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U.S. Department of State

Diplomacy in Action

II. Country Assessments and Performance Measures - Georgia


U.S. Government Assistance to and Cooperative Activities with Eurasia
Bureau of European and Eurasian Affairs
January 2007
Report
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Country Overview

Country Facts
  • Map of GeorgiaArea: 26,216 sq mi (67,900 sq km), slightly smaller than South Carolina 
  • Population: 4,661,473 (July 2006 est.) 
  • Population Growth Rate: -0.34% (2006 est.) 
  • Life Expectancy: Male 72.8 yrs., Female 79.87 yrs. (2006 est.) 
  • Infant Mortality: 17.97 deaths/1,000 live births (2006 est.) 
  • Gross Domestic Product (GDP): $16.03 billion (purchasing power parity, 2005 est.)
  • GDP Per Capita Income: $3,400 (purchasing power parity, 2005 est.) 
  • Real GDP Growth: 9.3% (2005 est.)

Overview of U.S. Government Assistance

In FY 2006, the USG provided an estimated $153.01 million in assistance to Georgia, including:

  • $18.88 million in democratic reform programs; 
  • $23.13 million in economic reform programs; 
  • $20.03 million in humanitarian programs; 
  • $75.67 million in security, regional stability, and law enforcement programs; 
  • $10.88 million in social reform programs; 
  • $4.42 million in cross-sector and other programs; and 
  • Privately donated and USG excess humanitarian commodities valued at $13.29 million.

FY 2006 Assistance Overview

U.S. STRATEGIC INTERESTS & FOREIGN POLICY PRIORITIES

Located at a strategic crossroads between Europe, Russia, the Middle East, and Asia, Georgia is at the center of two core U.S. foreign policy interests. First, on "the frontier of freedom," Georgia can serve as a model of reform in a region that largely fails to meet international standards for democratic processes. Second, Georgia's location positions it as a transit corridor for Caspian energy and other goods and, as part of a Southern Caucasus Corridor; it already brings energy supplies to Europe and the world. If Georgia continues to improve its security, rule of law, and its investment environment, it will enhance trade across its borders and enable the world to diversify energy supplies.

The U.S. Government (USG) has five foreign policy priorities in Georgia. First, the U.S. seeks to assist the Government of Georgia (GOG) in consolidating and advancing the array of democratic reforms it has undertaken since the November 2003 Rose Revolution. Second, the U.S. supports Georgia's territorial integrity and the peaceful resolution within Georgia's internationally recognized borders to separatist conflicts in Abkhazia and South Ossetia. Third, the U.S. advocates Georgia's integration into the Euro-Atlantic community. Fourth, the U.S. encourages Georgia's economic development, growth, and prosperity through the continued implementation of free-market reforms and increased investment. Finally, the U.S. encourages the GOG's efforts to attain energy security by diversifying energy sources and continuing energy sector reforms.

The Millennium Challenge Corporation signed a compact with the Government of Georgia in 2005 for $295 million over a five-year period to foster economic development and rehabilitate regional infrastructure. In April 2006, Georgia received its first disbursement of funds through the Compact.

FOREIGN ASSISTANCE PRIORITIES

USG assistance supports foreign policy and development objectives. Throughout the year, democratic gains continued with successful local government elections and the consolidation of municipal government bodies. USG assistance trained these newly elected officials and supported further reform. Economic growth assistance focused on improving the overall business climate. In 2006, Georgia was ranked 37 out of 175 countries in the World Bank's Doing Business Top Performer Report, moving up from 112 in 2005. Following the Russian embargo of Georgian agricultural, wine, and water products, the GOG identified alternate markets to export their goods. USG assistance helped reduce Georgia's dependency on Russian energy imports by expanding Georgia's trade with its neighbors and identifying new strategies for energy security. U.S. support for the European Neighborhood Policy process through regional conferences to promote civil society cooperation helped Georgia produce the Action Plan that it signed with the European Union (EU) in November. The USG's continued commitment to Georgia's territorial integrity was reinforced through confidence building measures such as the creation of a business development center in South Ossetia and joint U.S. study tours for young Abkhaz and Georgian professionals.

OPERATING ENVIRONMENT

The events of the last year continued to provide an excellent environment for U.S. assistance. The GOG has implemented reform at a tremendous pace across every sector since the Rose Revolution. In 2006, the GOG drafted, passed, and implemented local governance legislation. In October, it held local government elections that devolved power to local authorities for the first time in Georgia's history. The GOG continued its drive against corruption, with the World Bank naming Georgia the top anti-corruption reformer in its annual "Anti-Corruption in Transition" report. Reforms in the education sector resulted in school board elections for the first time ever. Tax reforms produced a five-fold increase in state budget revenues. The GOG is committed to integrating into Euro-Atlantic institutions and with U.S. assistance has made significant progress in meeting international standards for good governance, a free-market economy, and social stability. Moreover, U.S. assistance has also had a multiplier effect, as it complements other development projects undertaken by the GOG as well as other donors.

Georgian Democratic Reform

The "radar" or "spider web" graphs below illustrate Georgia's democratic performance during FY 2005. Ratings are based on a 1 to 5 scale, with 5 representing the greatest advancement. These charts provide a disaggregated look at each of the indices and are reported to Congress on a regular basis. The gray shaded area represents 2005 performance levels, while the two dark lines indicate how each country compares in its progress vis-�-vis two standards: (1) the average of Romania's and Bulgaria's performance in each indicator as of 2002 (2002 was the year that Romania and Bulgaria - the "threshold countries" - were invited to join NATO and received favorable indications of future EU membership); and, (2) where the country stood in each indicator in 1999. Together, these charts provide a broad picture of gaps in performance, and to what extent these gaps are being filled. For more information, including a detailed explanation of each indicator shown in the graph, see USAID/E&E/PO, "Monitoring Country Progress in Central and Eastern Europe & Eurasia," No. 10 (August 2006). Found online at: http://inside.usaid.gov/EE/po/mcp.html.

Graph shows Georgian Democratic Reform:  Average of Romania and Bulgaria-2002, corruption, 1.8; electoral process, 2.5; civil society, 3.3; independent media, 2.8; governance/public admin, 1.8; rule of law, 2.3

The graph above shows Georgia's democratic reform scores in 2005* (the gray shaded area) as compared to the average of Romania's and Bulgaria's democratic reform scores in 2002 (the bold line) when they were invited to join NATO and receive favorable indications of future EU membership.

*Actual 2006 scores not yet available.

 

Graph shows Georgian Democratic Reform:  1999, corruption, 1.8; electoral process, 2.5; civil society, 3.3; independent media, 2.8; governance/public admin, 1.8; rule of law, 2.3

The graph above shows Georgia's democratic reform scores in 2005* (the gray shaded area) as compared to its democratic reform scores in 1999 (the bold line).

*Actual 2006 scores not yet available.

Georgian Economic Reform

The "radar" or "spider web" graphs below illustrate Georgia's economic performance during 2005. Ratings are based on a 1 to 5 scale, with 5 representing the greatest advancement. These charts provide a disaggregated look at each of the indices and are reported to Congress on a regular basis. The gray shaded area represents 2005 performance levels, while the two dark line indicates how each country compares in its progress vis-�-vis two standards: (1) the average of Romania's and Bulgaria's performance in each indicator as of 2002 (2002 was the year that Romania and Bulgaria - the "threshold countries" - were invited to join NATO and received favorable indications of future EU membership); and (2) where the country stood in each indicator in 1999. Together, these charts provide a broad picture of where remaining gaps are in a country's performance, and to what extent these gaps are being filled. For more information, including a detailed explanation of each indicator shown in the graph, see USAID/E&E/PO, "Monitoring Country Progress in Central and Eastern Europe & Eurasia," No. 10 (August 2006). Found online at: http://inside.usaid.gov/EE/po/mcp.html.

Graph shows Georgian Economic Reform: Average of Romania and Bulgaria-2002, external debt percent GDP, 3.5; private sector share, 3.5; share of employment in SMEs, 1.0; export share of GDP, 1.0; FDI pc cumulative, 2.0; GDP as percent 1989 GDP, 0.5; 3yr avg inflation, 4.0

The graph above shows Georgia's economic reform scores in 2005* (the gray shaded area) as compared to the average of Romania's and Bulgaria's economic reform scores in 2002 (the bold line) when they were invited to join NATO and received favorable indications of future EU membership.

*Actual 2006 scores not yet available.

Graph shows Georgian Economic Reform: 1999, external debt percent GDP, 3.5; private sector share, 3.5; export share of GDP, 1.0; FDI pc cumulative, 2.0; GDP as percent 1989 GDP, 0.5; 3yr avg inflation, 4.0

The graph above shows Georgia's economic reform scores in 2005* (the gray shaded area) as compared to its economic reform scores in 1999 (the bold line).

*Actual 2006 scores not yet available.

FY 2006 Country Program Performance

Governing Justly and Democratically

Three years after the Rose Revolution, the GOG has implemented an impressive program of governance reform, anti-corruption, and democratic institution building. In FY 2006, Parliament passed sweeping local government reforms designed to decentralize power to the regions and give local governments increased authority. In October, Georgia held successful local elections to fill new municipal and regional government positions throughout Georgia. Georgia received high marks from the World Bank and other observers as the GOG continued its aggressive anti-corruption campaign. Democratic institutions were strengthened as public service reform gained momentum and the government laid key groundwork to institute key judicial reforms.

Despite remarkable progress, work remains to be done. GOG statements calling for greater judicial independence and institution building need to be followed up with action. Implementation of the local government reform package will require the GOG to put mechanisms in place to ensure that newly-elected officials have the means and authority to serve citizens without undue influence from central authorities. Although the October elections met international standards, genuine political competition was limited. The GOG and opposition parties must take the necessary steps to capitalize on lessons learned and implement the recommendations of the election observer team from the Organization for Security and Cooperation in Europe's (OSCE) Office for Democratic Institutions and Human Rights (ODIHR), in preparation for Parliamentary and Presidential elections in 2008.

U.S. ASSISTANCE PRIORITIES

A top priority for U.S. assistance in FY 2006 was support for the sweeping government decentralization process, municipal capacity development, and local government elections support. More broadly, U.S. assistance continued to assure the long-term viability of Georgia's democratic transition through support to improve public sector transparency and accountability at the national level, advance the rule of law, foster broader public participation in political life, and promote national integration of Georgia's ethnic minorities.

DESCRIPTION OF PROGRAMS AND ACTIVITIES

The USG-funded local government reform program directly supported budget decentralization, municipal capacity development, and service improvement in targeted Georgian cities. Public budget hearings, customer service satisfaction surveys, and community outreach all spurred citizen participation. USG election assistance supported voter education campaigns, domestic election observation, and parallel vote tabulation. Political party development assistance included campaign training, party-building seminars, youth candidate training, and women candidate training.

Good governance-related activities included strengthening parliament, public administration reform, civil registry reform, and technical assistance to the President and Prime Minister. A USG advisor worked within the Georgian Ministry of Finance to facilitate comprehensive budget reforms that ensure transparency and public participation. Rule of law assistance supported reforms in the legal profession with the establishment of the Georgian Bar Association, legal education curriculum reform, enforcement of judgments, judicial training, and domestic violence legislation.

Civil society was supported through NGO grants, direct assistance to the Georgia Foundation for Strategic and International Studies (GFSIS), a Tbilisi-based think tank, and numerous participant training opportunities. Media assistance included multiple professional development activities and support of the Journalism School at the Georgian Institute for Public Affairs (GIPA), international visitor programs, television cooperatives, and visiting U.S. specialists.

OUTPUTS

U.S. assistance facilitated the adoption of a package of decentralization legislation, trained 2,500 citizens on the new system of local governance, and distributed 30,000 brochures on the reform to stakeholders nationwide. As a result of USG assistance, more than 1,000 people participated in public budget hearings in 14 cities, and more than 12,000 citizens took part in local economic development planning.

Local elections assistance included voter education and get-out-the-vote campaigns in Tbilisi with eight billboards, 20,000 posters, and 250,000 door-hangers. Over 5,500 Georgian election observers in all 3,100 electoral precincts nationwide monitored the October elections; two Georgian NGOs conducted a parallel vote tabulation effort in the country's five largest cities.

At the national level, the Offices of the President and Prime Minister benefited from technical assistance, training, and information technology. A civil registry information technology strategy implementation plan was developed, 15 civil registry offices were refurbished, and the civil registry archive for 1994-2004 was digitized. With U.S. assistance, the Georgian Ministry of Finance released a Citizen's Guide to the 2007 budget, a direct effort to increase the transparency of the budget process.

U.S. assistance allowed the Parliament to facilitate dialogue among opposition party factions, convene 12 roundtable discussions on reform legislation to facilitate stakeholder input, and host four workshops to improve parliamentary rules of procedure.

Rule of law assistance supported the establishment of the Georgian Bar Association and the Bar's adoption of a Code of Professional Ethics. The assistance enabled 1,500 people to take the judicial qualification exams, and introduced a Street Law Program to promote human rights awareness among youth. Assistance promoted the development of anti-domestic violence legislation through roundtables with judges and government officials and public service announcements. A Regional Judicial Conference brought together 30 prominent judges from across the region, and 13 U.S. and international experts to discuss judicial independence in the South Caucasus.

Political party development assistance allowed for the training of over 850 candidates and party activists (including youth and women candidates) through campaign training, party building seminars, and youth- and women-oriented party training.

U.S. assistance funded 23 civil society development grants to local NGOs to establish six youth clubs, educate 1,200 first-time voters, support 20 ecological clubs, train 600 entrepreneurs, and train 420 teachers. GFSIS conducted six modules on strategy and security, training 20 government, NGO, and media representatives. Fourteen NGOs received grants for activities focused on civic activism, national integration, and multicultural awareness. USG assistance also enabled 276 people (including 159 women) to participate in training to prevent domestic violence, public sector accountability, city management, and conflict resolution.

The Journalism School at GIPA had 22 masters' students graduate and secure jobs in media and educational institutions. International visitor programs sent 14 government specialists to the U.S. to improve outreach and press relations. Ten leading journalists attended International Visitor or co-op programs to develop programming and new skills. Visiting U.S. media specialists provided professional development to 60 press officers and 100 journalists.

PROGRAM PERFORMANCE/IMPACT

U.S. assistance directly promoted the GOG's ability to implement decentralization: local government reform legislation consolidated the number of local government units from over 1,000 to just 65; an equalization formula increased the transparency of central government transfers; and property ownership was decentralized. U.S. assistance also increased the amount of citizen participation at the local level. Fourteen partner cities now produce program budgets, holding public hearings prior to budget approval. Citizen satisfaction with municipal services in target cities has increased by 86% and fee collection rates have doubled.

Local elections in October were viewed as generally free and fair. Impartial local NGOs verified the conduct of the election, ensuring citizen oversight of the process. While minor irregularities were reported, the OSCE declared that the elections accurately reflected the wishes of the Georgian people. Political party development assistance focused on training party candidates in the run-up to the local elections, with an emphasis on women candidates. As a result, over 10% of newly elected local officials in Georgia are women.

With USG assistance, the GOG developed the civil registry to such an extent that the Central Election Commission was able to use digitized archives to increase the accuracy of local election voter lists. USG assistance allowed the Ministry of Finance to improve substantially the format and content of the state budget, bringing it closer to complying with international Public Expenditure and Financial Accountability standards.

USG assistance to the Parliament facilitated dialogue among opposition party factions, resulting in their decision to end a self-imposed boycott of parliamentary plenary sessions. Workshops and technical assistance improved parliamentary rules and procedures. Roundtables on reform legislation led to improved laws, including refinements to both the Labor and Election Codes.

Rule of law assistance enabled the Bar Association to overcome its divisions and establish itself as a formal organization. Previous USG support for the judicial qualification exams enabled the High Council of Justice to develop an effective system of exam administration; in September the Council administered the exams without U.S. support. In June, Parliament adopted the Law on Domestic Violence; the government drafted an action plan to implement it. Forty Georgian law students are currently teaching human rights at 18 high schools throughout Georgia.

As a result of USG assistance, the Procuracy established a fully-functioning Inspector General (IG) unit, developed an interactive trial advocacy training curriculum and case study for Georgian prosecutors, and conducted trial advocacy training for 410 prosecutors from throughout Georgia. Fully one-third of the 144 Georgian Procuracy interns selected to date for full-time positions with the Procuracy have risen in its ranks to acquire positions of significant responsibility. Furthermore, 85% of the current interns are expected to be hired permanently on expiration of their one-year internships.

USG-funded grants supported Georgian civil society organizations and their activities in various areas, including enabling 5,500 Georgians to participate in civic integration events. GFSIS continued to educate mid-level staff in government and civil society, inform senior policy makers, and advance Georgia's Euro-Atlantic aspirations.

Media programs focused on developing a well-trained cadre of professional journalists, as well as training Georgian government officials on strategies and techniques for media engagement. Media development contributed to Georgia's improved ranking in Journalists Without Borders ranking media freedom index, improving ten points in 2006.

MEASURES OF PROGRAM EFFECTIVENESS

In order to determine how U.S. Government assistance affects a country, U.S. embassies set targets for improvement called "performance indicators." Data for these indicators are collected by research institutes, embassies and international organizations. By examining data over time, U.S. policymakers can better understand whether or not assistance programs are having the intended impact.

Two important indicators are cited below in the area of Governing Justly and Democratically. In the charts, the "Baseline" refers to a starting point from which to measure progress or regression over time. The embassy and its partner organizations then agree on a "Target" figure that they hope to achieve as a result of U.S. assistance programs. The "Rank" figure is the resulting measurement. "FY" stands for "fiscal year," the period of the U.S. budget that runs from October 1 - September 30 of the following year. "CY" stands for "calendar year," or January 1 - December 31.

Performance Indicator: National Democratic Governance Index (formerly Governance Index). This indicator measures the stability of the governmental system; the authority of the legislative bodies; decentralization of power; the responsibilities, election and management of local governmental bodies; and legislative and executive transparency. (7-point scale: 1 indicates good governance, 7 indicates poor governance) The data upon which this ranking is based comes from the previous calendar year. Source: Freedom House, Nations in Transit. Found online at http://www.freedomhouse.org/research/nattransit.htm .

CY 2002 Baseline

CY 2005 Rank

CY 2006 Rank

CY 2007 Target

5.00

5.50

5.50

5.25



Impact of U.S. Assistance on the Above Indicator: This index did not show progress in 2006 due to the 12-month time lag between data collection and publication, and because of the lack of resolution of the frozen conflicts, a factor weighed by the index. It is expected that next year's ranking will show improvement.

Performance Indicator: Independent Media Rating. This indicator addresses the current state of press freedom, including libel laws, harassment of journalists, editorial independence, the emergency of a financially viable private press, and Internet access for private citizens. 7=lowest, 1=highest; data based on previous calendar year. Source: Freedom House Nations in Transit. The data upon which this ranking is based comes from the previous calendar year. Found online at: http://www.freedomhouse.org/research/nattransit.htm

CY 2002 Baseline

CY 2005 Rank

CY 2006 Rank

CY 2007 Target

3.75

4.25

4.25

4.25



Impact of U.S. Assistance on the Above Indicator: The independent media rating is not as high as it could be, in part as a result of lack of editorial independence. However, the sector remained stable in 2006, without noticeable progress or backsliding.

Performance Indicator: Judicial Framework and Independence Rating (formerly Constitutional, Legislative, and Judicial Framework Rating). Highlights constitutional reform, human rights protections, criminal code reform, judicial independence, the status of ethnic minority rights, guarantees of equality before the law, treatment of suspects and prisoners, and compliance with judicial decisions. (7-point scale: 1 is the highest, 7 is the lowest). The data upon which this ranking is based comes from the previous calendar year. Source: Freedom House, Nations in Transit 2006, found online at: http://www.freedomhouse.org/research/nattransit.htm

CY 2002 Baseline

CY 2005 Rank

CY 2006 Rank

CY 2007 Target

4.25

5.00

4.75

4.25



Impact of U.S. Assistance on the Above Indicator: During 2006, U.S. assistance advanced reforms to the High Council of Justice. The Prosecutor General was removed and more judges were appointed. Now, half of the High Council's members are judges. The judiciary's budget was increased from GEL (lari) 20 million to GEL 33 million. For the first time without USG assistance, the HCoJ administered the first part of the judicial qualification exam with 550 taking the exam and 199 passing. The pass rate was 21.6%, consistent with previous exams. After completing the second part of the exam, over 110 judges were appointed; an increase of approximately 20% from 2005.

Economic Growth

Georgia's economy is expected to grow by up to 10% in 2006, despite Russia's imposition of politically-motivated embargoes that greatly reduced wine, water, and agricultural exports, severed transport links, and closed the border crossing between Russia and Georgia. Georgia's strong commitment to economic reform resulted in the designation of the world's top reformer in the World Bank's Doing Business Index. Reforms have led to increased tax revenues, greater public investment and social sector expenditure, an improved business environment, and reduced corruption. Still, more than 40% of the population lives below the poverty line and many people still rely on subsistence agriculture.

USG assistance contributed to an increase in domestic electricity production and improved management of electricity distribution, which has achieved 98% reliability for 24-hour a day service. Due to unreliable natural gas supplies and decaying energy supply networks, Georgia has had to carefully plan its use of energy, diversify sources, and improve the efficiency of its distribution systems, all of which continue. The main source of future growth, poverty reduction, and employment will come from domestic and international private investment and increased exports. The Government's challenge is to implement existing legislation, continue the fight against corruption, undertake new judicial reforms, and continue to improve the business climate. Government expenditures and monetary policy should more effectively support the objectives of growth and employment.

U.S. ASSISTANCE PRIORITIES

USG assistance promotes economic growth through the development of transparent and consistent economic policies that support free and open competition, and encourage growth through increased local and international investment. The USG seeks to help Georgia develop and implement good energy policy, diversify energy sources, and foster a commercially viable, stable, competitive energy market. Tax and customs administration support ensures adequate revenue to the Government, without stifling economic activity. Infrastructure improvements are needed to improve road transport and energy supplies. The USG supports small and medium enterprises, which helps create jobs and increase economic activity. USG assistance supports macroeconomic stability and the securitization of Georgia's debt portfolio to limit inflation. It also helps to attract foreign investors and facilitate the banking sector's ability to manage risk. Land privatization, improved business and agricultural education, statistics collection, public administration, improved reliability of energy supplies, and access to micro-credit for farmers help the rural areas of Georgia. USG assistance is focused on building up exports of more diverse and more globally competitive products that increase the flow of commerce within the country and to export markets. The methodologies used to commercialize electricity distribution will be adapted to water utilities, thereby reducing their burden on the GOG and encouraging eventual privatization.

DESCRIPTION OF PROGRAMS AND ACTIVITIES

In FY 2006, training and advice were provided to the Ministry of Finance on tax procedures, customs administration, debt management, and budgeting and controls. A management contract with Georgia's largest electricity distribution utility worked to increase its commercial viability. USG-funded advisors in the Ministry of Energy helped generate plans and policy for guiding and managing the energy sector.

The Central Bank received assistance in the formulation of monetary policy, banking regulation, and exchange rate policy. USG-funded advisors assisted the Ministries of Justice, Economic Development, and Economic Reform to create effective commercial legislation and to improve the business climate in areas such as licensing, registration, bankruptcy, real and personal property, privatization of government assets, and microfinance. The Ministry of Environmental Protection received assistance in managing national parks and watersheds.

The USG supported rural communities to develop economic growth plans such as creating business plans, gaining access to credit, and obtaining contracts for power and gas. USG assistance to banks helped to finance these small and medium enterprise activities. USG assistance for Georgia's infrastructure rehabilitated a main road in Samskhe-Javakheti, invested in water supply, sanitation, irrigation and other projects, and improved the main North-South gas pipeline. USG funded technical assistance created institutions to support lending, such as a credit bureau. Universities, business associations, and NGOs provided training in business skills and developed reform advocacy potential. The USG provided recommendations to streamline tax, business and land registration procedures, develop new draft construction licensing procedures, review border crossings procedures, and assess tax administration capacity.

OUTPUTS

USG assistance aided the development of a draft ten-year agricultural sector strategy, as well as legislation and regulations related to customs and tax codes, land registration, and microfinance operations. Eight public/private conferences were held to discuss these reforms. Surveys of all 161,700 parcels of previously un-surveyed government land were completed; 37,000 new parcels of land were registered for privatization; boundaries for 3,500 leased parcels of land were corrected; privatization plans and training for 525 government councils were completed; and consultation services were provided to more than 4,500 people.

USG assistance improved the ability of hazelnut, mandarin, bay leaf, herb, apple, and dairy consolidators to store, process, package and market their goods. Support enabled agricultural associations and private sector nurseries to introduce new crops such as blueberries and green tea, as well as superior potato seed varieties. Training and support was provided to 169 rural communities to create and fund community-level development plans, affecting approximately 153,220 individuals. Six business support organizations were established around the country in cooperation with leading Georgian business associations. These entities provided business skills training to 824 clients during their first months of operations, and prepared nine policy papers on issues such as tax and customs regulations. In addition, more than 4,733 individuals took part in over 569 training events. Guarantees were provided to two financial institutions, which will allow them to access a total of $14.5 million in new lending capital from international markets.

Training was provided to at least 2,000 individuals to improve teaching methods, integrate agriculture in the curriculum, and establish Future Farmers of Georgia youth groups. USG support was provided to approximately 20 government statisticians to improve Georgia's ability to update agricultural information.

Revenues under the USG-managed United Energy Distribution Company (UEDC) increased from 6.7 to 12 million GEL per month, while losses were reduced from 35% to 27%, and monthly electricity use (almost nationwide) was reduced from 190 to 150 M kwh. The USG supported the Ministry of Energy in developing two strategic plans, a management information system, a policy analysis model, and three investment pre-feasibility studies. The USG trained 120 GOG employees in energy policy, market development, tariff-setting, and general economics, 85 employees in renewable and energy efficiency technologies, 40 employees in energy resource planning, nine power producers in business plan development, and two banks in power investment analysis. One small hydro power plant (SHP) and one natural gas distribution project were constructed. USG investments of $700,000 leveraged $4.5 million in loans, donor grants, and equity for the rehabilitation of seven SHPs. The USG trained 28 participants from Georgia, Armenia, and Azerbaijan in integrated water resources management, and 26 in monitoring and data exchange.

The Millennium Challenge Compact with Georgia began in April 2006. The agricultural grant program received 160 grant proposals and in October, eight grants were approved for four Farm Service Centers and four Farm Primary Production Centers. The energy program selected sites on the North-South gas pipeline for emergency repairs this upcoming winter. The design to rehabilitate the road linking Tbilisi and Samtskhe-Javakheti neared completion and the project is scheduled to break ground in spring 2007. The USG negotiated an agreement with the European Bank for Reconstruction and Development (EBRD) for parallel financing of projects and selected the Poti municipal water treatment facility as its first project.

PROGRAM PERFORMANCE/IMPACT

USG assistance resulted in reforms that make it easier to start a business by lowering capital requirements, and reducing the average time to export or import products by more than one-third. Simpler tax registration procedures and unified tax and business registration processes spurred an increase in the number of registered tax payers, which nearly doubled during 2006. USG programs assisted the Ministry of Finance and the National Bank of Georgia to develop proper market-based tools to implement monetary policy initiatives, implement debt management principles, and develop capital markets and a functioning market for government securities. Land privatization moved forwarded at an impressive pace with 4,700 parcels covering a total of 39,500 hectares being placed in private sector hands.

A forum for public/private dialogue was established within the newly created, government-backed Business Information Center. The GOG's revised customs code incorporated 98% of 140 customs code recommendations made by the American Chamber of Commerce through this mechanism. A new customs code will come into force at the beginning of 2007, and a new microfinance law will provide regulatory control and oversight for microfinance operations. USG assistance to the private sector facilitated $7.3 million in agricultural exports, generated nearly $1.5 million of income in targeted rural communities, and created 1,268 long-term jobs. A strong network of Business Support Organizations and communities trained in economic planning have been developed, which will serve as the backbone for the provision of sustained training and locally empowered development planning in the future.

USG advisory and management assistance helped the GOG consolidate energy sector reforms in FY 2006. The cost-based tariff enacted this year minimized government energy subsidies and supported the commercialization of all energy institutions in the sector. Improvements at the U.S.-managed but GOG-owned UEDC allowed the utility to cover 78% of its power costs (compared to 23% one year ago), attracting a qualified buyer two years earlier than anticipated. Pre-feasibility studies attracted international donor financing, and advisory assistance and training improved strategic planning and policy-making within the GOG. In addition, Georgian Railways is now implementing a restructuring plan that is based on USG recommendations. USG assistance has helped the Ministry of Economic Development plan roads and the Ministry of Agriculture develop agricultural policy, phytosanitary and animal health standards, and statistics.

Five new SHP loans will be the first to be granted to privately-owned SHPs. This is a milestone in laying the foundation for improved access to financing for future SHP development, a key component of Georgia's local power production goals. Rural energy interventions provided 250 kilowatts of power to 200 households, and provided 1,200 households with natural gas. Projects started this year will provide over ten megawatts of new power. Regional water management agreements were signed between Armenia, Azerbaijan, and Georgia.

MEASURES OF PROGRAM EFFECTIVENESS

In order to determine how U.S. Government assistance affects a country, U.S. embassies set targets for improvement called "performance indicators." Data for these indicators are collected by research institutes, embassies and international organizations. By examining data over time, U.S. policymakers can better understand whether or not assistance programs are having the intended impact.

Two important indicators are cited below in the area of Economic Growth. In the charts, the "Baseline" refers to a starting point from which to measure progress or regression over time. The embassy and its partner organizations then agree on a "Target" figure that they hope to achieve as a result of U.S. assistance programs. The "Rank" figure is the resulting measurement. "FY" stands for "fiscal year," the period of the U.S. budget that runs from October 1 - September 30 of the following year. "CY" stands for "calendar year," or January 1 - December 31.

Performance Indicator: Ease of Doing Business (rank among countries surveyed) -- This indicator reflects the government's relative progress in enacting and implementing reforms that make it easier to register, conduct and close a business in Georgia. Source: World Bank, "Doing Business" Annual Report. 2007 Report was released in 2006. Found online at http://www.doingbusiness.org. 112 is a low number while 32 is high. 

CY 2004 Baseline

CY 2005

CY 2006 Rank

CY 2007 Target

112

100

37

32


Impact of U.S. Assistance on the Above Indicator: U.S. assistance had major impact on many of the areas of study found in the Doing Business report. USG assistance resulted in reforms that make it easer to start a business by lowering capital requirements, and brought about a reduction in the average time to export or import products by more than one-third, both of which are measurements utilized by the Doing Business Report. Other areas of assistance, such as improving tax collections and programs for judicial education and registration of property, had a less direct effect on Georgia's ranking.

Performance Indicator: Gap between Energy Production Costs and Payments for Power (Million GEL). This indicator measures the gap between the costs of producing energy by Georgian producers and exporters and the amount paid by direct customers (industry and electricity distribution companies). This amount is currently being subsidized at great budget expense by the GOG (19 million GEL). Payments for power will increase as disincentives for commercial operation are removed and monitoring of the sector improves. As a result, Georgia will have greater options for purchasing power and will reduce its dependence on one supplier. Source: Georgia Wholesale Electricity Market (GWEM) forecast. Data used to calculate this indicator is available online: www.gwem.org.ge/financial.htm for the period up to September 1, 2006 (Note: fiscal vs. calendar year due to market changes effective Sept. 1).

CY 2003 Baseline

CY 2004 Rank

CY 2005 Rank

FY 2006 Rank*

58 M GEL

55.9

28

15.3


Impact of U.S. Assistance on the Above Indicator: USG influence was greatest in electricity distribution management reform and Ministry of Energy advisory assistance. UEDC collections increased from 6.7 to 12 M GEL (65% to 73%). USG technical assistance and training to the Ministry of Energy and GOG electricity regulator in tariff setting methodology resulted in the regulator approving higher tariffs that increased sector liquidity. This combination of improvements resulted in UEDC payments for power rising from 2.1 to 7.5 M GEL. UEDC was the only company in Georgia whose payments for locally produced power improved significantly during the last fiscal year.

Investing in People

Throughout the three years since the Rose Revolution, the Government of Georgia (GoG) has implemented major reforms of its health, education and child welfare systems. In FY 2006, the GOG continued to implement sweeping reforms of its health, education, and child welfare systems. The Ministry of Health continued efforts to improve the legislative and policy framework governing provision of services, reorganize and strengthen its institutional capacity, implement and institutionalize national health accounts and information systems, and improve reproductive health and family planning services. New general and higher education legislation established a system of school governance and enabled higher education institutions to meet international standards, implement admissions testing, and provide a systematic process for accrediting schools or faculties. The Ministry of Education also continued to implement comprehensive child welfare and deinstitutionalization reform. A persistent challenge is ensuring that the rapid pace of reforms does not harm sustainability, efficiency, and the ability to provide services to the most vulnerable.

U.S. ASSISTANCE PRIORITIES

Improvements in the social sector can greatly improve citizens' perception of quality of governance and can contribute to the growth of civil society. A top priority of USG assistance was to support the Government's far-reaching reforms in the health, education, and child welfare sectors. USG assistance focused on increasing the population's access to exchange programs, educational opportunities, English-language resources, and technical assistance. The USG committed resources to improve and deliver housing, health, and education services to those affected by the conflicts in Abkhazia and South Ossetia.

DESCRIPTION OF PROGRAMS AND ACTIVITIES

The health reform program provided direct assistance to the Ministry of Health to strengthen its organizational structure, improve health financing, and initiate a hospital accreditation system. Other USG-funded health activities focused on reducing the transmission and impact of HIV/AIDS, preventing and controlling infectious diseases (i.e. avian influenza), expanding and improving access to health services in maternal and child health, and increasing awareness of healthy reproductive behavior through the use of family planning.

USG education projects assisted the Ministry of Education in decentralizing its general education system by establishing regional bodies of educational management and training school boards of trustees, developing and institutionalizing an accreditation system for general and higher education institutions, and building the capacity of the Ministry to implement education programs. USG assistance provided outreach services to street and at-risk children and raised the level of attention to these previously neglected groups so that they would be considered in GOG reforms of the child welfare system. The USG also funded shelter and school rehabilitation projects and allowed for durable housing solutions by providing housing vouchers to targeted groups of vulnerable internally displaced persons (IDPs).

American Corners and library development projects enhanced the Georgian public's access to information by providing books, Internet access, and information resources. USG assistance funded English-language training at secondary schools and universities to improve teaching methodologies and raise English language levels. U.S. -style high schools and graduate schools offered western-standard education and helped disseminate modern teaching practices A democracy-oriented small grants program supported civil society through youth education and mobilization activities.

OUTPUTS

USG assistance in the health sector enabled 64,541 patients to visit primary health care centers. Outreach and peer-led activities focusing on behavioral change to reduce sexually transmitted infections (STI) and HIV benefited 27,088 high-risk individuals. Hundreds of thousands of people received over 70,000 STI-HIV prevention messages and materials. Distribution of free contraceptives increased from 25 to 145 sites. The USG response to reported outbreaks of avian influenza resulted in the distribution of 1,600 Personal Protective Equipment kits, development of guidelines on surveillance and control of human cases of avian influenza, and training of 339 health personnel.

In the education sector, USG assistance contributed to the full refurbishment of ten educational resource centers (ERCs); training of 68 ERC directors in human resource management and administrative law; institutionalization of the State Accreditation Service (SAS), and a draft strategic plan for the SAS in 2007- 2009. In addition, assistance led to an increase in the number of national standards and criteria for accreditation of higher education Institutions, training of quality assurance teams at ten universities, and consultation and training of 20 Ministry of Education officials. The USG also supported training for 215 people in vocational education, technology-based learning, disabilities, contraceptive logistics, safe motherhood, and breast cancer detection.

The American Academy graduated 41 students (ten matriculated to U.S. colleges). The faculty trained 100 rural Georgian teachers in modern methodologies. GIPA graduated 116 Masters Degree students. GFSIS conducted eight seminars on security, policy, and democratic governance for 21 government officials, media specialists, and civil society members.

Through USG assistance, 1,800 street and at-risk children and their families received direct rehabilitation services, 50 day care center staff received service delivery training, and 700 elementary education classes were held. USG assistance provided vouchers for 94 vulnerable IDP families to purchase houses.

American Corners were established in a Tbilisi youth center and in the Batumi Central library. The American Corners offered Internet access and English references to readers. USG assistance allowed 500 titles to be distributed to 12 universities, theaters, libraries and government offices, enhancing their existing collections and improving their access to modern technical information. As a result of USG programs, 90 secondary schools in nine regions of Georgia piloted new English textbooks and more than 350 Georgian teachers of English were trained in new approaches to teaching. More than 65 schools opened English resource rooms, 18 schools established computer centers, and almost 90% of schools started English clubs. The U.S. funded summer schools, Girls Leading Our World camps, and ecology camps where more than 350 girls and boys received training in leadership, life skills, critical thinking, environmental awareness, and conflict resolution. In youth clubs, 1,095 youth participated in trainings in conflict transformation, human rights, civil society and advocacy, student self-governance, and business.

PROGRAM PERFORMANCE/IMPACT

Health sector assistance produced improvements in health financing and hospital accreditation. Not only has the GOG become a regional leader in preparation of national health accounts, but data from these accounts enabled the GOG to increase health care funding by 20% percent in 2006. USG assistance also contributed to the successful introduction of hospital accreditation to the national health agenda.

Among specific health activities, USG assistance helped to increase modern contraceptive prevalence from 19% percent to 28%. The use of condoms among prostitutes increased from 84.8% percent in 2004 to 89.2% in 2006. Georgia became the first country to pilot a World Health Organization course in modern evidence-based obstetric and neonatal care, resulting in a reduction of Caesarean sections from 25% to 10% of all deliveries; reduction of episiotomy rates from 69% to 9.4%, and an increase in partner-attended deliveries from 0% to 91%. The establishment of tuberculosis rooms in primary health care facilities resulted in an increase from 28% to almost 98% in medical staffs' abilities to directly observe and verify patients' daily drug intake.

USG assistance contributed to the transformation of general education into a democratic and decentralized system that uses information management for informed decision-making. Accreditation of higher education institutions helped reduce the number of institutions from 110 in 2004 to 41 in 2006 while at the same time increasing the quality of education.

American Corners provide Internet service and information on the U.S. to at least 500 students during the year. Fifteen presentations by Americans increased mutual understanding and provided access to native English-speakers to students of English. The donation of library books provided additional resources to over 1,000 readers and created stronger linkages between the USG and 12 local institutions.

USG-funded programs allowed NGOs to improve their skills in organizational management, project planning and management, fundraising and resource identification, and networking. As a result, 32 NGOs throughout Georgia received training and attended seminars conducted by USG volunteers. Fifteen organizations received grants to conduct projects including, but not limited to, focusing on global youth service day, youth camps and forums, training for orphans in leadership and entrepreneur skills development, and tourism development.

The American Academy of Tbilisi (AAT) continues to prepare Georgia's future leaders for study at U.S. and European universities. AAT's western-standard faculty provided professional development for educators in Georgia's regions. GIPA provided Masters Degrees in law, public administration, foreign policy, journalism, and educational development. The Kvali Educational Advising center in Tbilisi State University improved student access to American universities and colleges through preparation and guidance on exams offered in the U.S. and Europe.

MEASURES OF PROGRAM EFFECTIVENESS

In order to determine how U.S. Government assistance affects a country, U.S. embassies set targets for improvement called "performance indicators." Data for these indicators are collected by research institutes, embassies and international organizations. By examining data over time, U.S. policymakers better understand whether specific assistance programs are making their intended impact and, if necessary, how to adjust these programs to improve the impact.

Two important indicators are cited below in the area of Investing in People. In the charts, the "Baseline" refers to a starting point from which to measure progress or regression over time. The embassy and its partner organizations then agree on a "Target" figure that they hope to achieve as a result of U.S. assistance programs. The "Rank" figure is the resulting measurement. "FY" stands for "fiscal year," the period of the U.S. budget that runs from October 1 - September 30 of the following year. "CY" stands for "calendar year," or January 1 - December 31.

Performance Indicator: The Rate of Immunization. This indicator measures the percent of children under 1 year of age who receive the full course (3 doses) of DTP vaccine. This is a proxy indicator for measuring full immunization coverage for children under 1 year of age. Sources: United Nations Children's Fund (UNICEF) and the GoG. 

FY 1997 Baseline

FY 2004 Percent

FY 2005 Percent

FY 2006 Target

85%

80.5%

80.9%

84%



Impact of U.S. Assistance on the Above Indicator: The National Center for Disease Control reported increased immunization coverage rates in 2005 vs. 2003-2004 data. (The 2006 coverage rates will be available by early 2007). The FY 2006 target is lower than the baseline because of improved quality of data collection. USG assistance helped procure 50% of vaccine and injection safety supplies needed for the 2007 National Immunization Program. These supplies included: 78,000 twenty-dose BCG, 16,000 ten-dose DPT, and 16,000 ten-dose OPV vaccines, 306,000 0.5 ml Auto Destructive syringes; 32,500 BCG syringes, 4,800 2 ml reconstitution syringes and 2,450 safety boxes.

Performance Indicator: Education Spending as a Percentage of Public Expenditure. This indicator measures total annual spending on education as a percentage of the national budget. Source: the GoG.

FY 2002 Baseline

FY 2004 Percent

FY 2005 Percent

FY 2006 Target

5.1%

3.7%

2.5%

10.39%



Impact of U.S. Assistance on the Above Indicator: While the percentage of public expenditure in education decreased in FY 2005, this indicator is misleading. First, a greater commitment to education by the GOG has significantly increased funding for general and higher education. However, as the entire budget has expanded, the percentage spent on education has decreased but not the amount. It has increased. In addition, both an increase in the amount and in the percentage of the budget is expected to be reflected in FY 2006.

Peace and Security

Georgia continues to reform and modernize its law enforcement and military institutions against a backdrop of threats, including separatist regions, poorly secured borders, and tense relations with Russia. Recent years have seen noticeable improvements in anti-corruption, border control, and military preparedness, though some structural reforms, such as in the Ministry of Internal Affairs, still lag. The unresolved conflicts of South Ossetia and Abkhazia, which comprise roughly 20% of Georgia's territory, prevent the GOG from fully controlling its borders and restricts its efforts to fight terrorism and crime. The USG remains actively engaged in finding a peaceful resolution to these conflicts within Georgia's internationally recognized borders and that supports Georgia's territorial integrity.

U.S. ASSISTANCE PRIORITIES

U.S. assistance priorities in security, regional stability, and law enforcement focus on helping key institutions develop in keeping with international standards. First, the USG works with the Forensic Lab, Patrol Police, Police Academy, Procuracy, Defense Bar, and Ministry of the Interior to create a democratic legal framework and to increase the professionalism of Georgian legal and law enforcement officials. Second, USG agencies support the Georgian Border Police and Customs Service in their efforts to fight smuggling, increase revenue, and improve border control. USG assistance helps the GOG to combat terrorism and transnational crime, and to prevent the spread of weapons of mass destruction, biological weapons, and pathogens. Third, the USG assists the Georgian military to increase its military preparedness and to help it conform to NATO standards. In September 2006, NATO offered Georgia "Intensified Dialogue," an important step in Georgia's integration into the Euro-Atlantic community. Finally, the USG remains actively engaged in finding a peaceful resolution to the conflicts of South Ossetia and Abkhazia that supports Georgia's territorial integrity.

DESCRIPTION OF PROGRAMS AND ACTIVITIES

In FY 2006, the USG worked with the forensic lab, patrol police, police academy, procuracy, defense bar, and Ministry of the Interior to raise standards and the professionalism of Georgian legal and law enforcement officials. The USG assisted the police academy in introducing a new curriculum and management techniques, and to construct a new police academy and forensic lab. USG provided needed training and equipment to help reform the financial police. The USG supported the development of a new Criminal Procedure Code (CPC) that complies with international standards, provided criminal procedure exemplars, funded U.S. and European experts to advise the Procuracy on how to incorporate modern investigative tools and procedural safeguards, and provided Georgian IG prosecutors with study opportunities in the U.S. Additional activities included raising public awareness on trafficking issues, the provision of legal aid, establishing a trafficking victims' shelter, and improving mechanisms for victim protection.

USG border assistance security programs worked with the Georgia Border Police and the Department of Customs to develop new infrastructure for migration control, border management, and revenue collection. USG assistance is currently funding the construction of land border crossing facilities at Kazbegi and Sadaklo, a grass landing strip at Mestia, and a radar station at Anaklia, the construction of new remote border posts at seven locations along the Azeri border, and for building a new Customs Training Academy. The USG assisted the GOG to counter the threat of weapons of mass destruction by providing training and equipment. The USG also assisted the GOG develop a biological threat agent detection and response system, and implement the International Counter-proliferation Program. USG assistance is helping the GOG create a system of labs with modern technology and state-of-the-art data reporting system and electronic integrated data surveillance systems. These labs were the only facilities in the region that had the capacity and expertise to test for avian influenza during a critical period in late 2005-early 2006 when outbreaks were reported in the South Caucasus.

U.S. military advisors assisted with Georgia's strategic defense review. The UH-1 helicopter unit received support from a full-time program manager and quarterly assistance visits from the U.S. National Guard in the State of Georgia. The U.S. trained and equipped the 2nd Infantry Brigade, the majority of which will serve in operational deployments to Iraq.

USG activities also included projects to promote peace and to build confidence between the GOG and separatist regions within Georgia. At the GOG's request, the USG provided legal advisors to support the chief GOG official negotiating with the Abkhaz de facto authorities to achieve a peaceful resolution to the conflict in Abkhazia. USG-funded mine clearance activities in the Abkhazia's Ochimchire region are almost complete and the district will soon be declared landmine impact free. The USG continues to fund mine clearance operations in Abkhazia's Sukhumi region and parts of the lower Kodori Gorge. By the end of 2007, Sukhumi is expected to be declared landmine impact free. However, operations in much of the lower Kodori Gorge have had to be temporarily suspended due to safety concerns.

The USG supported the preparation of the South Ossetia Needs Assessment Study that brought together technical experts from the Georgian and South Ossetian sides to identify projects to build confidence and cooperation in the conflict zone. This needs assessment formed the basis of projects that donors pledged over ten million euros to support at an OSCE-sponsored donors conference. The USG pledged two million dollars for a business development center to provide training and technical support to Georgian and South Ossetian enterprises. The USG launched a new program through a Georgian NGO to support property restitution to South Ossetian refugees who fled Georgia in the early 1990s. This initiative supports Georgian restorative justice legislation to resolve specific land disputes between displaced Ossetians and the people now living in the communities that the displaced Ossetians left 15 years ago.

OUTPUTS

The USG trained over 100 patrol police officers in crime scene management for forensic experts, defensive police tactics, and hostage negotiations skills. Ninety police officers were trained to operate the new mobile police communication system, which provides access to the motor vehicle registration database. The forensic lab is now able to perform DNA analysis. Patrol police received 11 Hurst "jaws of life" tools. A target simulator for the Police Academy was provided which will eventually train hundreds of police officers on defensive shooting skills.

Based on what they learned during their study tour to the U.S., Georgian Procuracy IG members drafted and then adopted a Prosecutors' Code of Ethics. The three Georgian participants in U.S. trial advocacy training produced an 80-page trial advocacy manual incorporating key aspects of the new CPC with a case study tailored for Georgian practitioners. They conducted advocacy trainings using the manual for 410 prosecutors throughout the country. As part of its overhaul, the Procuracy now requires all prosecutors to make extensive financial disclosures as a condition of continued employment. The Georgian Parliament finalized and then adopted the law on anti-trafficking. The GOG established a shelter for victims of trafficking in Adjara and developed a national referral mechanism for victims of trafficking.

Forty-nine Georgian Customs and Border Police personnel were trained in the U.S. and an additional 52 received training in Georgia. The Especially Dangerous Pathogens that were located in Georgia were consolidated and secured at the temporary Central Reference Lab. Construction on a new lab has begun.

The USG continued its support for the transformation of the Georgian military into a NATO interoperable force. The USG sent 46 officers, NCOs, and military civilians from the Georgian Armed Forces and Ministry of Defense to various schools in the U.S. Additionally six training teams came to Georgia to teach in the areas of logistics, instructor development, medical care, and self-deployment.

USG assistance projects helped clear mines from 692,369 square miles of land in the region of Abkhazia, destroyed 261anti-personnel mines, two anti-tank mines, and 69 pieces of unexploded ordinance. Following the completion of USG-funded de-mining, over 40,000 ethnic Georgian IDPs returned to the Gali district. The Abkhaz Water and Wine Company is now using five hectares of cleared land outside of Sukhumi to grow grapes for wine. Fifty-five young leaders from Georgia and the region of Abkhazia participated in two-week peace-building and democracy study tour programs in the U.S. A new USG-funded business development advisor is in a region of South Ossetia, providing training and technical assistance for enterprises in the conflict zone.

PROGRAM PERFORMANCE/IMPACT

The Criminal Procedure Code was finalized in early 2006 and is expected to be passed into law in early FY 2007. With USG assistance, the Procuracy has undergone a major restructuring. It introduced open job competition procedures to select highly qualified and trustworthy professionals and initiated wide-ranging innovations designed to increase institutional accountability and transparency.

USG assistance helped the police force become more effective. The USG-funded mobile police communication system gave the police access to the motor vehicle database, drastically reducing the average wait at traffic stops and helping the police to curb car thefts. The USG-supported police academy curriculum reform is the driving force behind an increasingly democratic, modern police force. U.S. guidance was vital in supporting the GOG's efforts to transform the financial police into a modern revenue service that will improve the business climate and attract much needed foreign direct Investment.

U.S. assistance in the area of anti-trafficking helped to prevent and assist victims of trafficking. U.S. assistance also supported the GOG to develop comprehensive victim support assistance mechanisms, including the establishment of an anti-trafficking fund for victim support.

As a result ofUSG assistance, Georgia has made rapid progress in controlling its borders. The establishment of a computerized command and control system, communications upgrades, greatly improved border crossing and border post facilities, extensive training of border police and customs officials, and management improvements have increased Georgia's ability to prevent the passage of terrorists, weapons, and illegal drugs. As a result of better infrastructure at ports of entry and better trained and equipped inspectors, customs officials have seized contraband at an increasing rate and customs revenue has increased. During FY 2006 Georgia's border police and customs authorities foiled 148 smuggling attempts, detected 131 cases of forged entry documents, and increased drug seizures. The Georgian Coast Guard seized 21 ships for various infractions. Installation and operation of an improved personal identification and registration system enabled the monitoring of persons who cross the borders. As a sign of their commitment to protecting their borders, in FY 2006 the GOG increased its budget for the border patrol by 80%.

As a result of the USG working closely with the Georgian Border Police and the Customs Department to improve border security at Georgia's key land borders, the GOG increased the Border Police's funding. In addition, the Border Police have now funded two of their own border crossing projects.

USG training, equipment, and expert advice assisted the GOG develop an effective Weapons of Mass Destruction (WMD) crime detection, investigation, interdiction, and incident response capability. The Border Police, Customs, and other law enforcement officials now work more effectively together on crime scene management, criminal investigations, and border protection.

Performance Indicator: Global Trafficking in Persons Report country rankings. Tier 1 countries are those whose governments fully comply with the minimum standards of the Trafficking Victims Protection Act of 2000. Tier 2 countries are those whose governments do not fully comply with the Act's minimum standards but are making significant efforts to bring themselves into compliance with those standards. Tier 3 countries are those countries whose governments do not fully comply with the minimum standards and are not making significant efforts to do so. The data upon which this ranking is based comes from the previous calendar year. Source: U.S. State Department Global Trafficking in Persons Annual Report, found online at http://www.state.gov/j/tip/rls/tiprpt/

CY 2002 Baseline

CY 2005 Rank

CY 2006 Rank

CY 2007 Target

2

2

2

2

Impact of U.S. Assistance on the Above Indicator: Although Georgia does not yet fully comply with the minimum standards for the elimination of trafficking in persons, it is making significant efforts to do so.

Humanitarian Assistance

Throughout the year, the GOG continued to reform its public health and welfare systems. Russian embargos of agricultural products and water increased pressure on the Georgian national budget and the cancellation of energy subsidies and continuing conflicts in Abkhazia and South Ossetia severely hampered progress. Because the GOG had to focus spending on more pressing concerns, conditions for the needy, remote, and institutionalized remained extremely difficult. An extraordinarily harsh winter and severe spring flooding compounded the situation.

U.S. ASSISTANCE PRIORITIES

U.S.-funded humanitarian programs helped the GOG meet the basic survival needs of vulnerable groups through the distribution of commodities and provision of basic services. USG-funded humanitarian programs focused on the most vulnerable individuals, particularly those living in institutions or remote areas. The provision of medicine, food, clothing, and adequate shelter remained the top priority for humanitarian efforts. The second priority was assisting the GOG meet the needs of hundreds of thousands of people displaced by on-going conflicts.

DESCRIPTION OF PROGRAMS AND ACTIVITIES

For FY 2006, the U.S.-funded humanitarian program included an-ongoing commodity distribution project, an ongoing healthcare services project, small reconstruction projects, provision of food, a direct feeding "soup kitchen" project, and disaster response.

The USG funded the distribution of donated and USG excess medical and other relief items. The USG funded the operation medical clinics in Tbilisi, Tsalka, and Tsikhisjvari, a mobile medical unit, and rural nurse stations. This three-tiered program provided basic medical and diagnostic services to underprivileged and remote rural populations throughout the year.

As part of a USG plan to bolster overall disaster preparedness for the entire region, a seven container "disaster package" including items such as folding beds, blankets, and medical supplies was delivered to the U.S. Embassy in Tbilisi, to distribute as need should arise. In response to the GOG's February call for help, aid was dispatched to internally displaced persons (IDPs) affected by heavy snow in Western Georgia.

The USG funded the renovation of two ambulatory clinics and a children's boarding school. These projects repaired roofs, re-installed plumbing, and renovated living areas of institutions identified as those most in need.

Ninety-eight thousand Meals Ready to Eat left over from international donations following hurricane Katrina were transported and distributed to a new soup kitchen project conceived by the mayor of Tbilisi. This project also delivered 26,000 humanitarian daily rations donated by the U.S. military. This shipment provided a jump start to a project that today feeds 12,920 beneficiaries daily and allows 710 frail elderly and disabled persons to receive hot food delivered to their homes.

The USG funded shipping to any registered U.S. charitable organization that wished to send humanitarian commodities to local partners in Georgia. In May, a regional conference was held in Tbilisi for participating consignees from Armenia, Azerbaijan, and Georgia to share program information and best practices, and to provide a forum to discuss future cooperative projects.

OUTPUTS

In FY 2006, the humanitarian program delivered 92 surface containers and two airlifts of various humanitarian commodities valued at $13.29 million. The cost to transport, distribute, and monitor these commodities was just over $2 million. Commodities delivered included, medicine, medical supplies, shelter items, clothing, shoes, food, blankets, linens, hygiene kits, and school supplies. All disabled residents in the Zestafoni region now possess properly fitted wheelchairs. The head physicians of 11 outpatient clinics of the Gali district and the Gali central hospital received pharmaceuticals and supplies. The water and sewage system at the Kodori Children's Boarding School, home to 105 children, was completely renovated. Toilets and showers were installed and all of the schools water-damaged areas were reconstructed.

PROGRAM PERFORMANCE/IMPACT

Humanitarian programs, while significantly having an impact on the day-to-day lives of recipients, are not intended to have long-term development impacts on recipient countries. However, some aspects of these programs do help to contribute to sustainable development. The provision of relief supplies and the renovation of facilities alleviate some of the burden placed on the GOG and allow for resources to be focused on democratic and economic reforms that will enable the country to care for its own. In addition, humanitarian programs foster greater cross cultural understanding between our two countries and can stand as a foundation for future economic and cultural exchange activities. Lastly, humanitarian programs can help the local governments identify areas in need of improvement and act as a blueprint for how to begin solving social welfare problems.

FY 2006 Funds Budgeted for U.S. Government Assistance to Georgia [PDF format]



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