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U.S. Department of State

Diplomacy in Action

II. Country Assessments and Performance Measures - Moldova


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 MoldovaArea: 13,067 sq mi (33,843 sq km), slightly larger than Maryland 
  • Population: 4,066,706 (July 2006 est.) 
  • Population Growth Rate: 0. 28% (2006 est.) 
  • Life Expectancy: Male 61. 61 yrs., Female 69. 88 yrs. (2006 est.) 
  • Infant Mortality: 38. 38 deaths/1,000 live births (2006 est.) 
  • Gross Domestic Product (GDP): $8. 175 billion (purchasing power parity, 2005 est.)
  • GDP Per Capita Income: $1,800 (purchasing power parity, 2005 est.) 
  • Real GDP Growth: 6. 8% (2005 est.)

Overview of U.S. Government Assistance

In FY 2006, the USG provided an estimated $26.74 million in assistance to Moldova, including:

  • $9.38 million in democratic reform programs; 
  • $9.97 million in economic reform programs; 
  • $0.70 million in humanitarian programs; 
  • $5.19 million in security, regional stability, and law enforcement programs; 
  • $4.41 million in social reform programs; 
  • $0.10 million in cross-sector and other programs; and 
  • Privately donated and USG excess humanitarian commodities valued at $9.81 million.

FY 2006 Assistance Overview

U.S. STRATEGIC INTERESTS & FOREIGN POLICY PRIORITIES

Even though it was an early post-Soviet leader in both democratic and economic reforms, Moldova remains the poorest country in Europe. It is in the U.S. Government's (USG) interest that Moldova be democratic, prosperous, secure within its recognized borders, and free to become a full partner in the Euro-Atlantic community. Promoting political reform, rule of law and economic growth in Moldova expands democracy and furthers peace and stability in Europe. The U.S. joins the international community in seeking to ensure the territorial integrity of Moldova and to bring to an end the unresolved conflict involving an authoritarian separatist regime that controls the country's Transnistria region. In the 1999 Istanbul Commitment, Russia committed to withdraw its troops and munitions from Moldovan territory by 2002, but it has yet to do so. Limited border controls along the Transnistrian portion of the Moldova-Ukraine border threaten regional security because they are insufficient to prevent weapons proliferation, smuggling, human trafficking, and other transnational crime. Moldova has been a strong supporter of the Global War on Terrorism and Operation Iraqi Freedom and contributes a small contingent to Coalition forces in Iraq.

FOREIGN ASSISTANCE PRIORITIES

In 2005, Moldova signed an EU Action Plan, a "roadmap" of reforms to strengthen Moldova's democracy, advance its economic prosperity, and facilitate its Euro-Atlantic integration. USG assistance complements the EU-Moldova Action Plan by supporting Moldovan reform. Overall, the USG provides assistance to Moldova to strengthen rule of law, democratic governance, territorial integrity, and the economic well-being of its people and to help Moldova address cross-border threats. USG assistance supports Moldova's development of legislation and sustainable institutions that promote democratic, judicial, legislative, market, regulatory, and law enforcement reforms. In this way, the U.S. supports Moldova's becoming a vibrant, responsive democracy underpinned by the rule of law and a functioning market economy, secure in its borders, and well integrated in the region.

The USG places a priority on helping the Government of Moldova (GOM) combat corruption, strengthen rule of law, build up and balance its democratic institutions, improve governance, and make its political processes more vibrant and pluralistic. To this end, USG assistance also supports increasing the capacity of both media and civil society.

The USG also places assistance priority on helping the GOM to promote economic growth, support rural economic development, increase competitiveness of its agricultural exports, undertake the reforms necessary to attract international financing and integrate with Europe, diversify its export markets, and integrate with Southeastern Europe including through the Stability Pact and the Energy Community of Southeastern Europe. The USG seeks to reinforce Moldova's efforts to meet European Union (EU) standards and implement needed reforms outlined in its EU Action Plan.
USG security and military assistance to Moldova focuses on restructuring and reforms necessary for NATO interoperability, promoting border security, and combating transnational crime including trafficking in persons. The USG also focuses assistance on Moldovan participation in regional law enforcement programs.

The USG supports combating HIV/AIDS and other diseases, such as avian influenza, and providing social services and employment opportunities to vulnerable populations including those at risk of being trafficked. USG humanitarian assistance helps the most vulnerable, and Peace Corps volunteers advance a number of assistance priorities. In all areas of assistance, the USG seeks to expose Moldovans in the Transnistria region to independent information and democratic values and to build links between them and the rest of Moldova.

OPERATING ENVIRONMENT

Having in recent years made a strategic turn toward the West, the GOM in 2006 made progress on reforms to set Moldova on a path to European integration, renewed international financial institution funding, and an environment more conducive to investment. Since the 2005 passage of Moldova's "guillotine" law (cutting unnecessary business regulations and reducing opportunities for corruption), momentum and international support for Moldovan reform have been building. In 2006, the Board of Directors of the Millennium Challenge Corporation (MCC) approved Moldova's proposed $24.7 million Threshold Country Plan to combat corruption and designated Moldova eligible for MCC Compact consideration. In 2006, the International Monetary Fund (IMF) concluded an agreement with Moldova, and creditors rescheduled Moldova's debt via the Paris Club, thus substantially easing Moldova's balance of payments.

The business and investment climate in Moldova remained challenging, marked by entrenched corruption, excessive bureaucracy, and GOM interference. As an agricultural country, Moldova is vulnerable to external and market pressures on its primary agricultural products. Economic dependence on Russia as an export market and energy provider made Moldova increasingly subject to politically and economically motivated Russian pressure, most notably Russian bans on Moldovan wine and agricultural products and suspension of its natural gas supplies. Economic conditions since independence have encouraged extensive emigration and fostered an economy dependent on remittances that Moldova's residents use for consumption, rather than investment. Moldova's poverty also makes it a major source country of trafficked persons.

The secessionist control of Moldova's Transnistria region poses a major challenge to Moldovan statehood, territorial integrity, and political and economic progress. A renewed round of negotiations on the Transnistrian conflict began in October 2005 after a 15-month pause. Mediators from Ukraine, Russia and the Organization for Security and Cooperation in Europe (OSCE) joined the Moldovan and Transnistrian representatives at the talks and invited the U.S. and EU to participate as observers. However, negotiations made little progress on a settlement or on securing the withdrawal of Russian weapons or forces from Moldova. In response to Moldova's call for international monitoring of the border, in December 2005 the EU dispatched a Border Assistance Mission to help stem the flow of illegal trade between Ukraine and Moldova. A strict new Ukrainian-Moldovan customs regime and the Border Assistance Mission began to cut the illicit trade that supports the Transnistrian separatist regime.

COUNTRY PERFORMANCE MEASURES

Moldovan Democratic Reform

The "radar" or "spider web" graphs below illustrate Moldova'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 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 Moldovan Democratic Reform:  Average of Romania and Bulgaria-2002, corruption, 1.5; electoral process, 3.0; civil society, 3.0; independent media, 2.3; governance/public admin, 1.8; rule of law, 2.5

The graph above shows Moldova'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 Moldovan Democratic Reform:  1999, corruption, 1.5; electoral process, 3.0; civil society, 3.0; independent media, 2.3; governance/public admin, 1.8; rule of law, 2.5

The graph above shows Moldova'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.

Moldovan Economic Reform

The "radar" or "spider web" graphs below illustrate Moldova'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 Moldovan Economic Reform: Average of Romania and Bulgaria-2002, external debt percent GDP, 2.0; private sector share, 3.0; export share of GDP, 3.0; FDI pc cumulative, 1.5; GDP as percent 1989 GDP, 0.5; 3yr avg inflation, 3.0
The graph above shows Moldova'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 Moldovan Economic Reform: 1999, external debt percent GDP, 2.0; private sector share, 3.0; export share of GDP, 3.0; FDI pc cumulative, 1.5; GDP as percent 1989 GDP, 0.5; 3yr avg inflation, 3.0

The graph above shows Moldova'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

Moldova's political system is heavily centralized. The Communist Party of President Vladimir Voronin has held a majority in the unicameral parliament since 2001. Governance is not fully transparent or accountable; corruption is endemic; and the judicial system is ineffective. Nevertheless, successive governments have been elected in elections that the OSCE has recognized as generally free and fair.

U.S. ASSISTANCE PRIORITIES

In FY 2006, USG assistance in the area of democratic reform focused on helping Moldova meet its EU Action Plan commitments, increase citizen participation in economic and political decision-making, and implement reforms to qualify for MCC Compact eligibility. Assistance priorities included: encouraging the development of broad-based democratic political parties; promoting the development of independent and objective media; developing the capacity of civil-society institutions; advancing the rule of law by informing citizens of their legal rights and responsibilities; increasing the capacity of the legal system by improving the knowledge of judges, lawyers, and other legal professionals; and working with local governments to improve strategic planning, financial management, services, and transparency and citizen participation.

DESCRIPTION OF PROGRAMS AND ACTIVITIES

To help develop broad-based, democratic parties, the USG provided assistance to help Moldovans at the grass-roots level develop leadership and democratic initiatives. USG assistance focused on helping citizens build coalitions, democratic local party structures, and policy platforms.

To advance rule of law, USG assistance programs worked with Moldovan legal institutions, judges, bar associations, students, and lawyers to strengthen their awareness of legal education and reforms, particularly judicial reform and environmental law. The USG also helped the Collegium of Advocates and Judicial Training Center develop continuing legal education programs.

USG programs conducted activities to improve local governments' fiscal autonomy, efficiency, responsiveness, accountability and transparency. Work in this area focused on improving the capacity of municipal officials to implement reforms and deliver services and providing assistance to NGOs to help strengthen citizen participation.

USG assistance programs enhanced civic participation through activities to show citizens how they could create tangible change in their communities through civic activity and democratic practices. Assistance focused on building the capacity of community activists and NGOs to improve the quality of community life, funding local development activities, increasing citizens' knowledge of transparent governance, and fostering constructive citizen-local government dialogue and partnerships.

The USG funded a special initiative to combat corruption and promote academic integrity in the Moldovan educational system. The USG also supported U.S. internships to expose participants to democratic values and structures and avenues for reform. USG funding supports NGO programs to strengthen civil society's involvement in reform, business development, education and management training, public administration, and local governance.

OUTPUTS

During FY 2006, 16 communities secured US-funded grants, and more than 15,000 citizens participated in USG-supported community fora and workshops on advocacy, communication/facilitation, participatory activities, project design, project management and leadership. As a result, 218,271 households received new or improved public services, and more than 100 communities benefited from USG-funded training and technical assistance.

With USG support, 69 Moldovans participated in month-long thematic internships in the U.S. on such topics as social assistance infrastructure for victims of domestic violence, economic reporting for journalists, and combating corruption in the judiciary.

USG support brought free legal services to 7,004 individuals through 6,630 legal consultations and 374 public interest lawsuits. These recipients included 341 residents of the Transnistrian region. Four USG-supported legal clinics provided practical skills and law training to 90 law students, including 15 in Tiraspol. Local NGOs receiving USG-funded technical assistance conducted 87 trainings and informal educational programs for 1,752 NGO representatives, public authorities and citizens on human rights, rights of the handicapped, and access to public information. Two of the training sessions took place in Transnistria and had a total of 44 participants.

USG funding supported 10 training sessions for 260 judges, prosecutors, and bailiffs on building a legal anti-corruption framework and three training sessions on enforcement of court judgments. Four trainers from the Moldovan Bar conducted training sessions on legal ethics for 30 advocates in Orhei and Balti. Sixteen professors from six Chisinau law faculties and four law students from the Transnistrian region participated in training on interactive teaching methods. Fifteen to 20 participants attended each of the five USG-supported programs on legal-clinic sustainability and organizational development. In addition, the USG funded monthly law trainings for seven traveling lawyers and others to focus on legal issues in their caseloads.

The USG supported a number of projects, including: completion of a "Convention on the Elimination of All Forms of Discrimination against Women Assessment Tool Report"; field work for a second Judicial Reform Index; publication of a book of case materials for the first freedom-of-expression case won by a Moldovan at the European Court for Human Rights; and publication of "Know Your Rights" brochures for citizens in rural areas. USG-funded legal experts analyzed and commented on draft laws and strategies for parliament and various ministries.

USG-funded experts increased the knowledge and level of outreach, grassroots, and retail political skills of more than 8,000 political-party officials and local activists. With USG-funded support, Moldovan NGOs implemented voter-education campaigns, trained members of election commissions, and conducted media and elections monitoring for the Gagauzia region's gubernatorial election. The USG also supported a coalition of Moldovan NGOs dedicated to exposing and eradicating corruption.

PROGRAM PERFORMANCE/IMPACT

At the local level, USG-funded programs tangibly helped Moldovans reinvent the relationship between local governments and constituent communities. Projects increased local government transparency and citizen participation in more than 100 communities by helping citizens engage to solve shared community problems, introducing community strategic planning, measurably improving local-government financial management, and helping Moldovans implement projects that improved the quality and reliability of basic municipal-utility services.

Through legal assistance, the USG contributed significantly to Moldova's improving its legal system and building confidence in the rule of law. USG assistance helped to improve legislation on access to justice and increased the sustainability and organizational capacity of justice-sector NGOs.

USG assistance to Moldovan NGOs supported a more free and fair election process. The USG provided support and technical assistance to Moldovan NGOs to support voter-education campaigns, to provide training for members of election commissions, and to conduct media and election monitoring for the Gagauzia governor's elections.

USG-funded training increased youth involvement in political-party activities, including from the Transnistrian region. USG-funded training also significantly increased the involvement and influence of women in political parties and institutions. USG-supported mentoring partnerships for professional staff of the Moldovan Parliament with Lithuanian and Latvian parliamentary staff enabled the Moldovan parliamentary staff to learn about European governance standards, the usage of information technology in parliaments, parliamentary research, and committee operations.

After participating in internships in the U.S. where they were exposed to the institutions and challenges of a democratic, free-market society, Moldovan participants were inspired to promote reform and implement change in Moldova, including building public-private partnerships and establishing professional linkages with American organizations.

MEASURES OF PROGRAM EFFECTIVENESS

In order to determine how US 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.

Please find below an important indicator 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: Civil Society Rating, drawing from Freedom House, Nations in Transit 2006 as modified by, "Monitoring Country Progress in Eastern Europe and Eurasia" USAID/E&E/PO, #10 August 2006. (1=lowest, 5=highest; data based on previous calendar year). Freedom House measures progress towards democratic freedoms by assessing a series of questions in six categories: (1) electoral process; (2) civil society; (3) independent media; (4) governance and public administration; (5) rule of law; and (6) corruption. Progress towards each category is rated on a seven-point scale, 1 representing the most advanced and 7 the least advanced. In the MCP system, these scores are reversed and re-scaled to range from 1 to 5, with 5 being the most advanced. The Civil Society rating assesses the growth of NGOs, their organizational capacity and financial sustainability, and the legal and political environment in which they function; the development of free trade unions; and interest-group participation in the policy process. The data upon which this ranking is based comes from the previous calendar year. Found online at: http://www.usaid.gov/locations/europe_eurasia/country_progress/index.html

FY 2002 Baseline

FY 2004 Rank

FY 2005 Rank

FY 2006 Target

3. 0

3. 0

3. 0

3. 0


Impact of U.S. Assistance on the Above Indicator: In cooperation with the Swedish International Development Cooperation Agency and the Royal Norwegian Ministry of Foreign Affairs, the USG provided funding and NGO secretariat assistance to the Anti-Corruption Alliance (ACA), a Moldovan NGO coalition established in 2006 and dedicated to exposing and eradicating corruption. The ACA has developed a working partnership with the Moldovan Center for Combating Economic Crime and Corruption to increase the role of civil society and media in preventing and fighting systemic corruption, monitoring government performance, providing technical advice, and reporting to the public on corruption. Because data for this ranking is based on the previous calendar year, the indicator has not yet captured the impact of this NGO coalition's efforts.

Economic Growth

Moldova is, by most measures, the poorest country in Europe. The Gross Domestic Product per capita is $860. Nearly 50% of GDP, 40% of employment, and 65% of exports are related to agriculture. Since independence, an estimated 600,000 to one million Moldovans have emigrated. Official remittances, estimated at $600 million annually, help maintain growth in an otherwise stagnant economy. Real GDP growth stood at 7% and inflation was 10% in 2005. The trade balance deteriorated significantly in 2006, largely because of higher energy prices. Moldova signed a new program with the IMF in May 2006. Major creditors rescheduled Moldova's debt via the Paris Club.

Moldova adopted broad structural reforms to improve the business and investment climate and to promote exports to new, non-CIS markets. The politically and economically motivated Russian bans of Moldovan agricultural products and wines remained a serious concern. Russia previously imported about 80% of Moldovan wine exports. Governmental interference in the economy continues to be a concern, despite significant achievements in regulatory reform. Overall, progress is evident in the development of a market economy, but the private sector is not yet sufficiently dynamic or internationally competitive in many areas.

U.S. ASSISTANCE PRIORITIES

To promote economic growth, the USG's priorities were assisting Moldova: to improve productivity, quality, international competitiveness and trade performance of its agricultural sector and thus promote rural economic development; to improve its investment climate by identifying and removing barriers to business; to enhance the competitiveness of private enterprise in the global market; to develop a viable, effective and efficient financial sector; to consolidate land holdings through market-driven mechanisms; to create jobs and economic opportunities through development of small and medium-sized enterprises (SMEs); and to achieve the standards to integrate its economy into the European and global system.

DESCRIPTION OF PROGRAMS AND ACTIVITIES

USG-funded programs provided technical assistance to Moldovan private enterprise to improve productivity, quality and marketing. The USG supported development of industry clusters in wine, textile/apparel, and information and communication technology. USG-funded technical assistance also supported productivity, quality and marketing improvements in the agricultural sector to increase rural incomes and employment, improve international competitiveness and market alternatives, and help Moldova's private farmers achieve success in the transition to a market economy. The USG supported Moldovan agribusiness in applying new technologies to increase significantly the value and sales of Moldovan farm produce.

The USG funded a loan-portfolio guarantee project that encouraged select Moldovan banks to grant credit to farmers and SMEs by facilitating access to capital, cash markets, and technical knowledge. The USG also supported an SME development program and a land privatization support program which completed their activities in FY 2006. To improve the business environment, USG-funded experts conducted legal and economic analysis to support the amendment of existing legislation as well as the drafting of new legislation and regulations. The USG programs supported the creation of a Regulatory Impact Analysis Commission to monitor the regulatory impact and cost-benefit of proposed legislation and also supported expansion of the network of one-stop shops for business registration, certificates, and licenses. The USG- funded land privatization support program assisted in correcting survey and land distribution errors made during the 1990s land-privatization, provided a means to consolidate land holdings through market-driven mechanisms, advanced gains made in land privatization, and assisted in the development of private-property rights.

OUTPUTS

The USG worked with more than 80 agribusinesses and farmers to improve international competitiveness and trade performance. By disbursing development grants worth $915,900, the USG helped generate $1,758,600 in private investment, thus leveraging $1.92 for each $1.00 provided. USG-funded specialists conducted more than 170 training courses, field trips and domestic study tours for approximately 1,600 beneficiaries in farming and agribusiness.

In the information and communication technology sector, the USG assisted two leading firms to market their products in information technology media and supported the participation of three Moldovan information and communication technology companies in a trade show in Germany. In the textile and apparel industry, the USG assisted one of Moldova's leading carpet manufacturers to increase efficiency, helped re-brand a local apparel company to compete with imports, and assessed and improved the productivity of seven cut-and-make apparel firms. In the wine sector, the USG funded the first in-depth research of the Romanian market for Moldovan exports and co-financed the Moldovan Wine Festival in Romania.

Through its loan portfolio guarantee project, the USG helped the Moldovan banking sector increase its lending to SMEs and agricultural entrepreneurs. Moldovan banks granted more than 2,000 credits (worth more than $25.5 million) to SMEs and agricultural entrepreneurs. The average value of a credit was approximately $12,000.

In support of land privatization, the USG supported a nation-wide training program on land consolidation and finalized the correction of survey and other errors that occurred during the initial land privatization program in the 1990s. In addition, in the first two quarters of FY 2006 the USG supported providing land- transaction-related information and legal assistance to 6,500 agricultural land owners.

In support of an improved business environment, the USG promoted the establishment of 10 regional working groups for the development and discussion of local policy and regulatory reform initiatives and 15 on-line one-stop shops throughout the country to facilitate trade authorization and construction. The regional working groups, established via the innovative "guillotine law" process, provided the private sector a voice in governmental decisions.

PROGRAM PERFORMANCE/IMPACT

USG assistance in support of economic growth expanded the role of SMEs in the Moldovan economy, provided SMEs with access to new markets and investment capital, and improved the investment climate by helping identify and remove barriers to business.

The USG assisted the Moldovan high-value agricultural sector identify and access new export markets. With USG support for study tours and training sessions, export-market appraisals and the launch of a web-based market information system, Moldovan agribusinesses have been able to enter and/or expand their presence in foreign markets. More than 80 new permanent jobs were created during the reporting period, and cumulative high-value agriculture exports by USG grantees totaled $1.9 million.

USG support and technical assistance have also led to increased export-market opportunities for Moldovan companies in the wine, apparel and information and communication technology sectors, including access to new markets in Romania, Bulgaria and the United Kingdom. In one example, technical assistance to a local carpet-manufacturing company helped save over $2 million and increased the company's export competitiveness.


With substantial assistance from USG-funded experts, the GOM approved and adopted a new "Law on Basic Principles and Mechanisms Regulating Entrepreneurial Activity" in July 2006 to institute new cost-benefit principles in the development of business legislation. This "guillotine law" cut unnecessary business regulations and reduced opportunities for corruption. One-stop shops also reduced the time needed to obtain an authorization from an average of 100 days to ten days for trade authorizations, and from eight months-two years on average to 15-30 days for construction permits. The new issuing procedures also eliminated direct contact between the applicant and the authorities, thus reducing opportunities for corruption. In addition, costs for governmental services to authorize trade and construction were reduced significantly.

The loan portfolio guarantee project had a positive impact on access to credit by mitigating lenders' perceptions of borrower risk and establishing a sustainable bridge between financial sector institutions and SMEs and agriculture entrepreneurs.

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.

Please find below an important indicator 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: Private Sector Share of GDP - In percent. Source: European Bank for Reconstruction and Development Transition Report 2005. 

CY 2002 Baseline

CY 2004 Percentage

CY 2006 Percentage

FY 2006 Target

50%

50%

60%

63%



Impact of U.S. Assistance on the Above Indicator: USG assistance in developing the private sector focused on expanding the role of small and medium enterprises; improving the investment climate; assisting the agribusiness sector to increase the value and sales of farm produce; and increasing Moldova's competitiveness in international markets.

Investing in People

A dramatic reduction in public funding with an outflow of professional staff has undermined the Moldovan health system and ultimately eroded the population's health. Moldova has diseases typical of developing and developed countries. The deterioration of health services and the high cost of care have exacerbated the unequal access to health care. A UNICEF survey indicates that nearly 30% of the population requiring care was unable to receive services because of high costs. Weaknesses in the health-care system are of particular concern in view of the emerging epidemics of HIV/AIDS, hepatitis, and tuberculosis.

Because of emigration, around 20,000 children have been left with relatives or abandoned. According to the latest USAID Demographic and Health Survey, about 31% of children under age 15 do not live with both parents, and seven percent do not live with either. Approximately 13,600 Moldovan children are in orphanages or state boarding schools. A UNDP survey found that only 35% of these children received special medical assistance and 29% educational assistance. Annual funding for the orphanages covers only about 55% of operational expenses. Young adults leaving orphanages or state boarding schools are at heightened risk of falling victim to poverty, drug abuse, and human trafficking.

U.S. ASSISTANCE PRIORITIES

The USG puts a priority on combating human trafficking through public awareness and information campaigns, assistance to potential and actual victims of trafficking through legal consultations, crisis-prevention services, psychological rehabilitation, and training programs in job skills and entrepreneurship; supervised learning and living environments for returning victims, and providing graduates of state boarding schools or orphanage with life-skills, job and employment training, health services, counseling and work experience.

USG assistance is focused on strengthening infectious-disease prevention and control of HIV/AIDS, Hepatitis B and C, and tuberculosis (TB). In its public health activities, the USG seeks to complement a larger, technically and politically complex effort involving the World Bank and the Global Fund and to coordinate closely with the Moldovan Ministry of Health.

DESCRIPTION OF PROGRAMS AND ACTIVITIES

In support of potential and actual victims of human trafficking, the USG funded public awareness and information campaigns, rehabilitation programs, training opportunities, and counseling. To reduce the criminal trade in human beings, the USG funded programs providing employment opportunities for young women and girls.

The USG supported establishing a network of self-sustaining, transitional living and educational "halfway houses" to reduce the vulnerability of returned victims and of graduates of state boarding schools and orphanages to trafficking by providing safe, affordable, supervised learning and living environments. In these environments the returned victims and vulnerable young adults have access to life-skills, job and employment training, health services and counseling, and tangible work experience to prepare them for employment and successful (re)integration into the community.

To combat TB, the USG supported improved implementation of the Directly Observed Treatment Short-Course (DOTS) strategy for TB diagnosis, treatment and surveillance. To improve detection and cure rates, the USG supported establishment of a national TB laboratory network, promoted increased access to quality TB services for vulnerable groups, and funded activities to increase public awareness. To decrease transmission of HIV/AIDS and viral Hepatitis B and C, USG-funded programs supported strengthening voluntary counseling and testing services for HIV/AIDS, implementing behavior-change communication, improving the safety of blood and blood products, strengthening laboratory capacity to diagnose Hepatitis B and C, and improving epidemiological surveillance.

To combat the threat of Avian Influenza (AI) in Ukraine and reduce the risk of bird-to-bird and bird-to-human transmission, the USG provided communications support to national preparedness and containment efforts.

OUTPUTS

To promote TIP-prevention, the USG funded a total of 220 short-term leadership training sessions for 3,551 women and girls. U.S. assistance also supported the following training for women and girls: a 169 short-term employability training sessions (2,661 participants), 48 entrepreneurship training sessions (770 participants), six long-term courses in entrepreneurship (189 participants), and 12 long-term courses in professional skills (200 participants). USG support also made possible 1,975 legal and 2,426 psychological consultations. USG-funded mobile technical units provided an integrated package of services to remote rural communities 97 times and reached 4,310 beneficiaries. In addition, 71 newspaper articles, 41 television programs and 44 radio programs covered USG-funded programs to combat trafficking in persons. Nine episodes of the Destinies & Destinations program, produced with USG funding, were broadcast on seven stations across the country. Eighteen episodes of the companion radio program were also broadcast. In all, the training sessions and services provided by USG-funded implementers reached over 15,300 women and girls, of whom 12,919 were in the target group of 16- to 25-year old women.

To advance TIP protection, the USG funded the opening of four social reintegration centers for youth in Carpineni, Ungheni, Soroca and Edinet and a social reintegration center for vulnerable mothers and children in Drochia. The centers participated in five capacity-building training sessions and a study tour to Romania to partner NGOs that managed the centers. The USG supported programs that provided psychological assistance and life-skills education, including residential care, to 189 individuals.

To combat Avian Influenza, the USG funded development of three video, two animation, and four radio spots now being broadcast on three national TV channels, 20 local TV channels, four national radio stations and eight local radio stations. The spots promote messages on handling poultry, cooking safely, not touching birds, and personal hygiene. Materials developed included posters and leaflets for households, guidelines for health workers, guidelines for veterinarians, guidance for journalists, and outbreak communications guidelines for high-level officials in health and agriculture.

USG-funded experts provided 25 training sessions for 588 doctors and nurses in DOTS. USG support helped establish an electronic surveillance system in Transnistria and link it to the national surveillance system. The USG funded 25 trainings in laboratory diagnostics in microscopy and supported training 161 laboratory and TB specialists in drug-susceptibility testing. The USG also funded the broadcast of a 45-day public-awareness campaign in Transnistria and Cahul regions where the highest TB rates were recorded.

PROGRAM PERFORMANCE/IMPACT

TB case notifications increased steadily during the period of USG-promoted DOTS expansion and full implementation in Moldova. Overall, the number of total TB cases notified increased by about 50%, and the number of new TB cases notified increased by about 30% from 2001 to 2005. Between 2004 and 2005, the number of patients for whom TB diagnostic investigations were conducted increased from 34,872 to 40,220, an increase of 15.3%. During the same time the number of public health-care visits (for all causes) increased from 8,937,634 to 10,122,012, an increase of 13.3%.

With direct assistance from USG-supported programs, 261 vulnerable women (including 219 from the target group of 16-25 year olds) found employment and vulnerable women receiving USG-funded assistance started 93 new businesses. In addition, 49% of those assisted who had originally been interested in emigrating to seek work reportedly decided to remain in country. Of those still interested in emigrating, 52% were able to name ways in which to do so safely. During the reporting period, the USG-funded programs reintegrated 62 vulnerable youth and assisted 12 victims of trafficking.

With USG support, the level of the Moldovan population's awareness about Avian Influenza reached about 98%. A high percentage of the population, over 80%, can name at least one way Avian Influenza is transmitted.

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.

Please find below an important indicators in the area of Investing in People. In the chart, 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: Tuberculosis Incidence per 100,000 - Number of newly diagnosed tuberculosis cases of all forms during the given calendar year. Source: World Health Organization, European Health for All Database, found online at: http://data.euro.who.int/hfadb/.

CY 2002 Baseline

CY 2003 Number

CY 2004 Number

CY 2005 Target

88. 98

114. 73

133. 35

133. 4



Impact of U.S. Assistance on the Above Indicator: In the initial phase of assistance, higher numbers reflect better capacity for diagnosis. The USG worked with the Ministry of Health and in coordination with other donors to provide specific measures to strengthen TB control, including by renovating one national and three regional TB laboratories, renovating the multi-drug-resistant TB unit in Chisinau; training laboratory staff, and developing software for a national electronic surveillance system.

Peace and Security

Moldova has a small military that is not able to meet Moldova's basic defense needs, but has some useful niche capabilities such as de-mining. The GOM developed a program to restructure and modernize its military forces. However, the GOM's progress in doing so has been slow because of chronic under-funding of the defense budget. The defense budget primarily pays salaries and maintains a large, deteriorating infrastructure. Despite severe resource constraints, Moldova is a reliable and valuable defense partner and an active member of NATO's Partnership for Peace. In 2005 the government requested an Individual Partnership Action Plan (IPAP) with NATO. Moldova has developed a fledgling peacekeeping battalion and is focusing its efforts to train and equip these forces to participate in United Nations and other international peacekeeping missions.

Moldova faces a well-armed, Russian-backed secessionist movement that controls most of the territory east of the Dniester River. Despite Russia's commitment at the 1999 OSCE Istanbul Summit to withdraw its troops and munitions from Moldovan territory by the end of 2002, no Russian arms were removed from Transnistria in 2006. Moldova is committed to European integration and is pursuing closer relations with the EU, NATO and other regional and sub-regional organizations such as SECI and the GUAM group (Georgia, Ukraine, Azerbaijan, Moldova).

Law enforcement agencies, like the judicial system as a whole, are generally ineffective and suffer from low pay and endemic corruption. Moldova is a major source country for victims of human trafficking, primarily for sexual exploitation but also for labor. The International Organization for Migration estimates that every year approximately 10,000 Moldovan women, most of them from rural areas, go abroad in search of work. Most of them are between 15 and 30 years old; more than 10 percent are under the age of 18, and some are as young as 12.

U.S. ASSISTANCE PRIORITIES

In its FY 2006 security assistance, the USG placed a priority on promoting Moldova's territorial integrity, strengthening Moldovan law enforcement and border security to fight transnational crime, redirecting weapons-of-mass-destruction (WMD)-related expertise towards sustainable peaceful research, and helping Moldova develop its peacekeeping capabilities along with other targeted military capabilities to facilitate the interoperability of Moldovan forces with Western forces. In its law enforcement assistance, the USG placed a high priority on enhancing Moldova's institutional capacity to combat corruption, organized crime and trafficking in persons.

DESCRIPTION OF PROGRAMS AND ACTIVITIES

U.S.-trained MOD personnel participated in drafting the Moldova's NATO Individual Partnership Action Plan. The USG provided assistance for a defense reform advisory project in support of IPAP goals. The USG provided Moldova with military equipment, education and training as well as a one-time grant of $1 million in recognition of its contribution to Coalition forces in Iraq in 2005.

The separatist-controlled region of Transnistria remains a source of and transit point for contraband. A significant portion of the USG export control and border security assistance was again used to monitor Transnistria. The USG provided training and support for 22 USG-funded mobile inspection stations to monitor more closely the movement of contraband. USG assistance also enabled Moldovan officials to participate in meetings of regional groups such as SECI, GUAM, and the Stability Pact for Southeastern Europe.

Moldova's law enforcement and judicial institutions are plagued by low salaries, insufficient training and equipment, and widespread corruption. In FY 2006, the USG continued direct assistance to Moldovan law enforcement agencies in the form of training, protective equipment, computers and vehicles and provided technical assistance to the Prosecutor General and the Center for Combating Economic Crimes and Corruption (CCECC) on anti-corruption initiatives. In FY 2006, the USG and the Lithuanian Government joined to provide technical management assistance to the CCECC. Assistance focused on an assessment of the CCECC's structure. After the Lithuanian anti-corruption authority reported on the CCECC's operations, a U.S. expert visited the CCECC to focus on prosecutorial, institutional development, and reform issues. Then the Lithuanian anti-corruption authority hosted seven high-ranking CCECC managers in Vilnius to study anti-corruption strategies employed by the Lithuanian government.

In FY 2006, the USG and the Supreme Court of Justice implemented a nation-wide corruption case file-monitoring project to identify concrete impediments to combating corruption. More than three hundred closed corruption cases from 2004 to 2006 will be tracked from investigation through trial and appeal and then analyzed for trends and problems. The report will address the numerous different articles of the Moldovan Criminal Code concerning corruption-related offenses.

Moldova remains a source nation for trafficked persons. The USG is engaged on several fronts to assist the GOM in its fight against this problem. USG assistance supported social interventions aimed at prevention and reintegration as well as law enforcement efforts. USG assistance also helped establish a Center for Combating Trafficking in Persons (CCTIP) and provided training, technical assistance and equipment to the police anti-trafficking unit. The USG also provided victim/witness protection assistance and support for legislative and legal reform.

OUTPUTS

In 2006, the USG provided the Moldovan military with requested tactical communications repair parts, generators, personal equipment, parachute repair parts and training for peacekeeping and deployment. The USG also trained 31 Moldovan officers in the U.S.

The USG conducted a command, control, communications, computers and intelligence assessment of Moldovan Armed Forces' capabilities in February 2006. Based on this assessment, the GOM is developing a proposal to use USG grant assistance for communications and automation equipment.

In 2006, the USG trained 70 GOM law enforcement and security officials in combating money laundering, terrorist financing, and organized crime and in officer safety and survival. Additionally, 46 GOM law enforcement and security officials participated in USG-funded training/exchange programs overseas. These programs focused on basic police skills, combating terrorism, prosecutorial and police teambuilding, and law enforcement task-force methodologies.

The USG facilitated training for 30 members of the newly established CCTIP on leadership and teambuilding skills and on the functioning of task forces. The USG also funded vetting by polygraph of the CCTIP's 80-member staff, 64 of whom successfully passed the polygraph testing.

PROGRAM PERFORMANCE/IMPACT

Moldova's NATO Individual Partnership Action Plan was approved in May 2006. In 2006, Moldova sent its third and fourth contingents of soldiers to Iraq to be attached to a U.S. Army unit. USG military education and training have played an important role in the professional development and education of highly motivated, Moldovan military personnel and in improving interoperability with Western forces. USG-trained officers are normally assigned to positions of increased responsibility within the various military organizations following their return from training. Although some returning officers are not being utilized to their maximum potential, retention rates remained high at 89%.

In 2006, the Moldovan Parliament passed a Trafficking in Persons (TIP) law that creates a comprehensive regime centered on victims. The Government also ratified the UN Convention on Transnational Organized Crime and the associated trafficking and smuggling protocols. The TIP Case File Monitoring Project, which was co-sponsored by the USG and the Moldovan Supreme Court of Justice, disclosed serious flaws in the GOM system of reporting, investigating and prosecuting TIP cases. The project also identified changes that needed to be made in criminal procedure and law. As a result of a USG-sponsored trip for GOM officials to Turkey, the Governments of Turkey and Moldova signed a Protocol to Cooperate in Combating TIP.

U.S. and Lithuanian engagement allowed the GOM to receive concrete and extensive recommendations for re-structuring and reforming the CCECC. In addition, the General Prosecutor's Office Anti-Corruption Office moved its offices to the CCECC for closer cooperation, and the CCECC shifted its stated focus from economic crime to corruption cases.

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.

Please find below an important indicator in the area of Peace and Security. In the chart, 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," covering events from January 1 - December 31 of the subject year or last calendar year.

Performance Indicator: Transparency International'sCorruption Perceptions Index (CPI) - Measures perceptions of the degree of corruption as seen by business people and country analysts and ranges between 10 (highly clean) and 0 (highly corrupt). Measurement below is the CPI raw score not the country ranking. . The data upon which this ranking is based comes from the previous calendar year. Found online at: http://www.globalcorruptionreport.org/index.html.

CY 2002 Baseline

CY 2004 Rank

CY 2005 Rank

CY 2006 Target

2. 1

2. 3

2. 9

3. 2



Impact of U.S. Assistance on the Above Indicator: In FY2006, USG assistance increasingly targeted the culture of corruption. Support for regulatory reform, including the implementation of the "guillotine law," improved the business climate and reduced opportunities for corruption. Technical assistance increased the capabilities of the Center for Combating Economic Crime and Corruption and the Prosecutor General and helped improve legislation. Although problems remain acute, these efforts have begun to bear fruit.

Humanitarian Assistance

In FY 2006, a majority of Moldovan citizens remained well below the international poverty line, and as a result, there remained significant need for humanitarian assistance. Continued economic growth has led to improved living conditions for some Moldovans. However, widespread unemployment, high inflation, low government health spending and medical shortages mean that risks for vulnerable populations remain high. As a result, the USG-funded humanitarian assistance program continued in FY 2006 to direct assistance to meet survival needs of these left-behind groups through distributions of commodities and provision of basic services.

U.S. ASSISTANCE PRIORITIES

Humanitarian programs in Moldova continued to focus on improving the daily lives of the most vulnerable, often institutionalized, persons living in remote areas without even the most basic of necessities. The provision of medicines, clothing and adequate shelter remained the top priority for humanitarian efforts. In addition, emphasis was put on bolstering local and USG disaster and crisis response capability.

DESCRIPTION OF PROGRAMS AND ACTIVITIES

The primary focus of the USG humanitarian program is the distribution of humanitarian commodities, for which need has been verified, to vulnerable persons beyond the reach of other USG assistance programs and GOM social welfare spending. For FY 2006, the USG-funded humanitarian program in Moldova consisted of an-ongoing commodity distribution project which delivered both medical and non-medical assistance. The USG funded needs assessments, sourcing of requested items, transportation, distribution and in-country monitoring. The sourced items were either donated or USG-excess. Other humanitarian programs included inoculations, school feeding and renovation of community structures. In addition, the USG funded a program that provided free shipping to any registered U.S. charitable organization that wished to send humanitarian commodities to local partners in Moldova.

OUTPUTS

Overall in FY 2006, the humanitarian program delivered 42 surface containers and 3 airlifts of various humanitarian commodities valued at $9.81 million. The cost to transport, distribute and monitor these commodities was just over $0.6 million. Commodities delivered included, medicines, medical supplies, shelter items, clothing, shoes, food, blankets, linens, hygiene kits and school supplies. Delivered assistance included, for example, warm jackets and winter clothing to orphanages in the village of Chernoleuka, disaster items to local authorities for emergency situations, and medical supplies to medical colleges. As another example, USG transport assistance permitted one U.S. charitable organization to provide over 6000 orphans with towels, clothing school supplies and hygiene items. In total, the USG facilitated the delivery of 10 containers of various commodities valued at over $1 million to needy recipients throughout Moldova.

The USG supported administration of inoculations against chickenpox and dental fluoride treatments to 5,968 Moldovan children located in 25 orphanages and boarding schools across the country. In FY 2006, the USG continued a joint USG-GOM renovation in Chisinau of the Moldovan Republican Burn Treatment Center, the sole facility in the country dedicated to the treatment of severe burn victims. Renovations of the dilapidated and obsolete facility began in FY 2005. USG assistance also contributed to the interior renovation of a fire and rescue station in the town of Basarabeasca.

In FY 2006, USG funds fed 350,000 students in 2,500 schools via a nation-wide school-feeding program.

PROGRAM PERFORMANCE/IMPACT

Humanitarian programs, while significantly impacting the day-to-day lives of recipients, are not designed to have long lasting impacts on recipient countries; however, some aspects of these programs assist in sustainable development. The provision of relief supplies and the renovation of facilities alleviate some of the burden placed on the GOM 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. Humanitarian programs can help the local government identify areas in need of improvement and act as a blueprint for how to begin solving social welfare problems.

The percentage of children enrolled in basic education (7-15 year olds) has dropped in Moldova since independence because of high poverty rates and a deteriorating educational infrastructure, among other factors, but USG-funded school feeding helped stabilize attendance and improved child nutrition.

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



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