produce 75% of GDP and dominate almost all economic sectors. Although the Government of Kazakhstan repeatedly has delayed the full privatization of several large enterprises, it has sold partial interests in many of these companies to private investors.

Kazakhstan's strong macroeconomic performance continued in 2002, with GDP growth expected to be at least 9% due to strong prices for Kazakhstani exports on world markets, solid economic conditions among its primary trading partners, and continued prudent macroeconomic policies. Inflation has been in single digits for the last three years. Kazakhstan established a National Fund with privatization revenues and higher than expected oil revenues, in order to ensure fiscal stability during periods of low oil prices. The fund grew to $1.85 billion by December 2002. Prudent and transparent management of the National Fund is a key issue between the IMF and the Government of Kazakhstan.

In March 2002, the U.S. Department of Commerce graduated Kazakhstan to market economy status under the U.S. anti-dumping law. The change in status recognized substantive market economy reforms in the areas of currency convertibility, wage rate determination, openness to foreign investment, and government control over the means of production and allocation of resources. Because of its strong macroeconomic performance and financial health, Kazakhstan became the first former Soviet Republic to repay all of its debt to the IMF in 2000, seven years ahead of schedule. Economic growth in 2001, along with tax and financial sector reforms, has contributed to improved government finances. A new tax code, which represents continued progress toward establishment of a transparent and effective tax system, went into effect in January 2002. Kazakhstan also was able to reduce the Value Added Tax from 20 to 16 percent and reduce social (payroll) taxes in 2001. In 2002, the Government drafted a new Customs Code, to increase efficiency and transparency in trade transactions, and a new Land Code, which allows privatization of agricultural land.

From 1993 through the first half of 2002, U.S. firms, led by oil and gas companies, have invested more than $6 billion out of gross foreign direct investment of $18.4 billion and are the largest investors in Kazakhstan. Although the Government of Kazakhstan has taken many steps to create a more Western-style business environment, local and foreign businesses must deal with frequently changing and unevenly implemented legislation, a poorly functioning court system, frequent regulatory and personnel changes, and a cumbersome and often corrupt bureaucracy. Foreign companies also are faced with difficulties obtaining work permits for expatriate employees as the Kazakhstan Government has pressured foreign firms to boost local employment and use local inputs. More troubling were attempts by the Government to re-open contracts with foreign oil and gas companies, although President Nazarbayev has publicly stated that existing contracts will be honored. The World Bank, Asian Development Bank, and European Bank for Reconstruction and Development are all active in Kazakhstan. In 1993-2001, the World Bank had financed 15 projects in Kazakhstan and disbursed $1.14 billion for their implementation. Currently, the World Bank has seven projects under implementation worth almost $460 million. The EBRD primarily supports development of small and medium enterprises (SMEs), transport and communications infrastructure, financial institutions and industrial enterprises. The ADB has provided technical assistance in 2002 in areas such as rural and agricultural development, road rehabilitation, promoting childhood development, and developing an energy strategy.

Kazakhstan applied for membership in the World Trade Organization (WTO) in 1996. The U.S. has provided technical assistance in Kazakhstan's accession process. Kazakhstan has submitted offers for services, technical barriers to trade, intellectual property policies, and SPS issues to the WTO Secretariat and engaged in multilateral and bilateral negotiations with WTO members, including the U.S., during 2002. Although the Government of Kazakhstan has shown a renewed focus on WTO accession, much work remains to be done in the negotiation process for Kazakhstan's goods access offers to meet its future WTO partners' expectations.

Kazakhstan has endeavored to strengthen protections for intellectual property. Kazakhstan joined the Bern Convention for the Protection of Literary and Artistic Works in 1999 and acceded to the Geneva Phonograms Convention in 2000. Kazakhstan has signed but has not yet ratified the 1997 WIPO Copyright Treaty and the WIPO Performances and Phonograms Treaty. Current laws, however, do not provide clear retroactive protection to sound recordings as required by the Bern Convention and TRIPS Agreement. Nevertheless, the Government announced that in 2003 Kazakhstan intends to amend its Copyright Law to include additional provisions on retroactive protection of copyrights. Despite an increase in confiscations of pirated goods and the gradual growth of licensed dealers, enforcement remains the most serious obstacle to a sound IPR regime. The Government agency charged with IPR protection is under funded and the judicial system does not effectively prosecute IPR related cases. Public awareness of IPR issues is growing due to Government and private sector efforts and the Government is actively working to inform judges and police about their responsibility to enforce IPR protections.

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

The Government's poor human rights record worsened in 2002, and it continued to commit abuses.  Its adherence to OSCE commitments and respect for internationally recognized human rights suffered primarily in the areas of the independent media and opposition political expression. In other areas, most notably prison reform, the steady progress seen in recent years has continued. The gap between law, including the Constitution, and actual practice undermines citizens' faith in public institutions and rule of law. However, Presidential Nazarbayev created by decree the office of the Human Rights Ombudsman to investigate certain government abuses.

There were cases when members of the security forces beat or otherwise abused detainees. There were instances of arbitrary arrest, and of individuals held in prolonged detention without charge. On January 1, 2002, the administration of the prison system was transferred from the Interior Ministry to the Justice Ministry, a step human rights defenders advocated as essential to reduce abuse of prisoners. Criminal actions taken against police for abusing detainees continue to increase, although human rights observers believe that the cases brought against police cover only a small fraction of the incidents, which they characterize as routine, and they assert that the legal system remains riddled by corruption. The government has begun to take a more active role in efforts to improve prison conditions and the treatment of prisoners. A government working group formed in 2001 to look into alternatives to confinement produced a draft law, which human rights defenders applauded and which passed the lower house of the Parliament in September 2002. The proposed law contained more than 100 changes to the Codes governing sentencing.

The Constitution and the Media Law provide for freedom of speech and of the press; however, the Government used a variety of means - including criminal and administrative charges, physical attacks, and vandalism - throughout the year to silence its critics. For example, one newspaper's office was firebombed; an independent printing press was also firebombed; and a prominent journalist who wrote articles critical of the government was beaten shortly before he was to travel to Warsaw to attend the OSCE Human Dimension Review meeting to discuss media freedom in Kazakhstan. Several newspapers and television stations were forced to close down. As a consequence of these methods, many journalists practiced self-censorship; some have left the country. Amendments to the Media Law from 2001 imposed foreign rebroadcast and Kazakh language requirements, giving the Government more tools to temporarily suspend or close at least five media outlets in 2002. The amendments also expanded the exposure of media outlets for libel. President Nazarbayev said in August that the Media Law should be amended again to further define journalists' responsibility not to undermine the state and to create a journalistic code of ethics.

Despite this restrictive legislation, the Government continued to issue new licenses for various types of media and the overall number of media outlets increased, as it had over the previous year. The Government continues to own some major printing and distribution facilities and to enjoy influence over most of those owned privately. Publishing houses, which also are responsible legally for the information that they publish, were reluctant to publish anything that might contain "undesirable" stories.  While these limitations are not imposed by the government, they effectively limit the media's ability to publish strongly critical items. Both the Criminal and Civil Codes contain articles establishing broad libel liability. At the same time, two influential new newspapers are regularly publishing stories critical of the government.

The government sporadically infringes on citizens' rights to privacy. Kazakhstan's authorities are believed to tap phones and monitor the correspondence of some members of the political opposition. New legislation covering prosecutors, passed in August 2002, expanded the legal authority of the Government to monitor individuals' activities. Freedom of association, while generally respected, is sometimes hindered by complicated registration requirements for organizations; the minimum membership for a political party was raised to 50,000 under legislation passed in July 2002. Freedom of assembly is restricted by requiring a permit to hold a demonstration or public meeting and groups must make requests for such permits at least ten days in advance. Authorities have at times refused to issue such permits or have arrested demonstrators for not having one. Courts fined some organizers of unsanctioned demonstrations. Opposition activists have been denied permission to use rented facilities at the last minute, reportedly at the instruction of Kazakhstan's security officials. The Constitution provides for the right to emigrate and the right of repatriation; both are respected in practice. Thus, since 1997, U.S. Presidents have determined that Kazakhstan meets the emigration requirements of Jackson-Vanik legislation. In July 2001, the Government formally abolished the exit visa requirement for temporary travel of citizens. The Committee for National Security (KNB) has legal authority to deny permission to travel in and out of the country, but emigration is not hindered. Certain situations remain in which exit from the country may be denied, including pending criminal or civil legal proceedings, unserved prison sentences, evasion of duty as determined by a court of law, presentation of false documentation, or travel by active-duty military.

The government generally respects freedom of religion and most denominations worship without government interference. However, local governments sometimes harass Islamic and Christian groups whose members they regard as religious extremists. Representatives of Jehovah's Witnesses and some other non-traditional religions alleged incidents of harassment by local governments. Government officials have frequently expressed concerns about the potential spread of religious extremism from other states. Despite their concerns about regional security threats from groups claiming a religious basis, the government has refrained from imposing new legal restrictions on religious freedom. The Constitutional Council ruled restrictive draft amendments to the Religion Law unconstitutional in April 2002 and the Government has made no effort to craft new amendments since.

The Constitution states that, "everyone is equal before law and court. No one may be subjected to any discrimination for reasons of origin, social position, occupation, property status, sex, race, nationality, language, attitude to religion, convictions, place of residence, or any other circumstances." In September 2002, the Government created the position of Human rights Ombudsman. Although it is an institutionally weak office, its authority is much greater than that of the existing Presidential Human Rights Commission. Kazakh is the state language, although Russian is officially recognized and widely used. Minority ethnic groups are represented in the Government, but ethnic Kazakhs hold the majority of leadership positions.

Traditional cultural practices limit the role women and disabled persons play in society. Women are limited in their ability to own and manage businesses or real property. The President and other members of Government speak in support of women's rights and official state policy maintains that constitutional prohibitions on sex discrimination must be supported by effective government measures. Three Government ministers are women. There are laws mandating the provision of accessibility to public buildings and commercial establishments for the disabled; however, the Government does not enforce these laws and few accommodations exist in practice. The Government provides almost no care for the mentally ill and mentally retarded due to a lack of resources.

The Constitution and the Labor Code guarantee basic worker rights, including the right to organize, to collective bargaining, and to strike; however, the Government has, at times, tried to limit the influence of independent trade unions, both directly and through its support for state-run unions. The law does not provide mechanisms to protect workers who join independent trade unions from threats or harassment by enterprise management or state-run unions.

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."

Kazakhstan has made a strong commitment to respect its international legal obligations and OSCE commitments to refrain from the threat or use of force and to settle disputes peaceably. Kazakhstan is at peace with its neighbors and has defensive military forces that do not pose an offensive threat to the region. Kazakhstan is also a strong proponent of dialogue and cooperation among the states of the former Soviet Union. Kazakhstan is an active member of NATO's Partnership for Peace.

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

Kazakhstan has been an active participant in coalition efforts to resolve the conflict in Afghanistan. Kazakhstan provided a one-time donation of wheat to help feed the people of Afghanistan during the conflict. Kazakhstan is committed to establishing a multi-ethnic national identity and is generally sensitive to the concerns of the large ethnic Russian community and the communities of the dozens of other nationalities that live in Kazakhstan.

Section 498A(a}(6): "implement responsible security policies, including—

(A) adhering to arms control obligations derived from agreements signed by the former Soviet Union;

(B) reducing military forces and expenditures to a level consistent with legitimate defense requirements;

(C) not proliferating nuclear, biological, or chemical weapons, their delivery systems, or related technologies; and

(D) restraining conventional weapons transfers."

Kazakhstan continues to be a strong partner in preventing the proliferation of nuclear, biological and chemical materials of concern. As a further sign of its commitment, in 2002 Kazakhstan became a member of the Nuclear Suppliers Group and ratified the bilateral Cooperative Threat Reduction Agreement with the U.S. When the USSR broke up, Kazakhstan was one of the four Soviet successor states with nuclear weapons on its soil and the second Soviet successor state to accede to the NPT as a non-nuclear weapon state, doing so in February 1994. All nuclear weapons were removed from its territory by the end of April 1995. In August 1995, Kazakhstan's safeguards agreement with the International Atomic Energy Agency entered into force. Kazakhstan is negotiating a regional nuclear weapon free zone treaty with other Central Asian nations. It has also ratified the START treaty and eliminated all strategic offensive arms under START well ahead of schedule. Kazakhstan is a successor state party to the INF and START treaties and has been an active participant in their implementation by virtue of its representation on those treaties' respective implementation commissions, the JCIC and SVC. Kazakhstan has indicated its wish to be considered a successor state under the ABM Treaty, and has participated in the SCC, the implementation commission established by that treaty. Kazakhstan is also a signatory to the Comprehensive Test Ban Treaty.

Since 1994, Kazakhstan has been a member of the Moscow-based International Science and Technology Center, a multilateral nonproliferation program redirecting former weapons of mass destruction scientists to peaceful activities. The government is also committed to maintaining a military force consistent with legitimate defense requirements.

The Government of Kazakhstan has consistently stated that it is against its policy to transfer conventional weapons to terrorist-list states, or to engage in the proliferation of nuclear, biological, or chemical weapons, their delivery systems, or related technology. We are not aware that it has engaged in transfers of, or in the proliferation of, nuclear, biological, or chemical weapons, their delivery systems, or related technology.

However, the 1999 transfer of MiG-21 fighter aircraft from Kazakhstan to North Korea raised serious questions about the government's controls on conventional military technology and its commitment to non-proliferation in this area. As a result of USG interaction with Kazakhstan on this matter, the government provided extensive, concrete nonproliferation commitments and agreed to take specific steps to ensure that no such transfers occur in the future. In October 2002, Kazakhstan passed a new export control law, and U.S. export control cooperative efforts continue to work to prevent future transfers. The U.S. has also urged the Government of Kazakhstan to ensure that its missile-related policies and practices are consistent with international standards, and in particular, the Missile Technology Control Regime.

Kazakhstan became a State Party to the Chemical Weapons Convention (CWC) on April 22, 2000. In July 2001, U.S. experts completed the second site visit to three chemical weapons production facilities as part of the GOK undertakings regarding nonproliferation in the wake of the MiG transfers to North Korea. A full assessment of these visits must be conducted before a judgement on Kazakhstan's compliance with the CWC can be made. Kazakhstan is actively reviewing whether to become a State Party to the Biological Weapons Convention.

Kazakhstan ratified the CFE Treaty on October 30, 1992. It ratified the CFE Flank Agreement on May 14, 1997. Kazakhstani representatives have participated actively in the CFE Joint Consultative Group, the body responsible for CFE implementation, as well as in the CFE adaptation negotiations completed in November 1999. Kazakhstan signed the CFE adaptation agreement at the November 1999 OSCE Summit in Istanbul. Finally, Kazakhstan has never declared CFE Treaty-Limited Equipment in the portion of its territory covered by the Treaty. It has provided annual notification that it has no TLE in the area of application in past years.

Kazakhstan 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. Kazakhstan has submitted Confidence- and Security-Building Measures (CSBM) annual data declarations for the years 1995-2001 and has willingly undergone CSBM inspections and evaluation visits in accordance with the OSCE Vienna Document.

The U.S. worked closely with Kazakhstan to dismantle nuclear weapons facilities at Semipalatinsk and the destruction of delivery systems, including 147 SS-18 silo launchers. The U.S. has also cooperated with the GOK to reduce the proliferation risk from former Soviet nuclear test site at Degelen Mountain. Kazakhstan's full-scope IAEA safeguards agreement entered into force in August 1995. Although Kazakhstan is not a member of the Nuclear Suppliers Group, it has expressed an interest in joining. The Agreement for the Peaceful Uses of Nuclear Energy, signed by the United States and Kazakhstan in 1997 after Kazakhstan provided the requisite assurances of non-cooperation with proliferating states, entered into force in November 2000. After Kazakhstan voluntarily shut down the BN-350 nuclear reactor at Aktau two years ahead of schedule, the United States and Kazakhstan completed the packaging of the spent nuclear fuel from the reactor on June 18, 2001, and continued cooperation on the decommissioning and safe shutdown of the reactor itself.

The U.S. Nuclear Regulatory Commission and the Kazakhstan Atomic Energy Committee also renewed their agreement for nuclear safety cooperation through 2004. Prime Minister Tokayev issued a decree in October 1999 exempting from taxes U.S. assistance funds paid to Kazakhstan's scientists under the Initiative for Proliferation Prevention (IPP) projects, allowing the resumption of six projects that had been suspended over this issue and the funding of four new projects by the United States. The USG has agreed to fund an "Ecological Survey of Industrial Sites" environmental monitoring project at Stepnogorsk through the International Science and Technology Center in cooperation with the U.S. Environmental Protection Agency.

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

Kazakhstan suffered severe environmental degradation under Soviet rule. There is broad-based support for domestic protection of the environment. The government's resources are inadequate to address some of the world's most challenging environmental problems: desiccation of the Aral Sea, protection of the fragile Caspian ecosystem, remediation of the Semipalatinsk nuclear testing range, clean-up of Baykonur launching facility, extremely polluted cities, desertification, and development of mechanisms for regional transboundary water management.

The government has shown an interest in regional cooperation on environmental policy and has agreed to the establishment of a coordination and information sharing mechanism as a first step toward fuller cooperation on trans-border and international environmental problems. It has taken some steps to establish public policy mechanisms to address environmental issues, including reorganizing the Ministry of Natural Resources and Environmental Protection in 2002 into the Ministry of Environmental Protection and transferring the Committee on Water Management and Committee on Forestry, Fishery and Hunting to the Ministry of Agriculture. National environmental NGOs are gaining access to the policy-making process on environmental issues. Kazakhstan has also expressed willingness to cooperate in developing laws on water rights and water user associations with other countries in the region. It is an active member of the Interstate Coordination Water Commission of Central Asia.

Kazakhstan signed and ratified the Aarhus Convention on environmental information in 2002. It also began implementation of a main principal of the Rio+10 Declaration: public access to environmental information. It contributed to the development of the Regional Environmental Action Plan for Central Asia, which Kazakhstani representatives presented at the 2002 World Summit on Sustainable Development.

In 1999, Kazakhstan signed and deposited its instruments of ratification of the Convention on International Trade in Endangered Species (CITES), which will facilitate further efforts to conserve threatened and endangered species in the area. It has taken active measures to comply with CITES quotas on Caspian sturgeon fishing. In 2002, the U.S. Fish and Wildlife Service conducted a training workshop related to CITES implementation, obligations, and enforcement.

Kazakhstan discusses Caspian Sea environmental protection issues regularly with the other Caspian littoral states. Kazakhstan has been an active and constructive player in regional and international efforts to alleviate the deteriorating environmental conditions and fosters regional cooperation in the Aral Sea basin. Kazakhstan has worked with the World Bank and international donors on a 15-20 year plan to stabilize the Aral Sea. To address the water management problem of the Syr Darya River, Kazakhstan and other basin states, with technical assistance from USAID/Central Asia, established the 1998 Framework Agreement on the Use of Water and Energy Resources of the Syr Darya Basin.

The United States and the European Union have worked together with the Ministry of Environmental Protection to establish an independent, non-profit, and non-political Regional Environmental Center {REC) in Almaty in 2001. The mission of the REC is to strengthen civil society and support sustainable development by promoting public awareness and participation in environmental decision-making among the countries of Central Asia. In 2002, the U.S. Environmental Protection Agency, U.S. Embassy and Ministry of Environmental Protection signed a Memorandum of Understanding to provide the REC with funding for its grants program.

Section 498A(a){8): "deny support for acts of international terrorism."

Kazakhstan does not grant sanctuary from prosecution to individuals or groups that have committed acts of international terrorism or otherwise support international terrorism. Kazakhstan has strongly supported U.S. actions against the perpetrators of the September 11, 2001 terrorist attacks on the United States. President Nazarbayev has frequently and publicly reiterated his support for the U. S. in the fight against international terrorism. In addition to its public support for U.S. efforts, Kazakhstan granted the U.S. permission to use its airspace for military and humanitarian flights, with over 800 U.S. overflights in support of OEF in 2002. Kazakhstan has offered the U. S. use of its military bases, if needed. In July 2002, Kazakhstan signed an agreement to use Almaty Airport as a divert airfield for OEF. Kazakhstan offered to supply food and fuel to U.S. forces in Central Asia; it provided wheat for humanitarian relief efforts and offered a peacekeeping battalion for post-conflict peacekeeping efforts in Afghanistan. Kazakhstan also has been actively searching for terrorist financial assets in Kazakhstan and has blocked the assets of an individual listed on the E.O. 13223 terrorist list.

Kazakhstan is a party to nine of the twelve international counter-terrorism conventions. In 2002, it ratified the Convention for the Suppression of Terrorist Bombings and the Convention for Suppression of the Financing of Terrorism. A third (on the Physical Protection of Nuclear Material) is in the process of ratification. The two on which it has not yet acted are the Conventions for the Suppression of Unlawful Acts against the Safety of Maritime Navigation (Rome-1988) and for the Suppression of Unlawful Acts against the Safety of Fixed Platforms located on the Continental Shelf (Rome -1991). Also in 2002, Kazakhstan enacted tougher anti-terrorism laws with increased penalties.

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). Kazakhstan signed both the October and December 1991 agreements. The December 1991 agreement provided that Kazakhstan's share of the FSU debt would be 3.86 percent. 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. On September 6, 1993, Kazakhstan signed a "double zero option" agreement with Russia under which Russia agreed to pay Kazakhstan's share of the foreign debt of the FSU in return for Kazakhstan's share of the external assets of the FSU. Please see section 498(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 that was established in March 1992. The U.S. side of the Commission visited Kazakhstan in August 1994 and Kazakhstan promised cooperation on the POW/MIA effort. The government has been cooperative with all related interviews conducted in Kazakhstan.

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 Kazakhstan is providing military, intelligence, economic, nuclear, or other assistance to the Government of Cuba.


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

KAZAKHSTAN

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

No. Although Kazakhstan's human rights record worsened in 2002, its Government did not engage in a consistent pattern of gross human rights violations. The most troubling negative developments were the selective prosecutions and convictions of two opposition politicians on corruption charges, the suspension or closure of five independent media outlets, and harassment of multiple independent journalists. These setbacks occurred alongside limited positive developments, including the temporary registration of a major new opposition party, successful nationwide registration campaigns conducted by two opposition parties, and the emergence of new progressive media outlets publishing articles critical of the government. In 2002, the Government continued its laudable progress on prison reform and created a Human Rights Ombudsman. Draft legislation to restrict religious freedom was struck down as unconstitutional. On the troubling issues, the United States and its Embassy have expressed strong and consistent concern through diplomatic efforts and will continue to exert pressure on the Government. Our assistance programs are instrumental in promoting human rights and international standards, and relied upon by a burgeoning civil society. Improvement of Kazakhstan's human rights situation will depend in part on continued engagement and assistance from the United States.

Section 498A(b)(2): has the President determined that the Government of Kazakhstan 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. Kazakhstan has been a leader in nuclear nonproliferation. It has eliminated all strategic offensive arms under START I well ahead of schedule. Kazakhstan deposited its instrument of accession to the NPT in 1994, ratified the Comprehensive Test Ban Treaty, and become a member of the Nuclear Suppliers Club.

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

(A) missiles or missile technology inconsistent with the guidelines and parameters of the Missile Technology control Regime; or

(B) any material equipment, or technology that would contribute significantly to the ability of such country to manufacture any weapon of mass destruction (including nuclear, chemical, and biological weapons) if the President determine [d] that the material, equipment, or technology was to be used by such country in the manufacture of such weapon?"

No such determinations have been made.

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

No. We do not have information from which to conclude that Kazakhstan is prohibited from receiving assistance under these statues.

Section 498A(b)(5): has the President determined and certified to the appropriate congressional committees that the Government of Kazakhstan "is providing assistance for, or engaging in, non-market-based trade (as defined in section 498(k)(3) with the Cuban Government? If so, has the President taken action to withhold assistance from Kazakhstan 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 Kazakhstan 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

KYRGYZ REPUBLIC

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."

The Kyrgyz Republic has expressed a commitment to the protection of human rights, democracy and the rule of law. Although the 1993 Constitution defines the form of government as a democratic republic, President Askar Akayev dominates the government. Earlier this year, President Akayev announced that he would step down when he completes his third term in 2005. Despite constitutional limitations, Parliament has become more independent and has modified or blocked presidential initiatives. In October 2002, regional by-elections for seats in the Kyrgyz Legislative Assembly (lower house) were held in Osh. Despite improvements in electoral law and regulation, and participation by independent domestic observers, the by-elections were marred by serious violations, including illegal ballot issuances, multiple voting, family voting, and moderate interference with election observers. Also, there is a case of one candidate who won 46 percent of the vote but was disqualified on charges of alleged false financial reporting.

In August 2002, a constitutional assembly was formed by decree of President Akayev to recommend revisions to the Constitution that would strengthen democracy. The assembly met in September and issued a list of proposals aimed at enhancing the authority and autonomy of the Parliament, enhancing the independence of the judiciary, and promoting local self-government. A national referendum on the proposed constitutional amendments will take place in 2003.

The Parliament has become more independent, initiated its own legislation, and on occasions overrode presidential vetoes in defense of its own legislative priorities. In the past, the parliament and the president have worked together to pass significant reforms of the criminal, civil and commercial codes and to begin the process of privatizing state industry and state-owned commercial enterprises. In January a prominent member of Parliament was arrested and charged for abuse of power seven years earlier, but was eventually released after months of citizen protests. In 2002, Parliament passed legislation to create an ombudsman, and proposed legislation to decriminalize libel, and reform the educational system.

The constitution also provides for an independent judiciary, but despite extensive judicial reforms and a large body of new law, the judiciary continues to be dominated by the executive branch; the Government used judicial proceedings against prominent political opposition and independent media figures in numerous instances. In May a leading opposition leader was sentenced to ten years in prison. Trials of six local law enforcement officers involved in the Aksy killings of five protestors began in late September but were postponed after protesters disrupted the proceedings; citizens continued to call for higher-ranking officials to face accountability.

Civil society continues to be the most vibrant and viable in the region. A large and active NGO community has been able to focus and organize public demands. Oppositionists and human rights activists organized two national Kurultais (people's assemblies) for public discussion of political issues in 2002; however, they were prevented from meeting in the capitol. Parliament sometimes acts in partnership with NGOs and civil society and has held hearings on issues of public interest, including human rights.

There are numerous independent newspapers and magazines in the Kyrgyz Republic that are often critical of the government. Although, in principle, they are allowed to operate freely, most face periodic harassment from executive and judicial authorities. In May 2002, the Kyrgyz government rescinded Decree Number 20 that had severely restricted freedom of the press.

Despite its expressed commitment to protect human rights, the government's record in practice is poor in many areas. In the last year, there were credible reports of police abuse and brutality, and there are reports of numerous cases of arbitrary arrest and detention.

The Kyrgyz Republic's constitution provides substantial guarantees of rights for its citizens, including members of non-Kyrgyz ethnic groups. Nevertheless, despite efforts by President Akayev to mitigate the effects of Kyrgyz nationalism, the ethnic Russian and Uzbek populations continue to complain of discrimination by ethnic Kyrgyz officials.

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)."

The Kyrgyz Republic has made important progress in restructuring its economic system and implementing legislation that will be the basis for a market economy. The national currency, the som, was introduced in May 1993, and parliament has adopted key legislation on privatization, joint ventures, foreign trade and investment and free economic zones. Most small and medium enterprises have been privatized. A trade agreement with the United States provides for reciprocal Normal Trade Relations (formerly Most Favored Nation) status and contains intellectual property rights (IPR) provisions. The Kyrgyz government has taken some steps to meet the IPR provision of the agreement, but enforcement remains weak. An Overseas Private Investment Corporation (OPIC) agreement is also in force. A bilateral investment treaty with the United States entered into force in January 1994. The Kyrgyz Republic has committed to avoid imposing restrictions on payments for current international transactions and avoid engaging in multiple currency practices or discriminatory currency arrangements. The Kyrgyz Republic is a member of the International Monetary Fund (IMF), World Bank, European Bank for Reconstruction and Development, and the Asian Development Bank. In December 1998 the Kyrgyz Republic was the first former Soviet state to become a member of the WTO. In June 2000, it was graduated from the application of the Jackson-Vanik amendment of Title IV of the Trade Act of 1974.

The Kyrgyz Republic has distinguished itself by adopting relatively liberal economic policies and achieving six straight years of real economic growth. Growth reached 5.3 percent in 2001. While analysts expect a drop to just under 1 percent this year, due to reduced gold and energy exports, both the Government and the IMF project a rebound next year. Inflation has been moderate, at 3.7 percent for 2001. The fiscal deficit remains substantial, at 5.2 percent of GDP last year, but the government has made steady strides in controlling it. Tax revenue remains low, at 12.1 percent of GDP in 2001, but the government has taken steps to rationalize the tax structure in hopes of encouraging greater compliance.

The external outlook of the Kyrgyz Republic has stabilized since 1998. The Kyrgyz Republic was the first Central Asian republic to embark on an IMF reform program. In 2001, the IMF approved a three-year, USD 93 million Poverty Reduction and Growth Facility (PRGF) and the Fund completed the first review in July, 2002. The Paris Club approved a non-concessional debt flow rescheduling in March for the Kyrgyz Republic (an IDA-only country), and a goodwill clause provides for a stock rescheduling available upon successful completion of the PRGF. The current account deficit should rise slightly from last year's 3.3 percent of GDP, but expected capital inflows should cover this amount. Renewed confidence in the Kyrgyz currency (som) has permitted high money growth without inflation, and international reserves (valued at more than four months' imports) have exceeded IMF targets. While exports can be volatile, due to fluctuations in gold prices and electricity sales, the Kyrgyz government is focused on promoting export growth. As part of this strategy, the Kyrgyz government is working to attract foreign investment.

Growth and increased social spending have helped the Kyrgyz Republic to reduce poverty. A World Bank survey found that poverty fell from 52 percent in 2000 to 48 percent in 2001. In April, the government adopted measures to increase the lowest government salaries and pensions to compensate for a 42 percent electricity tariff increase, leading to a 5 percent real increase in social spending. The Kyrgyz government is focused on promoting economic growth as the surest path to poverty reduction and hosted a Consultative Group meeting in October to present the National Strategy for Poverty Reduction.

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

The Kyrgyz Republic's human rights record remained poor, and indeed worsened in some areas, however, there were some positive developments. NGOs and Parliament deputies on occasion succeeded in blocking presidential initiatives through parliamentary action and grassroots campaigns. There were credible reports of police abuse and brutality. Prison conditions are very poor, and there were many cases of arbitrary arrest and detention.

The Constitution provides citizens with the right to assemble freely; however, at times the Government restricted this right in practice. On occasion the Government used force, including lethal force, to disrupt peaceful demonstrations. At a March demonstration police shot and killed five unarmed protesters. On September 7, the Government issued a proposal to ban rallies, demonstrations, and street protests for three months. Following widespread criticism, the draft bill was withdrawn ten days later.

The law provides for freedom of speech and of the press; however, the Government routinely restricts these rights. Journalists have been arrested on several occasions on criminal libel charges. Several of these journalists have served time in jail, but most were either immediately freed or, if convicted, were released with credit for time served.

President Akayev has sought to reassure ethnic minorities while simultaneously trying to satisfy the aspirations of ethnic Kyrgyz for greater national identity. The new constitution includes substantial protection for individuals, including non-ethnic Kyrgyz. Concerns remain over ethnic discrimination, but in general the situation for minorities has improved, and emigration, while free, has decreased.

The Kyrgyz constitution provides for freedom of religion. The government does not support any specific religion and expressly forbids religious instruction in government schools. The government does not, however, fully protect religious rights. A 1996 law requires that religious groups register with the State Commission on Religious Affairs. In practice, the Commission requires each congregation to register separately and does not always process the applications promptly. Although the USG has not documented instances in 2000 or 2001of the Commission refusing religious groups attempts to register, there are credible reports that congregations of all-Kyrgyz Christians remain unregistered either because they are fearful to register or because they have been refused. Fearful of the rise of violent Muslim extremism in the region, the government recently drafted a new law on religion. OSCE experts and others criticized the draft as unduly restrictive and it was dropped for this past legislative year. There are reports that Muslim groups and mosques have recently received increased scrutiny, and that some domestic religious groups have experienced governmental interference, especially in rural areas.

Although there is no law on emigration, administrative procedures provide for the free movement of people. Emigrants are not prevented from returning to the country, and there is reportedly a small but steady flow of returnees.

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."

The Kyrgyz Republic has made a strong commitment to the observance of international legal obligations and OSCE commitments. The OSCE opened an office in the Kyrgyz Republic in January 1999. The Kyrgyz Republic is at peace with its neighbors, and is also a strong proponent of dialogue and cooperation among the states of the former Soviet Union. The Kyrgyz Republic participates in Partnership for Peace exercises. It also participates with neighboring Uzbekistan and Kazakhstan in a Central Asian Peacekeeping Battalion. The Kyrgyz Republic cooperated with its neighbors in 1999 and 2000 to repulse a Tajikistan-based group of armed insurgents, led by the Islamic Movement of Uzbekistan, who took hostages in the southern part of the country.

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

The Government of the Kyrgyz Republic is committed to establishing a multi-ethnic national identity and is particularly sensitive to the concerns of the non-Kyrgyz ethnic groups in the Kyrgyz Republic, although there are credible allegations of discrimination on the part of individual government officials.

Section 498A(a)(6): "implement responsible security policies, including--

(A) adhering to arms control obligations derived from agreements signed by the former Soviet Union;

(B) reducing military forces and expenditures to a level consistent with legitimate defense requirements;

(C) not proliferating nuclear, biological, or chemical weapons, their delivery systems, or related technologies; and

(D) restraining conventional weapons transfers."

The Government of the Kyrgyz Republic has formally declared its willingness and intent to accept all of the relevant arms control obligations of the former Soviet Union. The Kyrgyz Republic acceded to the NPT, as a non-nuclear weapon state, on July 5, 1994. The Kyrgyz Republic signed its NPT safeguards agreement with the International Atomic Energy Agency on March 18, 1998 (Note: However, it does not appear that the agreement has entered into force.). The Kyrgyz Republic is also committed to maintaining a small, defensive military force and National Guard. The Kyrgyz Republic has said that it is strongly opposed to the proliferation of weapons of mass destruction, their delivery systems or related technologies. The government is taking steps to establish a functioning system of export controls, including work on a new export control law. We have received occasional reports of transfers or potential transfers of conventional weapons to state sponsors of terrorism from or through the Kyrgyz Republic, which we carefully review in light of our legal obligations under the various proliferation sanctions laws. None of these reports resulted in a sanctions determination during the reporting period. We are not aware that the government of the Kyrgyz Republic has engaged in the proliferation of nuclear, biological, or chemical weapons, their delivery systems, or related technology. The Kyrgyz Republic is a signatory to, but has yet to ratify, the 1993 Chemical Weapons Convention. Additionally, the Kyrgyz Republic 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 Special Verification Commission, it continues to observe the Treaty's obligations. The Kyrgyz Republic has not acceded to the 1972 Biological Weapons Convention. The Kyrgyz Republic has not become a State Party to the 1972 Biological Weapons Convention.

In accordance with OSCE Vienna Document 1994 and its successor Vienna Document 1999, the Kyrgyz Republic has submitted Confidence- and Security-Building Measures (CSBM) annual data declarations for each year 1995-2001, but sometimes late and its data as of January 1, 2002, was not provided on time in December 2002. The Kyrgyz Republic has willingly undergone CSBM inspections and evaluation visits in accordance with the OSCE Vienna Document.

The Government of the Kyrgyz Republic signed the Open Skies Treaty in 1992, but the Parliament has not yet approved it. The Treaty entered into force on January 1, 2002.

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

The Kyrgyz Republic suffered severe environmental degradation under Soviet rule, and there is broad-based support for domestic protection of the environment. The Kyrgyz Republic 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 trans-border and international environmental issues. The Kyrgyz Republic is actively involved in bio-diversity issues and is working with international donors to advance bio-diversity studies. The Government of the Kyrgyz Republic has taken steps to establish public policy mechanisms to address environmental issues, including the establishment of a State Committee on Environmental Protection. National environmental NGOs continue to improve their access to the policy-making process on environmental issues.

The Kyrgyz Republic joined the other Central Asian states in the decision to locate the headquarters of a Regional Environmental Center (REC) in Almaty, Kazakhstan. The United States and the European Union support 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 Kyrgyz Republic has been an active and constructive player in regional and international efforts to alleviate the deteriorating environmental conditions and to foster regional cooperation in the Aral Sea basin. The Government of the Kyrgyz Republic has worked with the World Bank and international donors on a 15- to 20- year plan to stabilize the Aral Sea.

In October, the Kyrgyz Republic hosted the Global Mountain Summit which attracted over 500 participants from mountain nations, UN organizations, and interested NGOs to focus on partnerships for sustainable development, and mechanisms for conservation of mountain biodiversity.

Section 498A(a)(8): "deny support for acts of international terrorism."

The Government of the Kyrgyz Republic does not grant sanctuary from prosecution to individuals or groups that have committed acts of international terrorism or otherwise support international terrorism. The Kyrgyz Republic is a party to six of the twelve international counter-terrorism conventions. The government has been extremely supportive of the U.S.-led counter-terrorism coalition, allowing deployment of coalition aircraft from a civilian airport near the capital for operations in Afghanistan.

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 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 Kyrgyz Republic signed both the October and December 1991 agreements. The December 1991 agreement provided that the Kyrgyz Republic's share of the FSU debt would be 0.95 percent. 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 August 1992, the Kyrgyz Republic signed a "zero option" agreement with Russia under which Russia will pay the Kyrgyz Republic's share of the debt in return for its share of the 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.-Russian Joint Commission on POWs/MIAs that was established in March 1992. In November 1995, the U.S. side of this Commission made a successful visit to the Kyrgyz Republic. The Commission met with senior government officials, including President Akayev. All officials cooperated fully and pledged to do their utmost to locate information on American POWs/MIAs. There is no evidence of any American POWs/MIAs in the Kyrgyz Republic.

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 the Kyrgyz Republic 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

KYRGYZ REPUBLIC

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

No. We do not believe that the Government of the Kyrgyz Republic is engaged in such a pattern. Nonetheless, we will work to better address existing problems in the area of democracy and human rights both through diplomatic efforts and with assistance programs.

Section 498A(b)(2): Has the President determined that the Government of the Kyrgyz Republic "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 the Kyrgyz Republic has failed to take such actions.

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

(A) missiles or missile technology inconsistent with the guidelines and parameters of the Missile Technology Control Regime; or

(B) any material, equipment, or technology that would contribute significantly to the ability of such country to manufacture any weapon of mass destruction (including nuclear, chemical, and biological weapons) if the President determine[d] that the material, equipment, or technology was to be used by such country in the manufacture of such weapon"?

No. No such determinations have been made.

Section 498A(b)(4): Is the Government of the Kyrgyz Republic "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 the Kyrgyz Republic is prohibited from receiving assistance by these sections.

Section 498A(b)(5): Has the President determined and certified within 30 days to the appropriate congressional committees that the Government of the Kyrgyz Republic "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 Kyrgyz Republic under the Foreign Assistance Act with 30 days of such a determination, or has Congress enacted legislation disapproving the determination with that 30-day period?"

No. The President has not determined that the Government of the Kyrgyz Republic 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

MOLDOVA

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."

Throughout FY 2002, the Moldovan government continued to maintain its commitment to democracy and the rule of law. In September 2000, Moldova implemented a constitutional amendment eliminating popular presidential elections and giving Parliament the authority to elect the President. The amendment also removed the President's authority to initiate legislation in Parliament.

In December 2000, Parliament held the first parliamentary presidential election, but failed to elect a President in the statutorily-allowed two rounds. As a result, then-President Lucinschi dissolved Parliament and set early parliamentary elections for February 25, 2001. The Communists received 50 percent of the total vote and 71 seats in Parliament in voting that OSCE/ODIHR (Office of Democratic Institutions and Human Rights) observers declared free and fair. Parliament selected Communist Party Chairman Vladimir Voronin as President on April 4.

Parliament adopted in December 2001 a package of constitutional amendments to revise the current territorial-administrative system, replacing Moldova's current 13 counties and special municipalities with 36 smaller territorial units, and strengthening the central government's control over local operations. The Constitutional Court approved the territorial re-organization in March 2002, but struck down provisions to eliminate direct election of mayors and institute the new system immediately by cutting short current office-holders' terms. Nationwide local elections are now scheduled for May 2003.

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)."

Moldova continues to make progress toward developing a viable free-market economy. Moldova will record its third consecutive year of GDP growth in 2002, with year-end real GDP growth predicted at 6 percent. This growth rate is impressive considering that, prior to 2000, Moldova had recorded only one year of GDP growth since independence. Equally impressive, the 2002 inflation rate is estimated to be 8 percent, and the budget deficit to be 1.2 percent of GDP. Sporadic and ineffective enforcement of the law combined with economic and political uncertainty and low levels of income continue to discourage inflows of foreign direct investment. Moldova remains the poorest country in Europe, with GDP per capita at $406.

Moldova has adopted the basic reforms necessary for a market economy: prices have been largely freed, foreign trade has been almost fully liberalized, and the Moldovan leu is fully convertible for current account transactions. The government has improved customs collections, but needs to reinstate pre-shipment inspections to meet International Monetary Fund (IMF) conditionality for the next tranche of its Poverty Reduction Growth Facility (PRGF). Customs revenues increased substantially while these inspections were in place. Export quotas have been eliminated, and import tariffs have been substantially reduced. Moldova became a member of the World Trade Organization in 2001. Moldova enjoys permanent Normal Trade Relations with the United States subject to satisfying Jackson-Vanik legislation's semiannual reporting requirement.

The IMF approved a PGRF for Moldova in December 2000 but lending was suspended. In 2002, IMF and World Bank lending resumed with Moldova receiving $12 million from the IMF and $10 million from the World Bank. The World Bank and IMF have laid out conditions for Moldova to meet before further assistance will be disbursed.

Moldova continues to make progress integrating into the world economy through market-based economic reforms and privatization. A law governing the sale and purchase of land took effect in September 1997. Citizens and foreign investors can buy and sell land at market prices. More than 900 former collective farms were privatized as a result of the land privatization efforts, and about one million Moldovan citizens received land titles through 2001. A largely completed enterprise privatization program fully privatized 2,114 enterprises from many economic sectors, with an additional 321 enterprises privatized in cases where the state holds less than 49 percent of the shares. Privatization results in FY02 were mixed: several small companies and two wineries were privatized; but the Government of Moldova (GOM) was unable to privatize several larger state enterprises, notably Moldtelecom.

In February 2000, the Spanish firm Union Fenosa purchased three of Moldova's five electrical distribution companies. The GOM issued two tenders for sale of the remaining two distribution companies in 2000 and 2001. The first tender failed to secure bids of sufficient value, and the second was withdrawn as a result of concerns over bid levels and transparency. In 2002, the GOM agreed to work with a consultant to privatize the remaining firms. In November 2002, the Supreme Court upheld a lower court's finding of irregularities in the 2000 Union Fenosa purchase. The GoM insisted that the court's ruling was directed at Moldovans involved in the privatization, and not at Union Fenosa. Nevertheless, the court ruling has damaged Moldova's image amongst foreign investors.

During 2002, the GoM attempted to privatize the state telecommunications' company, MoldTelecom. However, in November, the GoM turned down the only purchase offer from MGTS, a Russian firm. Some independent observers have reported that the MGTS proposal contained market-distorting technical conditions.

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

The government generally respects the human rights of its citizens despite continuing problems in some areas. The situation is worse in the separatist Transnistria region, which is not under the control of the Moldovan central authorities. Moldovan law prohibits "abusive" proselytizing, although the government generally recognizes freedom of religion and has never taken legal action against individuals for proselytizing. Observers say journalists frequently practice self-censorship because of a provision in the press law that allows public figures to sue for defamation without distinction between their public and private persons. The 1994 constitution provides the legal framework to ensure protection of minority rights, and has received positive assessments from international experts. The Gagauz, a Turkish-speaking minority in southern Moldova, enjoy autonomous status. Gagauz autonomy was a contentious issue in 2002; In response to a series of steps that the previously elected governor and his supporters claimed involved several violations of the law, he resigned, claiming pressure from the Chisinau authorities. The Communist-backed candidate won the special election to succeed him.

In 2000, the Moldovan Audio-Visual Council suspended broadcasting licenses of three radio stations that broadcast almost entirely in Russian, after a court decision upheld a suit brought against the stations for violating a 65 percent national language content broadcast rule. The rule was later clarified to include only locally produced content, not material that originated in other countries and later rebroadcast. In 2001, under the Moldovan Audio-Visual Council in the current government, the linguistic content of broadcasts ceased to be an issue. The Council of Europe recommended in April 2002 that state-run broadcasting be made more independent. In response, Parliament passed a new Audio-Visual Law, but the Council of Europe concluded it was insufficient, primarily because of the provision on appointment of Board members. President Voronin has pledged to the Council of Europe that Parliament would re-visit the law.

After several years of controversy, and as part of its response to judicial decisions from the Council of Europe, the government in July 2002 registered the Metropolitan Church of Bessarabia.

Reports exist of human rights abuses by the authorities in the separatist Transnistrian region, among them discrimination against Romanian/Moldovan speakers. Transnistrian "presidential" elections on December 9, 2001 were reportedly plagued by abuses. The OSCE remains involved in investigating reported severe human rights abuses by Transnistrian security police in the village of Chitcani between 1992 and 1997, including severe beatings, murder, and disappearances. Transnistrian authorities shut down a secondary school in September 2002 for using the Latin alphabet in instruction, and the head of the school's committee of parents spent fifteen days in jail. Legal battles involving the Jehovah's Witnesses continued in Transnistria in 2002, with the Prosecutor General filing a case in June to close down the denomination's local organization.

Moldova has abolished the requirement for exit visas for travel abroad but individuals wishing to emigrate must settle financial and judicial obligations before permission to emigrate is granted. No cases of denial of permission to emigrate were reported in 2002.

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."

Moldova takes seriously its participation in the OSCE and its commitments under the Helsinki Final Act. The Transnistria region of Moldova, along the Ukrainian border, remains under the control of separatist forces. A Russian-brokered cease-fire in Transnistria has held firm since July 1992. The cease-fire established a tripartite peacekeeping force comprised of Moldovan, Russian, and Transnistrian units that have prevented a return to the use of force in the region. Since its election in 2001, Moldova's Communist government has made resolution of the ongoing conflict a top priority. Nonetheless, it has been unable to make significant progress because of fundamental disagreements with the separatist authorities in Transnistria over the status of that region.

In July 2002, the mediators to the conflict - the OSCE, Russia, and Ukraine - presented to the parties a document which called for Moldova and Transnistria to be re-integrated as a federal state. Subsequent negotiations on the basis of this "mediators' document " produced some progress, but encountered repeated obstacles from the Transnistrian side.

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

At the November 1999 OSCE Summit in Istanbul, Moldova reached a bilateral agreement with Russia, reflected in the Treaty on Conventional Armed Forces in Europe (CFE) Final Act and the Summit Declaration, on the withdrawal of Russian forces and equipment from the Transnistria region of Moldova. Ahead of schedule, Russia met its commitment to withdraw from Moldova all its equipment limited by the Treaty on Conventional Armed Forces in Europe, despite significant Transnistrian opposition. At the Istanbul Summit Russia also agreed to withdraw all of its forces based in Moldova by December 31, 2002. Moldova has supported OSCE efforts to work with Russia, Transnistrian authorities, and OSCE experts to lay the basis for disposal of the more than 40,000 tons of munitions and approximately 40,000 small arms stored at Russian depots in Transnistria. The U.S. and many other OSCE states have committed to assist with contributions to an OSCE Voluntary Fund to help defray the cost of destroying or removing the Russian ammunition stored in Moldova, provided all necessary accounting and verification requirements are met. Russia did not meet its withdrawal commitments in 2002, principally due to the magnitude of the task, the obstructionism of the Transnistrians, and a lack of political will. At the December 2002 OSCE ministerial in Porto, Russia committed to complete the withdrawal as soon as possible and stated its intent to do so by December 31, 2003.

Section 498A(a)(6): implement responsible security policies, including --

(A) adhering to arms control obligations derived from agreements signed by the former Soviet Union;

(B) reducing military forces and expenditures to a level consistent with legitimate defense requirements;

(C) not proliferating nuclear, biological, or chemical weapons, their delivery systems, or related technologies; and

(D) restraining conventional weapons transfers."

Moldova has formally declared its willingness and intent to accept all of the relevant arms control obligations of the former Soviet Union. Moldova ratified the CFE Treaty on July 6, 1992 and the 1996 Flank Document on May 15, 1997. Compliance with these obligations has been good. Moldova participates in the CFE Joint Consultative Group and was an active participant in negotiations on adaptation of the CFE Treaty. At the OSCE Summit in Istanbul, Moldova reached a bilateral agreement with the Russian Federation for withdrawal of Russian troops and equipment from Moldova according to a specified timeframe and also signed the Adapted CFE agreement. Moldova has actively cooperated with efforts to overcome continuing problems resulting from the unwillingness of Transnistrian separatists to allow Russian force withdrawals and unimpeded CFE inspections of Russian forces located in the region. Moldova fulfilled CFE requirements for submission of data on equipment holdings in December 1999 and 2000; it was late providing comparable data in 2001.

Moldova has submitted Confidence- and Security-Building Measures (CSBM) annual data declarations for 2001 and 2002, and has willingly undergone CSBM inspections and evaluation visits in accordance with the OSCE Vienna Document.

Moldova's armed forces are reorganizing and developing, with U.S. assistance, a peacekeeping battalion capable of interoperation with international peacekeeping forces. This battalion will form the core of Moldova's armed forces, which have a current strength of about 7,200 troops. The peacekeeping battalion is currently in training to participate in a peacekeeping operation with NATO-led SFOR forces. A portion of the battalion is deployed in the Moldovan/Transnistrian security zone. Two Moldovan staff officers are currently serving on the staff of U.S.-led Multinational Division (North) in Bosnia.

Moldova acceded to the Nuclear Non-Proliferation Treaty (NPT), as a non-nuclear-weapon state, in October 1994. The GoM signed a safeguards agreement with the International Atomic Energy Agency on June 14, 1996, but this has not yet entered into force. In May 2002, penalties were imposed on two Moldovan entities, under the Iran Nonproliferation Act of 2000, for the transfer of missile-related equipment to Iran. On November 25, 2002, Moldova subscribed to the International Code of Conduct against Ballistic Missile Proliferation. The Government of Moldova has supported international nonproliferation efforts.

Moldova has increased efforts to strengthen control over its borders, including participation by Moldovan customs and border guards in U.S.-assisted counter-proliferation programs designed to halt the flow of illicit WMD materials and conventional arms. Moldova issued new customs stamps in September 2001, with U.S. assistance, as required subsequent to its WTO admission, in an attempt to reduce smuggling operations across and along the Transnistrian part of the Ukrainian/Moldovan border. Moldova is also attempting to set up joint Moldovan/Ukrainian border posts on Ukrainian territory along that portion of its border with Ukraine controlled by the Transnistrian separatists to minimize smuggling. The U.S. is continuing its efforts to cooperate with Moldova in developing Moldova's export control system, in terms of both regulatory structure and enforcement capabilities.

Moldova 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 in September 1997 became a member of the International Atomic Energy Agency. The U.S. considers Moldova to be a party to the INF Treaty as a successor state to the Soviet Union. Moldova has taken no action which would call into question its commitments to that treaty.

Moldova is not a State Party to the 1972 Convention on the Prohibition of the Development, Production and Stockpiling of Bacteriological (Biological) and Toxin Weapons and on Their Destruction.

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

While information on specific "constructive actions" undertaken by the Moldovan Government to reduce cross-border pollution is limited, Moldova is taking steps to reduce overall levels of pollution. With U.S. help, Moldova increased awareness of environmental issues by completing a biodiversity assessment and by increasing awareness of the benefits of low-till farming methods via demonstration projects.

The government announced in 2002 its intention to create Moldova's first national park. The 55,000-hectare Lower Dniester Park project is funded by the World Bank / Global Environment Facility.

The U.S. cooperated with the EU in the creation of a Regional Environmental Center (REC) in Moldova, the mission of which is to strengthen civil society and support sustainable development by promoting public awareness and participation in environmental decision-making. The REC successfully executed one round of small project grants to environmental NGOs.

Section 498A(a)(8): "deny support for acts of international terrorism."

The Government of Moldova does not grant sanctuary from prosecution to individuals or groups having committed acts of international terrorism or otherwise support international terrorism. Moldova is a party to ten of the 12 international counter-terrorism conventions.

Following the September 11 attacks in the U.S., Moldova quickly passed a new anti-terrorism law that provides the legal framework for combating terrorism, sets out the rights and obligations of law enforcement agencies, and details the manner in which the agencies will be coordinated and supervised. The Moldovan government cooperated with all USG requests on blocking terrorism financing in 2002.

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 shares of both all the external assets and all foreign debt of the former Soviet Union (FSU). Moldova signed the October, but not the December 1991, agreement. The December 1991 agreement provided that Moldova's share of the FSU debt would be 1.29 percent. Beginning in 1992, Russia sought to replace the principle of joint and several liability with full liability for the debt in return for all the external assets. On October 19, 1993, Moldova signed a "zero option" agreement with Russia under which Russia will pay Moldova's share of the FSU debt in return for Moldova's share of FSU assets as defined by the December 1991 agreement.

(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, established in March 1992. Moldovan officials warmly welcomed the U.S. side of the Commission in August 1995. With the full support of the Moldovan government, the U.S. Chairman also made an appeal to the people of Moldova, asking them to come forward with information. Moldova has also fully supported subsequent inquiries in Moldova.

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 Moldova 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

MOLDOVA

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

No. We do not believe that the Government of Moldova is engaged in such a pattern.

Section 498A(b)(2): Has the President determined that the Government of Moldova "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 Moldova has failed to take such actions.

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

(A) missiles or missile technology inconsistent with the guidelines and parameters of the Missile Technology Control Regime (MCTR); or

(B) any material, equipment, or technology that would contribute significantly to the ability of such country to manufacture any weapon of mass destruction (including nuclear, chemical, and biological weapons) if the President determine(d) that the material, equipment, or technology was to be used by such country in the manufacture of such a weapon"?

No such determinations were made, however, in May 2002, penalties were imposed on two Moldovan entities, under the Iran Nonproliferation Act of 2000, for the transfer of MCTR-controlled equipment to Iran. These penalties are specific to these private entities and do not apply to the Moldovan government.

Section 498A(b)(4): Is the Government of Moldova "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 Moldova is prohibited from receiving assistance under these statutes.

Section 498A(b)(5): Has the President determined and certified to the appropriate congressional committees that the Government of Moldova "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 Moldova 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 Moldova 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

RUSSIA

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."

Russia's progress since 1991 towards building a society governed by law-based, democratic institutions has been apparent but somewhat uneven and beset by serious challenges. However, key democratic elements are in place. The 1993 Constitution established a governmental structure with a strong head of state (a President), a Government headed by a Prime Minister, and a bicameral legislature (Federal Assembly) consisting of the State Duma (lower house) and the Federation Council (upper house). Both the President and the Duma were selected in competitive elections, with a broad range of political parties and movements contesting offices. President Vladimir Putin was elected in March 2000, and Prime Minister Mikhail Kasyanov took office in May 2000. There were concerns expressed, however, that the Kremlin unfairly used the advantages of incumbency, particularly in its use of the media, to promote Putin's candidacy. Domestic and international observers commended the Central Election Committee for performing effectively as an independent and professional body, and, although there were some irregularities, the vast majority of polling station commissions were rated highly for their performances during the conduct of the poll.

The legislative branch consists of a bicameral Parliament, the State Duma and the Federation Council. Duma deputies are elected by party lists and single-mandate districts. Membership in the Federation Council was changed by recent legislation approved by the Federal Assembly and signed by the President in 2001, and is now via appointment by regional governors and the regional legislature, with the approval of the regional legislature. Two Federation Council members are appointed from each of the 89 regional subjects of the Federation. Duma elections, which were also judged free and fair, took place in 1993, 1995 and December 1999. The International Election Observation Mission, a joint effort of the Organization for Security and Co-operation in Europe (OSCE), Council of Europe, and European Parliament, noted some deficiencies in the December 19, 1999 Duma elections, but judged them to have been largely free and fair. The Mission noted that this marked significant progress for the consolidation of democracy in the Russian Federation.

The constitution provides for an independent judiciary, including a Supreme Court that hears appeals from the courts of general jurisdiction and a constitutional court. The Government made important progress during the year in the implementation of constitutional provisions for due process, and fair and timely trial. On December 5, 2001, the Federation Council approved the Code of Criminal Procedure, the Law on the Status of Judges, the Law on the Judicial System, and the Law on the Constitutional Court. These laws will go into effect over a three-year period, beginning July 2002. The new Code balances the protection of society with the rights of the individual, establishes an adversarial system rather than an inquisitorial system, and requires that all serious crime cases be tried before juries within two years in all 89 regions. The Law on the Constitutional Court establishes the obligation of Russian legislatures to alter immediately laws found unconstitutional. The Law on Judges makes judges more accountable for their actions and liable to criminal investigation. The judiciary has shown signs of limited independence - ruling against the government in some cases. However, despite making progress towards reform, the judiciary continued to lack resources, suffered from corruption and remained subject to some influence from the executive, military and security forces. The judicial system continues to be plagued by large case backlogs and trial delays, though both the number of persons in pretrial detention and the average length of time spent there has declined significantly.

Russia has yet to enact comprehensive anti-corruption legislation or to develop a multidisciplinary approach to address corruption. The government has, however, begun to engage on the issue in multilateral fora, such as the UN, the G-8, the Council of Europe, the February 1999 Global Forum on Fighting Corruption sponsored by the U.S., and the May 2001 Global Forum II sponsored by the Dutch.

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)."

The Russian economy has undergone tremendous stress as it has moved from a centrally planned to a free-market system. Since 1991, Russia has succeeded in privatizing most of the formerly state-owned economy and freed business entities to trade and compete in a market where prices are generally set by supply and demand. The Russian government officially estimates that more than 75 percent of manufacturing enterprises are fully or partially privatized. 85 percent of current manufacturing output reportedly stems from such enterprises, and more than 80 percent of Russia's industrial workers work in these firms. The vast majority of Russia's financial sector is in private hands, with only one state-owned bank (Sberbank, which controls most retail banking) remaining from the Soviet era.

The Russian economy showed 4 percent growth in 2002, slowing somewhat from 5 percent growth in 2001. Russia has maintained prudent macroeconomic policies, posting a primary federal budget surplus of 3 percent of GDP over the first ten months of 2002, maintaining a stable exchange rate, and accumulating international reserves of over $47 billion. The Russian government introduced three major reforms to the tax code in 2001 -- a 13% flat income tax, a reduced corporate tax from 35% to 24%, and a streamlined, less complicated tax code with fewer loopholes. Other major reform legislation passed in 2001-2002 included a market-oriented labor code, the majority of the provisions for a 'fully-funded' pension system, and the first elements of a package to reduce the scope of government licensing and streamline business registration and inspection.

Implementation of structural reforms has significantly accelerated under President Putin in 2001, but much remains to be done in this arena to assure Russia's sustained economic development. Even with the economic windfalls from energy exports, slow development and uneven enforcement of securities regulation, lack of a developed real property system, lack of financing due to political and economic uncertainty, over-reliance on barter transactions and failure to enforce bankruptcy against insolvent enterprises continue to prevent the Russian economy from reaching its potential, and render it vulnerable to adverse external shocks. In addition, resistance by the bureaucracy and other vested interests has attempted to push reforms back from their original aims, and hampered implementation, especially at the local level. With Duma/Presidential elections in late 2003/early 2004, and remaining reforms politically sensitive, there has been some slowdown in the reform pace. Rail and electricity restructuring legislation is likely to be delayed until spring 2003, and legislation on communal services reform has stalled.

Since 1995, Russia's trade regime has moved generally toward greater liberalization, eliminating an oil export quota and special exporter regime and export tariffs. Russia's trade surplus, fueled by high oil prices, was $49.7 billion in 2001, but has slowed in the first half of 2002 to $26.1 billion due to rising imports. Russia's economy -- and its federal budget -- are particularly vulnerable to the world energy markets. The current recovery, while broader-based than just the energy sector, is built on the back of the 1998 devaluation.

Russia's economic team appears committed to a reformist agenda, but remaining reforms -- breaking up the monopolies, production sharing agreements, and more -- will be difficult. Russian officials have recognized the connection between WTO accession and structural economic reform and reinvigorated their accession effort. Since 1994, U.S. Presidents have determined that Russia meets the freedom of emigration stipulations to the Jackson-Vanik amendment to the Trade Act of 1974, allowing Russia to receive Normal Trade Relations status.

Although the government has officially welcomed foreign investment, the Duma is considering laws that would limit foreign investment in some service sectors, including insurance, auditing, tourism and some sectors connected to national security. Russia joined the Asia-Pacific Economic Cooperation group in 1998. While the government is committed to further integration into the world economy, making the necessary reforms has proved politically difficult.

Russia's intellectual property rights (IPR) legislation provides protection for patents, copyrights, trade and service marks, and semiconductor chip designs. Legislation introduced in 2001 reflects Russian efforts to prepare for World Trade Organization (WTO) accession and the IPR commitments of the WTO Agreement on Trade-related Aspects of Intellectual Property Rights (TRIPS). The legislation includes retroactive protection of copyrights, but includes alterations to the civil code that may confuse rights holders when pursuing claims against pirates. The Duma is still considering this legislation. Pervasive problems remain in enforcement, and piracy of optical media increased dramatically in 2002. Partially in response to this increase, the GOR set up an IPR task force led by Prime Minister Kasyanov in the fall of 2002. One of the first steps taken by the commission were police raids in late November on three pirate plants operating on land leased from the military in Moscow, Moscow Oblast, and Yekaterinburg, netting more than 250,000 pirated CDs, DVDs and videos worth millions of dollars. Russia remains on the U.S. Special 301 priority watch list. In 1998, Russia established a Patent Chamber, a specialized court for appellate review of patent disputes

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

Russia's constitution guarantees respect for internationally recognized human rights, and its government generally respected the human rights of its citizens, but serious problems remained in many areas. Although the Russian parliament has been slow to pass implementing legislation in many areas, the Constitutional guarantees of freedoms of speech, press, religion, assembly and movement have dramatically recast the individual's relationship with the state in Russia compared with the Soviet period. Institutions and democratic practices are evolving but are not fully developed. Despite the continued wide diversity of the press, government pressure on the media increased during the year. There were continuing, credible reports of widespread human rights violations by Russian troops in Chechnya, who demonstrated little respect for basic human rights. (Chechnya is further addressed in the following section (a)(4).) The treatment of prisoners and conditions in pretrial detention facilities and prisons also were generally poor.

Freedom of expression and of the media is now well established in Russia, with the print and broadcast media reflecting a far wider diversity of political views than under the Soviet period. Nevertheless, cases of government pressure on the media continued. Television station NTV's coverage of the October 2002 Moscow theater hostage crisis, for example, generated criticism by Russian officials, including President Putin. There was some evidence of efforts by top Kremlin officials to bring NTV under stricter state control. On the positive side, President Putin's late November veto of proposed amendments to the Law on Mass Media - which would have greatly restricted coverage of counterterrorist operations and extremist activity - was widely greeted by Russian media and human rights groups.

There have been several prosecutions in relation to so-called "espionage" cases that appear to be politically motivated. Several of these cases have involved Russians and foreigners working together and exchanging information that the authorities considered sensitive. For example, Russian military journalist Grigoriy Pasko, who had reported on the Russian navy's dumping of nuclear waste, was convicted in 2001 of one count of espionage in a case that led many human rights activists and Russian politicians to question the apparent undue influence of the Federal Security Service (FSB) and judicial independence. Some journalists have been killed and kidnapped and the government has failed to investigate these crimes actively, in the eyes of some observers. In another case, arms control researcher Igor Sutyagin remained in pre-trial detention at year's end.

The Russian Constitution prohibits discrimination based on race, sex, religion, language, social status, or other circumstances. However, both official and societal discrimination still exists. There continue to be credible reports that law enforcement agents in Moscow routinely detained, intimidated and extorted money from and beat people of color, mainly people from the Caucasus and Central Asia. Police and other security forces in various parts of Russia continue their practice of targeting citizens from the Caucasus and darker-skinned persons in general for arbitrary searches and detentions on the pretext of fighting crime and enforcing residential registration requirements. Human rights groups in Moscow have complained of increased detentions of people from the Caucasus, who have come under intense police scrutiny following the October 2002 terrorist attack on the Dubrovka Theater. On the positive side, both Putin and Moscow Mayor Luzhkov have made strong, repeated public statements on the unacceptability of collective punishment, and the need to respect Chechens' civil rights.

Although religious freedom has greatly expanded in Russia since the end of the Soviet Union, with a variety of faiths experiencing new opportunities and gaining new adherents, the last year has seen increasing pressure on religious minorities, especially Roman Catholics. In September 1997, President Yeltsin signed a law "On Freedom of Conscience and Religious Associations" that replaced a more liberal law on religious freedom and introduced significantly more government regulation over religious organizations. Russian officials pledged that implementation of the law would be consistent with Russia's international commitments to religious freedom and have taken some steps to ameliorate some of the law's negative aspects, but the Ministry of Justice acknowledges closing almost 1000 (980) groups by mid-year. Some of these were already defunct, but some were active and unable to re-register.

At first the federal government generally attempted to apply the 1997 law liberally, and most allegations of restrictive practices were directed at local officials. However, there is evidence that the Procurator General has encouraged local state prosecutors to challenge the registration and re-registration of some "non-traditional" religious groups. The vagueness of the law and regulations, contradictions between federal and local law, and varying interpretations of the law have furnished regional officials with a pretext to restrict the activities of religious minorities. Many of those groups initially denied registration have been evangelical, proselytizing groups. In some cases they have successfully sued and the courts have ordered local officials to register them. All but one of the organizations required to re-register at the federal level did so. About 90 percent of the estimated 20,000 organizations required to re-register at the local level did so successfully, and many of those that did not are apparently defunct.

Officials in Moscow and other cities have repeatedly attempted to ban local branches of the Salvation Army, the Jehovah's Witnesses, and Scientologists, so far without success. Some religious groups have experienced harassment either from official sources, such as the FSB and local officials, or unofficial sources, such as extremists. Roman Catholic clergy came under renewed pressure in 2002, when five foreign-born priests and a bishop - one of only four Catholic bishops serving in Russia - had their visas cancelled or were forced to leave Russia when their current visas expired and their visa applications denied. The denials of visas to Roman Catholic clergy raised strong concerns over the influence of the security services and the Russian Orthodox Church and had a chilling effect on Russia's Catholic community, which depends on clergy from abroad. Some Evangelical Protestants, Buddhists, and Muslim religious workers and clergy also were denied visas or visa-renewals. Federal authorities have issued directives to bring local laws on religious registration and non-complying regions into line with the federal law. The U.S. government and NGO community are monitoring this closely and have raised these issues with Russian officials at the highest levels.

Muslims, Jews and members of other religious minority groups continue to encounter societal prejudices, antagonism, and discrimination. With the continuing conflict in Chechnya and more recently the international war on terrorism, societal discrimination and harassment against Muslims is frequently reported. President Putin and other officials have called for greater tolerance and specifically have condemned anti-Semitic acts, especially during last summer's rash of anti-Semitic bomb attacks and threats. President Putin has spoken out publicly on the need to protect religious freedom, promote tolerance, and preserve the separation of church and state. While many groups have noted improvements in certain respects over the past year, societal discrimination, harassment, and violence against members of some religious minorities remain a problem.

Lack of respect for due process remains a serious shortcoming. Russian prisoner's rights groups have documented cases in which members of the security forces tortured and beat detainees and prisoners, and in 1998 the President's Permanent Human Rights Chamber found that torture was "widespread and systematic," especially in the pre-trial phase. There is little accountability for such abuses. Although suspects were once routinely detained for 12-18 months in pre-trial detention centers, implementation of the new Code of Criminal Procedure has dramatically reduced both the amount of time prisoners spend in pre-trial detention and the overall numbers in detention. Pre-trial detention conditions there have improved somewhat, although both there and in regular prisons they remain deplorable.

Criminal procedures in regions where juries have not been introduced are still weighted heavily in favor of the prosecution. The new Criminal Procedure Code passed by the Federation Council in December 2001 shifts the criminal justice system from an inquisitorial to an adversarial system and places the once powerful Russian procuracy on roughly the same legal footing as the defendant. The Code also calls for jury trials to be held nationwide for most serious crimes. There were some cases in which the courts ruled against the government, suggesting that the law was becoming an increasingly important tool for those seeking to protect human rights, but serious problems remain. In addition, the judiciary was subject to manipulation by central and local political authorities and was plagued by large case backlogs and trial delays.

Tens of thousands of Russian citizens emigrate annually. In FY 1998, the latest statistics available, approximately 11,500 Russian citizens emigrated to the United States. The number of state secrecy and other cases on the listings of "refuseniks" maintained by the American Jewish organizations has decreased from over 1,000 in the late 1980s to 13 in 2002.

Some regional governments severely restrict the constitutional right of citizens to freely choose their place of residence by requiring residence permits to live and work in a specific area. These restrictions, though repeatedly challenged in court, remain largely in force and are tolerated by the Federal Government. The presence of these restrictions, which increased following terrorist bombings in September 1999 and were reinvigorated following an explosion in Moscow in August 2000, demonstrated the continued obstacles to the enforcement of judicial rulings. Citizens may freely travel within Russia, but must carry internal passports. Citizens are free to emigrate. However, individuals who, during the course of their work, had access to classified material can be refused permission to travel abroad for five years following the last date of access to such material. The law allows for an additional period of five years, although in practice, restrictions of more than five years are rarely imposed.

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."

Responding to attacks on Dagestan in July and August 1999 by extremist Chechen field commander Shamil Basayev, and to the bombing of apartment buildings in Moscow and elsewhere, the Russian government launched a military campaign to assert control over Chechnya. Three years later, the conduct of Russian armed forces in the campaign against Chechen rebels continues to be poor. The indiscriminate use of force by both government and rebel troops resulted in widespread civilian casualties and the displacement of more than 100,000 people, the majority of whom sought refuge in the neighboring republic of Ingushetiya.

There were numerous credible reports of human rights abuses and atrocities committed by both federal and Chechen forces, including extrajudicial killings, torture, rape, disappearance and arbitrary detention. Such actions are not consistent with Russia's international commitments under international humanitarian law and/or the OSCE's Code of Conduct on politico-military aspects of security, which provides that states should "take due care to avoid injury to civilians or their property." Despite General Moltenskoy's March 2002 Decree #80, which was designed to improve the conduct of Russian forces in Chechnya, command and control amongst military and special police units often appeared to be weak, and a culture of lawlessness and corruption has flourished. This culture fostered individual acts of violence and looting against civilians and a lack of accountability. While government prosecutors have ostensibly pursued investigations of some of these incidents, few cases have been brought to court. According to press reports, 34 servicemen were convicted of various crimes, although some were amnestied. In the most highly publicized case, the Military Prosecutor's office acquitted on the grounds of temporary insanity Colonel Yuriy Budanov on charges of abducting and murdering a young Chechen woman. This represents a major disappointment and refusal by the Russian Government to assure the accountability of Russian forces in Chechnya. There have been no reliable mechanisms to investigate and prosecute abuses purportedly committed by Chechen separatists. Chechen fighters have reportedly used landmines, booby traps and other explosive devices that sometimes have caused civilian casualties, and they have carried out numerous assassinations of local civilian officers serving in the pro-Moscow Chechen administration.

The OSCE maintains an Assistance Group (AG) in Chechnya whose mandate includes human rights monitoring and facilitating delivery of humanitarian assistance. In November 2002, the Russian delegation to the OSCE proposed far-reaching changes to the Assistance Group's mandate. The changes would, if implemented, greatly reduce the AG's political and human rights dimension and largely restrict it to assisting the Russian government in its efforts to restore Chechnya economically and to facilitating the return of refugees. The U.S., together with other OSCE member states, accepts enlarging the AG's economic dimension in response to Russia's request, but insists that the AG's role in monitoring human rights be preserved.

In a September 2001 speech, President Putin differentiated between Chechen separatists and "terrorists," creating an opening for contacts between the Russians and Chechen President Maskhadov. However, while Putin's representative and Maskhadov's envoy met face-to-face in November 2001, no further meetings took place. The consolidation of Chechen separatists under Maskhadov in the summer of 2002, followed by the Moscow theater hostage crisis in October 2002, have led Russian officials from President Putin down to rule out negotiations with Maskhadov or any other Chechen separatist. Putin has declared his own political solution for Chechnya, centered around a constitutional referendum in the first half of 2003, to be followed by elections to a Chechen parliament and presidency in late 2003. Russian officials hope that the election of Chechen officials, together with a Chechen police force, will marginalize the separatists and deprive them of public support.

Russian leaders have generally called for enhanced efforts by the UN and the OSCE in peacekeeping, including in the New Independent States (NIS). Russia has, to varying degrees, been supportive of OSCE missions and UN peace efforts in Azerbaijan (Nagorno-Karabakh), Estonia, Georgia, Latvia, Moldova, Tajikistan, and Ukraine, but did not support the decision in December 2001 to close missions in Estonia and Latvia.

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

Russia's role in resolving regional conflicts in adjacent countries has been generally positive. Russia has a strong interest in increasing stability and security along its borders to reduce the threats of terrorism, extremism, narcotics trafficking, and organized crime growing out of unresolved regional conflicts. Russia's foreign policy also remains committed to strengthening the Commonwealth of Independent States (CIS), preserving Russia's influence in the region of the former Soviet Union and defending the interests of ethnic Russians in neighboring states.

Russia continued to cooperate with a Georgia-based OSCE mission charged with bringing Ossetians and Georgians to the negotiating table. In 1992, Russia helped broker the cease-fire agreement in South Ossetia. This truce accord still holds.

Abkhaz representatives have so far not been prepared to enter into serious negotiations with Georgia on the basis of separate and equal status with Tbilisi, but with Abkhazia agreeing to remain part of the Georgian state. Moscow says that it supports Georgian sovereignty and territorial integrity, but has taken few, if any, serious steps to press the Abkhaz to negotiate seriously toward a settlement based on acceptance of these principles. At the same time, the Georgians have expressed concern over Russia's issuance of passports to ethnic Russians living in Abkhazia on the basis of their former status as citizens of the Soviet Union.

With regard to Russian forces in Abkhazia, at the Istanbul OSCE Summit (November 18-19, 1999) Georgia secured a Russian commitment to: remove all equipment limited by the CFE Treaty from the Gudauta base in Abkhazia (as well as from certain other facilities) by December 31, 2000; and disband the Gudauta and Vaziani bases entirely by July 1, 2001. Russia withdrew from Vaziani before the deadline and later announced that it had disbanded Gudauta and withdrawn all but "peacekeeping" troops from Gudauta. However, Russia and Georgia have not yet agreed on the status of the Gudauta base and Russian troops located there, nor have they reached a common understanding on transparency modalities for the base.

Russia, the United States, and France co-chair the Minsk Group peace process, which is the OSCE's negotiating forum for a peaceful settlement of the Nagorno-Karabakh conflict. Cooperation among the co-chairs has been excellent. The Minsk Group has been actively negotiating with the parties to reach a durable settlement. A Russian-brokered cease-fire has been in effect in Nagorno-Karabakh since May 1994 and has held, despite sporadic violations.

President Yeltsin visited Kiev in May 1997 and signed a Friendship and Cooperation Treaty with Ukraine that has been ratified by both countries. The two sides also concluded agreements to resolve the issue of the Ukraine-based Black Sea fleet, which had been a source of disagreement since 1992. The two countries have still not formally demarcated their interstate border, although border issues have not been a source of contention in recent years.

Russia played a significant role in facilitating the peace process in Tajikistan that led to a comprehensive settlement of the internal conflict there in June 1997. Russia's 201st Motorized Rifle Division, stationed in Tajikistan since Soviet times, is still present in the country. The 201st is the largest group of Russian forces outside Russian borders. The Division supports the current regime and Russia's interests in the region. Cooperation exists between Russian and Tajik armed forces and Tajiks serve in the Russian forces stationed there.

In Moldova, Russia has played an active role in the five-side negotiations (involving Moldova, the Transnistrian region, Russia, Ukraine and the OSCE) to reach a peaceful, political settlement to the conflict between Moldova and its secessionist region of Transnistria. However, Russia has not been consistent in using its considerable influence over Transnistria and its leadership to overcome their intransigence and lack of cooperation with peace process. In connection with the Transnistrian conflict, Russian forces have been stationed in Moldova since July 1992. Additionally, there are remnants of the Soviet 14th Army, now referred to as the Operational Group of Russian Forces, present in Moldova. At the Istanbul OSCE Summit in 1999, Russia agreed to withdraw all of its military forces from Moldova by December 31, 2002. The status of this commitment is discussed in the arms control section below (498A(a)(6)(A)). Withdrawal of arms and ammunition from Moldova was not completed by that deadline. At the OSCE Ministerial Meeting in Porto, Portugal (December 6-7, 2002), Russia agreed to complete the withdrawals by December 31, 2003.

Russia has been generally constructive in mediating international conflicts through its participation as a co-sponsor of the Middle East peace process, as a part of the international security presence in Kosovo (KFOR), as a member of the Bosnia Contact Group, and through its support of UN and other multinational initiatives in the Persian Gulf, Haiti, and Angola.

Section 498A(a)(6): "implement responsible security policies, including--

(A) adhering to arms control obligations derived from agreements signed by the former Soviet Union;

(B) reducing military forces and expenditures to a level consistent with legitimate defense requirements;

(C) not proliferating nuclear, biological, or chemical weapons, their delivery systems, or related technologies; and

(D) restraining conventional weapons transfers."

Arms Control. The government of Russia continues to make progress resolving arms control issues inherited as a result of the disintegration of the Soviet Union, including the fulfillment of obligations undertaken in connection bilateral and multilateral treaties such as: the Intermediate-Range Nuclear Forces (INF) Treaty; Strategic Arms Reduction Treaty (START); the 1972 Convention on the Prohibition on the Development, Production, and Stockpiling of Bacteriological (Biological) and Toxin Weapons and on Their Destruction (the BWC) ; the Chemical Weapons Convention (CWC); and the Conventional Armed Forces in Europe (CFE) Treaty.

On November 4, 1992, the Russian parliament approved the START Treaty, which entered into force December 5, 1994. Russia has eliminated substantial numbers of strategic offensive arms and met its START Treaty central limit obligations by the December 5, 2001 deadline. However, Russia has failed to honor some of its other START obligations and in some cases has not allowed the United States to exercise fully its Treaty verification rights. The START I Treaty's Joint Compliance and Inspection Commission (JCIC) --in which both Russia and the United States participate -- is the mechanism for resolving questions concerning implementation of the treaty. The JCIC meets regularly in Geneva and a number of implementation questions have been resolved through this mechanism. The United States will continue to press Russia to take steps to resolve outstanding compliance issues.

Russia continues to observe its obligations under the INF Treaty, including participating in the Special Verification Commission, the mechanism for resolving implementation questions under the Treaty. The INF inspection regime formally concluded May 31, 2001.

Russia continues to reaffirm its commitment to comply with the CFE Treaty and urges entry into force of the CFE Adaptation Agreement signed by the 30 States Parties at the OSCE Summit in November 1999. Russia complies with key elements of the CFE Treaty, although important longstanding concerns remain.

According to its flank data as of July 1, 2002, and a related notification, Russian holdings of Treaty-limited equipment (TLE) continue to exceed most of the legally-binding limits for the original and revised flank areas. However, the 30 CFE States Parties acknowledged the validity of Russia's desire for additional flexibility regarding flank equipment levels by agreeing on higher ceilings for the Russian flank under the Adapted CFE Treaty, which was signed in 1999 but not yet ratified by all 30 States Parties. Russia now appears to be within the future limits of the Adapted CFE Treaty for TLE on Russian territory in the revised flank area (the "adapted flank" area).

Russian data as of 1 January 2002 showed compliance with overall limits for TLE, but Russia continued to exceed its overall limits for artillery in active units. While Russia has demonstrated a generally positive record of implementation of most CFE Treaty provisions, there have been some areas of concern that the Administration has continued to monitor closely.

In addition, for several years, there have been serious concerns about Russian forces stationed in Georgia and Moldova. At the 1999 OSCE Summit in Istanbul, Russia committed to specific actions related to withdrawal of its forces and equipment from these two States Parties. Russia has fulfilled a number of elements of these commitments, in particular those which pertain directly to CFE TLE. But other issues remain unresolved.

In Moldova, Russia fulfilled its Istanbul commitment to destroy or withdraw its TLE by the end of 2001. Fulfillment of the commitment to withdraw all Russian forces by the end of 2002 has been hindered, to date, by political issues related to the Transnistrian separatist regime, which has obstructed the process, and by the magnitude of certain aspects of the withdrawal task, which includes the removal, destruction, or demilitarization of large quantities of stored Russian ammunition and Russian small arms. Some ammunition has been withdrawn, including with financial assistance from OSCE via a Voluntary Fund, and this has been confirmed using multinational OSCE and CFE inspection teams. Efforts by senior-level Russians in late summer and fall 2002 to speed this process via negotiations with Transnistrian authorities, led to the temporary resumption of withdrawal of ammunition and equipment by train in October-November 2002. While Russia was unable to fulfill its commitment to withdraw all of its forces from Moldova by the end of 2002, at the 2002 OSCE Ministerial in Porto, Russia committed to complete the withdrawal as early as possible and stated its intention to do so by December 31, 2003. In order to assist Russia in fulfilling its renewed commitment, the OSCE Voluntary Fund donor states expressed their continued support, including through financial contributions, for the withdrawal process into 2003.

In Georgia, Russia completed its Istanbul commitments to withdraw CFE TLE in excess of agreed levels by December 31, 2000, and closed and transferred to Georgia its base at Vaziani by July 1, 2001, as agreed at Istanbul. Still to be achieved - consistent with the Istanbul commitments contained in a Georgia-Russia Joint Statement (Annex 14 of the CFE Final Act) - are agreements between Russia and Georgia on the status of the Russian base at Gudauta in separatist Abkhazia (which was to have been disbanded by July 1, 2001), and on the duration of the residual presence of Russian forces at the remaining bases at Batumi and Akhalkalaki. Following the OSCE's Porto Ministerial in December 2002, Russia and Georgia resumed discussions of withdrawal issues at the expert level.

Despite a generally positive record of implementation of most CFE Treaty provisions, the Administration continues to monitor closely concerns about some. There is also a broad concern about Russia's continued insistence - probably with a valid basis related to safety concerns - that CFE on-site inspections cannot take place at facilities in Chechnya which would normally be subject to non-refusable inspections under the Treaty. There are a number of other compliance-related issues that the United States continues to track, including: instances of denial of full access during on-site inspections at sites where units or installations that are not subordinate to the conventional armed forces are present; questionable armored personnel carrier (APC) ambulances at some flank units; continued Russian claims of more decommissioned items than the Treaty allows to be exempted from counting rules; continued Russian failure to count against limits items characterized as "non-combat-capable" (a category that the Treaty does not recognize); declaration of all ground TLE in the flank zone as being in active units (which is not permitted until entry into force of the Adapted Treaty); and Russian refusal to declare MT-LB-APC look-alikes or IRM armored infantry fighting vehicle (AIFV) as TLE look-alikes that are listed in the Treaty's "Protocol on Existing Types" of CFE-accountable equipment. (Details can be found in the Annual Compliance Reports).

On the other hand, throughout 2002, Russia has continued to take steps to fulfill the provisions of a CFE-related side agreement on equipment destruction outside the CFE area, on Russian territory east of the Urals (by continuing to notify tank destruction with the goal of equaling the numbers of destroyed or converted ACVs in excess of its ACV commitment for east-of-the Urals equipment destruction).

Russia 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.

Russia is also a party to the Treaty on Open Skies (OS), which establishes a regime of unarmed aerial observation flights over the territories States Parties. (The Soviet Union was not a party to the OS Treaty.) The Treaty is a United States' initiative designed to enhance mutual understanding and confidence and to promote openness and transparency in military forces and activities. Prior to the Treaty's entry into force on January 1, 2002, Russia cooperated with 26 other signatories during its period of provisional application.

The Chemical Weapons Convention (CWC) requires Russia to declare and destroy its chemical weapons (CW) stocks. (Russia ratified the CWC, but it was never an obligation of the Soviet Union.) Russia has requested Cooperative Threat Reduction (CTR) assistance to destroy Russian chemical weapons stocks and destroy several former chemical weapons production facilities (CWPFs) in accordance with CWC requirements. With regard to declared stockpiles, the Russian leadership has taken steps reflecting its commitment to the elimination of its CW program, including approving a CW destruction program plan in April 1996, and depositing its instrument of ratification of the CWC in November 1997. In becoming a State Party to the CWC, Russia accepted legal obligations to forego the development or possession of chemical weapons. In May 1997, the Duma passed and President Yeltsin signed the Russian Federal Law on Chemical Weapons Destruction, approving implementation of the 1996 destruction plan. The plan has subsequently undergone several revisions, most recently in July 2001.

In recent years, the Russian Federation has taken steps to strengthen its CW destruction program, including consolidating responsibility under civilian leadership and significantly increasing funding, admittedly from a low starting point. For both financial and bureaucratic reasons, progress toward fulfilling Russia's CWC obligations has been slow, and senior-level Russian policy statements regarding Russia's general commitment to destroy its CW stocks remain largely unimplemented. As a result, Russia has requested extensions on its CW destruction deadlines from the Organization for the Prohibition of Chemical Weapons (OPCW). With international assistance, Russia is close to commencing the destruction of its blister agent stockpile.

The United States is concerned that Russia may maintain undeclared CW stockpiles and facilities as well as CW production mobilization capabilities, and that Russian CW research activities may continue on fourth-generation agents and other nontraditional agents. Any development, production and stockpiling of fourth-generation agents that are "chemical weapons" as defined by the CWC are prohibited by that Convention. In addition to the declared agent and weapons at Russia's seven declared storage sites, the United States is concerned that Russia may possess chemical agent/munitions stocks in excess of what it declared under the CWC. Russia may store such stocks at sites that were not declared under the CWC. The Administration believes that the Russian declaration of chemical weapons development facilities is incomplete. Moreover, there are facilities that Russia may be required to declare as chemical weapons production facilities as well. The USG is engaged with the Russian Federation at senior levels and through expert-level bilateral consultations to address these concerns.

Rather than destroying many of its declared CWPFs, Russia is converting them into commercial chemical production facilities, making them sources of revenue. Based on U.S.-negotiated changes, once Russia completes the conversion of its declared CW production facilities, these facilities should have no greater capability than equivalent industrial facilities to produce CW, as required under the CWC, and will be subject to OPCW inspections through at least 2012, and review to determine if continued verification is warranted.

With respect to the 1972 Convention on the Prohibition on the Development, Production, and Stockpiling of Bacteriological (Biological) and Toxin Weapons and on Their Destruction (the BWC), the United States has determined that the offensive biological weapons (BW) program Russia inherited from the Soviet Union violated the BWC at least through March 1992. (Russia succeeded to this convention, i.e. it was a Soviet Union obligation.) In early 1992, President Yeltsin confirmed that the former Soviet Union had an offensive BW program and issued a decree prohibiting all activities that contravene the BWC. In June 2000, President Putin reiterated Russia's adherence to the BWC. By April 2001, the Duma voted to remove a Russian reservation to the 1925 Geneva Protocol that had allowed for Russia's retaliatory use of biological weapons.

Since September 1992, U.S. and UK officials have met their Russian counterparts to discuss the BWC compliance. The so-called "Trilateral Process" has remained moribund primarily due to Russian refusal to allow access to military facilities suspected of having the capability to make offensive BW weapons. There has been a significant increase in openness on an institutional level at key civilian facilities associated with the former Soviet BW program. Also, in the summer of 2000 BW-related discussions resumed between the U.S. Department of Defense and the Russian MoD after being suspended by the Russians due to NATO's bombing of Serbia in 1999. Nevertheless, the United States remains concerned about the activities taking place at former Soviet BW-related facilities, especially those controlled by the Russian Ministry of Defense.

We continue to have significant concerns about Russia's current arms control compliance in some areas, notably biological and chemical weapons. While Russia has taken concrete steps toward fulfilling its arms control obligations since the dissolution of the Soviet Union, the status of Russian compliance performance remains under our constant, careful review.

Reducing Forces and Expenditures. Due to extreme budgetary constraints and a changing view of Russian military needs, military spending on equipment and manpower was drastically reduced during the period of 1992-1995. During this period, Russian troop strength was cut by approximately 35%, while tanks, ACVs and artillery were reduced by 50% or greater. Since 1995, Russian personnel strength has continued to drop sharply from a level of 1.7 million authorized military personnel to a present level of roughly 1 million. However, Russian equipment levels have declined to a lesser degree in this time period as the Russian military restructures its forces in accordance with planned military reforms.

Non-Proliferation. The United States and Russia have continued their active dialogue concerning non-proliferation of nuclear, biological, and chemical weapons, their delivery systems, and related technologies. Moreover, nonproliferation has become a key part of the new relationship, with the agenda broadening to include regional issues. The United States and Russia are, for example, conducting a high-level dialogue on Iran nonproliferation issues.

As a co-depositary government of the NPT with the United States (and the UK), Russia continues to consult closely on matters relevant to this important Treaty. In a joint statement of November 13, 2001, Presidents Bush and Putin endorsed efforts to strengthen the NPT. The Treaty of Moscow, signed May 24, 2002, both refers to and evidences their progress in meeting their disarmament obligations under the NPT. The United States and Russia consulted prior to and at the first meeting of the first Preparatory Committee for the 2005 NPT Review Conference, which was held in New York in April 2002. The United States and Russia met in October 2002 as preparations began for the second meeting of the Preparatory Committee, which will be held in Geneva in April 2003.

Although economic difficulties have limited Russia's ability to provide resources for dismantling activities, we believe it remains committed to making a substantial investment in dismantling weapons of mass destruction.

The government-to-government Highly Enriched Uranium (HEU) Agreement between the United States and the Russian Federation, signed February 18, 1993, provided for conversion of 500 metric tons of HEU from dismantled Russian nuclear weapons into low enriched uranium fuel over a 20 year period.

The Agreement provides for the United States Enrichment Corporation (USEC), the U.S. executive agent under the agreement, to purchase HEU in the form of LEU suitable for fabrication into fuel for commercial power reactors. Between June 23, 1995, the date of the first LEU delivery, and November 2002, approximately 4932 metric tons of LEU (equal to roughly 168 metric tons of HEU) have been delivered to USEC. The LEU is sold by USEC for use as fuel in commercial nuclear reactors. In 2002, the U.S. and Russian executive agents entered into an amendment to the implementing contract that provides the terms for LEU shipments through 2013.

In March 1999, agreement was reached concerning the disposition of the natural uranium component of material delivered under the HEU Purchase Agreement. Under this arrangement, the U.S. government agreed to purchase natural uranium associated with material delivered in 1997 and 1998. In a separate contract, a group of Western companies (Cameco, Cogema and NUKEM) agreed to buy the natural uranium component beginning in 1999. Material that is not purchased by the Western companies is shipped back to the Russian Federation.

Transparency procedures intended to provide confidence that the arms control and nonproliferation goals of the agreement are being met are in place and are being implemented at both U.S. and Russian facilities. These measures are designed to increase U.S. confidence that uranium purchased under the HEU Agreement is derived from nuclear weapons and converted into low enriched uranium for use as fuel in commercial nuclear reactors.

The United States and Russia are cooperating on a variety of other initiatives and programs related to fissile materials. Among these is the bilateral initiative for disposition by the United States and Russia each of 34 metric tons--68 metric tons total--of weapon-grade plutonium that have been declared excess to defense needs. A bilateral agreement that records these mutual obligations and provides a framework for cooperation on the construction and operation of industrial-scale plutonium disposition facilities was signed and began to be applied in September 2000. The United States is seeking participation and funding from other G-8 countries in this initiative.

The United States is also actively cooperating with Russia to improve security of fissile material stockpiles, combat illicit nuclear trafficking, protect radioactive sources and redirect the activities of weapons scientists and institutes, with the aim of reducing proliferation risks. Additionally, in December 1999, the United States, Russia, and the International Atomic Energy Agency began discussions on a proposed program to return fresh and spent nuclear fuel containing uranium enriched in Russia or the former Soviet Union from foreign research reactors to Russia for management and future disposition. In August 2002 the Russian and Yugoslavian governments cooperated with the United States in shipping nearly 50 kilograms of fresh HEU from the Vinca Institute in Belgrade to Dmitrovgrad in Russia, where it will be blended down to LEU.

Since 1996, the United States, Russia, and the IAEA have been working on a new IAEA verification regime that can be applied to materials declared excess to defense requirements in the U.S. and Russia. In 2002, the three parties concluded that the original task undertaken, i.e. to examine the technical, legal, and financial issues associated with such verification, had been successfully completed.

Russia continues its efforts to strengthen its export controls on sensitive materials and technology. Over the past two years the Russian Government has issued several regulations to implement the Federal Law on Export Controls, which was enacted in 1999. The United States continues to work closely with the Russian Government to aid in the effective implementation and enforcement of these laws and regulations. As part of this effort, Russia and the United States are working to educate Russian producers and exporters of sensitive technologies on the importance of export controls and of their obligations under Russian law, and to install internal compliance programs at individual Russian entities to help ensure that these entities fully comply with Russian export control laws and regulations. The U.S. is also helping to outfit key Russian border transit points with detection equipment to deter and interdict illicit transfers. Of concern, however, is Russian nuclear cooperation with India in violation of Nuclear Suppliers Group Guidelines for nuclear export control and Russian attempts to reinterpret the provisions for exemption from the full-scope safeguards provisions of the Guidelines.

Russia joined the Missile Technology Control Regime (MTCR) in August 1995, became an original Subscribing State to the International Code of Conduct Against Ballistic Missile Proliferation (ICOC) in November 2002, and has stated its commitment to missile nonproliferation, regional stability, and the goals of the MTCR. The Russian government also has assured the United States of its commitment to the highest nonproliferation standards and has told us repeatedly that it does not support Iran's long-range missile development efforts. In this context, the United States has pursued a high-level dialogue with Russia aimed at finding ways to work together to cut off the flow of sensitive goods to Iran's ballistic missile development. Russia's government has created institutional foundations to implement a newly enacted nonproliferation policy and passed laws to punish wrongdoers. It also has passed new export control legislation and adopted implementing regulations to tighten government control over sensitive technologies and continued a dialogue with the United States aimed at strengthening export control practices at Russian aerospace firms. However, while some progress has been made, there are reports of missile cooperation by Russian entities with Iran, in many cases apparently without the knowledge of the Russian government. In sum, Russian entities have engaged in transfers that are contrary to the nonproliferation criteria outlined in the MTCR guidelines. The Russian government needs to address the remaining proliferation concerns in order to meet fully its political commitment under MTCR.

Russian entity support to sensitive nuclear programs in Iran remains a serious concern, and intensive discussions with Russia continue in order to find a satisfactory resolution of this issue. The United States also continues to press the Russian government to take additional steps against entities involved in missile-related technology transfer to Iran. In June 1998 and January 1999, the United States imposed administrative measures pursuant to the provisions Executive Order 12938, as amended, against a total of ten Russian entities involved in cooperation with Iran's missile or nuclear weapons programs. These measures remain in force (specifically, a ban on U.S. exports and U.S. government assistance to these entities, and on imports and U.S. government procurement from these entities). The Executive Order penalties imposed on entities INOR and Polyus in 1998 were lifted in November 2000. We periodically receive reports potentially related to Russian entity transfers of material, equipment, or technology that could contribute to the ability of countries to manufacture missiles or weapons of mass destruction (WMD). We carefully review these reports in light of legal obligations under the applicable nonproliferation sanctions laws. None of these reports has resulted in a sanctions determination on the Government of Russia for missile or WMD transfers during the reporting period.

Conventional Arms. The United States and Russia maintain active contacts on a wide range of conventional arms transfer issues. The Government of Russia has generally complied with its obligations to observe UN arms sanctions against Iraq and the former Yugoslavia, and has worked with the UN Sanctions Committee as questions have arisen. Russia has moved away from past policies of arms transfers for ideological or strategic purposes and now relies heavily on arms exports to maintain the viability of its military-industrial base. We have continuing concerns with respect to Russian arms sales to state sponsors of terrorism and regions of instability and are working with the Russian Government to address these concerns.

In 1999, the United States, as a matter of policy, imposed sanctions against three Russian entities for transfers of lethal military equipment to a state sponsor of terrorism. These measures included the denial of U.S. assistance to the entities, a ban on U.S. government procurement, denial of new export licenses for USML items and an import ban on defense articles and services. In 2002, the United States, as a matter of policy, imposed sanctions (in this case the sanctions were imposed for one year) against three Russian entities for the transfer of lethal military equipment to state sponsors of terrorism. These measures included the denial of U.S. assistance to the entities, a ban on U.S. government procurement, and the denial of new licenses for the export of defense articles and services to and from the sanctioned entities. The United States periodically receives reports potentially related to Russian entity transfers of material, equipment, or technology that could contribute to the ability of countries to manufacture missiles or weapons of mass destruction or acquire advanced conventional weapons. Reports of transfers that raise questions under the applicable nonproliferation sanctions laws are under review.

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

In 2000, the State Commission for Environmental Protection (SCEP) and the forestry service were abolished; the Ministry of Natural Resources (MNR) absorbed their duties and many, but not all, of their personnel. It appears that MNR's priorities lie mainly in natural resource-based economic development, not in environmental protection. If conflicts of interest arise within the ministry between environmental protection and economic development, it appears likely that MNR would choose the option most profitable in the near term. Some local and regional bodies and non-governmental organizations have taken on some responsibilities previously held by central bodies. Apparently, pressure from international financial institutions and donor countries will hold the strongest hand in influencing a shift in these priorities toward a more environment-friendly agenda.

Regional Environmental Centers. The United States, the European Union and five host nations (Russia, Ukraine, Moldova, Georgia, and Kazakhstan) are participating in the establishment of independent, non-profit, and non-political Regional Environmental Centers (RECs.) The mission of each REC will be to strengthen civil society and support sustainable development by promoting public awareness and participation in regional environmental decision-making. The EU has the lead for the establishment of the Moscow REC, the foundation of which has been delayed by a series of bureaucratic hurdles and opposition from a number of existing Russian NGOs.

Climate Change and CFCs. The U.S. and Russia are currently finalizing a bilateral Climate Change Policy Dialogue as part of the enhanced bilateral/regional outreach called for in President Bush's February 2002 climate change policy announcement. The U.S. has also agreed to work closely with Russia in preparing for the World Conference on Climate Change to be held in Moscow in October 2003. Russia is a member of the "Umbrella Group" of key partner nations with which the U.S. has worked on issues under the U.N. Framework Convention on Climate Change (UNFCCC). During the 2002 World Summit on Sustainable Development, Russia indicated its intention to become party to the Kyoto Protocol. However, due to some internal bureaucratic processes and the need for formal action by the State Duma, there is still some question as to when Russia will actually ratify the Protocol.

Under the Kyoto Protocol, which sets emissions allowances for the period 2008-2012, Russia agreed to stabilize its emissions at 1990 levels. As Russia's greenhouse gas levels are expected to be significantly below 1990 levels due to the collapse of its economy since then, the nation expects to benefit from both capital flows generated from the sale of emissions credits and Western investment in its energy sector. Russia's participation in the international emissions trading system depends, inter alia, upon the establishment of a reliable domestic monitoring and verification regime.

In August 2002, the World Bank announced payment of $17.3 million in compensation to seven Russian enterprises that have ceased production of chlorofluorocarbons and halons, the most dangerous ozone depleting substances (ODS). The ending of ODS production in Russia completed the phase out of CFCs and halons in developed countries as required by the Montreal Protocol.

Persistent Contaminants. Several projects addressing toxic contaminants in Russia were initiated or advanced in FY02, with leveraged funding from other member states of the Arctic Council. These projects deal with polychlorinated biphenyls (PCBs), dioxin/furans, obsolete organic pesticides, and mercury. Another project seeks to incorporate cost-saving "cleaner production" techniques at the mining and metallurgy complex at Norilsk in the Russian Arctic. Beyond the direct environmental benefits and financial leverage, such projects help accustom Russian officials and industrial managers at various levels to multilateral cooperation and facilitate communication across institutional boundaries, which is essential in addressing complex environmental problems.

Radioactive Waste. Several projects and initiatives contribute to addressing the problem of radioactive waste management. The first project established was an operational low-level liquid radioactive waste (LLRW) processing facility in Russia located in Murmansk on the Kola Peninsula and operated by RTP-Atomflot. It has historically processed a small amount of LLRW from the Russian North Fleet. In 1994, the plant was operating near capacity, while storage capacity was virtually exhausted. Russia had no other LLRW processing capacity and, until 1993, disposed of LLRW in the Barents and Kara Seas.

In 1993, all parties to the London Dumping Convention of 1972, except Russia, adopted Resolution 51/16 to amend annex I and II of the Convention to ban completely the disposal at sea of radioactive waste, including LLRW. To assist Russia to be in a position to adopt the amendment, the United States, Norway, and Russia began exploring the possibility of expanding and upgrading the Murmansk facility. The agreed project expanded the capacity of this facility from 1,200 cubic meters to 5,000 cubic meters per year and thus upgraded Russia's capability of processing LLRW from nuclear submarine decommissioning. Japan has provided similar assistance to establish a facility in Vladivostok. Both facilities are now operational.

At the September 1994 Summit Meeting, the Russian Federation stated its intent, following the completion of these liquid radioactive processing facilities, to formally adhere to the London Convention amendment banning the disposal at sea of radioactive materials. This commitment was reaffirmed through a joint Protocol signed on June 20, 2001 at the completion of the Murmansk facility. However, as recently as the 24th Consultative Meeting of the Convention Parties (LC 24) in November 2002, Russia indicated that it still was not in a position to accept the amendment. Russia did confirm its continuation of a voluntary moratorium on the dumping at sea of radioactive wastes, implemented at the time of the adoption of the resolution in 1993. At LC 24, the Russian delegation reported that the Russian government had developed an inter-agency action plan to satisfy the oversight requirements of a wide range of ministries involved in nuclear and environmental controls. The delegation indicated that the Russian government anticipated being able to withdraw its non-acceptance of resolution 51/16 within the next year. Numerous other delegations expressed their regret at the Russian Federation's failure to withdraw its non-acceptance of the amendment.

Since 1996, the Arctic Military Environmental Cooperation Program (AMEC), in which the United States, Norway and the Russian Federation participate, has conducted a number of technology demonstration projects to address Russian pollution of the prime fishing grounds of Norway, a key NATO ally. Eighty percent of these projects address radiological waste issues in Northwest Russia, including projects designed to enhance the safety and security of stored radioactive material. Non-radiological projects are focused on elimination of hazardous waste produced during nuclear submarine dismantling processes. AMEC radiological waste projects have been conducted under the U.S.-Russia Cooperative Threat Reduction agreement and therefore are covered by the liability and other protections of that agreement. Because a separate stand-alone agreement for AMEC has yet to be concluded, work for non-radiological waste projects, which are not covered by the Cooperative Threat Reduction agreement, cannot be undertaken.

AMEC projects have transformed Russian nuclear waste storage technology from a "wet" system to a "dry" system, which is the system used in many Western nations. Storage and transport of spent nuclear fuel (SNF), which accounts for 99 percent of the radioactivity released from radioactive waste while constituting only 5 percent of the volume, has been improved through the use of a "40 tonne cask", as well as a temporary storage and transshipment pad, provided by AMEC projects. The 40-tonne cask is Russia's first "dual use" transport and storage cask, while the pad will reduce shipment of SNF from three months to three weeks. Solid radioactive waste processing, transport, and storage will be improved through use of a mobile pretreatment facility and the use of steel transport containers, another "dual use" first and both provided by AMEC projects. Radioactive storage sites will be monitored remotely for both radiological and ecological conditions. In addition, the personal safety of radioactive waste workers has been improved through training and the use of U.S. and Norwegian supplied dosimeters. All of these projects have been completed or will be completed during FY03.

Based on the success of AMEC, the United Kingdom plans to become a full participant in AMEC by the end of January 2003.

Endangered Species. In October 2000, the U.S. and Russia signed a bilateral agreement to conserve and manage Alaska-Chukotka polar bears. Trade in caviar from Caspian Sea sturgeon has been restricted under the Convention on International Trade in Endangered Species (CITES). In August 1998, former Prime Minister Kiriyenko signed a decree establishing a system of import/export controls on sturgeon and its byproducts, including caviar, to implement the recommendations of the Tenth Conference of the Parties of the CITES, and the Russian government has taken steps to limit the Russian sturgeon harvest to 700 tons, down from 1200 tons in 1998. Conservation of sturgeon and the related sustainability of the caviar trade, as well as the survival of the Siberian tiger and other Russian biodiversity, are important areas of U.S.-Russia cooperation.

Section 498A(a)(8): "deny support for acts of international terrorism."

The Government of Russia does not generally grant sanctuary from prosecution to individuals or groups who have committed acts of international terrorism or otherwise support international terrorism. Since the September 11 attacks, the Government of Russia has provided significant and unprecedented diplomatic and intelligence support to the coalition against terrorism and to Operation Enduring Freedom. Russia provided U.S. military aircraft with access to its airspace and took measures to assist in strengthening border security on the frontlines. However, Russia has not responded to a Georgian government request for the extradition of Igor Giorgadze, the former head of the Georgian security ministry, whom Georgia has alleged has been in Russia and was involved in assassination attempts on President Shevardnadze.

The United States has conducted regular counter-terrorism consultations with Russia since June 1994. After September 11, 2001, counterterrorism cooperation with Russian expanded to unprecedented levels. Counterterrorism consultations with Russia in the Afghanistan Working Group, which began in August 2000, were expanded to cover terrorist threats around the world in the new Counterterrorism Working Group. This met for the first time with the new mandate in July 2002, and will next meet in January 2003. One of the Working Group's subgroups deals with the use of chemical and biological weapons as instruments of terror. Numerous exchanges between governments took place during and in the aftermath of the October 23, 2002 terrorist hostage-taking incident in Moscow in which 129 people were killed, including one American citizen.

Russia is a party to ten of the twelve international counter-terrorism conventions, has signed the other two, and has initiated UN consideration of a proposed convention to combat nuclear 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 (NIS) 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 with the so-called "double zero" agreement, whereby all NIS countries would relinquish all Soviet-era assets and liabilities to Russia. All of the non-Russian NIS countries, with the exception of Ukraine, have signed and ratified the "double zero" agreement.

In August 2000, Russia finalized the agreement reached in February 2000 with the "London Club" of commercial creditors to restructure about $32 billion in Soviet-era commercial debt. The London Club agreed to write off $10.4 billion in exchange for $270 million in cash payment and $20.6 billion in Eurobond issuances, an approximately 35 percent reduction in the face value of the original debt. In those negotiations, Russia sought to restructure amounts owed to banks that were not insured by official guarantees and that arose in connection with loans to or other claims on the former Soviet Union. Repayment of each category of debt is scheduled to begin after completion of a seven-year grace period. In 2002, work began on restructuring foreign trade obligations -- borrowings by Soviet companies without state guarantees -- on similar terms. On December 18, Russia exchanged a first tranche worth $1.28 billion of foreign trade obligations for Eurobonds due 2010 and 2030. A second exchange for the remaining amount is expected to take place early next year.

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 who may have been taken to the former Soviet Union is being conducted through the U.S.-Russian Joint Commission on POW/MIAs, which was established by Presidents Yeltsin and Bush in March 1992. President Yeltsin and the late General Dmitriy Volkogonov, former head of the Russian side of the Commission, pledged their full cooperation. President Yeltsin directed all relevant Russian ministries to cooperate fully with the Commission. Until his death in December 1995, General Volkogonov oversaw a broad-based research effort conducted by Russian archivists in search of information on missing American servicemen. He also arranged for the U.S. side of the Commission to travel across Russia in order to interview Russian citizens and conduct research in regional archives. This level of U.S.-Russian cooperation on POWs/MIAs was unprecedented.

In March 1996 General-Major Vladimir Zolotaryev became the Russian Chairman of the Commission, replacing General Volkogonov. In December 1998 General Roland Lajoie became the U.S. Chairman, replacing Ambassador Malcolm Toon, who had served as U.S. Chairman since the Commission's inception.

The Commission has held eighteen plenary sessions, the most recent in November 2002. Other key events in 2002 included a Co-Chairman meeting in May and a meeting between Russian Commission members and Deputy Assistant Secretary of Defense for Prisoner of War/Missing Personnel Affairs Jerry Jennings. Recent meetings, all or which took place in Moscow, have focussed on: joint efforts to recover and identity remains from Russia's Pacific coastal region, following up on successful recovery of debris and remains from a World War II crash site in the Kamchatka Peninsula in the summer of 2001; and expanded U.S. access to Russian military archives to help identify and locate historical records and eyewitnesses with possible knowledge of the fates of U.S. POW/MIAs since World War II. U.S. representatives on the Commission continue to investigate reports of sightings of American POWs in the Soviet Gulag. Russian officials do not impede investigation of these reports, but have discounted them and offer little assistance in bringing them to a conclusion.

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."

In 1991, Moscow ended its $4 billion a year subsidy of the Cuban economy. In 1992, Russia halted construction of the Juragua nuclear power plant near Cienfuegos, Cuba. Russia maintained a credit line for mothballing parts of the facility completed before suspension, but Castro announced in January 2001 that Cuba had decided against continuing with the project.

In 1993, Russia withdrew its last remaining combat troops from Cuba. On October 17, 2001 President Putin announced Russian withdrawal from Moscow's intelligence facility at Lourdes, Cuba. The Russians had completed the dismantling of the Lourdes site by late summer 2002, and the Government of Cuba announced that it would convert the former listening post to a large computer science campus. With the closing of the facility, Russia ceased providing Cuba a $200 million annual payment for its use.

Russian officials continue to assure us that Russia is not providing assistance to Cuba, and that all trade is conducted on a commercial, non-preferential basis. Russian-Cuban economic interaction centers on oil-for-sugar barter arrangements and nickel plant investments, both part of a 2001-2005 trade plan agreement which established "recommended" trade targets. According to the agreement, Russia aims at delivering 1.5-2.0 million tons of oil per year to Cuba. Other Russian exports include spare parts, fertilizers, and steel. Cuba aims at exporting 2.2-2.8 million tons of sugar to Russia per year, as well as nickel, medicines, vaccines and medical equipment, citrus fruits, cigarettes and rum.

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

RUSSIA

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

No. Although there are continuing and credible reports of human rights violations and abuses by Russian military forces and Chechen rebels in Chechnya, generally poor treatment of prisoners and inadequate detention facilities, and the law on religion and refusals of visas to foreign clergy serving in Russia are grounds for concern, we do not believe that the government of Russia is engaged in such a pattern. Nonetheless, we will work to better address existing problems in the area of democracy and human rights not only through diplomatic efforts but also through our assistance programs.

Section 498A(b)(2): Has the President determined that the Government of Russia "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"?

The President has not made that determination, as the Russians have taken constructive steps in this area.

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

(A) missiles or missile technology inconsistent with the guidelines and parameters of the Missile Technology Control Regime; or

(B) any material, equipment, or technology that would contribute significantly to the ability of such country to manufacture any weapon of mass destruction (including nuclear, chemical, and biological weapons) if the President determine[d] that the material, equipment, or technology was to be used by such country in the manufacture of such weapon"?

Russia became an MTCR Partner in August 1995. Russia is a Party to the NPT, CWC, INF, START and BWC, and the Russian government has demonstrated a commitment to the non-proliferation of weapons of mass destruction. There was no termination of assistance to Russia during the reporting year under section 498A(b)(3). Additional information related to implementation of this section, however, has previously been provided to Congress on a classified basis. (We periodically receive reports potentially related to Russian transfers of material, equipment, or technology that could contribute to the ability of countries to manufacture missiles or weapons of mass destruction. We have under review reports of transfers that raise questions under the applicable nonproliferation sanctions laws.) However, during the reporting period, no determinations were made against the Government of Russia under section 498A(b)(3).

Section 498A(b)(4): Is the government of Russia "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. The government of Russia is not 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 Russia "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 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 Russia is providing assistance for, or engaging in any non-market-based trade with, the Cuban government.

Section 498A(b)(6): Has the government of Russia "failed to make significant progress on the removal of Russian or Commonwealth of Independent States troops from Estonia, Latvia, and Lithuania" or "failed to undertake good faith efforts, such as negotiations, to end other military practices that violate the sovereignty of the Baltic states"?

No. The process of Russian troop withdrawal from Lithuania was completed in 1993 and from Latvia and Estonia in 1994. Russia ceased operating its radar facility at Skrunda, Latvia in August 1998 as called for in a bilateral agreement. Dismantling of the facility was completed ahead of schedule by September 1999 under OSCE supervision. The Baltic states were invited to join NATO at the November 2002 Prague Summit. Russia's did not react sharply to the invitations but expressed concern that the Baltic states accede to the Adapted Conventional Forces in Europe Treaty as soon as practicable.

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

TAJIKISTAN

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."

The comprehensive peace accords signed on June 27, 1997 ended five years of civil conflict in Tajikistan and set the stage for Tajikistan's transition from a Soviet dictatorship to a more open and competitive system. The ruling regime has established some nominally democratic institutions. Key elements of the central government continue to be predominantly controlled by President Rahmonov and other Tajiks from his native Kulyab region. Some politicians from opposition parties, however, continue to hold seats in the government. The central government's less than total control over some areas of the country forces it to compromise and forge alliances. The government and its former opposition continued to cooperate on key issues in an integrated government.

A joint mission of the UN and the OSCE observed elections to the Lower House of Tajikistan's new bicameral national Parliament on February 27, 2000. The joint UN-OSCE observation mission noted that the elections, characterized by the open participation of six parties and a number of independent candidates, were an improvement over the limited choice offered to voters during presidential elections in November 1999. The joint observer mission concluded, however, that the elections failed to meet the minimum standards for equal, free, fair, transparent, and accountable elections. In particular, problems were noted with regard to the independence of election commissions, as well as the protection of the ballot boxes, conduct of the vote count and tabulation of results. State organs, particularly regional and local administration officials, interfered in the preparations for and conduct of the elections in a manner not foreseen by law and inconsistent with international standards for democratic elections. The law on parliamentary elections, approved by the former parliament in December 1999, was flawed in areas such as media access, campaign funding, criteria for disqualification of candidates, exclusion of independent domestic observers, and treatment of suspect election results. Still, this was an improvement over civil war just five years earlier.

It is noteworthy that Tajikistan has a legal opposition, including a political party that is overtly Islamic and committed to a secular state. At least one prospective independent candidate for the Lower House of Parliament was prevented from registering as a candidate for the elections to the Lower House, but several opposition parties were allowed to participate in parliamentary elections. One opposition party, the Islamic Renaissance Party, won two seats in the Lower House. President Rahmonov's People's Democratic Party of Tajikistan controls an overwhelming majority of seats in both houses of Parliament, however this party itself has divided into separate movements. While the legislative branch is not genuinely independent of the executive branch, it is becoming more so.

The peace agreement that was signed in 1997 and implemented in 2000, continued to hold. During 2002, stability in the country continued to increase, and the year was largely free of the assassinations and outbreaks of violence perpetrated by unreformed opposition members that plagued the country in previous years. Credible reports indicate that security forces frequently tortured, beat, and abused detainees. There were similar allegations of threats, extortion, looting, and abuse of civilians. The government rarely prosecutes security officials believed responsible for human rights abuses, though prosecutions of this type increased during 2002 and in other cases such officials were reprimanded and/or transferred to other areas. The government continues to strengthen and control more of its territory.

The government's human rights record is poor but has improved incrementally since independence. Freedom of the press improved significantly during 2002. Though the government controls most press and broadcast facilities and journalists often lack funds to publish or broadcast, during the year the government licensed three independent radio stations in the capital, the first of their kind. Journalists complain more of self-censorship than government harassment. An openly Islamic political opposition newspaper begun in 1998 continued to publish, though it suspended its weekly TV show due to management issues at the TV station. A number of small television stations were operated by non-governmental organizations (NGOs). During the past three years, opponents of the government spoke at OSCE-sponsored local political debates, on nationally televised political debates sponsored by the International Foundation for Election Systems , and on popular USAID-sponsored prime time TV shows without government retaliation. Freedom of assembly remains limited to those who register, and Tajikistan eliminated registration fees for NGOs. The government supports registered religious organizations. However, the rule of law is applied unevenly at best.

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)."

The civil war (1992-1997) severely damaged Tajikistan's already-weak economic infrastructure and caused a sharp decline in industrial and agricultural production. Since 1997, however, Tajikistan has experienced economic growth. Despite the difficulties associated with high world oil prices, growth remains strong and the macroeconomic environment continues to show signs of greater stability.

In 2001, real GDP growth in Tajikistan is estimated to have reached 10.2%, with consumer price inflation estimated at 12.5%. Growth occurred despite volatility in world prices for aluminum and cotton, which account for most of Tajikistan's exports. While these growth figures are very encouraging, Tajikistan's economic performance remains fragile due to uneven implementation of structural reforms, weak governance, and its heavy external debt burden. Though rainfall and corresponding agricultural production increased significantly during 2002, the cumulative effects of two years of severe drought from 2000-2001 continue to be a problem.

Improved fiscal discipline by the Government of Tajikistan has supported the return to positive economic growth. The government budget was nearly in balance in 2001, and the government's 2002 budget targets a fiscal deficit of 0.3% of GDP, including recent increases in social sector spending.

Progress on implementing Tajikistan's structural reform agenda has been significant since 1998, particularly with regard to the privatization of small-scale state-owned enterprises (SOEs). During the year, the government announced its intent to fully adopt international accounting standards by FY 2004 and made initial efforts towards this goal. The potential for continued economic growth is found in the agricultural and light-manufacturing sectors where productivity increases are anticipated from continued privatization of medium-sized and large SOEs and land reform. Restructuring of the banking sector and improved governance generally are top priorities if the country is to create an improved environment for private sector investment and growth.

The Government of Tajikistan has worked closely with its other development partners, including USAID, to modernize its legal and regulatory framework to support its shift to a market economy. Restructuring of the banking sector and improved governance generally remain top priorities if Tajikistan is to create an improved environment for private sector investment and growth. Ten years after independence, the country still does not have a functioning banking system. There is also little confidence in the capacity of the courts and government agencies to implement and enforce rights and obligations created by new legislation and regulations.

Tajikistan's high external debt service requirement and incomplete structural reforms leave the country vulnerable to economic shocks. Tajikistan's total external debt (acquired after independence) is slightly over $1.01 billion, or 99 % of GDP. Debt servicing could require as much as 50% of government revenues in 2003. This overhang of old debts is a serious drain on government resources and constrains the government of Tajikistan's ability to meet pressing development needs. Uzbekistan's ability to effectively blockade its border with Tajikistan also has a severe impact on the Tajik economy, as almost all of Tajikistan's trade must transit Uzbekistan.

Tajikistan remains a member in good standing with the International Monetary Fund, World Bank, Asian Development Bank and European Band of Reconstruction and Development. An Overseas Private Investment Corporation (OPIC) agreement entered into force in 1992. The 1993 bilateral trade agreement between Tajikistan and the United States provides reciprocal Normal Trade Relations benefits, subject to annual review, and contains intellectual property rights provisions. Tajikistan 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). In May 2001, Tajikistan submitted a formal request for accession to the WTO and a working group was formed. It has not yet submitted a memorandum of Foreign Trade Regime.

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

The government cooperated with the United Nations High Commissioner for Refugees (UNHCR) in the repatriation of Tajik refugees from Afghanistan due to the 1992-1997 Tajik Civil War, and by 1998 the final tranche of refugees finished returning to their homes. The government continues to work with the UNHCR, the International Organization for Migration, and the International Committee of the Red Cross to facilitate the return of remaining internally-displaced persons from eastern Gorno-Badakshan oblast (region), and those who sought refuge in other neighboring states. Some of this latter group may have settled in their new homes as economic migrants with no intention of returning to Tajikistan at this time.

Retribution against returnees did not take place as originally feared, and the government has made positive efforts to resolve the cases of returnees whose homes had been occupied during their absence. Persons from Kulyab have been favored over those from other regional clan groups and some harassment of those from Garm and Pamir, opposition strongholds during the war, continues. Fear about the future as well as linguistic and employment discrimination against the Russian minority led to large-scale out-migration of this group early during the civil conflict. This trend has slowed significantly in recent years, for a number of reasons: the return of stability; the fact that most of those with family in Russia have already left; and a 1996 agreement with Russia permitting dual citizenship.

According to the Constitution, Tajikistan is a secular state and religious freedoms are guaranteed by law. Islam is the majority religion. While two members of Dushanbe's Baha'i community were murdered in late 2001, minority religions in general enjoy both government and individual tolerance with the exception of native Tajiks who convert from Islam and who experience occasional discrimination and harassment. There does not appear to be official discrimination against religious minorities, but religious communities must register and are monitored to ensure that they do not become overly political. Unregistered, recently organized religious communities, however, such as Hare Krishna groups, function with no apparent restrictions.

One issue of contention remains the apparent goal of some Islamists to make Tajikistan an Islamic state. President Rahmonov has aggressively defended secularism and occasionally criticized Islam as a political threat. Leading Islamic figures within the former opposition who have joined the government have downplayed the issue, saying that Tajikistan is not ready to become an Islamic state and that they are committed to peacefully resolving their differences in a secular nation-state. However, the Government has specifically banned the activity of one religious-political group, the Hizb-ut-Tahrir, which has developed a significant following among the increasingly politically alienated ethnic Uzbek population of northern Tajikistan. The Hizb-ut-Tahrir seeks to establish a Caliphate in all of Central Asia. Many of its adherents have been detained.

Tajikistan has no law on emigration. Thus, since 1997, U.S. Presidents have determined that Tajikistan meets the emigration requirements of Jackson-Vanik legislation. During 2002, the Tajik Government removed the exit visa requirement for Tajik nationals who wish to travel abroad.

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."

The Government of Tajikistan has made a public commitment to respect international legal obligations and OSCE commitments. In November 1999, Tajikistan joined other OSCE states in signing the Charter for European Security, which reaffirms full adherence to all existing OSCE documents. It has cooperated with the OSCE mission in Dushanbe on matters related to electoral law, human rights monitoring, and efforts that obtained a political settlement to the civil conflict. The OSCE mission in Tajikistan was expanded in 1995 to take on human rights monitoring functions previously carried out by the UNHCR, and continued its work in this field throughout 2000. The government still has not yet established a formal human rights ombudsman as recommended by the OSCE, despite its statement in 1996 (before its civil war ended and its current government was established) that it would do so. The government has, however, permitted human rights organizations to establish offices and freely operate in Tajikistan.

Tajikistan still has outstanding border disputes with the Kyrgyz Republic and China, but neither has erupted into armed conflict, nor are they likely to. Minor clashes in late 1999 between Uzbekistan and Tajikistan did not escalate into anything more serious. Uzbek authorities, however, in mid-2000 heavily mined the still un-demarcated border in response to raids by Islamic Movement of Uzbekistan (IMU) units which Uzbekistan claimed operated out of Tajikistan. Over 100 (approximately 50-60 per year) civilians and unknown numbers of livestock have died because of this.

Irredentist rhetoric about the largely ethnic Tajik cities of Samarkand and Bukhara (located in present-day Uzbekistan) has not been taken seriously by the government. Tajikistan continues to try to form an independent national military. It has been largely successful in integrating former opposition fighters with government forces, but faces significant equipment and training shortages in maintaining its armed forces. As a result, it has neither the capacity nor any apparent intention to pursue aggressive actions against its neighbors. Tajikistan has been an active participant in regional dialogues and cooperative peacemaking efforts. However, most of its efforts at conflict resolution have been domestic -- participating in the inter-Tajik peace negotiations and seeking reconciliation following the civil war.

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

The Government of Tajikistan welcomed international efforts to seek a peaceful resolution of the 1992-1997 Tajik civil conflict. The three-year UN-mediated negotiating process of peace talks with the Tajik opposition led to the June 27, 1997, signing of comprehensive peace accords and the creation of a Commission on National Reconciliation chaired by then-opposition leader Abdullo Said Nuri. Implementation of the accords and the conduct of some of its requirements (1999 constitutional referendum and presidential elections) were implemented but left much to be desired. However, following parliamentary elections in February 2000 in which six opposition parties participated, the United Nations Mission of Observers in Tajikistan (UNMOT) declared itself satisfied the process was sufficiently complete and declared its mission fulfilled in May. Abdullo Said Nuri declared his Commission on National Reconciliation to have fulfilled its mission as well and is now the head of the Islamic Renaissance Party in government.

The Tajik civil war was primarily a regional and clan-based struggle, not a war between communists and Islamists as is often mistakenly proclaimed. Although the population is 25% ethnic Uzbek and Uzbeks fought on the side of the government during the civil war against the opposition, the ethnic question was not an aspect of the conflict. Rather, the war fostered sub-ethnic regional identities among Tajiks, as discrimination against Tajiks from other regions such as Garm and Pamir region took place.

Section 498A (a)(6): "implement responsible security policies, including --

(A) adhering to arms control obligations derived from agreements signed by the former Soviet Union;

(B) reducing military forces and expenditures to a level consistent with legitimate defense requirements;

(C) not proliferating nuclear, biological, or chemical weapons, their delivery systems, or related technologies; and

(D) restraining conventional weapons transfers."

Tajikistan has formally declared its willingness and intent to accept all of the relevant arms control obligations of the former Soviet Union. Tajikistan is a party to the Treaty on the Non-Proliferation of Nuclear Weapons as a non-nuclear-weapons-state and supported indefinite extension of the Treaty at the NPT Review Conference in 1995. During 2002, the Government of Tajikistan signed an NPT safeguards agreement with the International Atomic Energy Agency, which has been approved by the IAEA's executive board.

Tajikistan has submitted Confidence- and Security-Building Measures (CSBM) annual data declarations for 1998-2001 (but is often late and has not yet submitted its data as of January 1, 2002 and has willingly undergone CSBM inspections in accordance with the OSCE Vienna Document 1994 and its successor Vienna Document 1999. Tajikistan's fledgling military forces do not represent an offensive threat to neighboring states. We are not aware that the government of Tajikistan has engaged in the proliferation of nuclear, biological, or chemical weapons, their delivery systems, or related technology. The United States considers Tajikistan to be a party to the INF Treaty as a successor state to the Soviet Union. Tajikistan was one of the first NIS countries to become a State Party to the 1993 Chemical Weapons Convention in 1997 and there are no concerns about their behavior under this convention. Tajikistan has yet to become a State Party to the 1972 Convention on the Prohibition of the Development, Production, and Stockpiling of Bacteriological (Biological) and Toxin Weapons and on Their Destruction. Tajikistan has taken steps to establish a basic framework for export controls including adoption in 1997 of an export control law and has cooperated with the U. S. government and other governments to strengthen export controls. The border with Afghanistan, however, is still porous.

Last year, Tajikistan activated its membership in Partnership for Peace and is conducting annual Bilateral Defense Consultations with the Department of Defense on U.S.-Tajikistan security cooperation. A core tenet of this cooperation is military reform. FMF and IMET assistance have been devoted to the purpose of providing professional western military education and assistance to promote reform of the Tajik forces. Tajikistan is in the process of working with the Department of Defense to develop long-term plans under this assistance.

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

Shared upstream hydro facilities in the Kyrgyz Republic and Tajikistan, vital to the region because they store water for downstream irrigation and provide power, have inadequate funding for operation and maintenance and have suffered deterioration since the breakup of the Soviet Union. Tajikistan's downstream neighbor, Uzbekistan, also cash-strapped, is unwilling to contribute to better upkeep of the existing facilities. However, Tajikistan is actively engaged in a search for solutions and participates in a number of initiatives focusing on environmental concerns, particularly those related to management of water resources and the shrinking of the Aral Sea. In 2002, the Government of Tajikistan assumed the chairmanship of the Interstate Fund for the Aral Sea and is a member of the Interstate Council for Kazakhstan, the Kyrgyz Republic, Tajikistan, and Uzbekistan (ICKKTU), which was created in 1996 to replace the ineffective Soviet-era structures to manage the water resources of the Syr Darya. Tajik water officials are also fully participating with USAID training activities offered in the region and they work closely with the US NOAA snowmelt-forecasting project. The challenge ahead is to work with regional officials toward a mutually agreed-upon regional methodology for trans-boundary cooperation on managing of the region's water resources. Although Tajik officials have asked for assistance in this regard, the necessary policies, agreements, and institutions are not yet in place to ensure sustained upkeep or investment.

Tajikistan participates in regional activities managed by the Regional Environmental Center (REC) in Almaty, Kazakhstan, for which the U.S. provided funding support in 2002. The REC provides a valuable service by promoting the role of civil society in domestic governance, fostering dialogue between government and non-government stakeholders, and building capacity among civil society organizations to achieve their goals. The REC has the continued support of both the United States and the European Union.

Section 498A (a)(8): "deny support for acts of international terrorism."

The Government of Tajikistan does not grant sanctuary from prosecution to individuals or groups that have committed acts of international terrorism or otherwise support international terrorism. Although not condoned by the government, Islamic extremist groups have operated out of Tajikistan from areas that are not under complete government control. Tajikistan was very strongly critical of the former Taliban in Afghanistan for harboring Osama bin Laden and long warned the international community of the threat the Taliban represented. It did not negotiate with the Taliban, and openly and uniformly opposes Islamic terrorism. After the attacks of September 11, Tajikistan immediately supported Coalition forces in Operation Enduring Freedom, and has generously offered assistance without reservation. Tajikistan is a party to eight of the twelve international counterterrorism conventions and has signed one.

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

In October 1991, shortly before the Soviet Union dissolved, Russia and nine other Soviet republics signed a Memorandum of Understanding declaring them selves jointly and severally liable for the pre-October 1991 external debt of the Soviet Union. In December 1991, Russia and seven other republics signed an agreement which assigned to each of the newly independent states a share of all the external assets and external debt of the former Soviet Union (FSU). Tajikistan signed both the October and December 1991 agreements. The December 1991 agreement provided that Tajikistan's share of the FSU debt would be 0.82%. In 1992, Russia sought to replace the joint and several liability principle by seeking full liability for the external debt of the FSU in return for all the external assets of the FSU. In December 1993, Tajikistan signed a "double-zero option" agreement with Russia under which Russia agreed to pay Tajikistan's share of the external debt of the FSU, in return for Tajikistan's share of the external assets of the FSU. This agreement is still in force.

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 that was established in March 1992. The U.S. side of the Commission visited Tajikistan in September 1996. The visit was positive and indicated American interest. Requests for information were broadcast on local television, but there is no indication that any American POWs are in Tajikistan.

Section 498A (a)(11): "terminate support for the communist regime in Cuba, including removal of troops, closing military and intelligence facilities, including 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 Tajikistan is providing military and intelligence, economic, nuclear, or other assistance to the Government of Cuba.

CHECKLIST FOR GROUNDS OF INELIGIBILITY UNDER SECTION 489A(b) OF THE FOREIGN ASSISTANCE ACT OF 1961

TAJIKISTAN

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

No. While there have been serious shortcomings in human rights observance in Tajikistan, the government has undertaken efforts to address some of the problems. In some areas, especially political violence, there have been marked improvements since the end of the civil war. Many of the existing shortcomings result from the government's lack of control over a continually decreasing number of un-reconciled armed opposition groups. We will work to better address these human rights problems not only through diplomatic efforts but also through our assistance programs.

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

No. The Government of Tajikistan has not failed to take action to facilitate effective implementation of arms control obligations.

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

(A) missiles or missile technology inconsistent with the guidelines and parameters of the Missile Technology Control Regime; or

(B) any material, equipment, or technology that would contribute significantly to the ability of such country to manufacture any weapon of mass destruction (including nuclear, chemical, and biological weapons) if the President determine (d) that the material, equipment, or technology was to be used by such country in the manufacture of such weapon"?

No such determinations since 1992 were made with respect to Tajikistan in 2002.

Section 498A(b)(4): Is the Government of Tajikistan "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.

Section 498A(b)(5): Has the President determined and certified to the appropriate congressional committees that the Government of Tajikistan "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 Tajikistan 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 Tajikistan 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

TURKMENISTAN

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."

Turkmenistan remains a one-party state dominated by its president and his closest advisors. Despite President Niyazov's commitments during and after his April 1998 visit to the United States, the Government of Turkmenistan has failed to take any concrete steps to strengthen the rule of law and political pluralism. The 50-member unicameral Parliament (Mejlis) has no genuinely independent authority, and in practice the president controls the judicial system. Seriously flawed parliamentary elections held on December 12, 1999, included only government-selected candidates and did not allow for any free political discourse; turnout was announced at 98.9 percent, despite reports that many polling places remained empty throughout the election day. A 1994 referendum of questionable constitutionality having already extended President Niyazov's term of office to ten years (through 2002), on December 28, 1999, the Mejlis extended his presidency indefinitely in response to a stage-managed resolution by the annual People's Council that he be made president for life. According to the government, Parliamentary elections held October 20, 2002 also had a high turnout, although polling places did not appear to be full throughout the day.

The Government of Turkmenistan severely restricts freedom of speech and does not permit freedom of the press. There is no organized political opposition in Turkmenistan. The government completely controls the media, censors all newspapers and domestic electronic media and rarely permits independent criticism of government policy or officials. The only officially registered party is the Democratic Party (formerly the Communist Party of Turkmenistan). Freedom of assembly and association are restricted in practice, as is freedom of religion. Government monitoring of unregistered NGOs, especially those affiliated with minority groups, continued in 2002, although reports of harassment diminished. The government does not allow any public meetings or demonstrations involving a political agenda or criticism of government policies. The government attempts to prevent private political meetings and gatherings from taking place.

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)."

The Government of Turkmenistan has implemented few economic reforms and many of the half steps taken in the early years after independence have been reversed in the last few years. Turkmenistan remains one of the most closed economies in the region. Access to foreign exchange is tightly controlled, with a large black market premium in the curb market. Foreign companies sometimes experience great difficulty in obtaining hard currency to purchase inputs or repatriate earnings. The economy remains overwhelmingly under state control. The Government directs agricultural production through a system of state orders. The European Bank for Reconstruction and Development (EBRD) estimates that the share of the private sector in production is just 25 percent.

President Niyazov's ten-year economic plan envisions a gradual transition to a market economy and the use of hard currency earnings from Turkmenistan's natural resources, especially oil and gas, to finance expenditures and soften the impact of the economic transition. Even though Turkmenistan is richly endowed in natural resources, its economy remains fragile as evidenced in part by a high external debt burden. Since Turkmenistan joined in 1992, the World Bank has approved three projects with a cumulative value of $89.5 million. The World Bank, however, has not approved loans to Turkmenistan since 1997. The World Bank ended lending to Turkmenistan because of the government's failure to report external debt statistics and violations of World Bank rules. The International Monetary Fund (IMF) has no program in Turkmenistan. The EBRD has extended Euro 155 million (approximately USD $171 million) in loans to Turkmenistan, but has made no new loans since August 2000.

Turkmenistan has laws on foreign investment, banking, property ownership and intellectual property rights, but all are poorly implemented and enforced, and respect for contracts remains an issue. The government introduced its currency, the manat, in November 1993, which has helped it establish an independent monetary policy. However, the currency is not freely convertible. A bilateral trade agreement providing for reciprocal Normal Trade Relations, subject to annual review, and containing intellectual property rights (IPR) provisions, entered into force in October 1993. Since 1997, U.S. Presidents have determined that Turkmenistan meets the freedom of emigration provisions of the Jackson-Vanik legislation and has received Normal Trade Relations status. An Overseas Private Investment Corporation (OPIC) agreement entered into force in June 1992. Turkmenistan is a member of the IMF, World Bank, EBRD, the Asian Development Bank, and in December 2001 received full membership in the Islamic Development Bank. Turkmenistan has not applied to join the World Trade Organization.

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

The government's record on respect for internationally recognized human rights is very poor. Law enforcement authorities routinely beat criminal suspects, prisoners, and witnesses before and after trial. The government restricts civil and political rights, and security agents have used force to suppress political opposition. There is no organized internal political opposition. Most opposition figures have left Turkmenistan; opposition figures still in the country engage in self-censorship. The government has attempted to extradite Turkmen dissidents from Uzbekistan and Russia on charges that appear politically motivated. Turkmenistan sought to extradite former FM Shikhmuradov from the United States. As part of its efforts to foster a sense of nationhood among the Turkmen, the government has reversed decades of favoritism toward ethnic Russians. Ethnic Turkmen now receive favored treatment, leading ethnic minorities to complain of discrimination, especially in employment practices. This has resulted in substantial out-migration, particularly by ethnic Russians. Turkmenistan allows citizens of Russian descent to hold dual Russian citizenship. There were no documented cases of extra-judicial killings in Turkmenistan in 2002.

The constitution guarantees freedom of religion and does not establish a state religion. However, while recent amendments to Turkmen law theoretically provide greater religious freedom, in practice, they tighten government control over religious groups. Religious congregations are technically required to register with the Government. The requirement that religious organizations have at least 500 members in the locality in which they wish to register has prevented all but two religions, Russian Orthodox Christianity and Sunni Islam, from registering. During 2001, the Turkmen Government continued its harassment of minority faiths and expulsions of foreign religious workers. The government tries to control all Islamic activity. In contrast to the Soviet era, when imams were chosen by their communities, imams are now appointed by the government only. Since 1997, the government has forbidden the teaching of Islamic theology by imams affiliated with mosques. In June 2001, the Government closed the only remaining independent madrassa in Dashoguz, Turkmenistan, leaving only one institution for the study of Islam in the country, which is under government control. An April 2000 Presidential decree requires law enforcement authorities to respect citizens' freedom from illegal search and seizure and right to privacy in their homes. However, after only a brief hiatus, law enforcement officials resumed violating the rights of religious minorities by allegedly planting evidence to justify their warrants. Some Protestants affiliated with home churches have been harassed, arrested, and fined. On July 2, 2002, Jehovah's witness Nikolay Shelekhov was sentenced a second time for refusing to perform compulsory military service because of his religious beliefs. Several Protestants were severely beaten, and/or pressed to renounce their faith, although reports of such harassment and beatings have declined in 2002 compared to previous years. In a positive development, the long-demanded release of prisoner of conscience, Baptist Shageldy Atakov, occurred on January 7, 2002.

Turkmenistan permits most citizens to emigrate without undue restriction. Thus, since 1997, U.S. Presidents have determined that Turkmenistan meets the emigration requirements of Jackson-Vanik legislation. Turkmenistan abolished its exit visa requirement as of January 1, 2002. The government restricts movement within Turkmenistan by limiting travel to border cities and regions, having declared these parts of the country "restricted zones." As part of a comprehensive redevelopment plan for Ashgabat, the government has forcibly displaced residents from several neighborhoods with less than a week's advance notice and minimal, if any, compensation for their destroyed property.

The Institute for Democracy and Human Rights (IDHR) was founded in 1996 with a mandate to support democratization and monitor the protection of human rights. While an IDHR investigation of poor prison conditions led to a general amnesty, the Institute is not independent of the government. Initial hopes that the IDHR would serve as an ombudsman for the people have not been realized.

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."

The Government of Turkmenistan has a proclaimed policy of neutrality towards other nations and has done nothing inconsistent with its OSCE obligations to refrain from the threat of the use of force and to settle disputes peacefully. Turkmenistan is at peace with its neighbors. The Turkmen military does not currently present an offensive threat to the region nor to any of its neighbors. Turkmenistan complies with the Confidence and Security Building Measures (CSBM) in Europe of the 1994 Vienna Document, regularly submitting CSBM declarations and undergoing a CSBM inspection in February 1998.

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

Turkmenistan supported regional and international efforts to resolve peacefully the conflicts in Tajikistan and Afghanistan and has played an important role as a conduit for humanitarian assistance to Afghanistan this year.

Section 498A(a)(6): "implement responsible security policies, including--

(A) adhering to arms control obligations derived from agreements signed by the former Soviet Union;

(B) reducing military forces and expenditures to a level consistent with legitimate defense requirements;

(C) not proliferating nuclear, biological, or chemical weapons, their delivery systems, or related technologies; and

(D) restraining conventional weapons transfers."

The Government of Turkmenistan has formally declared its willingness and intent to accept all of the relevant arms control obligations of the former Soviet Union. Turkmenistan acceded to the Non-Proliferation Treaty (NPT), as a non-nuclear weapon state, in 1994. Turkmenistan has not yet signed an NPT safeguards agreement with the International Atomic Energy Agency. Turkmen armed forces are guided by a defensive military doctrine. We are not aware that the Government of Turkmenistan has engaged in the proliferation of nuclear, biological, or chemical weapons, their delivery systems, or related technologies. Turkmenistan is a State Party to the 1993 Chemical Weapons Convention and to the 1972 Biological Weapons Convention. It has not provided any voluntary annual BWC-related CBM Data Declarations since it became a State Party to the Convention, however. An export control and related border security assistance program with Turkmenistan, including responsible missile nonproliferation policy, is being implemented. Turkmenistan is committed to the worldwide moratorium on nuclear testing. To our knowledge, Turkmenistan has not engaged in any significant level of conventional arms transfers. Additionally, Turkmenistan 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 Special Verification Commission, it continues to observe the Treaty's obligations.

Turkmenistan has submitted Confidence- and Security-Building Measures (CSBM) annual data declarations for 1995-2000, although sometimes late, and its data as of January 1, 2002, was not provided on time in December 2001 as required. Turkmenistan has willingly undergone CSBM inspections and evaluation visits in accordance with the OSCE Vienna Document.

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

Although Turkmenistan has one of the best developed systems of nature preserves in Central Asia, its Karakum Canal -- badly deteriorated since independence -- contributes to the region's most serious environmental problems, notably in the Aral Sea, by aggravating existing water pollution, pesticide run-off, and water-table problems. International environmental experts have noted these problems may be further exacerbated by President Niyazov's plan to build a vast lake in the middle of the country.

Turkmenistan joined the other Central Asian states in a decision to locate the headquarters of a Regional Environmental Center (REC) to Almaty, Kazakhstan. The United States and the European Union supported the establishment of this independent, non-profit, and non-political organization, the mission of is to strengthen civil society and support sustainable development by promoting public awareness and participation in regional environmental decision-making. The U.S. signed an MOU with Kazakhstan and provided a small amount of funding in support of the REC in early 2002.

Turkmenistan is currently engaged in talks with Russia, Azerbaijan, Kazakhstan and Iran on environmental protection of the Caspian Sea. These marine environmental protection talks will include discussion of development of the mineral resources of the Caspian seabed and use of the sturgeon population in a way that protects the Caspian ecosystem.

Section 498A(a)(8): "deny support for acts of international terrorism."

The Government of Turkmenistan does not grant sanctuary from prosecution to individuals or groups that have committed acts of international terrorism or otherwise support international terrorism. Turkmenistan is a party to nine of the twelve international counter-terrorism conventions. Turkmenistan committed itself to the international coalition against terrorism shortly after September 11 and has cooperated on many initiatives, including the freezing of terrorist assets.

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 July 1992, the Government of Turkmenistan signed a "zero option" agreement with Russia under which Russia will pay Turkmenistan's share of the external debt of the Former Soviet Union (FSU) in return for Turkmenistan'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 that was established in March 1992. In November 1995 the Commission visited Turkmenistan, where it was warmly received by, and received full cooperation from, the Government of Turkmenistan.

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 Turkmenistan 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

TURKMENISTAN

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

No. The U.S. Government is deeply concerned about the broad and serious violations of human rights discussed above and continues to make human rights issues a central and consistent element of our dialogue with the Government of Turkmenistan as well as a principal focus of our assistance programs.

Section 498A(b)(2): Has the President determined that the Government of Turkmenistan "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 Turkmenistan has failed to take such actions.

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

(A) missiles or missile technology inconsistent with the guidelines and parameters of the Missile Technology Control Regime; or

(B) any material, equipment, or technology that would contribute significantly to the ability of such country to manufacture any weapon of mass destruction (including nuclear, chemical, and biological weapons) if the President determine[d] that the material, equipment, or technology was to be used by such country in the manufacture of such weapon"?

No. No such determinations were made.

Section 498A(b)(4): Is the Government of Turkmenistan "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 indicating that the Government of Turkmenistan is prohibited by these statutes from receiving such assistance.

Section 498A(b)(5): Has the President determined and certified within 30 days to the appropriate congressional committees that the Government of Turkmenistan "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 Turkmenistan 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 Turkmenistan 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

UKRAINE

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."

Ukraine has progressed unevenly in building a democratic society since gaining independence in 1991. The 1994 election of Leonid Kuchma to the Presidency against incumbent Leonid Kravchuk constituted the first peaceful, democratic, contested transfer of executive power in the former Soviet Union. Kuchma was reelected in November 1999, in Ukraine's third presidential election. Kuchma won with over 56 percent of the vote, compared to 38 percent for his communist rival. The election failed to meet a significant number of OSCE commitments, due to government manipulation, harassment of the media, and the systematic involvement of government officials in the campaign. Even given election irregularities, many observers concluded that, while the percentages might have changed, Kuchma would have still won the election. Some observers saw this result as an important endorsement by the Ukrainian people of continued political and economic reform and a pro-Western orientation, to which Kuchma had committed himself during the campaign. The April 2000 referendum on changes to the constitution that increased Kuchma's power at Parliament's expense and also gave rise to charges of irregularities. According to the Organization for Security and Cooperation in Europe (OSCE), the March 2002 parliamentary elections were an improvement over the 1998 parliamentary polls in some respects, but important flaws persisted. A general atmosphere of distrust pervaded the pre-electoral environment due to factors that included flawed implementation of the legal framework, interference by the authorities in the electoral process, and abuse of administrative resources, including allegations of pressure against public employees to vote for certain candidates. State media coverage was biased, and opposition candidates did not have access to the media. Two days before the election, unknown gunmen shot dead the deputy governor of the Ivano-Frankivsk Oblast, who was running for a seat in the parliament. On the day of voting, however, results of the exit polls tracked closely with official results.

The constitution mandates an independent judiciary, headed by a Constitutional Court that determines the constitutionality of laws and acts by all branches of government. In practice, however, the courts remain subject to considerable political interference, and are a weak check on the power of the executive branch. The legislative branch, the Rada, has been a more effective check, though its practical ability to influence Kuchma's authority has been limited. Allegations of vote buying in the Rada persist, as do charges that pro-presidential groups use coercive administrative methods to prompt defections from opposition parties and influence voting. Civil society is increasingly important in Ukrainian political life. Non-Governmental Organizations played a significant role in the March 2002 elections. Ukraine has a large and active NGO community; for example, the local NGO Committee of Voters provided thousands of domestic monitors during the 1999 presidential election as well as the 2002 Rada elections. Several NGOs have come into conflict with the government and face pressure from authorities. In late 2000 and early 2001 multiple political crises - -the unsolved murder of outspoken journalist Heorgiy Gongadze, sharp political battles, and street protests- -created virtual deadlock from December through May 2001. Protests flared again in 2002 on the anniversary of Gongadze's disappearance. Although there were confrontations between protestors and police, and a number of arrests, the protests were largely non-violent. Parliament's no-confidence vote in popular and reform-minded Prime Minister Yushchenko in April 2001 caused worries about reform in Ukraine. Fallout from the scandals continues to play a role in political decision-making and points to the need for continued democratic reform, strengthened rule of law, and more governmental transparency and accountability.

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)."

Ukraine has made important progress in creating an economy based on market principles, private ownership and integration into the world economy, but much work remains to complete the transition. The Kuchma administration's chief challenge in economic policy is to institutionalize structural reforms to permit sustainable economic growth. Ukraine recorded its third year of positive economic growth in 2002; the year-end estimate for overall GDP growth is 4.5 percent, down from 9.1 percent in 2001. Inflation continued to fall in 2002 end is expected to end 2002 below 3 percent. Ukrainian foreign currency reserves increased to nearly $4 billion by late 2002. However, continued slow progress on structural reform, energy sector reform and the lack of foreign investment, kept Ukraine's economy in a precarious position with a slowing economic growth rate.

The International Monetary Fund (IMF) supported the government with $760 million under a Structural Transformation Facility agreement and with a series of Stand-By Arrangements (SBA) in 1995, 1996, and 1997. Ukraine arrested hyperinflation, stabilized the foreign exchange market, substantially liberalized prices, ended most government subsidies and eliminated export quotas. Nevertheless, a cycle of stalled reforms, near crises, and renegotiated agreements led to on again/ off again status for IMF and World Bank lending programs in recent years. In November 2000, Ukraine and the IMF reached an agreement on a core set of policies for restarting the IMF program and the IMF Board resumed the program in December. The IMF EFF program ended in September 2002 without disbursing the final tranche. Ukraine is negotiating a precautionary stand-by agreement, but must pass a realistic 2003 budget and structural reforms before the new facility can be approved. The World Bank is negotiating a second Programmatic Adjustment Loan (PAL) of $250 million.

The government privatization program continued at a slower pace in 2002. Reform in the energy sector yielded some dramatic results in 2000, and in 2001 several regional electricity distribution companies (known as oblenergos) were privatized through an open, transparent international tender process. Energy sector reform stalled, however, after the change of Prime Ministers, and the program to privatize oblenergos is threatened by the lack of tariff reform. In October 2002, the government announced it would delay the privatization of remaining regional electricity utilities until it had restructured debts in the sector. In the agricultural sector, land titles have been issued to about 40 percent of farmers. In October 2001, parliament passed a Land Code that allows farmers to trade land and use it as collateral. The Code will allow land sales beginning in 2005.

Serious problems persist in the investment climate, with widespread corruption, arbitrary government actions, lack of respect for contracts, and lack of enforcement of property laws and court decisions. Although the constitution guarantees the legal equality of all forms of ownership and the inviolability of private property, the Rada has not passed legislation to implement these constitutional guarantees. Several long-standing disputes involving U. S. firms remain unresolved. The Financial Action Task Force (FATF) placed Ukraine on its list of Non-Cooperating Countries and Territories in September 2001 for inadequacies in its anti-money-laundering regime. In late November 2002, President Kuchma signed an anti-money laundering law, but FATF found that it failed to meet international standards and recommended that its members impose counter-measures on Ukraine.

With a few significant exceptions, imports and exports are largely unrestricted, but an array of taxes and duties and a cumbersome regulatory framework remain major obstacles to trade and investment. Ukraine has applied to join the World Trade Organization (WTO), and President Kuchma and other government officials reiterated this goal throughout the year. Much work remains before Ukraine can accede to the WTO, particularly the passage of WTO-compliant legislation. Ukraine 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. In November 2001, Ukraine announced a ban on imports of U.S. poultry (which remains in effect) due to a trade dispute over veterinary certification.

In January 2002, the U.S. Government imposed trade sanctions on Ukraine under Section 301 of the Trade Act of 1974 as amended in 1988. Sanctions were imposed due to Ukraine's failure to fulfill its commitment to the U.S. to stem rampant copyright piracy, which is causing substantial losses to U.S. industry. Although some steps were taken in 2002, including passage of an optical media licensing law, enforcement is insufficient and Ukraine remains one of the world's largest exporters of pirated compact discs.

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

The Ukrainian constitution provides a good legal framework for protecting civil and political rights. However, some constitutional provisions still await the passage of enabling legislation. In their absence, actual human rights practices often do not conform to constitutional requirements. Ukraine has a large and active independent press, but criticism of the President is often not tolerated well by the government. This issue took a sinister turn with the death of internet journalist Heorgiy Gongadze in fall 2000. Amid allegations of presidential involvement in his death, absence of a prompt and transparent investigation into his killing remains of great concern to observers. The USG continues to call for a full, credible and transparent investigation. In 2002, many journalists complained that the GOU was using "temnyki," or press guidance, sent to many influential media outlets, as a way of manipulating news coverage and controlling the press. Despite tightening government pressure on journalists, opposition media remain vocal.

Abuses continue in the unreformed legal and penal systems, particularly in pre-trial detention facilities where police and prison officials regularly beat detainees and prisoners, and in the military where incidents of violent hazing of conscripts have led to fatalities. In a positive development, the parliament enacted a progressive criminal code, which entered into force on September 1, 2001 and which includes penalties for torture. Lengthy pretrial detention is common. Violence and discrimination against women and ethnic minorities persist. Harassment of ethnic minorities, including by the police, is a problem. There were some limits on freedom of movement; however, in 2001, the Constitutional Court held that the Soviet-era internal passport system was unconstitutional.

Ukraine is an important source country for girls and women trafficked for sexual exploitation. The government has taken steps to address this problem. The new criminal code passed in 2001 criminalizes trafficking in persons, and anti-trafficking police units have been established at the national and local levels. A number of criminal cases have been initiated. Other sections of the criminal code, including fraud and illegal business activities, are also being used to help combat trafficking.

The government generally does not interfere with the registration or practice of religions and has allowed seminaries and Jewish religious schools to open. There are some restrictions by local authorities on the activities of some minority religions, but the national government's overall record is good on interethnic and inter-communal matters, particularly with Ukraine's estimated 300,000-strong Jewish community. Some minority religions complain of unequal treatment in matters of property restitution, leasing and use. Foreign religious workers and some Islamic groups have had difficulties in some regions, and it is unclear how effective federal authorities have been when local authorities infringe on religious liberties.

With OSCE assistance, the governments of Ukraine and Uzbekistan agreed in 1998 to simplify procedures for more than 65,000 Crimean Tatars to relinquish their Uzbek citizenship and to abolish the fee charged by Uzbekistan. Ukrainians who wish to travel abroad can do so freely. Exit visas are not required. The government can deny passports to individuals with access to state secrets, but this is rarely done and can be appealed. Since 1997, Ukraine has been found by U.S. Presidents to be in compliance with the emigration requirements of Jackson-Vanik legislation.

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."

Ukraine adheres to commitments under the Helsinki Final Act and the Charter of Paris and respects international law. Ukraine has no territorial claims on other states. In 1997, it signed a treaty with Romania to assist in resolving border disputes. Ukraine also reached a border agreement with Belarus in 1997, which was signed by both presidents and later ratified by the Ukrainian Parliament. The Belarusian Parliament has yet to ratify the agreement, but it is being observed by both sides. In addition, Ukraine sought the advice and counsel of the OSCE in resolving peacefully outstanding political differences regarding Crimea. The OSCE mission in Ukraine, its mandate on Crimean issues largely fulfilled, was replaced in May 1999 with an OSCE project office. OSCE observers monitored the two rounds of the presidential election in October and November 1999, as well as the March 2002 Parliamentary elections. In November 1999, Ukraine joined the other OSCE states in signing the Charter for European Security, which reaffirms full adherence to all existing OSCE documents.

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

The self-proclaimed government of the breakaway Transnistrian region of Moldova has been increasingly angry over Russia's public commitment to withdraw its forces, and the Transnistrians have been looking more to Ukraine for support against Moldovan pressure to reunify. Nevertheless, Ukraine has played a constructive role in the search for a peaceful resolution of separatist disputes in its region. In Moldova, Ukraine works with the OSCE as a mediator in multilateral talks to resolve the conflict in the disputed region of Transnistria. Ukraine has facilitated the withdrawal of Russian military hardware from Transnistria. While serving on the UN Security Council in 2000-2001, Ukraine participated in the informal Friends of Georgia group focused on resolving the conflict in the Abkhazian region of Georgia. A treaty with Romania, signed in 1997, resolved most questions involving a highly politicized border question and established a procedure to resolve the remaining issues. Remaining border issues persist with Romania, and were the subject of talks between the governments in 2002, but have not been the source of serious tension. In May 1997, Ukraine and Poland signed a Declaration of Historical Reconciliation to improve Polish-Ukrainian ties. Also in 1997, the governments of Russia and Ukraine signed several agreements towards resolving issues concerning Sevastopol and the former Soviet Black Sea Fleet, and also signed a Treaty of Friendship and Cooperation, both of which have been ratified by the respective parliaments. Ukraine is contributing more than 1,500 peacekeepers to missions in the Balkans, the Middle East, and Africa. Since November 1999 Ukrainian peacekeepers, with the support of the U.S. and other Allies, have been deployed in Kosovo as part of the UKRPOLBAT Ukrainian-Polish battalion, attached to the U.S. sector commander.

Within its own borders, Ukraine fostered peaceful resolution of political differences with Crimea by inviting and encouraging the active participation of the OSCE in evaluating the situation and making recommendations. The constitution grants a certain degree of autonomy to Crimea. Ukraine also has made clear efforts to guarantee rights of persons belonging to minorities and has been free of widespread ethnic conflict. Ukraine has offered to host an OSCE institution devoted to inter-ethnic relations.

Section 498A(a)(6): "implement responsible security policies, including--

(A) adhering to arms control obligations derived from agreements signed by the former Soviet Union;

(B) reducing military forces and expenditures to a level consistent with legitimate defense requirements;

(C) not proliferating nuclear, biological, or chemical weapons, their delivery systems, or related technologies; and

(D) restraining conventional weapons transfers."

In 2002, U.S.-Ukrainian bilateral relations were strained by confirmation that President Kuchma had authorized the sale and transfer of a Kolchuga early warning system to Iraq. If the system was transferred, it could enhance Iraq's ability to detect and track Allied aircraft flying over No-fly Zones. Although Kuchma authorized the sale and transfer, the question of whether the Kolchuga system was actually transferred to Iraq remains open. We continue to work a number of outstanding nonproliferation issues and are working to implement a restructuring of the Ukrainian arms industry, export control system and senior government oversight of defense industry and export activities and entities.

Overall, Ukraine's commitment to reduction of nuclear weapons has been good. In 1992, President Kravchuk made a written commitment to the United States that Ukraine would have a "non-nuclear status." In 1994 Ukraine signed the Trilateral Statement with the United States and Russia, which among other things committed Ukraine to transfer all nuclear weapons on its territory to Russia for elimination. Later in 1994 Ukraine acceded to the NPT as a non-nuclear weapon state. Ukraine's safeguards agreement with the International Atomic Energy Agency entered into force on January 22, 1998. By mid-1996, all of the nuclear weapons on Ukrainian territory had been transferred to Russia. Ukraine is not engaged in the proliferation of nuclear, biological, or chemical weapons, or related technology. Ukraine is a party to both the START and INF Treaties and is an active participant in the Joint Compliance and Inspection Commission and Special Verification Commission to implement those Treaties.

The CFE Treaty was approved by the Ukrainian Rada in July 1992. Ukraine ratified the 1996 CFE flank agreement in 1997, and participated actively in negotiations to adapt the CFE Treaty, which was signed by Ukraine and representatives of all 30 CFE States at the Istanbul Summit in 1999. Ukrainian has substantially complied with the CFE Treaty and Ukrainian government officials have reaffirmed their commitment to full implementation. However, Ukraine continues to have an unfulfilled obligation for reductions related to naval infantry and coastal defense forces, and has exceeded some of its active unit limits. This issue, and other, more technical concerns, have been discussed bilaterally and in the JCG context. Ukraine actively participates in the CFE Joint Consultative Group, the Treaty's implementation body. Ukraine has provided data on equipment as required by the Treaty and has also hosted on-site inspections as provided for in the Treaty.

Ukraine is also one of 55 participating states to the OSCE's Vienna Document on confidence and security building measures. Ukraine has submitted Confidence- and Security-Building Measures (CSBM) annual data declarations for 1995-2002 and has willingly undergone CSBM inspections and evaluation visits in accordance with the OSCE Vienna Document.

Ukraine is also a party to the Treaty on Open Skies, which establishes a regime of unarmed aerial observation flights over the territories of States Parties. Ukraine actively participates in the Open Skies Consultative Commission, which is the Treaty's implementation body. Prior to the Treaty's entry into force on January 1, 2002, Ukraine cooperated with 26 other signatories in the provisional application of the Treaty.

Ukraine has cooperated with efforts to limit proliferation of weapons and technologies of mass destruction. An original signatory to the 1993 Convention on the Prohibition of the Development, Production, Stockpiling, and Use of Chemical Weapons and their Destruction, Ukraine ratified the agreement in October 1998. Ukraine is a party to the 1972 Convention on the Prohibition of the Development, Production, and Stockpiling of Bacteriological (Biological) and Toxin Weapons and on their Destruction. Ukraine has actively supported U.S. and international efforts to promote nonproliferation in South Asia, including chairing the multilateral South Asia Task Force during 1999. Ukraine is a member of the Nuclear Suppliers Group and as such has adopted current international export standards, including the NSG commitment to require fullscope safeguards as a condition of nuclear supply. Ukraine has cooperated constructively on individual cases of concern raised by the United States and has stated that it will not provide assistance to unsafeguarded nuclear programs. In March 1998, Ukraine took the positive, politically difficult step to terminate the participation of a Ukrainian firm in a project to provide key components for an Iranian nuclear power plant. Ukraine adhered to the Missile Technology Control Regime (MTCR) Guidelines in 1994, joined the MTCR in 1998 and became an original Subscribing State on November 25, 2002 to the International Code of Conduct Against Ballistic Missile Proliferation.

Despite the Kolchuga issue and other arms transfer issues of concern, the U.S. government continues to work with Ukraine to improve its export control system and oversight of defense entities while stopping the proliferation of conventional arms and weapons of mass destruction technology, and delivery systems. While Ukraine has the potential to be a major arms supplier, it is a member of the Wassenaar Arrangement and supports its goals and objectives. Additional information relevant to conventional arms transfers has previously been provided to Congress on a classified basis. We occasionally receive reports of missile-related cooperation between Ukrainian entities and countries of proliferation concern and have sought cooperation from the government of Ukraine to prevent such transactions. We have an ongoing and high-level nonproliferation dialogue with the Government of Ukraine which has been a productive mechanism for raising and discussing these issues.

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

Significant environmental problems remain in Ukraine, particularly from the after-effects of Chernobyl and widespread industrial pollution. The government of Ukraine's capacity to manage regulatory programs is insufficient to the task, as many environmental functions have been decentralized. Nevertheless, environmental consciousness is growing, led by an active green movement.

In 1995, Ukraine signed a Memorandum of Understanding (MOU) with the G-7 on a comprehensive program to close the Chernobyl nuclear power plant by the year 2000. The United States worked closely with Ukraine and our G-7 partners to implement the MOU. The program seeks to help Ukraine undertake energy sector reforms and power sector investments needed to ensure that Ukraine's power needs will continue to be met after the closure of Chernobyl. On December 15, 2000, the final Chernobyl reactor was shut down.

The government of Ukraine has taken steps to address environmental issues, mainly through the Ministry of Environment and Nuclear Protection. Ukraine has met its commitments under the UN Framework Convention on Climate Change and is developing investment projects for the mitigation of greenhouse gas emissions. Given the Ukrainian economy's poor performance to date, however, full implementation of a pollution fee system taxing air and water emissions and solid waste disposal has lagged. National environmental NGOs are slowly gaining access to the policy-making process on environmental issues. Ukraine 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 international environmental issues. During the December 1999 meeting of the former U.S.-Ukraine Binational Commission, President Kuchma and Vice President Gore signed an agreement establishing a Regional Environmental Center (REC) to strengthen civil society and support sustainable development by promoting public awareness and participation in environmental decision-making and providing modest project grants to NGOs for projects. The U.S. and the EU have provided funding for the REC, which opened in 2000. Ukraine is also working with the U.S., EU and others to address pollution problems in the Black Sea. In Spring 2003, Ukraine will host a UNECE Environment for Europe conference.

Section 498A(a)(8): "deny support for acts of international terrorism."

Since September 11, 2001, Ukraine has fully supported the global campaign against terrorism. They have given assistance in several areas, including expanded intelligence sharing, allowing over 4,000 overflights of Allied aircraft participating in operations in Afghanistan and the region, and enhancing the Afghan National Army by transferring small arms and kit to the fledgling force. The government of Ukraine does not grant sanctuary from prosecution to individuals or groups that have committed acts of international terrorism or otherwise support international terrorism. Ukraine has ratified twelve international counterterrorism conventions.

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 (MOU) declaring themselves jointly and severally liable for the foreign debts of the Soviet Union (Ukraine did not sign this MOU). In December 1991, Russia and seven other former republics, including Ukraine, 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 December 1994, Ukraine signed a "double-zero option" agreement with Russia under which Russia agreed to pay Ukraine's share of the debt of the former Soviet Union (FSU) in return for Ukraine's share of the assets of the FSU. However, Ukraine's Rada has not ratified the agreement, and Kiev is still negotiating its details with Moscow. Disputes over ownership of former USSR diplomatic property continue.

Please see section 498(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, established in March 1992. The U.S. side of the Commission visited Ukraine in December 1992 and August 1993. Ukraine continues to cooperate in the search for evidence on American POWs/MIAs.

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 Ukraine is providing military, 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

UKRAINE

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

No. While many problems exist in the observance of democratic practices, we do not believe that the government of Ukraine is engaged in such a pattern. Nonetheless, we will work to better address existing problems in the area of democracy and human rights not only through diplomatic efforts but also through our assistance programs.

Section 498A(b)(2): Has the President determined that the Government of Ukraine "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. Ukraine has taken numerous actions to facilitate the implementation of arms control agreements signed by the USSR.

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

(A) missiles or missile technology inconsistent with the guidelines and parameters of the Missile Technology Control Regime; or

(B) any material, equipment, or technology that would contribute significantly to the ability of such country to manufacture any weapon of mass destruction (including nuclear, chemical, and biological weapons) if the President determine[d] that the material, equipment, or technology was to be used by such country in the manufacture of such weapon"?

No. No such determinations have been made with respect to the government of Ukraine in 2002.

Section 498A(b)(4): Is the Government of Ukraine "prohibited from receiving such assistance by section 101 or 102 of 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.

Section 498A(b)(5): Has the President determined and certified to the appropriate congressional committees that the Government of Ukraine "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 Ukraine 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. We have no evidence from which to conclude that the government of Ukraine is providing military, intelligence, economic, nuclear, or other assistance to the government of Cuba.

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

UZBEKISTAN

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."

While the overall human rights and democratic situation remains very poor in Uzbekistan, there have been small but significant steps in the area of democratization and rule of law in the past year.

The Constitution of Uzbekistan provides for the separation of powers between the executive, legislative, and judicial branches. However, President Karimov and the centralized executive branch that serves his authoritarian regime dominate political life. The government has not permitted the existence of an opposition party since 1993.

Chosen president in a 1991 election that most observers considered flawed, President Islam Karimov had his term in office extended until 2000 in a Soviet-style referendum in March 1995. In January 2000, Karimov was elected to a second term with 92.5 percent of the vote. The OSCE's Office for Democratic Institutions and Human Rights (ODIHR) stated that it could not "justify the deployment of an observation or assessment mission" to the presidential election because "the voters of Uzbekistan will have no genuine choice and the election cannot be considered competitive." The OSCE adjudged the presidential election, in which even the opposition candidate acknowledged voting for Karimov, to have fallen short of international standards. On January 27, 2002, the government held an advisory referendum on extension of the term of the President from five to seven years. The referendum passed by a large margin and was judged to be neither free nor fair by most observers. Parliament then passed a constitutional amendment extending the term. On April 4, President Karimov announced that the next presidential elections would take place in December 2007, resulting in an extension of his current term to just short of eight years.

On March 4, 2002, the government registered the Independent Human Rights Organization of Uzbekistan (IHROU), an independent indigenous human rights NGO. The government denied the registration, however, of two other independent NGOs. One of these NGOs, Ezgulik, intends to apply again for registration and is working closely with the U.S. Embassy in Tashkent. Unregistered NGOs continued to face difficulties operating their organizations during the year. The banned Birlik opposition political movement in Uzbekistan has held seven regional party congresses. These congresses, the first such opposition congresses in ten years, are meant to prepare for a national congress, a legally required step to gain government registration. Birlik intends to file registration papers in 2003. One year ago, Birlik would not have attempted to hold congresses, given the general political environment.

In May 2002, the government removed the requirement that the press must seek the approval of the office of the censor to publish articles. While prior censorship has been abolished, self-censorship is still practiced and most editors and journalists continue to express concerns about potential consequences of conducting serious investigative journalism. Nonetheless, some articles critical of the Government have appeared in both state and private press. The few independent radio and television stations are closely monitored by the government and generally exercise self-censorship. Radio Free Europe/Radio Liberty and the Voice of America are not permitted to broadcast from within the country, despite the government's 1992 contractual agreement to allow this activity. We have urged the government to meet its contractual obligations. The government allows both organizations to have correspondents in the country. The BBC World Service was required to broadcast on a very low FM frequency, which most radios are unable to receive. Limited numbers of foreign periodicals can be found in Tashkent, and authorized groups can obtain foreign periodicals through subscription. There are no private publishing houses, and government approval is required for all publications.

A mass media law, which came into effect in January 1998, guarantees freedom of expression, protects the rights of journalists and reiterates the ban on censorship. Nonetheless, several articles are worded in such a way that they could be used to punish government critics. One provision makes journalists responsible for the truth of the information contained in their news stories, potentially subjecting journalists to prosecution if a government official disagrees with a news report. Another permits authorities to close media outlets without a court judgment. Two TV stations were closed in 1999 under this provision; only one was allowed to reopen in 2000. Observers believe the dissident political background of the owner of the second station was the reason for the government's refusal to grant it a new license. The owner fled Uzbekistan in July 2001 to avoid arrest on charges related to an allegedly forged letter of recommendation from 1991. Finally, the law prohibits registration of organizations whose purposes include subverting or overthrowing the constitutional order.

The government abolished the requirement in October 2002 that all Internet service providers must route their connections through a government service provider. There appears to be a regular increase in Internet providers and there are no reports of censorship of internet sites.

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)."

The government embarked on an ambitious economic reform effort in December 2001 when it signed a Staff Monitored Program (SMP) agreement with the International Monetary Fund (IMF). According to the agreement, the government would implement critical macroeconomic reforms in return for an IMF program. The IMF conducted assessment missions in July and September 2002 to gauge the progress of reforms. It concluded that the government's performance had been "uneven". While the government has implemented several important reforms, it has yet to implement key reforms including opening currency convertibility and abolishing draconian tariffs introduced in July 2002. Positive moves include increased access to cash and to foreign exchange, elimination of the requirement for import licenses, and some cotton sector reforms.

Uzbekistan is a member of the International Monetary Fund (IMF), the International Bank for Reconstruction and Development (IBRD), the Asian Development Bank (ADB), and the European Bank for Reconstruction and Development (EBRD). In 1998, it submitted its Memorandum of Foreign Trade Regime to the World Trade Organization (WTO) secretariat but little progress was made in 2002 toward WTO accession.

An OPIC agreement entered into force in October 1992. A bilateral trade agreement with the United States that includes intellectual property rights provisions entered into force in January 1994, Uzbekistan has been determined to be compliant with the freedom of emigration provisions of the Jackson-Vanik amendment for Normal Trade Relations (subject to a semi-annual reporting requirement on its continued compliance with these provisions). The Senate gave advice and consent to ratification of the U.S.-Uzbekistan Bilateral Investment Treaty (BIT) in October 2000, but raised concerns about the investment climate. The Administration gave assurances that entry into force would not be initiated until the investment climate improved. Although the situation is improving, we continue to have concerns about the investment climate. Preliminary discussions on a treaty to avoid double taxation began in 1993, but major tax reform in Uzbekistan will be necessary before negotiations can move forward.

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

Although the overall human rights situation remains poor, the government has taken some small but significant steps to improve the situation in the past year. The 1992 law on citizenship and the constitution prohibit discrimination on the basis of sex, religion, language, or social status, and officially sanctioned discrimination does not occur. The election, religion and media laws all contain statements of principle that, if adhered to in practice, would substantially improve the government's human rights record.

The government continues to commit numerous serious abuses of human rights. Citizens cannot exercise the right to change their government peacefully. The Government permits the existence of opposition political parties but harasses their members and refuses either to register the parties or to allow them to participate in elections. Human rights activists were subject to surveillance, harassment and occasionally, selective prosecution. Security force mistreatment resulted in the deaths of several citizens in custody. Police and National Security Service (NSS) forces torture, beat, and harass people. Prison conditions continue to be poor, and pretrial detention often lasts several months. Security forces continue to arbitrarily arrest persons, particularly Muslims suspected of extremist sympathies. Planting of evidence is much less common than in the past, but it still occurs. The number of persons in prison for political or religious reasons--primarily individuals the Government believes are associated with extremist Islamic political groups but also members of the secular opposition and human rights activists--last year declined sharply from 1,500 persons in any 7-month period from 1999 to 2001, to 300 persons in the first 7 months of 2002. Estimates of political prisoners range from 6,500 to 7,000. The judiciary does not ensure due process and often defers to the wishes of the executive branch.

Police and the national security service committed numerous serious abuses of the rights of people they suspected of harboring Islamist extremist sympathies. The number of reports of planting evidence seems to have decreased, however. Despite a 1997 law providing for prison reforms and assuring basic rights for prisoners, prison conditions remained poor. The government has begun to hold some officers accountable for torturing and planting evidence. In 2001-2002, it convicted 8 police officers for torture and one for planting evidence. On January 16, an Uzbek court sentenced four policemen to twenty years each for the murder of a suspected member of Hizb ut-Tahrir. This appears to be the first time in eleven years of independence that any police or members of the security forces were convicted for violent acts committed in the course of their duties. On or about June 6, a police officer in Tashkent region was sentenced to seven years for beating and attempting to extort money from a citizen in an ordinary criminal case. On June 7, the central military court in Tashkent convicted three officers of the National Security Service for the murder of a suspected member of Hizb ut-Tahrir. Two of the officers were sentenced to fifteen years, and the third received four years. In February, an Andijan police officer was convicted of planting evidence on a suspected HT member. The Andijan office of the National Security Service reportedly initiated the case. Despite these improvements, human rights activists claim that the use of torture and beatings by authorities at Jaslyk prison, which holds mainly political prisoners, reemerged during the summer. On August 7, authorities returned the bodies of two men to their families. It appeared that the prisoners had been severely tortured. According to the preliminary assessment made by the UN Special Rapporteur on Torture at a press conference after his December 2002 visit, torture is systematic in Uzbekistan. We await the final report with the Rapporteur's conclusions, which will not be available until January 2003, but will continue to work closely with the Government of Uzbekistan to address issues of torture.

The vast majority of Uzbekistan's citizens are free to worship as they choose. However, the onerous registration requirements and restrictions on religious expression enacted in the 1998 law on religion remain in force. Most non-Muslim groups have been able to register under the law. However, some remain unregistered and are occasionally subject to harassment and detention for such offenses as meeting together to pray.

Although in some instances emigrants are delayed by long waits for passports and exit visas, potential emigrants who can find a host country willing to accept them are able to leave the country. Thus, since 1997, U.S. Presidents have determined that Uzbekistan meets the emigration requirements of Jackson-Vanik legislation. Since independence, a significant number of ethnic Russians, Jews, Ukrainians, and others have emigrated from the country, although no exact figures are available. Ethnic Russians have been dismissed from almost all the high government positions they held and from the military. However, by most accounts, emigration occurred not because of any systematic human rights abuses, but rather because of economic difficulties in Uzbekistan.

The government participates actively in the OSCE and is party to a number of international human rights conventions. During the September 1, 2001 amnesty, it released approximately 860 political prisoners. The government introduced another amnesty in December 2002, which will apply to political prisoners.

Intensive U.S. government dialogue with Uzbekistan's leadership on the need to address human rights abuses has achieved some modest results, and despite its generally poor record, the GOU responded favorably to U.S. engagement on some issues. For example, in January 2001, after extended discussion, the government of Uzbekistan signed a prison agreement with the International Committee of the Red Cross (ICRC) on access to all detention facilities in Uzbekistan and to all detainees, regardless of status (before charges are brought, pretrial and post trial). However, it was not until 2002 that the ICRC was able to get government cooperation to conduct visits to pre-trial detention facilities. In November 2002, the government hosted a visit from the UN Special Rapporteur on Torture and participated in an OSCE round-table on torture. In another positive step, the government registered an indigenous human rights NGO in March 2002.

Although the trend overall has been positive, the government still has far to go to improve the overall human rights situation and serious abuses continue. There continue to be disturbing reports of torture of prisoners and government harassment of political prisoners. Two human rights NGOs have been denied registration and there still are no true opposition parties registered in Uzbekistan. We will continue our intensive dialogue with the government to encourage further improvement.

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."

The government of Uzbekistan generally has respected international law and obligations. It joined the OSCE in January 1992. An OSCE regional office opened in Tashkent in September 1995, and the OSCE has held numerous national or regional seminars in Uzbekistan on human rights and other subjects. Nevertheless, the government continues to violate its commitments under various agreements to protect human rights, as detailed above.

In response to the Summer 2000 incursions into Uzbek territory from the Kyrgyz Republic and Tajikistan by militants of the Islamic Movement of Uzbekistan, the Uzbek military laid anti-personnel mines in some border areas. Several dozen people have reportedly been killed and injured by these mines.

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

The government of Uzbekistan supports regional and international efforts to resolve the conflicts in neighboring Tajikistan. The government of Uzbekistan is a guarantor of the 1998 Tajik peace accords and has allowed UNHCR to repatriate Tajik refugees from northern Afghanistan through Uzbekistan. It has continued to support the Tajik peace accords while criticizing Tajikistan for harboring forces of the Islamic Movement of Uzbekistan. On September 9, it concluded an agreement that completely delimited the border between Uzbekistan and Kazakhstan. It has held similar discussions with Tajikistan and the Kyrgyz Republic.

Section 498A(a)(6): "implement responsible security policies, including--

(A) adhering to arms control obligations derived from agreements signed by the former Soviet Union;

(B) reducing military forces and expenditures to a level consistent with legitimate defense requirements;

(C) not proliferating nuclear, biological, or chemical weapons, their delivery systems, or related technologies; and

(D) restraining conventional weapons transfers."

The government of Uzbekistan supports international efforts to eliminate nuclear, chemical and biological weapons and has consistently reiterated its acceptance of relevant arms control obligations of the Former Soviet Union. Uzbekistan became a party to the Treaty on the Non-Proliferation of Nuclear Weapons as a non-nuclear-weapons state in May 1992, and also signed an International Atomic Energy Agency safeguards agreement in October 1994. Following up on a conference on a Central Asian Nuclear Weapons Free Zone in September 1997, which it hosted, it participated in negotiations with its neighbors in the Fall, 2002 resulting in a proposed text of an agreement establishing such a zone. The text has been circulated to the five NPT nuclear weapon states for their views. Uzbekistan also participated in the 2000 Non-Proliferation Treaty Review Conference. Additionally, Uzbekistan 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 Special Verification Commission, it continues to observe the Treaty's obligations. Uzbekistan also was an original subscribing state to the International Code of Conduct Against Ballistic Missile Proliferation, which entered into effect on November 25, 2002.

We are not aware that the government of Uzbekistan has engaged in the proliferation of nuclear, biological, or chemical weapons. Uzbekistan is committed to the worldwide moratorium on nuclear testing and 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 (CWC). Uzbekistan acceded to the 1972 Convention on the Prohibition of the Development, Production and Stockpiling of Bacteriological (Biological) and Toxin Weapons and on their Destruction (BWC), and has submitted annual voluntary BWC related CBM Data Declarations four out of the past seven years, including in 2002. It has filed a declaration with the Organization for Prohibition of Chemical Weapons. To our knowledge, the government of Uzbekistan has not engaged in any significant level of conventional arms transfers. It has taken steps to develop its own export control system, and it has positively engaged with U.S. cooperative programs to counter proliferation and develop export controls. Under the terms of the Cooperative Threat Reduction (CTR) agreement with DOD of May 1999, the Uzbek government worked alongside U.S. Defense Department experts to dismantle, remove and destroy the specialized equipment and infrastructure of the Soviet-era chemical weapons-associated facility in Nukus. As of May 2002, a CTR team completed its demilitarization project at Nukus. Under their 2001 agreement on cooperation in the area of demilitarization of biological weapons associated facilities and the prevention of proliferation of biological weapons technology the U.S. Defense Department and the Uzbek Ministry of Defense have decontaminated the test facility on Vozrozhdeniye Island, eliminated the infrastructure of the test facility, and are working to improve the security of dangerous pathogen collections stored at scientific institutes throughout Uzbekistan so as to prevent their possible proliferation. The Uzbek government has twice in the past few years intercepted radioactive materials shipped through Uzbekistan from elsewhere in Central Asia.

The government of Uzbekistan has some 65,000 troops in its armed forces. The government has allowed the basing of U.S. forces on its territory, for use in operations in Afghanistan. Other coalition forces have been allowed to temporarily stage in Uzbekistan. The government does not allow any other basing of foreign forces on its territory.

Uzbekistan has submitted Confidence- and Security-Building Measures (CSBM) annual data declarations for 1995-2001 (but often late and data as of January 1, 2002 has not been provided) as provided for in the OSCE convention. It has also undergone CSBM inspections and evaluation visits in accordance with the OSCE Vienna Document, although not without some difficulties.

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

Uzbekistan has suffered severe environmental damage, including from lingering agrochemical pollution, as a result of the cotton monoculture imposed during the soviet era. The government continues to rely on a state order system for cotton, grain, and rice. This forces farmers to grow set amounts of these crops, thus exacerbating water shortages, land degradation, and the inexorable decline of the Aral Sea.

Several agencies and committees of the Parliament deal with environmental and ecological issues. The government, bilaterally and through regional organizations, has sought and used international assistance to deal with these issues. Uzbekistan and its neighbors continue to negotiate on problems of the Aral Sea watershed, although they struggle to find a mutually satisfactory mode for long-term cooperation. Current mechanisms for cooperation include work under organs of the International Fund for the Aral Sea (IFAS), and implementation of the 1998 multi-year agreement on water-and power-sharing among the four countries of the Syr Darya river basin (Uzbekistan, Kazakhstan, the Kyrgyz Republic, and Tajikistan).

The Uzbek government has made some effort to increase public consciousness and understanding of environmental problems, although discussion of problems created by government policies is limited. Uzbekistan joined the other Central Asian states in supporting the establishment of a regional environmental center (CAREC) in Almaty, Kazakhstan, and in early 2002 signed an MOU with the CAREC to establish a branch office in Tashkent. This independent, non-profit, and non-political organization is working to strengthen civil society and support sustainable development and promotes public awareness and participation in regional environmental decision-making. In addition, Uzbekistan has signed and ratified many treaties and conventions on the environment and sustainable development. It has, for example, ratified the Basel Convention on the Control of Transboundary Movement of Hazardous Waste, the Montreal Protocol on ozone depletion, and the Convention on International Trade in Endangered Species (CITES). The GOU recognizes that implementation of some of these agreements could be strengthened and the State Department is providing technical assistance to implement CITES, and consults regularly with the GOU on implementation of other agreements.

Section 498A(a)(8): "deny support for acts of international terrorism."

The Government of Uzbekistan does not grant sanctuary from prosecution to individuals or groups that have committed acts of international terrorism or otherwise support international terrorism. Uzbekistan is a party to all twelve UN counter-terrorism conventions. Uzbekistan actively works to increase international cooperation aimed at defeating terrorist movements. The government has been supportive of U.S.-led efforts to eradicate terrorism and to remove the Taliban and Al-Qaeda from power in Afghanistan. The government has provided the United States with access to an air force base at Karshi-Khanabad in support of Operation Enduring Freedom.

In August 2000, armed militants of the Islamic Movement of Uzbekistan (IMU) made incursions into Uzbekistan, as well as the neighboring Kyrgyz Republic, but were repulsed and, according to the Uzbek government, defeated. Some minor incursions occurred in 2001 and 2002, as well. The IMU, which Uzbekistan believes to have been responsible for fatal terrorist attacks in February 1999 targeting President Karimov, has employed terrorist tactics in some of these incursions. These acts included lethal attacks on civilian law enforcement officials and kidnapping of foreign nationals and others, including four American tourists. In October 2000, the U.S. government designated the IMU a Foreign Terrorist Organization. The IMU has been involved in fighting in Afghanistan against the U.S. led coalition forces.

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 (MOU) declaring themselves jointly and severally liable for the foreign debts of the Soviet Union. In December 1991, Russia and seven other former republics, including Uzbekistan 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 November 1992, Uzbekistan signed a "double-zero option" agreement with Russia under which Russia will pay Uzbekistan's share of the debt of the former Soviet Union in return for Uzbekistan'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.-Russian Joint Commission on POWs/MIAs that was established in March 1992. The Government of Uzbekistan has been cooperative with all related interviews conducted in Uzbekistan and in February 1996 hosted a successful visit by the Commission.

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."

The Government of Uzbekistan is not providing military, 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

UZBEKISTAN

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

No. However, the U.S. government remains concerned by the human rights situation in Uzbekistan. Lack of the freedoms of association, assembly, and press make real democracy impossible, while police planting of evidence, unfair trials, and torture raise serious concerns regarding the credibility of the system of justice in Uzbekistan. The law on religion continues to restrict freedom of conscience. Despite these problems, the Government of Uzbekistan has taken small but significant steps to improve its human rights records. Among other things, it released 860 political prisoners in September 2001, registered an independent human rights NGO in March 2002, and participated in an OSCE-sponsored roundtable to discuss the report by the U.N. Committee Against Torture and develop an action plan to address the issue of torture.

We will continue to monitor the Uzbekistan government's human rights performance and maintain this issue as a key part of our bilateral relationship. We will also work to better address Uzbekistan's human rights 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 Uzbekistan "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 think that the government of Uzbekistan has failed to take such actions.

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

(A) missiles or missile technology inconsistent with the guidelines and parameters of the Missile Technology Control Regime; or

(B) any material, equipment, or technology that would contribute significantly to the ability of such country to manufacture any weapon of mass destruction (including nuclear, chemical, and biological weapons) if the President determine[d] that the material, equipment, or technology was to be used by such country in the manufacture of such weapon"?

No such determinations were made in 2002.

Section 498A(b)(4): Is the Government of Uzbekistan "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. The Government of Uzbekistan is not prohibited from receiving assistance under these statutes.

Section 498A(b)(5): Has the President determined and certified to the appropriate congressional committees that the Government of Uzbekistan "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 Uzbekistan 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 Uzbekistan is providing assistance for, or engaging in any non-market-based trade with, the Cuban government.

 



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