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Area: 28,748 sq km, slightly smaller than Maryland
Population: 3,582,205 (2003 est.)
Annual Inflation: 6% (2002 est.)
Population Growth Rate: 1.03% (2003 est.)
Gross Domestic Product (GDP): $15.69 billion (purchasing power parity, 2003 est.)
Life Expectancy: male ? 69.53 years; female ? 75.42 years
GDP Per Capita: $4,400 (purchasing power parity, 2002 est.)
Infant Mortality: 37.28 deaths/1,000 live births
Real Annual GDP Growth: 7.3% (2002 est.)

U.S. STRATEGIC INTERESTS

Albania is of key regional importance to the United States. Its crucial, positive role in promoting peace and stability in the Balkans, juxtaposed with its crushing poverty and record of instability, requires continued close and carefully considered international support. The success or failure of the SEED Program in Albania will impact the efforts of the U.S. Government (USG) and the entire international community to stabilize and integrate the Balkans. Albania is a close ally of the U.S. and fully supports of the USG?s war on international terror. The Government of Albania (GOA) has deployed combat troops to both Afghanistan and Iraq and has entered into an Article 98 agreement with the U.S.

OVERVIEW OF U.S. GOVERNMENT ASSISTANCE

From 1992 through FY 2003, the USG provided more than $358.5 million in assistance (excluding significant FMF and USDA assistance) to Albania to facilitate its transition to a modern democracy with a market-oriented economy, and to support long-term development. This includes $18 million through the 1999 SEED Supplemental Act and $12 million in budget support to ease fiscal pressures caused by the Kosovo refugee emergency.

In FY 2003, the U.S. Government (USG) provided $39.51 million in assistance to Albania:

SEED funds ($28.5 million)

• $6.8 million in democratic reform programs (including Public Diplomacy exchanges); 
• $11.0 million in economic and social reform programs (including health sector reform);
• $4.9 million in security, regional stability, and law enforcement programs; and
• $5.8 million in cross-sectoral and other programs.

• $7.9 million in Foreign Military Financing (FMF) funds;
• $1.5 million in Peace Corps support;
• $957,000 in International Military Education and Training (IMET) funds; and
• $650,000 in NADR funds.

In FY 2003, a total of 28 Albanians traveled to the U.S. on USG-funded exchange programs.

U.S. ASSISTANCE PRIORITIES

Democratic Reform Programs: In FY 2003, the main priorities for USG democratic reform assistance in Albania were strengthening civil society principles and institutions; fostering citizen involvement in economic and political processes and decision making; increasing the flow and transparency of information, and citizen confidence in government and in the accuracy of news/ information; increasing the independence of local administrations from the central government; and strengthening representative government institutions. The USG?s rule-of-law program worked to improve legal sector institutions and to promote a more transparent legal system.

Economic and Social Sector Reform Programs

Economic Programs: In FY 2003, USG programs advanced economic reform by providing technical assistance and finance to develop micro, small, and medium-sized enterprises; improving export and international competitiveness; facilitating better customs clearance procedures; developing farmer and agribusiness associations; providing management support in completing the first steps toward a full land registration system; and upgrading financial services, with a specific focus on central bank operations, bank supervision, deposit insurance, and GOA debt management. USG programs support training to high school and vocational college students in business skills. USG programs also helped non-profit organizations and other civil society institutions to foster citizens? awareness of and involvement in ongoing legal and regulatory reforms.

Cross-Sectoral and Other Programs

Energy: GOA efforts to bring the energy sector to financial self-sustainability and put it on an environmentally sound footing were supported with technical assistance, training, and reform advocacy. A primary focus was restructuring the energy sector through the introduction of legislation establishing an independent energy regulatory entity and that would lead to the eventual privatization of the state energy monopoly and to the commercialization of its distribution, transmission, and generation assets.

USG support to date for restructuring and privatizing Albania?s energy sector has been closely tied to, and structured around, the eventual integration of the national electrical system with that of the South East European Regional Energy Market (REM). This will facilitate the stabilization of the national electrical system and Albania?s overall energy security through a least-cost approach that will link Albania more closely to the EU.

Anti-Corruption/Trafficking: Local anti-corruption efforts were strengthened through further enabling mechanisms to investigate citizen complaints and to empower coalitions of reform-minded individuals and NGOs. These efforts were reinforced by the advocacy of key legal reforms and by funding of public media that advocate citizen action against corruption. The prevention of trafficking in persons and the protection and reintegration of victims also received expanded attention. USG assistance included a new initiative against child trafficking and a separate umbrella activity directly to coordinate, integrate, and support NGO, GOA, and other donor efforts significantly to reduce trafficking in women and girls. These activities are undergirded by a separate activity to strengthen women?s legal rights.

Security, Regional Stability and Law Enforcement Programs

Regional Stability: This issue was addressed through a range of USG programs and outreach efforts, including speaker programs, support for civil society organizations engaged in regional issues, and media and public information campaigns. Speakers from leading U.S. think tanks provided a variety of Albanian audiences (students, lecturers, media analysts, intellectuals, etc.) with detailed explanations of USG views on terrorism and the global war against it.

Law Enforcement: The USG continued its development support to the Ministry of Public Order (MoPO), Albanian State Police (ASP), and the Office of the Prosecutor General (OPG), to improve the GOA?s performance and capabilities in law enforcement and public security services. Expertise, training, and equipment support were offered to the Vice Directorate of Organized Crime of the ASP to enhance its performance in the fight against organized crime. This activity spearheaded an international effort to establish, staff, train, and equip organized crime task forces in five major population centers.

Law enforcement accountability and professionalism were bolstered through training, equipment, and technical assistance to the MoPO?s Office of Internal Control, which investigates police corruption, misconduct, and criminal activity, and to the OPG, both independently and through Albania?s School of Magistrates. To improve the functionality, effectiveness, and crime fighting capabilities of police and prosecutors, comprehensive support was provided for the ongoing development of the information management resources of the police throughout the country.

SECTORAL ASSESSMENTS

Democratic Reform

Twelve years into Albania?s transition, both positive and negative developments and sobering and encouraging realities have emerged in the democracy, governance, and the rule of law. Elections occur regularly, the news media are unfettered, the basics of a market economy exist, civil society demonstrates vitality, and universal standards of human rights are recognized. However, malfunctioning GOA bureaucracies consistently disappoint in the maintenance of rights and privileges due to citizens under law. Pervasive, endemic corruption within the political system undermines the democratic process and alienates the public.

The October 2003 local government elections took [place in an atmosphere in which the political discourse was more civil and less divisive than in previous elections. ODIHR adjudged the elections as the best to date, though there were some technical problems and a few isolated incidents of irregularities, particularly in the village of Himara. GOA ruling structures remained relatively stable throughout the year -- as opposed to the previous year -- though infighting within the ruling Socialist party was noted. The opposition Democratic Party continued to take part in government, and while it at times engaged in disruptive behavior in Parliament, it refrained from its former tactics of using unruly public demonstrations to make charges of deceit and fraud. There were no serious threats to public order, although weak administration of an outdated civil registry system, on which voter lists are based, led to much confusion on election day, resulting in the disenfranchisement of a number of voters.

The GOA has taken some steps to combat organized crime and corruption, which remain endemic and continue to impede growth and investment. For example, in the past year the GOA nearly halted trafficking in persons by speedboat across the Adriatic and increased the number of arrests of senior police and public officials charged with corruption. It also passed important new reform legislation. However, there is a general lack of will on the part of political leaders and the bureaucracy to advance reform, especially in the fight against organized crime and corruption, through aggressive implementation of progressive laws enacted over the past decade. The best evidence of this is the failure to establish implementing rules and regulations (IRRs) for these laws. Many GOA agencies and officials simply do not have the procedures and systems in place to make legislative reform meaningful. These types of problems, and the disconnections they cause between legislation and reality, are common in many sectors.

In the late 1990s, Albania embarked on a decentralization process in which an impressive body of law was passed and significant authorities and resources were allocated to local governments. However, the supporting IRRs largely were not put into place, and the anticipated gains from the new legislation are yet to be fully realized. For example, while local governments have operational authority over various fiscal transactions, the Ministry of Finance refuses to allow them to open bank accounts due to a lack of enabling IRRs. Such IRRs are needed to give reform initiatives substance and reality to the bureaucracy, as well as the citizenry.

In FY 2003, USG assistance strengthened the rule of law in Albania in various ways. Some of the most gratifying results include the provision of legal services to victims of corruption and trafficking through the Citizens Advocacy Office; legal education in the Freedom of Information Act and the Administrative Procedures Code to local governments and citizens; introduction, on a pilot basis, of new systems and techniques in court administration, with the potential for nationwide rollout; and ever-higher levels of professionalism and scholarship at the Albanian School of Magistrates, where U.S. Department of Justice officials have participated with other foreign experts in conducting training courses and drafting curricula for sitting judges and prosecutors. Collaboration and cooperation have also been strengthened among Albanian, Greek, and Italian authorities and NGOs dealing with trafficking in persons issues, such as prevention, protection, assisted voluntary return, and re-integration of victims.

With prosecutors and police organizations, the USG has been extensively involved in conducting professional training, providing modern law enforcement equipment, and fostering inter-organizational cooperation. The USG has played a critical coordinating role in chairing the International Consortium, an organization dedicated to coordinating the many international actors in Albania that are involved in legal reform issues and rationalizing their activities. The Consortium has achieved particularly positive results in improving border control, coordinating anti-trafficking strategies, court reform, and legislative reform.

The USG has been intensively involved in providing feedback to the GOA and assisting in the drafting of several important new laws. Among the most significant indubitably is the landmark Law on the Declaration of Assets, which requires the disclosure of the assets of senior politicians, civil servants, and public officials. The USG has remained involved in assisting in the implementation of audit systems to enforce this legislation. Other recent legislation in which the USG has played a key advisory role includes new witness protection legislation (currently before the Parliament) and laws addressing money laundering and terrorism financing.

USG support in democracy and governance (D&G) has seen the strengthening of civil society (particularly NGOs) and political party activists, with growing participation of grass-roots citizen organizations in the political process. After years of effort, the slow and gradual maturation of the NGO community is increasingly evident, as is the GOA?s commitment to the devolution of authority and resources to local governments. Democratic systems and practices have been strengthened through support of public information campaigns, women?s rights and empowerment groups, and citizens' advocacy programs. Similarly, exchange programs and in-country English language teaching programs provide Albania's current and future leaders with invaluable exposure to, and insight into, democratic principles and values.

USG programs enabled the Central Election Commission (CEC) to run technically smooth local government elections, based on a new bipartisan electoral code passed in the summer, and a majority of its members carried out their work in a non-partisan fashion. USG assistance included a modern data center with 45 work stations; GIS maps of electoral jurisdictions; restructuring of the voter registry and voter list; and numerous training courses, including database management and procedures for organizing voting and ballot counting. The number of Albanian NGOs participating as domestic election monitors in the October 2003 elections was double that of the previous elections, in 2001. In addition, local organizations supported by the Embassy's Democracy Commission Small Grants Program, established a Forum of Local Monitors and produced a standardized monitoring form. They also conducted education campaigns and televised issue debates.

USG media training programs helped to develop a new, responsible, and more professional media cadre through on-site training, internships with U.S. media organizations, and study visits. The USG funded the widely watched TV programs "Heroes of Albania" and "Hapur," both of which focused on corruption and received acclaim for promoting civil empowerment. The GOA also is enforcing a new copyright law and has removed pirated programming from the airwaves.

Economic and Social Sector Reform

Economic: During 1993-96 and 1998-2000, Albania realized impressive annual economic growth rates of around 9 percent. GDP growth declined to 6.5 percent in 2001, mainly because of power shortages and a slowdown in the world economy. By 2002, GDP growth had fallen to less than 5 percent, due to lower public investment, continued energy shortages, political uncertainties, and delays in reforms. Inflation was 3.5 percent in 2001 and 5.7 percent in 2002, after spiking early in the year due mainly to higher prices for fuel and some basic food items. In 2003, inflation averaged a low 2.49 percent.

Tax revenue performance in 2001 was about 22 percent of GDP, an improvement over 1997 levels but short of the 30 percent average collected in 2001 in the poor-performing countries of Southeastern Europe. Despite revenue shortfalls, the fiscal deficit declined from 8.9 percent of GDP in 2000, to 8.2 percent in 2001 and 6.2 percent in 2002. Domestic borrowing remains at around 3 percent of GDP, and the budget deficit was expected to fall again, to 6.4 percent, in 2003. The external sector had stronger than expected imports, which worsened the 2001 trade balance, but the current account balance actually improved as a result of high private remittances. The current account deficit increased from 5.3 percent of GDP in 2001 to 9.5 percent in 2002, and was projected drop to 8.6 percent in 2003.

The private sector accounts for over 75 percent of GDP and over 80 percent of employment. Since the 1997 crisis, and consistent with the above figures, foreign investor confidence has been growing over the past two-three years. According to UNCTAD statistics, Albania attracted $143 million of foreign direct investment (FDI) in 2000, a three-fold increase over the 1997-99 levels. Despite this trend, Albania remains among the lowest recipients of FDI in Central and Eastern Europe (CEE). Unemployment estimates range from 10-22 percent, with 15.8 percent the official GOA figure. Surveys indicate that 25.4 percent of all Albanians fall below the accepted poverty line, with poverty reaching almost 30 percent in rural areas.

In FY 2003, the USG assisted 4,607 micro and SME enterprises, which now have improved technical, marketing, and managerial skills and better access to credit. The micro-loan program, serving over 2,500 poor Albanians, has achieved operational sustainability and received an A+ rating for a microfinance institution. Besides disbursing over $1.9 million to support a national micro-finance entity, the SME loan program used $0.75 million to leverage more than $5 million of loans from a commercial bank for its customers. The repayment rates were 99.8 percent for micro loans and 100 percent for SME loans. With USG support, other local entrepreneurs invested $4.86 million of their own funds in agribusinesses and were able to obtain $2.88 million in trade credit and $2.32 million in bank loans.

The USG provided financial expertise to the Central Bank of Albania. To help increase the security of private deposits in domestic banks, Albania?s Deposit Insurance Agency participated in an executive exchange with the Bulgarian Deposit Insurance Fund and Hungary?s National Deposit Insurance Fund. The Insurance Associations of Albania received training and consultations in claims management procedures and practices. USG efforts indirectly contributed to an increase in commercial bank deposits, which grew from $1.99 million to $2.77 million during 2001-2003. The USG also funded an intermittent Treasury advisor, who worked with the Central Bank and Finance Ministry on debt management, assisting in the creation of a government securities market, which improved the GOA?s ability to raise funds for much-needed poverty reduction and infrastructural upgrade projects.

USG assistance supported implementation of the first registration of property in Albania?s land titling process, to help create a viable real estate market. Firms now can make transparent purchase, sale, mortgage, and other legally valid property transfers. An amendment to the Immovable Property Registration Law to establish a self-regulating/financing land registration agency was drafted. Recommendations were prepared to modify the Land Restitution and Compensation Law, in cooperation with the OSCE, to assure equitable, timely treatment of valid claims.

In the NGO advocacy area, the USG strengthened the role of the Albanian Agribusiness Council (KASH) in serving the interests of farmer associations and agribusinesses by participating in negotiations on free trade agreements with neighboring countries and providing feedback on proposed and existing legislation. The interaction with the GOA has increased KASH members? confidence in the economy and willingness to invest. This has translated into a self-investment of $2.85 million among KASH members, $1 million in trade credit, and $0.51 million of bank loans.

USG education efforts continue to help raise the skills of the local labor force, as needed for a modern economy. Students, teachers, and entrepreneurs from all over Albania have graduated from business education programs and received non-formal training in business and economics. Local NGOs and private businesses signed contracts with the USG education program to obtain vocational and business training for their employees. Long-term education and training opportunities have prepared future leaders by targeting fields directly relevant to economic growth and stability. Many Ron Brown fellows have been, or are currently, filling high-level, private sector and governmental positions. Other exchanges have given representatives of Albanian business associations and chambers of commerce valuable insights into mediation between legislative and other government bodies and private businesses.

Social: Almost half of Albania?s population of 3.6 million is under the age of 25. The primary causes of death are cardiovascular and respiratory diseases, cancer, and trauma. The incidence of cancer and respiratory diseases is increasing as tobacco consumption climbs. Viral hepatitis and tuberculosis are the main communicable diseases. Albania is considered a low-prevalence country for HIV/AIDS, with only about 120 confirmed cases of full-blown AIDS. However, UN Agencies believe the actual infection rate to be four to 10 times higher, with Albanian youth increasingly engaged in high-risk behavior. Abortion remains a common means of birth control.

According to surveys, the poor are twice as likely as others to lack access to key public and private services. Physical and economic barriers to health care include limited access to, and the poor quality of, hospitals and health facilities. Only one in four rural households has running water indoors, with over half having no running water at all; only 14.3 percent of households report receiving electricity continuously. Similar trends are evident in the education sector. At the beginning of its democratic transition, Albania had high participation rates at all levels of education, while enrollment rates now have declined in all but the tertiary level of education.

With USG assistance to the primary health care (PHC) sector, the proportion of the population having access to reproductive services increased by over 20 percent in the past year. The total of those with access to these services is now 68 percent. The nationwide, fully functional Contraceptive Logistics Management Information System is now being maintained by the MOH, a major step toward ensuring the long-term availability of contraceptives. In addition, the USG-inspired Contraceptive Security Commission passed its first-ever national Reproductive Health Strategy, which the GOA adopted formally.

In FY 2004, the primary health care model will be functioning fully and its components tested to ensure their feasibility and sustainability. Technical assistance and training will serve to strengthen health reform efforts by rolling out a fully integrated countrywide PHC system that will be able to respond to the population?s basic health needs. Technical assistance will facilitate health care delivery responsibilities and strengthen capacity building at the central and local levels. In addition to the improvement of clinical competencies, training will expand to include modules in management, planning, and budgeting for both central and local health authorities.

Cross-Sectoral and Other Programs

Energy Sector Reform: The deplorable conditions in the power sector threaten economic growth, quality of life, and political stability, as it continues to drain GOA budget resources. No new generation plants have been added to the system in over 15 years. The physical plant -- from generation to distribution -- desperately needs overhauling. The virtual single-source reliance on hydropower and physical limits on the ability to import electricity place an enormous burden on the sector. Moreover, there are reported 35-40 percent system losses, and households account for over 60 percent of electricity consumption, at an artificially low tariff. Countrywide blackouts range from three to 14 hours daily. The World Bank estimates that, over the next 15 years, $1.1 billion in capital investment will be needed to rehabilitate and upgrade the sector.

The GOA seeks membership in the South East European Regional Energy Market (REM) and is targeting sector reforms and development for REM compliance. With USG assistance, the GOA adopted a National Energy Strategy and Power Sector Reform Law that established the Electricity Regulatory Authority (ERE) as a self-regulating/financing entity and provided for the unification of the legal framework for REM integration.

The managerial and technical capacities of the ERE were strengthened by USG financing of partnership programs with U.S. regulatory counterparts, and between the state power monopoly and U.S. utility counterparts. In 2004, plans for unbundling the energy monopoly into separate generation, transmission, and distribution entities will be initiated. The GOA and ERE are expected to adopt formally the concept of full cost-of-service based tariff mechanisms and initiate the first round of increases in residential tariffs.

Anti-Corruption: Corruption remains a major obstacle to meaningful political and economic reform in Albania. Transparency International?s 2003 Corruption Perceptions Index of ranked Albania 92^nd among 133 countries covered, with a score of 2.5 (same as last year) within a range of 0 to 10 (highly corrupt to highly clean). Though steady progress is being made in combating corruption, much remains to be done. Public awareness of what constitutes corruption is growing, and more people are empowered to speak out against it. The GOA has also taken steps to address corruption through the creation of a special ministerial post to deal with corruption issues, new legislation, and increased law enforcement efforts, directed at corruption both by police and public officials.

USG assistance has strengthened the Albanian Coalition Against Corruption (ACAC), a sophisticated network of individuals and NGOs. The Citizens Advocacy Office (CAO) investigates corruption complaints by citizens and provides legal services to victims of trafficking. The CAO conducts a weekly, one-hour call-in TV program on corruption that is the highest-rated program in its time slot. Public awareness about corruption and civic responsibility has also grown through investigative journalism training programs and information campaigns targeting transparency in public administration. With USG technical assistance, the GOA passed powerful enabling legislation on the Declaration of Assets for the country?s top 3,500 public officials.

In FY 2004, a new rule-of-law umbrella activity will aim at giving "teeth" to existing laws. The emphasis will be on implementing and enforcing existing legislation and assisting institutions to set rules and regulations, as necessary. Any action regarding new legislation will be limited to that specifically targeted at corruption. The USG also will continue to put pressure on the National Judicial Conference to enforce its Code of Ethics, support the administration of the pilot courts of first instance, and ensure the implementation of the Law on the Declaration of Assets by assisting the recently formed High Inspectorate for the Declaration and Audit of Assets. To improve oversight, transparency, and accountability in Albania further, the USG will also assign a full-time advisor to work with the Supreme State Audit Commission, the independent agency charged with auditing central and local government entities, and with the audit/inspector general offices of each major ministry.

Anti-Trafficking: Albania is defined as a source and transit country, primarily for women and girls trafficked to EU countries for sexual exploitation. In the State Department?s 2003 Trafficking in Persons Report, Albania was categorized as a Tier ll country for the second consecutive year, meeting minimum standards and making significant efforts to bring itself into compliance with the standards of the Trafficking Victims Protection Act 2000. The move up from Tier lll to Tier ll was due to the GOA?s National Strategy to Combat Trafficking in Human Beings in 2001. Child trafficking remains a problem between Albania and neighboring Greece and Italy.

The USG initiated implementation of its Three Port Strategy in FY 2003. This strategy placed law enforcement advisors in each of the country?s principal points of entry (POE): the Mother Teresa International Airport and the seaports of Durres and Vlora. In addition, the strategy offered equipment and training to support the enhanced control and screening of people, luggage, and goods moving through these POE?s. As a consequence, the interdiction of traffickers and victims and the disruption of trafficking networks increased. As part of the Three Ports Strategy, a U.S. advisor was placed in the Minister of State?s Office to assist in the drafting and implementation of the GOA?s anti-trafficking strategy and to facilitate government cooperation with NGOs working to combat trafficking in persons. The USG continued its efforts to achieve a consensus between international donors and the GOA on the mission of the Vlora Anti-Trafficking Center to remove the impasse preventing full implementation and operation of this component of the GOA?s anti-trafficking strategy. Promising developments took place at the end of the reporting period, with the principal international players convening and agreeing to make the center operational.

The USG?s initial protection and reintegration support program for trafficked victims helped meet the diverse needs of trafficked women and children. It developed a systematic national referral mechanism based on the International Office for Migration?s (IOM) regional and global presence, and tested models for a sustainable reintegration and shelter mechanisms for victims of trafficking. This USG-sponsored activity also assisted in completing, with IOM assistance, the reconstruction of a GOA-run shelter for women, children, and illegal migrants. Other innovative anti-trafficking efforts included training programs to develop economic opportunities for women and cultural activities that depict the dangers of trafficking. Key Albanian representatives were introduced to U.S. strategies and policies to combat trafficking in persons and investigated the role of the GOA in addressing the problem and collaborating with the U.S.

In the coming year, the USG will be engaged in a bilateral anti-trafficking initiative focusing on children, which is co-funded by five international NGOs. Specific areas of focus include prevention, protection, education/sensitization, and assisted voluntary return and reintegration of trafficked children into Albania. Unique to this program is its transnational and bilateral approach, where anti-trafficking efforts are coordinated not only within Albania but also among Albania, Greece, and Italy. In addition, a new and larger umbrella activity, which contains a grant-making mechanism, will focus on the preventive, reintegration, and regional aspects of trafficking of women and girls, and increase the coordination among the GOA, local NGOs, and international partners to deal with these issues more effectively.

Security, Regional Stability, and Law Enforcement

Security: As a signatory to the Athens MOU Power Sector Policy Statement, Albania seeks to increase its overall energy security by participating in the SEE Regional Electricity Market (REM) and ultimately the European electricity market. To do so requires the domestic power sector to be compatible with the technical, legal, and operational standards established by the REM within a defined timeframe. These standards are consistent with a financially sustainable and environmentally sound energy sector. These lofty goals stand in stark contrast, however, to Albania?s continuing power sector crisis, as described above, which is undermining sustainable economic development and national political stability.

In 2004, the USG will help the GOA in designing the proposed Albanian energy market (AEM). This covers development and adoption of market rules, grid codes, and other technical requirements to facilitate AEM?s establishment and operation, as required for participation in the larger REM and European electricity market. This is directly supported by USAID and concerned donor efforts first, to unbundle the state power monopoly into separate generation, transmission, and distribution companies; then, to commercialize all three companies; and subsequently, to privatize generation and distribution. This will be done concurrently with the advocacy of full-cost-based electricity tariffs and the addressing of the theft and non-payment issues.

The USG also supported the creation, development, and training of organized crime task forces for the five cities most afflicted by organized crime. Assistance is being offered to formalize the legal, organizational, and functional framework for these task forces, which will bring together elite and specially trained police and prosecutors. Advisory support, training, and equipment have been delivered to support the development of the internal affairs function of the Ministry of Public Order (MoPO) to investigate, prosecute, and remove from service police officers guilty of corruption, crime, or other misconduct. This assistance promotes a more professional and accountable police force at the service of the Albanian citizenry.

With USG assistance, law enforcement and other officials from Albania and Macedonia were brought together to discuss cross-border cooperation in promoting national and regional stability. A debate on national and regional security issues was conducted, which advanced collaboration between governments and NGOs and contributed to the development of national stability. The Department of State, Bureau of International Narcotics and Law Enforcement Affairs (INL), administered SEED funding in support of the Department of Justice, Office of Prosecutorial Development, Assistance and Training (DOJ/OPDAT) Resident Legal Advisor (RLA), Department of Justice, International Criminal Investigative Training assistance Training Program (DOJ/ICITAP) Police Reform project, and Three Ports Strategy, and the ICITAP-implemented anti-trafficking-in-persons training at the Vlora center.

Country Performance Measures

Economic Policy Reforms and Democratic Freedoms in Albania, 1991-2002

Ratings based on a 1 to 5 scale, with 5 representing the most advanced.
Sources: EBRD, Transition Report 2003 (November 2003); Freedom House, Freedom in the World 2003 (2003); and (various years).

Economic Structure and Human Development in Albania, 1991-2002

 
The Human Development Index (HDI) is based on three indicators: longevity, as measured by life expectancy; educational attainment, as measured by a combination of adult literacy and combined primary, secondary, and tertiary enrollment ratios; and standard of living, as measured by real per capita GDP ($PPP). The HDI ranges from 0 to 1, with higher values representing greater human development. UNDP, Human Development Report 2003 (July 2003), and previous editions; EBRD, Transition Report 2003 (November 2003), and previous editions.

MEASURES OF PROGRAM EFFECTIVENESS IN FY 2003

DEMOCRATIC RERORM

Performance Indicator: Corruption -- Freedom House Nations in Transit Corruption Rating (1 = highest; 7 = lowest)

FY 2003 Results: Corruption in Albania remains endemic, though the past year has seen some important progress. The Albanian Coalition Against Corruption mustered its technical and advocacy skills to ensure the passage of a strong, tough law on Declaration of Assets by Public Officials. The U.S. also assisted in the drafting of a new anti-money laundering law. The coalition continued to raise public awareness of corruption issues and anti-corruption initiatives. The Citizens? Advocacy Office handled 689 cases dealing with corrupt practices and/or trafficking in persons in the past year. The Albanian School of Magistrates graduated its third class of post-law-school students, providing a cadre of Western-trained judges and prosecutors. A new bi-weekly, "60 Minutes" style TV program on corruption is aired over a national network of 23 stations. Reform of judicial administration has begun in earnest, facilitating and easing business and citizen access to the judicial system. ICITAP assistance helped establish the Office of Internal Control with the police, charged with investigating internal corruption, and this office made a number of high-profile arrests. Arrests and prosecutions of senior government officials also increased, including that of a deputy minister and the deputy central bank governor.

Performance Indicator: NGO Development/Civil Society -- Freedom House Nations in Transit NGO Development/Civil Society Rating (1 = highest; 7 = lowest)

FY 2003 Results: The current legal environment is generally favorable to NGO sector development. The law allows NGOs to provide both goods and services. Organizational capacity continues to expand, though slowly, with much remaining to be done. The NGO sector remains highly dependent on the donor community for grants and as customers for its services. There was a noticeable increase in issue-based efforts by coalitions of NGOs during the year. The public image and perception of NGOs continues to improve, though slowly and unevenly, across the board. NGO influence on public policy, while still relatively weak, is expanding gradually.

ECONOMIC AND SOCIAL REFORM

Performance Indicator: Private-sector share of GDP (Source: EBRD)

FY 2003 Results: The privatization of small and medium-sized enterprises has largely been completed. However, delays have been encountered in the GOA?s privatization of the few remaining large public properties (strategic assets), such as the Albanian Electric Corporation and the National Savings Bank. With donor community support, the GOA is moving (albeit slowly) toward privatizing these few remaining state enterprises. The relatively stable macro-economic situation, together with the GOA?s efforts to create a more favorable business climate, is encouraging domestic and foreign private investments. However, high levels of corruption, the lack of streamlined administrative and tax/customs regulations, and inconsistent and unfair regulatory enforcement continue to hinder the development of the private sector.

Performance Indicator: Per Capita Income in purchasing power parity (PPP$) -- (Sources: World Bank and EBRD, August 2003)

FY 2003 Results: There has been a steady increase in per capita GDP from $673 in 1997 to $1,552 in 2002. However, the rate of the real growth of GDP has slowed since 1999. The rapid liberalization of the market following Albania?s WTO membership, combined with expanding demand for imports of all kinds, significantly increased Albania?s trade deficit. As a result, production in the manufacturing and agricultural sectors has been adversely affected, and the growing trade deficit has weakened the local economy. With assistance from the donor community, the GOA is taking steps to help local private enterprises raise their competitiveness in order to recapture the domestic market and penetrate new export markets. These actions are necessary conditions to reduce the country's trade deficit, stimulate SME growth, create more employment, and increase per capita income.

Performance Indicator: SME Employment -- Employment in small and medium-sized enterprises (SMEs) as a percentage of total employment (Source: World Bank, August 2003)

FY 2003 Results: Rapid growth of SMEs is the primary hope for providing jobs and income to hundreds of thousands of unemployed and underemployed Albanians. The GOA has made special efforts to improve this sector?s performance. Parliament passed an SME law to create a favorable legal environment in which this sector can expand. In addition to the Export Promotion Agency and the Business Advisory Council, the Ministry of Economy has established the SME Development Agency to create and implement an SME development strategy and an action plan to remove administrative barriers. The donor community, World Bank, and EBRD are providing considerable assistance for the development and financing of SMEs.

SECURITY, REGIONAL STABILITY, AND LAW ENFORCEMENT

Performance Indicator: Trafficking in Persons -- U.S. State Department 2003 Trafficking in Persons Report (Tier 1 = highest; Tier III = lowest)

FY 2003 Results: Albania first received a Tier II TIP ranking in 2002. Although the GOA did not meet the necessary criteria to move up to Tier I status for the 2003 reporting year, the State Department recognized it as having made significant progress in combating trafficking in persons. Examples include the near-total curtailment of trafficking by speedboat across the Adriatic; improved interdiction capabilities at Albania's three major ports; expanded national and regional anti-trafficking sting operations; increased arrests and prosecutions; and the opening of a new shelter/reintegration center for trafficking victims. As a result of these efforts, trafficking in persons in Albania has decreased significantly, a trend that is expected to continue.

FY 2003 Support For East European Democracy (SEED)
Funds Budgeted for Assistance To:

Albania (In millions $, as of 12/31/03)

USAID - Democratic Reform $6.61
USAID - Economic Prosperity & Security $5.31
USAID - Social Sector Reform $3.25
USAID - Special/Cross-Cutting $6.29
USAID Total: $21.45

State - Bureau of Public Affairs $0.03
State - ECA Exchange Programs $0.96
State - EUR Public Diplomacy $0.45
State - EUR Social and Economic Programs $0.16
State - IIP Public Diplomacy $0.05
State - INL Law Enforcement Activities $4.79
U.S. Department of State Total: $6.43

Broadcasting Board of Governors - Public Diplomacy $0.05
U.S. Department of Commerce - CLDP $0.30
DHS/Customs - Law Enforcement Activities $0.27
Other Agencies Total: $0.62

GRAND TOTAL: $28.50