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."

From 1991 to 2003, Georgia 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. Georgia’s November 2, 2003 parliamentary elections were marred by fraud and irregularities that resulted in popular demonstrations. Former President Eduard Shevardnadze resigned on November 23, 2003. An extraordinary presidential election was held in January and repeat parliamentary elections were held in March. Both elections marked a significant step forward and were heralded by the OSCE as bringing the country closer to meeting international standards.

Over the past years, parliament has passed significant legislation instituting legal, institutional and procedural reforms supportive of rule of law, individual freedoms and representative government. Several amendments were passed to the Criminal Procedure Code that brings the Code closer to international standards. The new government also began a comprehensive reform of law enforcement agencies. The traffic police department was disbanded and a new highway patrol was established. As a result, corruption in the department decreased substantially. The government also moved internal troops from the Ministry of the Interior to the Ministry of Defense. The troops will be transformed into a gendarmerie-style force.

However, problems remain. On February 62004, parliament passed a series of constitutional amendments that strengthened the power of the Executive relative to the Parliament and Judiciary. According to the OSCE/ODIHR, an analysis of the amendments by the Council of Europe’s Venice Commission "found many of the Constitutional changes problematic. Although the Georgian authorities claimed that circumstances required an expeditious consideration and approval of the amendments, the manner in which they were adopted, ignoring a constitutional provision requiring a one-month debate, raised serious concerns which were also voiced by representatives of Georgian civil society." Although the 1995 Constitution provides for an independent judiciary, the judiciary continues to be 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)."

Georgia made notable progress toward macroeconomic stabilization from 1996-1999, evidenced by a strong economic recovery, price and exchange rate stability, and sharp reduction in inflation, which has remained at around 5 percent since 2001. The period also saw gradual harmonization of economic legislation with international best practice. In the area of structural reforms, progress on banking sector reform was substantial, and fiscal and energy sector reforms also advanced, albeit with delays.

The National Bank of Georgia (NBG) has allowed the national currency, the lari, to float since 1998. The currency depreciated steeply at that time, but remained relatively stable through 2002 and appreciated markedly in 2004. The NBG has made significant progress in introducing key reforms in the legal and regulatory frameworks for banking supervision, and in strengthening its capacity to implement these measures. The question of who will succeed current NBG Governing Board members, including the current President, who is credited with most of the success of NBG policies since 1998, will come to the fore in 2005 when all NBG Board appointments expire.

Developments in the first half of 2004 were favorable, particularly with respect to fiscal performance. Government revenue collection increased more than twofold in 2004. The new government declared its first priority to be eliminating state corruption and conducting large overhauls of several agencies. The government also began efforts to legitimate the shadow economy. In late 2004, parliament proposed a financial amnesty bill that would allow citizens to register their undeclared assets and incomes (prior to 2004) in return for freedom from criminal charges or investigation of the same. Those against whom a criminal case had already been opened by December 31, 2004, would be excluded from the amnesty. The combined impact of lower tax rates in the proposed new tax code, tax amnesty, and better tax administration and enforcement is expected to reduce the shadow economy, promote economic growth, and hopefully maintain adequate revenue to support the government's financing needs.

A new Poverty Reduction and Growth Facility (PRGF) was concluded with the IMF in 2004, and as a result, Georgia received favorable debt restructuring from its Paris Club creditors. Relations with the IMF were strained at the close of the year, despite high revenue performance, due to mixed signals from the Georgian Government on its 2005 spending plans and indications of a potential increase in spending beyond sustainable levels. Despite an aggressively marketed privatization program, receipts for privatization remained low. It is expected that the Government's anti-smuggling campaign has widened the tax base of the economy, but the Government's much-trumpeted tax code revisions may result in lower tax revenues overall, unless revenues from increased economic growth, increased taxpayer participation, and improved tax administration make up the difference. High import tariffs remain a concern and a disincentive to needed foreign investment.

While progress was made in the context of the last two IMF-supported programs, the results fell short of expectations during the last PRGF. In August 2003, the IMF suspended the PRGF after the parliament failed to approve belt-tightening measures. Dwindling tax revenues in the years since independence have reduced the Government's ability to fund basic state functions. In November 2003, the IMF reported that the very weak fiscal scenario was exacerbating funding of Georgia's poverty reduction strategy. Tax revenue collection was extremely weak, receipts from privatization were low, donor grants were falling, and the EU, as donor, was retrenching. Remittances from abroad have been high and have helped stabilize the balance of payments. Annualized GDP growth in 2003 was 8.3% in the first three quarters of 2003, but the tax base of the economy is very narrow and in 2004 growth continued to be driven by Baku-Tbilisi-Ceyham (BTC) pipeline construction, which does not generate tax revenue, and which will be completed in 2005.

Georgia has undertaken significant privatization over the past decade. Virtually all small firms and over 1,000 medium and large ones have been privatized. However a significant proportion of large enterprises continue to be state-owned. The Government has not effectively controlled these firms, many of which systematically evade taxes and dividend payments to the budget. Georgia began to privatize its energy sector in 1998: the Telasi electricity distribution company was sold to American-owned AES group in 1998 (subsequently sold in August 2003 to the Russian UES group), and the thermal power plant at Gardabani was privatized in January 2000. The Wholesale Energy Market privatization was completed in 2001. Efforts to improve payment discipline by disconnecting non-paying customers have been constrained by technical, governance and political problems. Taxation of energy companies has changed frequently and erratically, and the sector has been burdened by old debts. A complicated system of transfers between state-supported energy consumers has left power generators with no payments for energy produced. These factors, combined with periodic droughts and breakdowns of thermal plants, have hampered supplies and the finances of the energy companies. Further progress in energy sector reform is needed to achieve the ultimate goals of a reliable energy supply and financial stability. Many needed reforms were not undertaken as expected in 2004, and Georgia once again found it necessary to import electricity for the winter of 2004 - 2005.

Low collections and pricing below cost have generated quasi-fiscal deficits of 6% of GDP a year in the electricity sector. They are "quasi-fiscal" because there is no line-item in the state budget to give away free energy, but their policy has the same net effect in that the Government sustains the cost. Social energy subsidies have been poorly targeted and those to enterprises have helped perpetuate non-viable industries. The quasi-fiscal losses were initially financed by accumulation of foreign debt, representing a major part of the overhang in indebtedness. When foreign resources dwindled, financing shifted toward de-capitalization of the system, putting much of the infrastructure in its current state of disrepair. Resulting interruptions in generation and transmission have undermined economic activity and provoked social discontent.

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.

Appreciation of the lari and responsible monetary policy has increased foreign reserves significantly, narrowing the current account deficit (including grants); reserves are currently equal to at least three months of imports.

Major legislative efforts are under way to improve the business environment. For agriculture, which makes up over 20% of GDP and 50% of employment, a new law has been drafted and is expected to be introduced shortly which would privatize about a third of all agricultural land. Previously small agricultural land plots had been privatized, while the new initiative would privatize larger, economically viable plots that could be used as collateral to mobilize rural credit. A veterinary reform law passed recently, and new laws liberalizing seed imports and bringing food safety standards into conformance with WTO standards are being drafted.

To improve the environment for financial service provision, a law on registration of immovable property has been drafted, and establishment of moveable property registration is expected soon. Other legislative initiatives under way include improvements to secured lending, leasing, credit information, microfinance, arbitration, licensing, and bankruptcy. If these initiatives are enacted over the next year, as planned, the policy environment for business should see marked improvement.

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 the President designated Georgia 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. The Government's human rights record remained poor in 2004; although there were notable improvements in some areas, serious problems remained. In 1995, the constitutionally mandated office of the Public Defender, or ombudsman, was created, though the position remained vacant for most of 2004. The head of parliament's committee on human rights, as well as the Public Defender, was active in several individual cases involving police misconduct. The new government has begun a systematic reform of law enforcement bodies and a complete redrafting of the Criminal Procedural Code and the Law on Imprisonment.

Judicial reform in Georgia is presently in a state of flux. In response to the high priority Georgia placed onto judicial reform after the adoption of the Constitution in 1995, substantial assistance was provided to the judiciary. Reforms focused on changes to the structure of the Georgian judiciary, the institution of judicial qualification examinations, an increase in salaries provided to judges, and the 2001 adoption of the voluntary code of ethics by the Conference of Judges. However, at the time, the following issues were identified as needing attention: public perception of the judiciary as corrupt, the absence of reform of the procuracy, the enforcement of court decisions, legal education, and judicial independence. In 2004, despite reforms put in place prior to the Rose Revolution, the structure of the judicial system - including the court structure and the bodies responsible for discipline and budgeting – is being reconsidered. Structural changes presently being considered include the relationship of the courts to the executive branch, the creation of a new magistrate position below the first instance courts, the consolidation of first instance courts from 56 to 25 courts and the consolidation of administrative and logistical responsibilities for the various courts into a more unified body, rather than the disparate responsibilities currently assigned to the staffs of the Constitutional Court, Supreme Court and Supreme Council of Justice. The outcome of these reforms, however, may disrupt court operations in the near term.

Prolonged pre-trial detention is a problem. Impunity and corruption in law enforcement are widespread. Torture is illegal; however, security forces continue to beat, torture and otherwise abuse detainees, usually to extract money or confessions. According to the Ministry of Justice, 28 persons died in custody in 2004, one death was considered a suicide, one death resulted in a charge of murder against a law enforcement official, and the remaining deaths were attributed to natural causes. Arbitrary arrest and detention remain problems.

The International Committee of the Red Cross had full access to detention facilities, including those in Abkhazia; such access included private meetings with detainees and regular visits. In the summer of 2004, the Ministry of Justice abolished the NGO monitoring board responsible for monitoring respect of human rights in detention facilities. Although it has been reestablished, by the end of the year, it was not yet carrying out its functions. 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. In 2004 the independent media showed a marked increase in self-censorship on issues relating to the Government. Media in general became significantly less critical of the Government. On some occasions, the president criticized the media for reporting on certain issues and the media responded by ceasing these reports. Few newspapers maintained editorial independence and commercially viability. Newspapers continued to struggle in the regions, due largely to the population's poverty.

The government generally observes the right of peaceful assembly and association. However, on January 11, 2004, police used excessive force to disperse demonstrators blocking a highway to protest a detention. Once the highway was clear, police continued to pursue demonstrators and kicked and beat them with clubs prior to placing them in vans. Seven of the demonstrators were sentenced to three months preventive pre-trial detention. According to human rights groups, this is the first time anyone has ever been charged under this article for participating in a peaceful demonstration. On July 1, 2004 Tbilisi riot police violently broke up 40-50 peaceful protestors in front of Tbilisi City Hall. In a July 6 closed meeting between President Saakashvili and the NGO community, the President condemned the excessive use of force, ordered the resignation of the riot police chief, and promised to launch an investigation into the matter. On September 2, 500 riot police violently dispersed a peaceful protest in the Batumi central market protesting the removal of the market to a new location. Riot police violently beat and kicked several participants, including Parliament member Koba Davitashvili, then loaded participants up in vans. Eleven participants were charged and placed in 3-month pretrial detention for disrupting public order.

In 2004, the status of religious freedom improved. At the end of 2004, the trial continued of excommunicated Georgian Orthodox Priest Father Basili Mkalavishvili, a major instigator of harassment of religious minorities, along with six of his colleagues. Also in 2004, the Jehovah’s Witnesses were allowed to register as a nongovernmental organization. In 2002 the group had had their registration revoked by the Georgian Supreme Court, and had experienced confiscation of their literature by customs officials as well as physical attacks. The Jehovah's Witnesses reported no physical assaults in 2004 and no difficulties in importing literature. As compared to previous years, no religions reported physical violence during 2004. Some religious groups continue to complain of verbal harassment and threats, and several continue to experience local governmental obstruction in construction of edifices of worship.

In 2002, the Government signed a Concordat with the Georgian Orthodox Church, granting the Church legal status and giving it particular privileges such as exemption from taxation. According to Georgia's Civil Code, religions may not register as entities subject to private law. Thus, currently, only the Georgian Orthodox Church has been granted legal status within Georgia. At the end of 2004, the government began discussion of an amendment to the Civil Code that would allow religions to register as entities subject to private law, thus granting them legal status without a contentious debate over what constitutes a "religion."

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 obligations and the Organization for Security and Co-operation in Europe (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 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."

Georgia is committed to negotiating a peaceful settlement to the conflict in Abkhazia, despite Abkhazia's unilateral declaration of independence in November 1994, its adoption of a constitution, its holding of presidential elections in October 1999, 2001 and 2004, 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.

The Georgian Government and representatives of the Abkhaz separatist regime have cooperated with the UN and OSCE, which has two officers in Sukhumi.

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 border monitoring, developing democratic institutions and encouraging respect for human rights throughout Georgia.

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 Intermediate Range Nuclear Forces Treaty (INF). Although it does not actively participate in the Treaty’s Special Verification Commission, Georgia continues to observe the Treaty’s obligations.

Georgia ratified the Conventional Armed Forces in Europe Treaty (CFE) 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. 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 1999 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 armored combat vehicles (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 facility. Additionally, Georgia and Russia have not yet reached agreement on the duration of the remaining Russian presence at bases at Batumi and Akhalkalaki, a failure at least partially attributable to various Russia delays. Sporadic discussions between Russian and Georgia at senior and technical levels since the OSCE’s Porto Ministerial in December 2002 have not resulted in an agreement. Russia's TLE withdrawal costs were reimbursed in the fall of 2003.

Georgia has submitted Confidence- and Security-Building Measures (CSBM) annual data declarations for years 1996 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), and International Military Education and Training (IMET). Other countries have also provided some military assistance, but the Georgian military remains ill-equipped. The $64 million Georgia Train and Equip Program, which was completed in 2004, sought to accomplish the broader goal of military reform, while enhancing Georgia's capability to secure control of its territory and combat terrorism. The U.S. has begun a new military training program in Georgia aimed at supporting Georgia's efforts to assist in the stabilization of Iraq, where Georgia currently has 850 troops.

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 (NPT) as a non-nuclear-weapon state on March 7, 1994. Georgia signed its NPT safeguards agreement, as well as the Additional Protocol, with the International Atomic Energy Agency on September 29, 1997, but this has not yet entered into force. Georgia is a state party to both the Convention on the Prohibition of the Development, Production, Stockpiling and Use of Chemical Weapons and on Their Destruction (CWC) and the Convention on the Prohibition of the Development, Production and Stockpiling of Bacteriological (Biological) and Toxic Weapons and on Their Destruction (BWC), which call respectively for the elimination of chemical, bacteriological and toxic 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. Georgia, as a member of both the International Science and Technology Center (ISTC) and the Science and Technology Center in Ukraine (STCU), participates in cooperative civilian research projects involving former weapons scientists. The Department of State’s Bio-Chem Redirect, BioIndustry Initiative, and Science Centers programs as well as the Department of Energy work through these science centers in cooperation with Georgia to advance mutual nonproliferation principles. 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.

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 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 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 United States and the European Union are supporting and co-financing the Regional Environmental Center (REC) co-founded by Georgia, Armenia, and Azerbaijan, and located in Tbilisi. REC is an 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.

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.

Since 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 2004, Georgian internal troops continued to carry out operations to rid the Pankisi Gorge of terrorists. The U.S. provided USD 17 million in FY 2004 to enhance Georgia's ability to control its borders. Georgia is a party to six of the twelve international terrorism 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 eleven other Soviet republics, including Georgia, 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 Georgia, signed an agreement that assigned to each of the Newly Independent States a share of all the external assets and foreign debt of the FSU.

In 1992, Russia sought to replace the joint and several liability principles by seeking full liability for the foreign debt of the FSU in return for all the external assets of the FSU. On September 14, 1993, Georgia signed a "double-zero option" agreement with Russia under which Russia agreed to assume Georgia's share of the foreign debt of the FSU in exchange for Georgia's share of the FSU's external assets.

Please see section 498A(a)(9) of the Russia assessment 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 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. The President has not made such a determination at this time. However, there continue to be 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. The President has not made such a determination at this time. 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. The President has not made such a determination at this time.

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.