Background Note: Italy

Bureau of European and Eurasian Affairs

PROFILE

OFFICIAL NAME:
Italian Republic

Geography
Area: 301,225 sq. km. (116,303 sq. mi.); about the size of Georgia and Florida combined.
Cities: Capital--Rome (pop. 2.8 million, 3.7 million metro). Other cities--Milan (1.3 million, 3.9 metro), Naples (975,000, 3 million metro), Turin (900,000, 2.1 million metro).
Terrain: Mostly rugged and mountainous.
Climate: Generally mild Mediterranean; cold northern winters.

People
Nationality: Noun and adjective--Italian(s).
Population (Jan. 2009 est.): 60 million.
Annual growth rate (2008 est.): 0.07%, mostly due to immigration.
Ethnic groups: Primarily Italian, but there are small groups of German-, French-, Slovene-, and Albanian-Italians.
Religion: Roman Catholic (majority).
Language: Italian (official).
Education: Years compulsory--16. Literacy--98%.
Health: Infant mortality rate--3.7/1,000 live births. Life expectancy--78.8 years for men; 84.1 years for women.
Work force (25.10 million, 2008): Services--66%; industry and commerce--30%; agriculture--4%. Unemployment rate is 6.7%.

Government
Type: Republic since June 2, 1946.
Constitution: January 1, 1948.
Branches: Executive--president (chief of state), Council of Ministers (cabinet) headed by the president of the council (prime minister). Legislative--bicameral parliament: 630-member Chamber of Deputies, 315-member Senate (plus a varying number of "life" Senators). Judicial--independent constitutional court and lower magistracy.
Subdivisions: 94 provinces, 20 regions.
Political parties: People of Liberty, Democratic Party, Northern League, Italy of Values, Union of the Center, Movement for Autonomy.
Suffrage: Vote for House is universal over 18; vote for Senate is universal over 25.

Economy
GDP (purchasing power parity, 2007 est.): $1.8 trillion.
GDP per capita (purchasing power parity, 2007 est.): $31,000.
GDP growth: -1.0% (2008); 1.5% (2007); 1.8% (2006); 0.5% (2005); 1.5% (2004), 0.0% (2003 est.); 0.5% (2002); 1.8% (2001).
Natural resources: Fish and natural gas.
Agriculture: Products--wheat, rice, grapes, olives, citrus fruits, potatoes, sugar beets, soybeans beef, dairy products.
Industry: Types--tourism, machinery, iron and steel, chemicals, food processing, textiles, motor vehicles, clothing, footwear, ceramics.
Trade: Exports (2008 est.)--$534.8 billion f.o.b.: mechanical products, textiles and apparel, transportation equipment, metal products, chemical products, food and agricultural products. Partners (2007)--Germany 12.9%, France 11.4%, Spain 7.4%, U.S. 6.8%, U.K. 5.8%. Imports (2007 est.)--$551.6 billion f.o.b.: machinery and transport equipment, foodstuffs, ferrous and nonferrous metals, wool, cotton, energy products. Partners (2007)--Germany 16.9%, France 9.0%, China 5.9%, Netherlands 5.0%, China 5.2%, Belgium 4.3%, Spain 4.2%.

PEOPLE AND HISTORY
Italy is largely homogeneous linguistically and religiously but is diverse culturally, economically, and politically. Italy has the fifth-highest population density in Europe--about 200 persons per square kilometer (490 per sq. mi.). Minority groups are small, the largest being the German-speaking people of Bolzano Province and the Slovenes around Trieste. There are also small communities of Albanian, Greek, Ladino, and French origin. Immigration has increased in recent years, however, while the Italian population is declining overall due to low birth rates. Although Roman Catholicism is the majority religion--85% of native-born citizens are nominally Catholic--all religious faiths are provided equal freedom before the law by the constitution.

Greeks settled in the southern tip of the Italian Peninsula in the eighth and seventh centuries B.C.; Etruscans, Romans, and others inhabited the central and northern mainland. The peninsula subsequently was unified under the Roman Republic. The neighboring islands came under Roman control by the third century B.C.; by the first century A.D., the Roman Empire effectively dominated the Mediterranean world. After the collapse of the Roman Empire in the West in the fifth century A.D., the peninsula and islands were subjected to a series of invasions, and political unity was lost. Italy became an oft-changing succession of small states, principalities, and kingdoms, which fought among themselves and were subject to ambitions of foreign powers. Popes of Rome ruled central Italy; rivalries between the popes and the Holy

Roman Emperors, who claimed Italy as their domain, often made the peninsula a battleground.
The commercial prosperity of northern and central Italian cities, beginning in the 11th century, combined with the influence of the Renaissance, mitigated somewhat the effects of these medieval political rivalries. Although Italy declined after the 16th century, the Renaissance had strengthened the idea of a single Italian nationality. By the early 19th century, a nationalist movement developed and led to the reunification of Italy--except for Rome--in the 1860s. In 1861, Victor Emmanuel II of the House of Savoy was proclaimed King of Italy. Rome was incorporated in 1870. From 1870 until 1922, Italy was a constitutional monarchy with a parliament elected under limited suffrage.

20th-Century History
During World War I, Italy renounced its standing alliance with Germany and Austria-Hungary and, in 1915, entered the war on the side of the Allies. Under the postwar settlement, Italy received some former Austrian territory along the northeast frontier. In 1922, Benito Mussolini came to power and, over the next few years, eliminated political parties, curtailed personal liberties, and installed a fascist dictatorship termed the Corporate State. The king, with little or no effective power, remained titular head of state.

Italy allied with Germany and declared war on the United Kingdom and France in 1940. In 1941, Italy--with the other Axis powers, Germany and Japan--declared war on the United States and the Soviet Union. Following the Allied invasion of Sicily in 1943, the King dismissed Mussolini and appointed Marshal Pietro Badoglio as Premier. The Badoglio government declared war on Germany, which quickly occupied most of the country and freed Mussolini, who led a brief-lived regime in the north. An anti-fascist popular resistance movement grew during the last two years of the war, harassing German forces before they were driven out in April 1945. A 1946 plebiscite ended the monarchy, and a constituent assembly was elected to draw up plans for the republic.

Under the 1947 peace treaty, minor adjustments were made in Italy's frontier with France, the eastern border area was transferred to Yugoslavia, and the area around the city of Trieste was designated a free territory. In 1954, the free territory, which had remained under the administration of U.S.-U.K. forces (Zone A, including the city of Trieste) and Yugoslav forces (Zone B), was divided between Italy and Yugoslavia, principally along the zonal boundary. This arrangement was made permanent by the Italian-Yugoslav Treaty of Osimo, ratified in 1977 (currently being discussed by Italy, Slovenia, and Croatia). Under the 1947 peace treaty, Italy relinquished its overseas territories and certain Mediterranean islands.

The Roman Catholic Church's status in Italy has been determined, since its temporal powers ended in 1870, by a series of accords with the Italian Government. Under the Lateran Pacts of 1929, which were confirmed by the present constitution, Vatican City is recognized by Italy as an independent, sovereign entity. While preserving that recognition, in 1984, Italy and the Vatican updated several provisions of the 1929 accords. Included was the end of Roman Catholicism as Italy's formal state religion.

Italy's Cultural Contributions
Europe's Renaissance period began in Italy during the 14th and 15th centuries. Literary achievements--such as the poetry of Petrarch, Tasso, and Ariosto and the prose of Boccaccio, Machiavelli, and Castiglione--exerted a tremendous and lasting influence on the subsequent development of Western civilization, as did the painting, sculpture, and architecture contributed by giants such as da Vinci, Raphael, Botticelli, Fra Angelico, and Michelangelo.

The musical influence of Italian composers Monteverdi, Palestrina, and Vivaldi proved epochal; in the 19th century, Italian romantic opera flourished under composers Gioacchino Rossini, Giuseppe Verdi, and Giacomo Puccini. Contemporary Italian artists, writers, filmmakers, architects, composers, and designers contribute significantly to Western culture.

GOVERNMENT
Italy has been a democratic republic since June 2, 1946, when the monarchy was abolished by popular referendum. The constitution was promulgated on January 1, 1948.

The Italian state is centralized. The prefect of each of the provinces is appointed by and answerable to the central government. In addition to the provinces, the constitution provides for 20 regions with limited governing powers. Five regions--Sardinia, Sicily, Trentino-Alto Adige, Valle d'Aosta, and Friuli-Venezia Giulia--function with special autonomy statutes. The other 15 regions were established in 1970 and vote for regional "councils." The establishment of regional governments throughout Italy has brought some decentralization to the national governmental machinery, and recent governments have devolved further powers to the regions. Many regional governments, particularly in the north of Italy, are seeking additional powers.

The 1948 constitution established a bicameral parliament (Chamber of Deputies and Senate), a separate judiciary, and an executive branch composed of a Council of Ministers (cabinet), headed by the president of the council (prime minister). The president of the republic is elected for seven years by the parliament sitting jointly with a small number of regional delegates. The president nominates the prime minister, who chooses the other ministers. The Council of Ministers--in practice composed mostly of members of parliament--must retain the confidence of both houses.

The houses of parliament are popularly and directly elected by a proportional representation system. Under 2005 legislation, the Chamber of Deputies has 630 members (12 of whom are elected by Italians abroad). In addition to 315 elected members (six of whom are elected by Italians abroad), the Senate includes former presidents and several other persons appointed for life according to special constitutional provisions. Both houses are elected for a maximum of five years, but either may be dissolved before the expiration of its normal term. Legislative bills may originate in either house and must be passed by a majority in both.

The Italian judicial system is based on Roman law modified by the Napoleonic code and subsequent statutes. There is only partial judicial review of legislation in the American sense. A constitutional court, which passes on the constitutionality of laws, is a post-World War II innovation. Its powers and the volume and frequency of its decisions are not as extensive as those of the U.S. Supreme Court.

Principal Government Officials
President--Giorgio Napolitano
Prime Minister--Silvio Berlusconi
Foreign Minister--Franco Frattini
Minister of Defense--Ignazio LaRussa
Minister of Finance--Giulio Tremonti
Minister of Justice--Angelino Alfano
Minister of the Interior--Roberto Maroni
Ambassador to the United States--Giulio Terzi di Sant'Agata

Italy maintains an embassy in the United States at 3000 Whitehaven Street, NW, Washington, DC 20008 (tel. 202-612-4400).

POLITICAL CONDITIONS
Until recently, there had been frequent government turnovers (more than 60 and counting) since 1945. The dominance of the Christian Democratic (DC) party during much of the postwar period lent continuity and comparative stability to Italy's political situation.

From 1992 to 1997, Italy faced significant challenges as voters--disenchanted with past political paralysis, massive government debt, extensive corruption, and organized crime's considerable influence--demanded political, economic, and ethical reforms. In 1993 referendums, voters approved substantial changes, including moving from a proportional to a largely majoritarian electoral system and the abolishment of some ministries. However in 2005, parliament passed a new electoral law based on full proportional assignment of seats.

Major political parties, beset by scandal and loss of voter confidence, underwent far-reaching changes. New political forces and new alignments of power emerged in March 1994 national elections. The election saw a major turnover in the new parliament, with 452 out of 630 deputies and 213 out of 315 senators elected for the first time. The 1994 elections also swept media magnate Silvio Berlusconi--and his Freedom Pole coalition--into office as Prime Minister. Berlusconi, however, was forced to step down in January 1995 when one member of his coalition withdrew support. The Berlusconi government was succeeded by a technical government headed by Prime Minister Lamberto Dini, which fell in early 1996. New elections in 1996 brought a center-left coalition to government for the first time after World War II.

A series of center-left coalitions dominated Italy's political landscape between 1996 and 2001. In April 1996, national elections led to the victory of a center-left coalition (the Olive Tree) under the leadership of Romano Prodi. Prodi's government became the second-longest to stay in power before he narrowly lost a vote of confidence (by three votes) in October 1998. A new government was formed by Democratic Party of the Left leader and former-communist Massimo D'Alema. In April 2000, following a poor showing by his coalition in regional elections, D'Alema resigned. The succeeding center-left government, including most of the same parties, was headed by Giuliano Amato, who had previously served as Prime Minister in 1992-93.

National elections, held on May 13, 2001, returned Berlusconi to power at the head of the five-party center-right Freedom House coalition, comprising the prime minister's own party, Forza Italia, the National Alliance, the Northern League, the Christian Democratic Center, and the United Christian Democrats. This Berlusconi government served its entire term.

In national elections held April 9-10, 2006, Romano Prodi's center-left Union coalition won a narrow victory over Berlusconi's Freedom House coalition. The Union coalition included the Democratic Party (born of the November 2007 fusion of the Democrats of the Left and the Daisy Party), UDEUR (Union of Democrats for Europe), Rose in the Fist (made up by Italian Social Democrats and Italian Radical Party), Communist Renewal, the Italian Communist Party, Italy of Values, and the Greens.

In May 2006, the parliament elected Giorgio Napolitano as the Republic's President. President Napolitano formerly served as a lifetime senator, Minister of the Interior, and a Member of the European Parliament as a member of center-left parties. President Napolitano's term ends in May 2013. The Senate, lower house, and regional representatives will vote to elect his successor.

In January 2008, the Prodi government fell when small coalition partner UDEUR withdrew support. In February, the President dissolved parliament and Silvio Berlusconi returned to power after defeating former Rome Mayor Walter Veltroni by a comfortable margin in elections on April 13-14, 2008. Berlusconi's winning coalition was composed of the People of Liberty (a union of Forza Italia and National Alliance), the Northern League, and the Movement for Autonomy. Berlusconi was sworn in as Prime Minister on May 8. Veltroni resigned as leader of the opposition in February 2009, and his deputy, Dario Franceschini, was elected new Democratic Party leader.

Political Parties
Italy's dramatic self-renewal transformed the political landscape between 1992 and 1997. Scandal investigations touched thousands of politicians, administrators, and businessmen; the shift from a proportional to majoritarian voting system also altered the political landscape.

Party changes were sweeping. The Christian Democratic Party dissolved; the Italian People's Party and the Christian Democratic Center emerged. Other major parties, such as the Socialists, saw support plummet. A new populist and free-market oriented movement, Forza Italia, gained wide support among moderate voters. The National Alliance broke from the neofascist Italian Social Movement. A trend toward two large coalitions--one on the center-left and the other on the center-right--emerged from the April 1995 regional elections. For the 1996 national elections, the center-left parties created the Olive Tree coalition while the center right united again under the Freedom Pole. The May 2001 elections ushered into power a refashioned center-right coalition dominated by Berlusconi's party, Forza Italia. The April 2006 elections returned the center-left to power under the eight-party Union coalition, a successor to the Olive Tree.

In October 2007, the Democrats of the Left and the Daisy parties officially merged to form the Democratic Party. Veltroni was chosen as party leader and was the center-left's candidate in the April 2008 elections. Silvio Berlusconi launched an alliance between his Forza Italia party and Gianfranco Fini's National Alliance. The parties ran together under the People of Liberty symbol in April 2008. The election greatly simplified parliament, dramatically reducing the numbers of parties, and for the first time since World War II, leaving communist parties out of parliament. People of Liberty (37.4%) won the largest share of the vote and took power in coalition with a strengthened Northern League (8.3%) and the tiny Movement for Autonomy (1.1%). The Democratic Party scored 33.2% and ran in alliance with Italy of Values (4.4%), while the Union of the Center (5.6%) ran alone.

In March 2009, Forza Italia and National Alliance changed the People of Liberty identification from an alliance to a party. The new mass center-right party is Italy's largest party and one of the largest in Europe. Party leaders define the party as post-ideological, charismatic, and pragmatic. It is led by Berlusconi.

ECONOMY
The Italian economy has changed dramatically since the end of World War II. From an agriculturally based economy, it has developed into an industrial state ranked as the world's sixth-largest market economy. Italy belongs to the Group of Eight (G-8) industrialized nations; it is a member of the European Union and the Organization for Economic Cooperation and Development (OECD).

Italy has few natural resources. With much land unsuited for farming, Italy is a net food importer. There are no substantial deposits of iron, coal, or oil. Proven natural gas reserves, mainly in the Po Valley and offshore in the Adriatic, constitute the country's most important mineral resource. Most raw materials needed for manufacturing and more than 80% of the country's energy sources are imported. Italy's economic strength is in the processing and the manufacturing of goods, primarily in small and medium-sized family-owned firms. Its major industries are precision machinery, motor vehicles, chemicals, pharmaceuticals, electric goods, and fashion and clothing.

Italy continues to grapple with budget deficits and high public debt--2.6% and 105.9% of GDP for 2008, respectively. Italy joined the European Monetary Union in 1998 by signing the Stability and Growth Pact, and as a condition of this Euro zone membership, Italy must keep its budget deficit beneath a 3% ceiling. The Italian Government has found it difficult to bring the budget deficit down to a level that would allow a rapid decrease of that debt. The worsening of the economic situation is expected to jeopardize this effort. The deficit is expected to grow well above the 3% ceiling in 2009 and 2010.

Italy's economic growth averaged only 0.8% in the period 2001-2008; 2008 GDP decreased 1.0%, largely due to the global economic crisis and its impact on exports and domestic demand. GDP is expected to contract further, with a huge decrease in 2009 (ranging from 2% to 3%) as the Euro zone and world economies slow.

Italy's closest trade ties are with the other countries of the European Union, with whom it conducts about 60.1% of its total trade (2007 data). Italy's largest EU trade partners, in order of market share, are Germany (12.9%), France (11.4%), and the United Kingdom (5.8%). Italy continues to grapple with the effects of globalization, where certain countries (notably China) have eroded the Italian lower-end industrial product sector.

The Italian economy is also affected by a large underground economy--worth some 27% of Italy's GDP. This production is not subject, of course, to taxation and thus remains a source of lost revenue to the local and central government.

U.S.-Italy Economic Relations
The United States and Italy cooperate closely on major economic issues, including within the G-8. With a large population and a high per capita income, Italy was the United States' twelfth-largest trading partner in 2008, with total bilateral trade of $51.6 billion comprised of exports to Italy totaling $15.5 billion and imports from Italy worth $36.1 billion. The U.S.'s $20.7 billion deficit with Italy in 2008 was slightly below the $20.9 billion deficit registered in 2007. Machinery and aircraft are becoming important U.S. exports to Italy. U.S. foreign direct investment in Italy at the end of 2007 exceeded $28.4 billion.

Labor
Unemployment is a regional issue in Italy--low in the north, high in the south. The overall national rate is at its lowest level since 1992. Chronic problems of inadequate infrastructure, corruption, and organized crime act as disincentives to investment and job creation in the south. A significant underground economy absorbs substantial numbers of people, but they work for low wages and without standard social benefits and protections. Women and youth have significantly higher rates of unemployment than do men.

Unions claim to represent 40% of the work force. Most Italian unions are grouped in four major confederations: the General Italian Confederation of Labor (CGIL), the Italian Confederation of Workers' Unions (CISL), the Italian Union of Labor (UIL), and the General Union of Labor (UGL), which together claim 35% of the work force. These confederations formerly were associated with important political parties or currents, but they have evolved into fully autonomous, professional bodies. The CGIL, CISL, and UIL are affiliated with the International Confederation of Free Trade Unions (ICFTU) and customarily coordinate their positions before confronting management or lobbying the government. The confederations have had an important consultative role on national social and economic issues.

Agriculture
Italy's agriculture is typical of the division between the agricultures of the northern and southern countries of the European Union. The northern part of Italy produces primarily grains, sugar beets, soybeans, meat, and dairy products, while the south specializes in fruits, vegetables, olive oil, wine, and durum wheat. Even though much of its mountainous terrain is unsuitable for farming, Italy has a large work force (1.4 million) employed in farming. Most farms are small, with the average size being only seven hectares.

For further economic and commercial information, please refer to the Country Commercial Guide for Italy.

FOREIGN RELATIONS
Italy was a founding member of the European Community--now the European Union (EU). Italy was admitted to the United Nations in 1955 and is a member and strong supporter of the North Atlantic Treaty Organization (NATO), the Organization for Economic Cooperation and Development (OECD), the General Agreement on Tariffs and Trade/World Trade Organization (GATT/WTO), the Organization for Security and Cooperation in Europe (OSCE), and the Council of Europe. It chaired the CSCE (the forerunner of the OSCE) in 1994, the EU from July to December 1990, January to June 1996, and July to December 2003, and the G-8 in 2001 and in 2009. Italy served a two-year term on the UN Security Council in 2007-2008.

Italy firmly supports the United Nations and its international security activities. Italy leads the UN mission in Lebanon (UNIFIL) and has actively participated in and deployed troops in support of UN peacekeeping missions in Somalia, Mozambique, and Timor-Leste. It provides critical support for NATO and EU operations in Afghanistan, Bosnia, Kosovo, Albania, Georgia, and Chad. Italy, under NATO's ISAF, maintains a Provincial Reconstruction Team in the western Afghanistan province of Herat, commands RC-West, and maintains a Carabinieri police training center. Italy supports reconstruction and development assistance to the Iraqi people through humanitarian workers and other officials, particularly in Dhi Qar Province, and is a leading contributor to the NATO Training Mission-Iraq, with approximately 100 military personnel and Carabinieri police trainers. Currently almost 9,000 Italian troops are deployed, including 2,100 in Kosovo, 2,350 in Lebanon as part of UNIFIL, and over 2,600 in Afghanistan.

The Italian Government seeks to obtain consensus with other European countries on various defense and security issues within the EU as well as NATO. European integration and the development of common defense and security policies will continue to be of primary interest to Italy.

U.S.-ITALY RELATIONS
The United States enjoys warm and friendly relations with Italy. Italy is a leading partner in the war against terrorism. The two are NATO allies and cooperate in the United Nations, in various regional organizations, and bilaterally for peace, prosperity, and security. Italy has worked closely with the United States and others on such issues as NATO and UN operations as well as with assistance to Russia and the New Independent States; Lebanon; the Middle East peace process; multilateral talks; Somalia and Mozambique peacekeeping; and combating drug trafficking, trafficking in women and children, and terrorism.

Under longstanding bilateral agreements flowing from NATO membership, Italy hosts important U.S. military forces at Vicenza and Livorno (army); Aviano (air force); and Sigonella, Gaeta, and Naples--home port for the U.S. Navy Sixth Fleet. The United States has about 13,000 military personnel stationed in Italy. Italy hosts the NATO Defense College in Rome.

Italy remains a strong and active transatlantic partner which, along with the United States, has sought to foster democratic ideals and international cooperation in areas of strife and civil conflict. Toward this end, the Italian Government has cooperated with the United States in the formulation of defense, security, and peacekeeping policies.

Principal U.S. Officials
Ambassador--David Thorne
Deputy Chief of Mission--Elizabeth Dibble
Economic Affairs--William Meara, Acting
Political Affairs--Barbara Leaf
Consular Affairs--Philip Egger
Public Affairs--Benjamin Ziff
Commercial Affairs--Thomas Moore
Regional Security Affairs--Nace Crawford
Agricultural Section--James Dever
Defense Attache--CAPT Michael James

Consular Posts
Consul General, Florence--Mary Ellen Countryman
Consul General, Milan--Carol Perez
Consul General, Naples--Patrick Truhn

The U.S. Embassy in Italy is located at Via Veneto 119, Rome (tel. (39)(06) 46741.

TRAVEL AND BUSINESS INFORMATION
The U.S. Department of State's Consular Information Program advises Americans traveling and residing abroad through Country Specific Information, Travel Alerts, and Travel Warnings. Country Specific Information exists for all countries and includes information on entry and exit requirements, currency regulations, health conditions, safety and security, crime, political disturbances, and the addresses of the U.S. embassies and consulates abroad. Travel Alerts are issued to disseminate information quickly about terrorist threats and other relatively short-term conditions overseas that pose significant risks to the security of American travelers. Travel Warnings are issued when the State Department recommends that Americans avoid travel to a certain country because the situation is dangerous or unstable.

For the latest security information, Americans living and traveling abroad should regularly monitor the Department's Bureau of Consular Affairs Internet web site at http://www.travel.state.gov, where the current Worldwide Caution, Travel Alerts, and Travel Warnings can be found. Consular Affairs Publications, which contain information on obtaining passports and planning a safe trip abroad, are also available at http://www.travel.state.gov. For additional information on international travel, see http://www.usa.gov/Citizen/Topics/Travel/International.shtml.

The Department of State encourages all U.S. citizens traveling or residing abroad to register via the State Department's travel registration website or at the nearest U.S. embassy or consulate abroad. Registration will make your presence and whereabouts known in case it is necessary to contact you in an emergency and will enable you to receive up-to-date information on security conditions.

Emergency information concerning Americans traveling abroad may be obtained by calling 1-888-407-4747 toll free in the U.S. and Canada or the regular toll line 1-202-501-4444 for callers outside the U.S. and Canada.

The National Passport Information Center (NPIC) is the U.S. Department of State's single, centralized public contact center for U.S. passport information. Telephone: 1-877-4-USA-PPT (1-877-487-2778); TDD/TTY: 1-888-874-7793. Passport information is available 24 hours, 7 days a week. You may speak with a representative Monday-Friday, 8 a.m. to 10 p.m., Eastern Time, excluding federal holidays.

Travelers can check the latest health information with the U.S. Centers for Disease Control and Prevention in Atlanta, Georgia. A hotline at 800-CDC-INFO (800-232-4636) and a web site at http://wwwn.cdc.gov/travel/default.aspx give the most recent health advisories, immunization recommendations or requirements, and advice on food and drinking water safety for regions and countries. The CDC publication "Health Information for International Travel" can be found at http://wwwn.cdc.gov/travel/contentYellowBook.aspx.

Further Electronic Information
Department of State Web Site. Available on the Internet at http://www.state.gov, the Department of State web site provides timely, global access to official U.S. foreign policy information, including Background Notes and daily press briefings along with the directory of key officers of Foreign Service posts and more. The Overseas Security Advisory Council (OSAC) provides security information and regional news that impact U.S. companies working abroad through its website http://www.osac.gov

Export.gov provides a portal to all export-related assistance and market information offered by the federal government and provides trade leads, free export counseling, help with the export process, and more.

STAT-USA/Internet, a service of the U.S. Department of Commerce, provides authoritative economic, business, and international trade information from the Federal government. The site includes current and historical trade-related releases, international market research, trade opportunities, and country analysis and provides access to the National Trade Data Bank.

Background Note: Philippines

Bureau of East Asian and Pacific Affairs

PROFILE

OFFICIAL NAME:
Republic of the Philippines

Geography
Area: 300,000 sq. km. (117,187 sq. mi.).
Major cities (2007 estimate): Capital--Manila (pop. 11.55 million in metropolitan area); other cities--Davao City (1.36 million); Cebu City (0.80 million).
Terrain: Islands, 65% mountainous, with narrow coastal lowlands.
Climate: Tropical, astride typhoon belt.

People
Nationality: Noun--Filipino(s). Adjective--Philippine.
Population (2009 estimate): 92.2 million.
Annual growth rate (2007 estimate): 2.04%.
Ethnic groups: Malay, Chinese.
Religions (based on 2000 census): Roman Catholic 80.9%, Muslim 5%, Evangelical 2.8%, Iglesia ni Kristo 2.3%, Aglipayan 2%, other Christian 4.5%, other 1.8%, unspecified 0.6%, none 0.1%.
Languages: Filipino (based on Tagalog), official national language; English, language of government and instruction in education.
Education: Years compulsory--6 (note: 6 years of primary education free and compulsory; 4 years of secondary education free but not compulsory). Attendance (2008)--85% in elementary grades, 62% in secondary grades. Literacy (2003)--93.4%.
Health: Infant mortality rate (2006)--24 per 1,000. Life expectancy (2005)--67.80 yrs. for males; 72.50 yrs. for females.
Work force (2008): 36.81 million. Services (including commerce and government)--51%; agriculture--34%; industry--15%.

Government
Type: Republic.
Independence: 1946.
Constitution: February 11, 1987.
Branches: Executive--president and vice president. Legislative--bicameral legislature. Judicial--independent.
Administrative subdivisions: 16 regions and Metro Manila (National Capital Region), 80 provinces, 120 cities.
Political parties: Lakas-Christian Muslim Democrats/KAMPI, Nationalist People's Coalition, Laban ng Demokratikong Pilipino, Liberal Party, Aksiyon Demokratiko, Partido Demokratikong Pilipino-Lakas ng Bayan, and other small parties.
Suffrage: Universal, but not compulsory, at age 18.

Economy
GDP (2008): $166.9 billion.
Annual GDP growth rate (2008): 3.8% at constant prices.
GDP per capita (2008): $1,841.
Natural resources: Copper, nickel, iron, cobalt, silver, gold.
Agriculture: Products--rice, coconut products, sugar, corn, pork, bananas, pineapple products, aquaculture, mangoes, eggs.
Industry: Types--textiles and garments, pharmaceuticals, chemicals, wood products, food processing, electronics and semiconductor assembly, petroleum refining, fishing, business process outsourcing services.
Trade (2008): Exports--$49.0 billion. Imports--$56.6 billion.

PEOPLE
The majority of Philippine people are descendants of Indonesians and Malays who migrated to the islands in successive waves over many centuries and largely displaced the aboriginal inhabitants. The largest ethnic minority now is the mainland Asians (called Chinese), who have played an important role in commerce for many centuries since they first came to the islands to trade. Arabs and Indians also traveled and traded in the Philippines in the first and early second millennium. As a result of intermarriage, many Filipinos have some Asian mainland, Spanish, American, Arab, or Indian ancestry. After the mainland Asians, Americans and Spaniards constitute the next largest minorities in the country.

More than 90% of the people are Christian as a result of the nearly 400 years of Spanish and American rule. The major non-Hispanicized groups are the Muslim population, concentrated in the Sulu Archipelago and in central and western Mindanao, and the mountain aboriginal groups of northern Luzon. Small forest tribes still live in the more remote areas of Mindanao.

About 87 languages and dialects are spoken, most belonging to the Malay-Polynesian linguistic family. Of these, eight are the first languages of more than 85% of the population. The four principal indigenous languages are Cebuano, spoken in the Visayas; Tagalog, predominant in the area around Manila; Ilocano, spoken in northern Luzon, and Maranao and related languages spoken in Mindanao. Since 1939, in an effort to develop national unity, the government has promoted the use of the national language, Pilipino, which is based on Tagalog. Pilipino is taught in all schools and is widely used across the archipelago. Many use English as a second language. Nearly all professionals, academics, and government workers are conversant or fluent in English. In January 2003, President Gloria Macapagal-Arroyo ordered the Department of Education to restore English as the medium of instruction in all schools and universities. Only a few Filipino families use Spanish or Mandarin as second languages.

The Philippines has one of the highest literacy rates in the developing world. About 93% of the population 10 years of age and older are literate.

HISTORY
The history of the Philippines can be divided into four distinct phases: the pre-Spanish period (before 1521); the Spanish period (1521-1898); the American period (1898-1946); and the post-independence period (1946-present).

Pre-Spanish Period
The first people in the Philippines, the Negritos, are believed to have come to the islands 30,000 years ago from Borneo and Sumatra, making their way across then-existing land bridges. Subsequently, Malays came from the south in successive waves, the earliest by land bridges and later in boats by sea. The Malays settled in scattered communities, named barangays after the large outrigger boats in which they arrived, and ruled by chieftains known as datus. Chinese merchants and traders arrived and settled in the ninth century, sometimes traveling on the ships of Arab traders, introducing Islam in the south and extending some influence even into Luzon. The Malays, however, remained the dominant group until the Spanish arrived in the 16th century.

Spanish Period
Portuguese explorer Ferdinand Magellan reached the Philippines and claimed the archipelago for Spain in 1521, but was killed shortly afterwards when he intervened in a dispute between rival tribes. Christianity was established in the Philippines only after the arrival of the succeeding Spanish expeditionary forces (the first led by Legazpi in the early 16th century) and the Spanish Jesuits, and in the 17th and 18th centuries by the conquistadores.

Until Mexico proclaimed independence from Spain in 1810, the islands were under the administrative control of Spanish North America, and there was significant migration between North America and the Philippines. This period was the era of conversion to Roman Catholicism. A Spanish colonial social system was developed with a local government centered in Manila and with considerable clerical influence. Spanish influence was strongest in Luzon and the central Philippines but less so in Mindanao, save for certain coastal cities.

The long period of Spanish rule was marked by numerous uprisings. Towards the latter half of the 19th century, European-educated Filipinos or ilustrados (such as the Chinese Filipino national hero Jose Rizal) began to criticize the excesses of Spanish rule and instilled a new sense of national identity. This movement gave inspiration to the final revolt against Spain that began in 1896 under the leadership of Emilio Aguinaldo (another Chinese Filipino) and continued until the Americans defeated the Spanish fleet in Manila Bay on May 1, 1898, during the Spanish-American War. Aguinaldo declared independence from Spain on June 12, 1898.

American Period
Following Admiral George Dewey's defeat of the Spanish fleet in Manila Bay, the U.S. occupied the Philippines. Spain ceded the islands to the United States under the terms of the Treaty of Paris (December 10, 1898) that ended the war.

A war of resistance against U.S. rule, led by revolutionary General Aguinaldo, broke out in 1899. During this conflict fighting and disease claimed the lives of tens of thousands of Filipinos and thousands of Americans. Filipinos and an increasing number of American historians refer to these hostilities as the Philippine-American War (1899-1902), and in 1999, the U.S. Library of Congress reclassified its references to use this term. In 1901, Aguinaldo was captured and swore allegiance to the United States, and resistance gradually died out until the conflict ended with a Peace Proclamation on July 4, 1902. However, armed resistance continued sporadically until 1913, especially among the Muslims in Mindanao and Sulu.

U.S. administration of the Philippines was always declared to be temporary and aimed to develop institutions that would permit and encourage the eventual establishment of a free and democratic government. Therefore, U.S. officials concentrated on the creation of such practical supports for democratic government as public education, public infrastructure, and a sound legal system.

The first legislative assembly was elected in 1907, and a bicameral legislature, largely under Filipino control, was established. A civil service was formed and was gradually taken over by the Filipinos, who had effectively gained control by the end of World War I. The Catholic Church was disestablished, and a considerable amount of church land was purchased and redistributed.

In 1935, under the terms of the Tydings-McDuffie Act, the Philippines became a self-governing commonwealth. Manuel Quezon was elected president of the new government, which was designed to prepare the country for independence after a 10-year transition period. Japan attacked, however, and in May 1942, Corregidor, the last American/Filipino stronghold, fell. U.S. forces in the Philippines surrendered to the Japanese, placing the islands under Japanese control. During the occupation, thousands of Filipinos fought a running guerilla campaign against Japanese forces.

The full-scale war to regain the Philippines began when General Douglas MacArthur landed on Leyte on October 20, 1944. Filipinos and Americans fought together until the Japanese surrendered in September 1945. Much of Manila was destroyed during the final months of the fighting. In total, an estimated one million Filipinos lost their lives in the war.

Due to the Japanese occupation, the guerrilla warfare that followed, and the battles leading to liberation, the country suffered great damage and a complete organizational breakdown. Despite the shaken state of the country, the United States and the Philippines decided to move forward with plans for independence. On July 4, 1946, the Philippine Islands became the independent Republic of the Philippines, in accordance with the terms of the Tydings-McDuffie Act. In 1962, the official Philippine Independence Day was changed from July 4 to June 12, commemorating the date independence from Spain was declared by Emilio Aguinaldo in 1898.

Post-Independence Period
The early years of independence were dominated by U.S.-assisted postwar reconstruction. The communist-inspired Huk Rebellion (1945-53) complicated recovery efforts before its successful suppression under the leadership of President Ramon Magsaysay. The succeeding administrations of Presidents Carlos P. Garcia (1957-61) and Diosdado Macapagal (1961-65) sought to expand Philippine ties to its Asian neighbors, implement domestic reform programs, and develop and diversify the economy.

In 1972, President Ferdinand E. Marcos (1965-86) declared martial law, citing growing lawlessness and open rebellion by the communist rebels as his justification. Marcos governed from 1973 until mid-1981 in accordance with the transitory provisions of a new constitution that replaced the commonwealth constitution of 1935. He suppressed democratic institutions and restricted civil liberties during the martial law period, ruling largely by decree and popular referenda. The government began a process of political normalization during 1978-81, culminating in the reelection of President Marcos to a six-year term that would have ended in 1987. The Marcos government's respect for human rights remained low despite the end of martial law on January 17, 1981. His government retained its wide arrest and detention powers, and corruption and cronyism contributed to a serious decline in economic growth and development.

The assassination of opposition leader Benigno (Ninoy) Aquino upon his return to the Philippines in 1983 after a long period of exile coalesced popular dissatisfaction with Marcos and set in motion a succession of events that culminated in a snap presidential election in February 1986. The opposition united under Aquino's widow, Corazon Aquino, and Salvador Laurel, head of the United Nationalist Democratic Organization (UNIDO). The election was marred by widespread electoral fraud on the part of Marcos and his supporters. International observers, including a U.S. delegation led by Senator Richard Lugar (R-Indiana), denounced the official results. Marcos was forced to flee the Philippines in the face of a peaceful civilian-military uprising that ousted him and installed Corazon Aquino as president on February 25, 1986.

Under Aquino's presidency, progress was made in revitalizing democratic institutions and civil liberties. However, the administration was also viewed by many as weak and fractious, and a return to full political stability and economic development was hampered by several attempted coups staged by disaffected members of the Philippine military.

Fidel Ramos was elected president in 1992. Early in his administration, Ramos declared "national reconciliation" his highest priority. He legalized the Communist Party and created the National Unification Commission (NUC) to lay the groundwork for talks with communist insurgents, Muslim separatists, and military rebels. In June 1994, President Ramos signed into law a general conditional amnesty covering all rebel groups, as well as Philippine military and police personnel accused of crimes committed while fighting the insurgents. In October 1995, the government signed an agreement bringing the military insurgency to an end. A peace agreement with one major Muslim insurgent group, the Moro National Liberation Front (MNLF), was signed in 1996, using the existing Autonomous Region in Muslim Mindanao (ARMM) as a vehicle for self-government.

Popular movie actor Joseph Ejercito Estrada's election as president in May 1998 marked the Philippines' third democratic succession since the ouster of Marcos. Estrada was elected with overwhelming mass support on a platform promising poverty alleviation and an anti-crime crackdown. During his first two years in office, President Estrada was plagued with allegations of corruption, resulting in impeachment proceedings. Estrada vacated his office in 2001. In 2007, an anti-graft court convicted Estrada of plunder charges. He received a presidential pardon soon after the conviction.

Gloria Macapagal-Arroyo, elected vice president in 1998, assumed the presidency in January 2001 after widespread demonstrations that followed the breakdown of Estrada's impeachment trial. The Philippine Supreme Court subsequently endorsed unanimously the constitutionality of the transfer of power. National and local elections took place in May 2004. Under the constitution, Arroyo was eligible for another six-year term as president, and she won a hard-fought campaign against her primary challenger, movie actor Fernando Poe, Jr., in elections held May 10, 2004. Noli De Castro was elected vice president.

Impeachment charges were brought against Arroyo in June 2005 for allegedly tampering with the results of the elections after purported tapes of her speaking with an electoral official during the vote count surfaced, but Congress rejected the charges in September 2005. Similar charges were discussed and dismissed by Congress in 2006, 2007, and 2008.

GOVERNMENT AND POLITICAL CONDITIONS
The Philippines has a representative democracy modeled on the U.S. system. The 1987 constitution, adopted during the Aquino administration, reestablished a presidential system of government with a bicameral legislature and an independent judiciary. The president is limited to one six-year term. Provision also was made in the constitution for autonomous regions in Muslim areas of Mindanao and in the Cordillera region of northern Luzon, where many aboriginal tribes still live.

The 24-member Philippine Senate is elected at large, and all senators serve six-year terms. Half are elected every three years. There are currently 239 members in the House of Representatives, 217 of whom represent single-member districts. The remaining 22 House seats are occupied by sectoral party representatives elected at large, called party list representatives. The Supreme Court approved the introduction of 32 additional party list seats in April 2009, in time for May 2010 national elections. All representatives serve three-year terms, with a maximum of three consecutive terms. On May 14, 2007, legislative and local elections were held. President Arroyo's coalition won the majority of the seats in the House of Representatives, gubernatorial seats, and city mayoral seats. However, the President's coalition won only three out of 12 vacant seats in the Philippine Senate. Although the election was marred by some violence and irregularities, civil society monitoring groups played a welcome and active role in ensuring a relatively fair and democratic process. The next presidential and congressional elections are scheduled for May 2010.

The government continues to face threats from terrorist groups, including four terrorist groups on the U.S. Government's Foreign Terrorist Organization list. The terrorist Abu Sayyaf Group (ASG), which gained international notoriety with its kidnappings of foreign tourists in the southern islands, remains a major problem for the government, along with members of the Indonesian-based Jemaah Islamiyah (JI). Efforts to track down and interdict ASG and JI members have met with some success, especially in Basilan and Jolo, where U.S. troops provide counterterrorism assistance and training to Philippine soldiers, along with conducting humanitarian activities. In August 2006, the Armed Forces of the Philippines began a major offensive against ASG and JI on the island of Jolo. This offensive was successful and resulted in the deaths of Abu Sayyaf leader Khadafy Janjalani and his deputy, Abu Solaiman. The U.S. Government provided rewards to Philippine citizens whose information led to these deaths in the military operations, as well as to many other operations against terrorist leaders. The broad-based efforts to weaken terrorist organizations resulted in the death or capture of over 200 terrorists in 2007 and 2008.

An international monitoring team continues to watch over a cease-fire agreement between the government and the separatist Moro Islamic Liberation Front (MILF). In June 2003, the MILF issued a formal renunciation of terrorism. In August 2008, during peace talks mediated by the Government of Malaysia, the Philippine Government and the MILF reached agreement in principle on a territorial agreement. However, intervention by the Philippine Supreme Court, and its subsequent October 14, 2008 ruling that the draft agreement was unconstitutional, forced both parties to seek new ways to reach a peace agreement. Fighting flared up after the agreement was struck down in court and continued sporadically in central Mindanao, until both sides agreed to a cease-fire on July 29, 2009 and resumed the peace talks.

Principal Government Officials
President--Gloria Macapagal-Arroyo
Vice President--Noli De Castro
Foreign Secretary--Alberto Romulo
Ambassador to the United States--Willie Gaa
Permanent Representative to the UN--Hilario G. Davide

The Republic of the Philippines maintains an embassy in the United States at 1600 Massachusetts Avenue NW, Washington, DC 20036 (tel. 202-467-9300). Consulates general are in New York, Chicago, San Francisco, Los Angeles, Honolulu, and Agana (Guam).

ECONOMY
Since the end of World War II, the Philippine economy has been on an unfortunate trajectory, going from one of the richest countries in Asia (following Japan) to one of the poorest. Growth immediately after the war was rapid, but slowed over time. Years of economic mismanagement and political volatility during the Marcos regime contributed to economic stagnation and resulted in macroeconomic instability. A severe recession from 1984 through 1985 saw the economy shrink by more than 10%, and perceptions of political instability during the Aquino administration further dampened economic activity.

During the 1990s, the Philippine Government introduced a broad range of economic reforms designed to spur business growth and foreign investment. As a result, the Philippines saw a period of higher growth, although the Asian financial crisis in 1997 slowed Philippine economic development once again.

Despite occasional challenges to her presidency and resistance to pro-liberalization reforms by vested interests, President Arroyo made considerable progress in restoring macroeconomic stability with the help of a well-regarded economic team. Nonetheless, long-term economic growth remains threatened by crumbling infrastructure and education systems, and trade and investment barriers. International competitiveness rankings have slipped.

The service sector contributes more than half of overall Philippine economic output, followed by industry (about a third), and agriculture (less than 20%). Important industries include food processing; textiles and garments; electronics and automobile parts; and business process outsourcing. Most industries are concentrated in the urban areas around metropolitan Manila. Mining also has great potential in the Philippines, which possesses significant reserves of chromate, nickel, and copper. Significant natural gas finds off the islands of Palawan have added to the country's substantial geothermal, hydro, and coal energy reserves.

Today's Economy
The Philippine economy seems comparatively well-equipped to weather the global financial crisis in the short term, partly as a result of the efforts over the past few years to control the fiscal deficit, bring down debt ratios, and adopt internationally-accepted banking sector capital adequacy standards. The Philippine banking sector--which comprises 80% of total financial system resources--has limited direct exposure to distressed financial institutions overseas (i.e., $2 billion, less than 2% of aggregate banking system assets). Conservative regulatory policies, including the prohibition of investments in structured products, shielded the insurance sector from exposure to distressed financial firms. While direct financial exposure to problematic investments and financial institutions is limited, the impact of external shocks to economic growth, poverty alleviation, employment, remittances, credit availability, and overall investment prospects is a concern.

GDP grew by 7.3% in 2007, the fastest annual pace of growth in over three decades--fueled by increased government and private construction expenditures; a robust information communications technology industry; improved post-drought agricultural harvests; and strong private consumption, spurred in part by $14.4 billion in remittances from overseas workers (equivalent to about 10% of GDP). However, real year-on-year GDP growth slowed to 3.8% during 2008, reflecting the impact of high food and fuel prices and global financial uncertainties on the domestic economy. Overseas workers’ remittances--which increased 13.7% year-on-year in 2008 to a new $16.4 billion record--helped cushion the impact of external shocks on economic growth, but began to slow during 2008’s fourth quarter. Remittances are expected to grow 3%-4% in 2009 despite the global financial crisis, helping the economy avoid recession and supporting the balance of payments and international reserves. Most independent forecasts also currently see Philippine GDP growing within the government’s 0.8%-1.8% targeted range for 2009. It will take a higher, sustained economic growth path to make more appreciable progress in poverty alleviation given the Philippines' annual population growth rate of 2.04%, one of the highest in Asia. The portion of the population living below the national poverty line increased from 30% to 33% between 2003 and 2006, equivalent to an additional 3.8 million poor Filipinos. Slower economic growth here and abroad, a soft domestic labor market, and uncertainties over overseas employment opportunities threaten to push more Filipinos into poverty.

Business process outsourcing (BPO) has been the fastest-growing segment of the Philippine economy and has been relatively resilient amid the global financial turmoil, totaling an estimated 10% of the global outsourcing market and generating more than $6 billion in revenues in 2008 (up 26% and equivalent to about 3.6% of Philippine GDP). Although revenue growth has slowed from 40% during 2006 and 2007, industry officials expect the BPO sector to post double-digit revenue growth of between 20%-30%, and to generate about 100,000 new jobs, during 2009. The balance of payments surplus--which hit a record $8.6 billion in 2007 from higher overseas worker remittances, tourism receipts, BPO-related revenues, portfolio investments, and official development assistance funds--narrowed to $18 million during 2008. Merchandise exports--which rely heavily on electronics shipments for about two-thirds of sales--declined by nearly 3% year-on-year during 2008, pulled down by a 23% year-on-year decline in fourth-quarter revenues. Although there has been some improvement over the years, the local value added of electronics exports remains relatively low at about 30%. Net foreign direct investment (FDI) inflows dropped by 48% from 2007, to $1.5 billion; and net foreign portfolio capital reversed from a $3.8 billion net inflow in 2007 to a $3.6 billion net outflow in 2008. Import growth slowed but nevertheless increased by more than 2%, mainly because of spikes in international prices of fuel, rice, and petroleum-based agricultural inputs. Foreign tourist arrivals sputtered to 1.5% growth and tourism-related revenues weakened. The United States remains the Philippines' largest trading partner with $17 billion in two-way trade during 2008, and is among the largest investors with $6 billion in total direct investments. Although showing signs of bottoming out, merchandise exports slumped further in 2009 (with January-August 2009 exports down 30.3% year-on-year). However, the merchandise import bill has also declined (31.2% as of August 2009), combining with the continued expansion in overseas remittances and BPO revenues, and improving net foreign direct and portfolio investment flows to produce a wider balance of payments surplus (estimated at $2.8 billion as of August 2009).

The Philippine stock market index--which closed 2008 down more than 48% year-on-year--closed mid-October 2009 more than 57% higher from end-2008. The Philippine peso, which closed 2008 15% weaker from end-2007, has appreciated by 2.5% since the beginning of the year. Gross international reserves ($37.6 billion as of end-2008) have risen further to a new record high of nearly $42.3 billion as of end-September 2009, adequate for close to 8 months of goods and services imports and equivalent to 3.6 times foreign debts maturing over the next 12 months.

Efforts in recent years to reduce the fiscal deficit by raising new taxes have helped reduce high debt ratios, create additional fiscal space to increase spending on vital social services and infrastructure after years of tight budgets, and improve confidence. December 2004 legislation provided for biennial adjustments to the excise tax rates for tobacco and liquor products until 2011; the government began implementing an amended value added tax (VAT) law in November 2005 that expanded VAT coverage and increased the VAT rate from 10% to 12%; and a law signed in January 2005 seeks to institute a performance-based rewards system in the government's revenue collection agencies. Although still high by regional and emerging country standards, the debt of the national government has declined to about 56% of GDP; and that of the consolidated public sector to about 64% of GDP. Major credit rating agencies raised their rating outlook from “negative” to “stable” in recognition of fiscal progress and more manageable debt ratios.

The national government worked to reduce its fiscal deficits for five consecutive years to 0.2% of GDP in 2007 and had hoped to balance the budget in 2008. The Arroyo administration no longer targets leaving office in 2010 with a balanced budget, opting instead for measured deficit spending to help stimulate the economy and temper the adverse impact of global external shocks on the already high number of Filipinos struggling with poverty. The national government ended 2008 with a deficit equivalent to 0.9% of GDP and has programmed a higher deficit for 2009 equivalent to 3.2% of GDP. Looking forward, further reforms are needed to ease fiscal pressures from large losses being sustained by a number of government-owned firms and to control and manage contingent liabilities. Despite recent improvements, challenges remain to the long-term viability of state-run pension funds. The national government's tax-to-GDP ratio increased from 13% in 2005 to 14.3% in 2006 after new tax measures went into effect; however, it declined and stagnated at 14% in 2007 and 2008, has declined further in 2009 (to 13.5% during the first semester), and remains low relative to historical performance (i.e., 1997’s 17% peak ratio) and vis-à-vis regional standards. The government has intermittently relied on heftier privatization receipts to make up for the shortfall in targeted tax collections but this is not a sustainable revenue source. Legislation passed in 2008 providing tax relief for minimum wage earners and individual taxpayers, a cut in the corporate income tax rate from 35% to 30% starting 2009, and no further adjustments to liquor and tobacco excise taxes after 2011 will erode government revenues further.

The Philippine Congress enacted an anti-money laundering law in September 2001 and followed through with amendments in March 2003 to address legal concerns posed by the Organization for Economic Cooperation and Development (OECD) Financial Action Task Force (FATF). The FATF removed the Philippines from its list of Non-Cooperating Countries and Territories in February 2005, noting the significant progress made to remedy concerns and deficiencies identified by the FATF to improve implementation. The Egmont Group, the international network of financial intelligence units, admitted the Philippines to its membership in June 2005. The FATF Asia Pacific Group conducted a comprehensive peer review of the Philippines in September 2008. Some of the more important concerns include the exclusion of casinos from the list of covered institutions and 2008 court rulings that inhibit and complicate investigations of fraud and corruption by prohibiting ex-parte inquiries regarding suspicious accounts. The Philippines’ financial intelligence unit is pushing for amendments to the anti-money laundering law to address these concerns.

Eight years after the Arroyo administration enacted legislation to rationalize the electric power sector and privatize the government's debt-saddled National Power Corporation (NPC), significant progress was made only in 2007, with the privatization of the state-owned transmission company (Transco) and sales of 68% of total generating assets in Luzon and the Visayas. The Arroyo government is confident it will complete its privatization targets in 2009.

The U.S. Trade Representative removed the Philippines from its Special 301 Priority Watch List in 2006, reflecting improvement in its enforcement of intellectual property rights (IPR) protection. It has maintained the Philippines on the Special 301 Watch List through 2009. However, sustained effort and continuing progress on key IPR issues will be essential to maintain this status.

Despite a number of policy reforms, the Philippines continues to face important challenges and must sustain the reform momentum to achieve and sustain the strong post-crisis recovery needed to spur investments, achieve higher growth, generate employment, and alleviate poverty for a rapidly expanding population. Absent new revenue measures, sustained fiscal stability will require more aggressive tax collection efficiency to address the severe under-spending in infrastructure and social services after years of tight budgets. Continuing efforts to fast-track power sector privatization remain critical to the long-term stability of public sector finances, ensuring reliable electricity supply, and bringing down the cost of power. Climate change is an emerging threat to agriculture and overall growth, and also could further complicate fiscal consolidation efforts.

Potential foreign investors, as well as tourists, remain concerned about law and order, inadequate infrastructure, policy and regulatory instability, and governance issues. While trade liberalization presents significant opportunities, intensifying global competition and the emergence of low-wage export economies also pose challenges. Competition from other Southeast Asian countries and from China for investment underlines the need for sustained progress on structural reforms to remove bottlenecks to growth, to lower costs of doing business, and to promote good public and private sector governance. The government has been working to reinvigorate its anti-corruption drive, and the Office of the Ombudsman has reported improved conviction rates. Nevertheless, the Philippines’ efforts are lagging and more needs to be done to improve international perception of its anti-corruption campaign--an effort that will require strong political will and significantly greater financial and human resources.

Agriculture and Forestry
Arable farmland comprises more than 40% of the total land area. Although the Philippines is rich in agricultural potential, inadequate infrastructure, lack of financing, and government policies have limited productivity gains. Philippine farms produce food crops for domestic consumption and cash crops for export. The agricultural sector employs more than one-third of the work force but provides less than a fifth of GDP.

Decades of uncontrolled logging and slash-and-burn agriculture in marginal upland areas have stripped forests, with critical implications for the ecological balance. Although the government has instituted conservation programs, deforestation remains a severe problem.

With its 7,107 islands, the Philippines has a very diverse range of fishing areas. Notwithstanding good prospects for marine fisheries, the industry continues to face a difficult future due to destructive fishing methods, a lack of funds, and inadequate government support.

Agriculture generally suffers from low productivity, low economies of scale, and inadequate infrastructure support. Despite the adverse effects of successive strong typhoons in the last four months of 2006, the overall agricultural output expanded by 3.8% during that year. In 2007, the sector grew by 4.7%, led by gains in the fisheries subsector. The sector registered slower growth in 2008 at 3.9%, due mainly to negative growth in the livestock sector and lesser output in the crops and fisheries subsector, and growth is expected to slow further to under 2% in 2009 due to adverse weather conditions.

Industry
Industrial production is centered on the processing and assembly operations of the following: food, beverages, tobacco, rubber products, textiles, clothing and footwear, pharmaceuticals, paints, wood and wood products, paper and paper products, printing and publishing, furniture and fixtures, small appliances, and electronics. Heavier industries are dominated by the production of cement, glass, industrial chemicals, fertilizers, iron and steel, mineral products, and refined petroleum products. Newer industries, particularly production of semiconductors and other intermediate goods for incorporation into consumer electronics are important components of Philippine exports and are located in special export processing zones.

The industrial sector is concentrated in urban areas, especially in the metropolitan Manila region, and has only weak linkages to the rural economy. Inadequate infrastructure, transportation, and communication have so far inhibited faster industrial growth, although significant strides have been made in addressing the last of these elements.

Mining
The Philippines is one of the world's most highly mineralized countries, with untapped mineral wealth estimated at more than $840 billion. Philippine copper, gold, and chromate deposits are among the largest in the world. Other important minerals include nickel, silver, coal, gypsum, and sulfur. The Philippines also has significant deposits of clay, limestone, marble, silica, and phosphate. The discovery of natural gas reserves off Palawan has been brought on-line to generate electricity.

Despite its rich mineral deposits, the Philippine mining industry is just a fraction of what it was in the 1970s and 1980s when the country ranked among the ten leading gold and copper producers worldwide. Low metal prices, high production costs, and lack of investment in infrastructure have contributed to the industry's overall decline. A December 2004 Supreme Court decision upheld the constitutionality of the 1995 Mining Act, thereby allowing up to 100% foreign-owned companies to invest in large-scale exploration, development, and utilization of minerals, oil, and gas.

FOREIGN RELATIONS
In its foreign policy, the Philippines cultivates constructive relations with its Asian neighbors, with whom it is linked through membership in the Association of Southeast Asian Nations (ASEAN), the ASEAN Regional Forum (ARF), and the Asia-Pacific Economic Cooperation (APEC) forum. The Philippines chaired ASEAN from 2006 to 2007, hosting the ASEAN Heads of State Summit and the ASEAN Regional Forum. The Philippines is a member of the UN and some of its specialized agencies, and served a two-year term as a member of the UN Security Council from January 2004-2006, acting as UNSC President in September 2005. Since 1992, the Philippines has been a member of the Non-Aligned Movement. The government is seeking observer status in the Organization of the Islamic Conference (OIC). The Philippines has played a key role in ASEAN in recent years, ratifying the ASEAN Charter in October 2008. The Philippines also values its relations with the countries of the Middle East, in no small part because hundreds of thousands of Filipinos are employed in that region. The welfare of the some four to five million overseas Filipino contract workers is considered to be a pillar of Philippine foreign policy.

The fundamental Philippine attachment to democracy and human rights is also reflected in its foreign policy. Philippine soldiers and police have participated in a number of multilateral civilian police and peacekeeping operations, and a Philippine Army general served as the first commander of the UN Peacekeeping Operation in East Timor. The Philippines presently has peacekeepers deployed in eight UN Peacekeeping Operations worldwide. The Philippines also participated in Operation Iraqi Freedom, deploying some 50 troops to Iraq in 2003. (These troops were subsequently withdrawn in 2004 after the kidnapping of a Filipino overseas worker.) The Philippine Government also has been active in efforts to reduce tensions among rival claimants to the territories and waters of the resource-rich South China Sea.

U.S.-PHILIPPINE RELATIONS
U.S.-Philippine relations are based on shared history and commitment to democratic principles, as well as on economic ties. The historical and cultural links between the Philippines and the United States remain strong. The Philippines modeled its governmental institutions on those of the United States and continues to share a commitment to democracy and human rights. At the most fundamental level of bilateral relations, human links continue to form a strong bridge between the two countries. There are an estimated four million Americans of Philippine ancestry in the United States, and more than 250,000 American citizens in the Philippines.

Until November 1992, pursuant to the 1947 Military Bases Agreement, the United States maintained and operated major facilities at Clark Air Base, Subic Bay Naval Complex, and several small subsidiary installations in the Philippines. In August 1991, negotiators from the two countries reached agreement on a draft treaty providing for use of Subic Bay Naval Base by U.S. forces for 10 years. The draft treaty did not include use of Clark Air Base, which had been so heavily damaged by the 1991 eruption of Mount Pinatubo that the United States decided to abandon it.

In September 1991, the Philippine Senate rejected the bases treaty, and despite further efforts to salvage the situation, the two sides could not reach an agreement. As a result, the Philippine Government informed the United States on December 6, 1991, that it would have one year to complete withdrawal. That withdrawal went smoothly and was completed ahead of schedule, with the last U.S. forces departing on November 24, 1992. On departure, the U.S. Government turned over assets worth more than $1.3 billion to the Philippines, including an airport and ship-repair facility. Agencies formed by the Philippine Government have converted the former military bases for civilian commercial use, with Subic Bay serving as a flagship for that effort.

The post-U.S. bases era has seen U.S.-Philippine relations improved and broadened, with a prominent focus on economic and commercial ties while maintaining the importance of the security dimension. U.S. investment continues to play an important role in the Philippine economy, while a strong security relationship rests on the 1952 U.S.-Philippines Mutual Defense Treaty (MDT). In February 1998, U.S. and Philippine negotiators concluded the Visiting Forces Agreement (VFA), paving the way for increased military cooperation under the MDT. The agreement was approved by the Philippine Senate in May 1999 and entered into force on June 1, 1999. Under the VFA, the United States has conducted ship visits to Philippine ports and resumed large combined military exercises with Philippine forces.

Key events in the bilateral relationship include the July 4, 1996 declaration by President Ramos of Philippine-American Friendship Day in commemoration of the 50th anniversary of Philippine independence. Ramos visited the United States in April 1998, and then-President Estrada visited in July 2000. President Arroyo met with President George W. Bush in an official working visit in November 2001, made a state visit in Washington on May 19, 2003, and returned for additional working visits on June 24, 2008 and July 30, 2009. President Bush made a state visit to the Philippines on October 18, 2003, during which he addressed a joint session of the Philippine Congress--the first American President to do so since Dwight D. Eisenhower. There are regular U.S. cabinet-level, congressional, and military visits to the Philippines as well.

President Arroyo has repeatedly stressed the close friendship between the Philippines and the United States and her desire to expand bilateral ties further. Both governments seek to revitalize and strengthen their partnership by working toward greater security, prosperity, and service to Filipinos and Americans alike. President Arroyo has lent strong support to counterterrorism efforts. In October 2003, the United States designated the Philippines as a Major Non-NATO Ally. That same month, the Philippines joined the select group of countries to have ratified all 12 UN counterterrorism conventions.

Annual bilateral military exercises contribute directly to the Philippine armed forces' efforts to combat insurgents, defeat Abu Sayyaf and Jemaah Islamiyah terrorists, and bring development to formerly terrorist-plagued areas, most notably in the southern Philippines. They include not only combined military training but also civil-military affairs and humanitarian projects. The International Military Education and Training (IMET) program is the largest in the Pacific and the third-largest in the world, and a Mutual Logistics Support Agreement (MLSA) was signed in November 2002. Similarly, law enforcement cooperation has reached new levels: U.S. and Philippine agencies have cooperated to bring charges against numerous terrorists, to implement the countries' extradition treaty, and to train thousands of Filipino law enforcement officers. There is a Senior Law Enforcement Advisor helping the Philippine National Police with its Transformation Program.

In FY 2009, the U.S. Government--working closely with the Philippine Government, civil society, the private sector, and other donors--provided $138 million in grant funds to support a more peaceful and prosperous Philippines. About 55% of economic assistance resources are targeted for Mindanao, for programs that promote economic growth, mitigate conflict, and promote peace and security. The United States supports programs that promote good governance at the national and local levels, improve electoral systems, promote rule of law and human rights, help address constraints to trade and investment, improve revenue collection/administration and fiscal transparency, and enhance the ability of military and civilian law enforcement agencies to maintain peace and security. Many programs across other sectors--including health, education, agricultural productivity, micro-enterprise development, and natural resource management--also support improved governance, human capital development, poverty alleviation, and/or sustainable growth. Health-related assistance programs include reproductive health, maternal and child care, tuberculosis and HIV/AIDS control, and avian flu preparedness. The United States also provides humanitarian assistance to internally-displaced persons in conflict-affected areas and to victims of natural disasters (including $5 million in reconstruction assistance for the typhoon-battered Bicol region in FY 2007 and, thus far, $6 million for disaster relief and early recovery following typhoons Ketsana and Parma in FY 2009 and FY 2010). In 2006, the Millennium Challenge Corporation (MCC) granted $21 million to the Philippines for a two-year Threshold Program targeted at addressing corruption in revenue administration and improving the capabilities of the Office of the Ombudsman. Performance under this Threshold Program contributed to the MCC awarding the Philippines Compact eligibility status in March 2008, and retention of such status in December 2008.

Nearly 400,000 Americans visit the Philippines each year. Providing government services to U.S. and other citizens, therefore, constitutes an important aspect of the bilateral relationship. Those services include veterans' affairs, social security, and consular operations. Benefits to Filipinos and U.S. citizens resident in the Philippines from the U.S. Department of Veterans Affairs and the Social Security Administration totaled approximately $330 million in 2007. Many people-to-people programs exist between the United States and the Philippines, including Fulbright, International Visitors, and Aquino Fellowship exchange programs, as well as the U.S. Peace Corps.

Trade and Investment
Two-way U.S. merchandise trade with the Philippines amounted to $17 billion in 2008 (U.S. Department of Commerce data). According to Philippine Government data, 12.7% of the Philippines' imports in 2008 came from the United States, and about 16.7% of its exports were bound for America. The Philippines ranks as our 31st-largest export market and our 37th-largest supplier. Key exports to the United States are semiconductor devices and computer peripherals, automobile parts, electric machinery, textiles and garments, wheat and animal feeds, and coconut oil. In addition to other goods, the Philippines imports raw and semi-processed materials for the manufacture of semiconductors, electronics and electrical machinery, transport equipment, and cereals and cereal preparations.

The United States traditionally has been the Philippines' largest foreign investor, with close to $6 billion in total foreign direct investment as of end-2008.

Since the late 1980s, the Philippines has committed itself to reforms that encourage foreign investment as a basis for economic development, subject to certain guidelines and restrictions in specified areas. Under President Ramos, the Philippines expanded reforms, opening the power generation and telecommunications sectors to foreign investment, as well as securing ratification of the Uruguay Round agreement and membership in the World Trade Organization. As noted earlier, President Arroyo's administration has generally continued such reforms despite opposition from vested interests and "nationalist" blocs. A major obstacle has been and will continue to be constitutional restrictions on, among others, foreign ownership of land and public utilities, which limits maximum ownership to 40%.

Although more reforms are needed, the relatively closed Philippine economy has been opened significantly over the last two decades by foreign exchange deregulation, foreign investment and banking liberalization, tariff and market barrier reduction, and foreign entry into the retail trade sector. The Electric Power Industry Reform Act of 2001 opened opportunities for U.S. firms to participate in the power industry in the Philippines. Information and communications technologies, backroom operations such as call centers, regional facilities or shared-service centers, tourism, and mining are likewise leading investment opportunities.

Principal U.S. Embassy Officials
Ambassador--Kristie A. Kenney
Deputy Chief of Mission--Leslie Bassett
Political Counselor--Thomas B. Gibbons
Economic Counselor--Brian P. Doherty
Public Affairs Counselor--Richard Nelson
Consul General--Karen L. Christensen
Management Counselor (acting)--Vivian Lesh
Commercial Counselor--Patrick Wall
USAID Mission Director (acting)--Elzadia Washington
Agricultural Counselor--Emiko Purdy
Transportation and Safety Administration--Scottie R. Laird
Department of Homeland Security--Frank J. Cabaddu
Department of Justice Attaché--Robert E. Courtney III
Defense Attaché Office--Colonel Anthony Senci
Joint U.S. Military Assistance Group--Colonel Kevin D. Clark
Regional Security Officer--Jacob M. Wohlman
Legal Attaché--James D. Nixon
U.S. Drug Enforcement Administration--Robert M. Cash
Veterans Affairs--Jonathan Skelly
Social Security Administration--Darrin Morgan
American Battle Monuments Commission--Larry A. Adkison
U.S. Peace Corps--Sonia Derenoncourt

The U.S. Embassy is located at 1201 Roxas Boulevard, Manila; tel. (63)(2) 301-2000; fax 301-2399; website: http://manila.usembassy.gov/. The American Business Center is located at 25/F, Ayala Life - FGU Center, 6811 Ayala Avenue, Makati City. It houses the Foreign Commercial Service: tel. (63)(2) 888-4088; fax 888-6606; website: http://manila.usembassy.gov/wwwh3012.html; and the Foreign Agricultural Service: tel. (63)(2) 887-1137; fax 887-1268; website: http://manila.usembassy.gov/wwwh3011.html.

TRAVEL AND BUSINESS INFORMATION
The U.S. Department of State's Consular Information Program advises Americans traveling and residing abroad through Country Specific Information, Travel Alerts, and Travel Warnings. Country Specific Information exists for all countries and includes information on entry and exit requirements, currency regulations, health conditions, safety and security, crime, political disturbances, and the addresses of the U.S. embassies and consulates abroad. Travel Alerts are issued to disseminate information quickly about terrorist threats and other relatively short-term conditions overseas that pose significant risks to the security of American travelers. Travel Warnings are issued when the State Department recommends that Americans avoid travel to a certain country because the situation is dangerous or unstable.

For the latest security information, Americans living and traveling abroad should regularly monitor the Department's Bureau of Consular Affairs Internet web site at http://www.travel.state.gov, where the current Worldwide Caution, Travel Alerts, and Travel Warnings can be found. Consular Affairs Publications, which contain information on obtaining passports and planning a safe trip abroad, are also available at http://www.travel.state.gov. For additional information on international travel, see http://www.usa.gov/Citizen/Topics/Travel/International.shtml.

The Department of State encourages all U.S. citizens traveling or residing abroad to register via the State Department's travel registration website or at the nearest U.S. embassy or consulate abroad. Registration will make your presence and whereabouts known in case it is necessary to contact you in an emergency and will enable you to receive up-to-date information on security conditions.

Emergency information concerning Americans traveling abroad may be obtained by calling 1-888-407-4747 toll free in the U.S. and Canada or the regular toll line 1-202-501-4444 for callers outside the U.S. and Canada.

The National Passport Information Center (NPIC) is the U.S. Department of State's single, centralized public contact center for U.S. passport information. Telephone: 1-877-4-USA-PPT (1-877-487-2778); TDD/TTY: 1-888-874-7793. Passport information is available 24 hours, 7 days a week. You may speak with a representative Monday-Friday, 8 a.m. to 10 p.m., Eastern Time, excluding federal holidays.

Travelers can check the latest health information with the U.S. Centers for Disease Control and Prevention in Atlanta, Georgia. A hotline at 800-CDC-INFO (800-232-4636) and a web site at http://wwwn.cdc.gov/travel/default.aspx give the most recent health advisories, immunization recommendations or requirements, and advice on food and drinking water safety for regions and countries. The CDC publication "Health Information for International Travel" can be found at http://wwwn.cdc.gov/travel/contentYellowBook.aspx.

Further Electronic Information
Department of State Web Site. Available on the Internet at http://www.state.gov, the Department of State web site provides timely, global access to official U.S. foreign policy information, including Background Notes and daily press briefings along with the directory of key officers of Foreign Service posts and more. The Overseas Security Advisory Council (OSAC) provides security information and regional news that impact U.S. companies working abroad through its website http://www.osac.gov

Export.gov provides a portal to all export-related assistance and market information offered by the federal government and provides trade leads, free export counseling, help with the export process, and more.

STAT-USA/Internet, a service of the U.S. Department of Commerce, provides authoritative economic, business, and international trade information from the Federal government. The site includes current and historical trade-related releases, international market research, trade opportunities, and country analysis and provides access to the National Trade Data Bank.

Background Note: Suriname

Bureau of Western Hemisphere Affairs

PROFILE

OFFICIAL NAME:
Republic of Suriname

Geography
Area: 163,194 sq. km. (63,037 sq. mi.); slightly larger than Georgia.
Cities: Capital--Paramaribo (pop. 242,946). Other cities--Nieuw Nickerie, Moengo, Brownsweg, Albina.
Terrain: Rain forest, savanna, coastal swamps, hills.
Climate: Tropical.

People
Nationality: Noun--Surinamer(s). Adjective--Surinamese.
Population (2004 census): 492,829.
Annual growth rate (2004): 1.30%.
Ethnic groups (2004 census): Hindustani (East Indian) 27%, Creole 18%, Javanese 15%, Maroon 15%, mixed 12.5%, Amerindians 3.7%, Chinese 1.8%.
Religions: Hindu, Muslim, Roman Catholic, Dutch Reformed, Moravian, several other Christian denominations, Jewish, Baha'i.
Languages: Dutch (official), English (widely spoken in Paramaribo), Sranan Tongo (Creole language), Hindustani, Javanese.
Education: Years compulsory--ages 6-12. Literacy--90%.
Health: Infant mortality rate (2004)--7 per 1,000. Life expectancy (2003)--71 yrs.
Work force (100,000): Government--35%; private sector--41%; parastatal companies--10%; unemployed--14%.

Government
Type: Constitutional democracy.
Constitution: September 30, 1987.
Independence: November 25, 1975.
Branches: Executive--President, Vice President, Council of Ministers. Legislative--elected 51-member National Assembly made up of representatives of political parties. Judicial--Court of Justice.
Administrative subdivisions: 10 districts.
Political parties: Governing coalition--National Party of Suriname (NPS); Progressive Reform Party (VHP); Pertjaja Luhur; A - Combination, a coalition of General Interior Development Party (ABOP), Brotherhood and Unity in Politics (BEP), and Seeka; Suriname Workers Party (SPA); Democratic Alternative '91 (DA '91). Other parties in the National Assembly--National Democratic Party (NDP), Democratic National Platform 2000 (DNP 2000), Alternative 1 (A1), Party for Renewal and Development (BVD), Javanese Indonesian Peasants Party (KTPI).
Suffrage: Universal at 18.

Economy
GDP (2008 est.): $2.81 billion (Source: IMF).
Annual growth rate real GDP (2007 actual): 5.5%.
Per capita GDP (2007 est.): $4,830.
Inflation (2007): 7.0%.
Natural resources: Bauxite, gold, oil, iron ore, other minerals; forests; hydroelectric potential; fish and shrimp.
Agriculture: Products--rice, bananas, timber, citrus fruits, fish and shrimp.
Industry: Types--alumina, oil, gold, fish and shrimp processing, lumber.
Trade (Source: IMF): Exports (2007)--$1.542 billion: alumina, gold, crude oil, wood and wood products, rice, bananas, fish, and shrimp. Major markets (2007)--Canada (23%), Norway (14.4%), U.S. (12.1%), Trinidad (7.2%), France (5.4%), Iceland (2.1%). Imports (2007)--$1.242 billion: machinery and transport equipment, manufactured goods, mineral fuels including lubricants, food and live animals. Major suppliers (2007)--U.S. (31.7%), Netherlands (20.4%), Trinidad and Tobago (17.9%), Japan (3.6%), China (5.5%), Brazil (2.9%).

PEOPLE
Most Surinamers live in the narrow, northern coastal plain. For its size, the population is one of the most ethnically diverse in the world. Each ethnic group preserves its own culture, and many institutions, including political parties, tend to follow ethnic lines. Informal relationships vary: the upper classes of all ethnic backgrounds mix freely; outside of the elite, social relations tend to remain within ethnic groupings. All groups may be found in schools and the workplace.

HISTORY
Arawak and Carib tribes lived in the region before Columbus sighted the coast in 1498. Spain officially claimed the area in 1593, but Spanish and Portuguese explorers of the time gave the area little attention. Dutch settlement began in 1616 at the mouths of several rivers between present-day Georgetown, Guyana, and Cayenne, French Guiana.

Suriname became a Dutch colony in 1667. The new colony, Dutch Guiana, did not thrive. Historians cite several reasons for this, including Holland's preoccupation with its more extensive (and profitable) East Indian territories, violent conflict between whites and native tribes, and frequent uprisings by the imported slave population, which was often treated with extraordinary cruelty. Barely, if at all, assimilated into plantation society, many of the slaves fled to the interior, where they maintained a West African culture and established the six major “Bush Negro” (or Maroon) tribes in existence today: the Djuka, Saramaccaner, Matuwari, Paramaccaner, Quinti, and Aluku.

Plantations steadily declined in importance as labor costs rose. Rice, bananas, and citrus fruits replaced the traditional crops of sugar, coffee, and cocoa. Exports of gold rose beginning in 1900. The Dutch Government gave little financial support to the colony. Suriname's economy was transformed in the years following World War I, when an American firm (ALCOA) began exploiting bauxite deposits in East Suriname. Bauxite processing and then alumina production began in 1916. During World War II, more than 75% of U.S. bauxite imports came from Suriname.

In 1951, Suriname began to acquire a growing measure of autonomy from the Netherlands. Suriname became an autonomous part of the Kingdom of the Netherlands on December 15, 1954, and gained independence, with Dutch consent, on November 25, 1975.

Most of Suriname's political parties took shape during the autonomy period and were overwhelmingly based on ethnicity. For example, the National Party of Suriname found its support among the Creoles, the Progressive Reform Party members came from the Hindustani population, and the Indonesian Peasant's Party was Javanese. Other smaller parties found support by appealing to voters on an ideological or pro-independence platform; the Partij Nationalistische Republiek (PNR) was among the most important. Its members pressed most strongly for independence and for the introduction of leftist political and economic measures. Many former PNR members would go on to play a key role following the coup of February 1980.

Suriname was a parliamentary democracy in the years immediately following independence. Henk Arron became the first Prime Minister and was re-elected in 1977. On February 25, 1980, 16 noncommissioned officers overthrew the elected government, which many accused of inefficiency and mismanagement. The military-dominated government then suspended the constitution, dissolved the legislature, and formed a regime that ruled by decree. Although a civilian filled the post of president, a military man, Desi Bouterse, actually ruled the country.

Throughout 1982, pressure grew for a return to civilian rule. On December 8, 1982, military authorities cracked down, arresting and killing 15 prominent opposition leaders, including journalists, lawyers, and trade union leaders.

Following the murders, the United States and the Netherlands suspended economic and military cooperation with the Bouterse regime, which increasingly began to follow an erratic but often leftist-oriented political course. The regime restricted the press and limited the rights of its citizens. The economy declined rapidly after the suspension of economic aid from the Netherlands.

Continuing economic decline brought pressure for change. During the 1984-87 period, the Bouterse regime tried to end the crisis by appointing a succession of nominally civilian-led cabinets. Many figures in the government came from the traditional political parties that had been shoved aside during the coup. The military eventually agreed to free elections in 1987, a new constitution, and a civilian government.

Another pressure for change had erupted in July 1986, when a Maroon insurgency, led by former soldier Ronnie Brunswijk, began attacking economic targets in the country's interior. In response, the army ravaged villages and killed suspected Brunswijk supporters. Thousands of Maroons fled to nearby French Guiana. In an effort to end the bloodshed, the Surinamese Government negotiated a peace treaty in 1989 with Brunswijk, called the Kourou Accord. However, Bouterse and other military leaders blocked the accord's implementation.

On December 24, 1990, military officers forced the resignations of the civilian president and vice president who had been elected in 1987. Military-selected replacements were hastily approved by the National Assembly on December 29. Faced with mounting pressure from the U.S., other nations, the Organization of American States (OAS), and other international organizations, the government held new elections on May 25, 1991. The New Front (NF) Coalition, comprised of the Creole-based National Party of Suriname (NPS), the Hindustani-based Progressive Reform Party (VHP), the Javanese-based Indonesian Peasant's Party (KTPI) and the labor-oriented Surinamese Workers Party (SPA) were able to win a majority in the National Assembly. On September 6, 1991, NPS candidate Ronald Venetiaan was elected President, and the VHP's Jules Ajodhia became Vice President.

The Venetiaan government was able to effect a settlement to Suriname's domestic insurgency through the August 1992 Peace Accord with Bush Negro (Maroon) and Amerindian rebels. In April 1993, Desi Bouterse left his position as commander of the armed forces and was replaced by Arthy Gorre, a military officer committed to bringing the armed forces under civilian government control. Economic reforms instituted by the Venetiaan government eventually helped curb inflation, unify the official and unofficial exchange rates, and improve the government's economic situation by re-establishing relations with the Dutch, thereby opening the way for a major influx of Dutch financial assistance. Despite these successes, the governing coalition lost support and failed to retain control of the government in the subsequent round of national elections. The rival National Democratic Party (NDP), founded in the early 1990s by Desi Bouterse, benefited from the New Front government's loss of popularity. The NDP won more National Assembly seats (16 of 51) than any other party in the May 1996 national elections, and in September 1996, joined with the KTPI, dissenters from the VHP, and several smaller parties to elect NDP vice chairman Jules Wijdenbosch president of an NDP-led coalition government. Divisions and subsequent reshufflings of coalition members in the fall of 1997 and early 1998 weakened the coalition's mandate and slowed legislative action.

In May 1999, after mass demonstrations protesting poor economic conditions, the government was forced to call early elections. The elections in May 2000 returned Ronald Venetiaan and his New Front coalition to the presidency. The NF based its campaign on a platform to fix the faltering Surinamese economy.

In the national election held on May 25, 2005, the ruling NF coalition suffered a significant setback due to widespread dissatisfaction with the state of the economy and the public perception that the NF had produced few tangible gains. The NF won just 23 seats, falling short of a majority in the National Assembly, and immediately entered into negotiations with the Maroon-based "A" Combination and the A-1 Coalition to form a working majority. Desi Bouterse's NDP more than doubled its representation in the National Assembly, winning 15 seats. Bouterse, the NDP's declared presidential candidate, withdrew from the race days before the National Assembly convened to vote for the next president and tapped his running mate, Rabin Parmessar, to run as the NDP's candidate. In the National Assembly, the NF challenged Parmessar's Surinamese citizenship, displaying copies of a Dutch passport issued to Parmessar in 2004. Parmessar was eventually allowed to stand for election, and parliament later confirmed his Surinamese citizenship. After two votes, no candidate received the required two-thirds majority, pushing the final decision in August 2005 to a special session of the United People's Assembly, where President Venetiaan was reelected with a significant majority of votes from the local, district, and national assembly members gathered. His running mate, Ramdien Sardjoe, was elected as vice president. While the Venetiaan administration has made progress in stabilizing the economy, tensions within the coalition have impeded progress and stymied legislative action.

Long-anticipated legal proceedings against those accused of participating in the December 1982 murders began in November 2007 with the issuance of summonses to 25 defendants, including opposition leader Desi Bouterse. The court martial tribunal convened on November 30, 2007, with a series of preliminary motions. The actual trial, with judges hearing witness testimonies, started on July 4, 2008.

GOVERNMENT
The Republic of Suriname is a constitutional democracy based on the 1987 constitution. The legislative branch of government consists of a 51-member unicameral National Assembly, simultaneously and popularly elected for a 5-year term.

The executive branch is headed by the president, who is elected by a two-thirds majority of the National Assembly or, failing that, by a majority of the People's Assembly for a 5-year term. If at least two-thirds of the National Assembly cannot agree to vote for one presidential candidate, a People's Assembly is formed from all National Assembly delegates and regional and municipal representatives who were elected by popular vote in the most recent national election. A vice president, normally elected at the same time as the president, needs a simple majority in the National Assembly or People's Assembly to be elected for a 5-year term. As head of government, the president appoints a cabinet of ministers, currently numbered at 17 and apportioned among the various political parties represented in the ruling coalition. There is no constitutional provision for removal or replacement of the president unless he resigns.

A 15-member State Advisory Council advises the president in the conduct of policy. Eleven of the 15 council seats are allotted by proportional representation of all political parties represented in the National Assembly. The president chairs the council; two seats are allotted to representatives of labor, and two are allotted to employers' organizations.

The judiciary is headed by the Court of Justice (Supreme Court). This court supervises the magistrate courts. Members are appointed for life by the president in consultation with the National Assembly, the State Advisory Council, and the National Order of Private Attorneys.

The country is divided into 10 administrative districts, each headed by a district commissioner appointed by the president. The commissioner is somewhat similar to the governor of a U.S. state but serves at the president's pleasure.

Principal Government Officials
President--Runaldo Ronald Venetiaan
Vice President--Ramdien Sardjoe
Foreign Minister--Lygia Kraag-Keteldijk
Ambassador to U.S.--Jacques R. Kross
Ambassador to UN--Henry MacDonald
Ambassador to OAS--Jacques R. Kross

Suriname maintains an embassy in the United States at 4301 Connecticut Ave, NW, Suite 460, Washington, DC 20008 (tel. 202-244-7488; fax. 202-244-5878). The embassy also manages Suriname's representation to the Organization of American States (OAS). Suriname has a separate mission to the UN, located at 866 United Nations Plaza, Suite 320, New York, NY 10017 (tel. 212-826-0660; fax. 212-980-7029). There also is a Suriname consulate general at 6303 Blue Lagoon Drive, Suite 325, Miami, FL 33126 (tel. 305-265-4655, fax. 305-265-4599).

NATIONAL SECURITY
Surinamese armed forces consist of the national army, air force, navy, and military police, which are collectively referred to as the “national army,” under the control of the Minister of Defense. A smaller civil police force is under the authority of the Minister of Justice and Police. The national armed forces comprise some 2,500 personnel, the majority of whom are deployed as light infantry security forces. The Netherlands has provided limited military assistance to the Surinamese armed forces since the election of a democratic government in 1991. In recent years, the U.S. has provided training to military officers and policymakers to promote a better understanding of the role of the military in a civilian government, as well as to improve the professional capabilities of its officers and senior personnel. The U.S. also provides assistance and training for disaster preparedness and mitigation as well as significant support for humanitarian aid projects. Since the mid-1990s, the People's Republic of China has provided small amounts of military equipment and logistical material to the Surinamese armed forces. The Netherlands, France, Venezuela, and Brazil also have working relationships with the Surinamese military.

Suriname's borders are porous; largely uninhabited, unguarded, and ungoverned rain forest and rivers make up the eastern, western, and southern borders, and the navy's capability to police Suriname's northern Atlantic coast is limited. Protecting natural resources from illegal exploitation such as unlicensed gold mining is difficult, and significant tax revenue is lost. Porous borders also make Suriname a target for transshipment of drugs.

ECONOMY
Suriname's economy has been dominated by the exports of alumina, oil, and gold. Other export products include bananas, shrimp and fish, rice, and lumber. In 2007, gold, alumina, and oil accounted for 31.7%, 41.9%, and 7%, respectively, of Suriname's exports. Both the oil and gold sector continued their strong performances in 2008, while the world economic downturn instigated a restructuring of the bauxite sector. The International Monetary Fund (IMF) expected Suriname’s economy to grow in 2009 by 3%, while the Economist Intelligence Unit Country Report (April 2009) predicted the country’s GDP would contract by 2%. Even though some economic diversification has taken place, the country's economy remains dependent on its mineral resources.

Suriname's bauxite deposits have been among the world's richest. Active in Suriname since 1916, SURALCO, a subsidiary of the Aluminum Company of America (ALCOA), has had a long-standing working relationship with the Australian-owned BHPBilliton. The year 2008 was a turning point in the future of bauxite in Suriname. Talks between the government and BHPBilliton on the joint development of the Bakhuys Reserves in west Suriname broke down in October 2008. Soon afterwards BHPBilliton, citing a drop in the world demand for aluminum, severe losses by its parent company caused by the world economic downturn, and the uncertainty of future endeavors in Suriname, announced it would cease operations in Suriname. BHPBilliton announced it would end its 70-year presence in Suriname in 2010, departing after the conclusion of its joint venture agreement with SURALCO, which includes mining Kaaimangrasie and Klaverblad mines until depletion, predicted for 2010. BHPBilliton also announced it would turn over to SURALCO its 45% stake in the refinery. The government set up its own mining company, ALUMSUR, and on April 22, 2009 signed a memorandum of understanding (MOU) with the Swiss Glencore International AG which will finance the development of ALUMSUR to take over the BHPBilliton operations after 2010. Delays in the process of issuing new mining concessions will lead to a gap in refining operations in 2010; SURALCO announced a reduction in the refinery’s capacity in order to retain enough bauxite to keep the refinery operational after 2010. Other proven reserves, sufficient to last until 2045, exist in the east, west, and north of the country. However, distance and topography make their immediate development costly.

The gold mining sector has both a formal and an informal component. The informal component is a highly unregulated, untaxed, small-scale service gold mining sector that takes place primarily in the southern and southeastern parts of the country. Because of a crackdown on illegal small-scale mining in French Guiana, this sector has seen an influx of Brazilians. This sector also has been linked to different social, health, environmental, and criminal issues. To date, the government has been unable bring this sector under its control. In the formal gold mining sector Rosebel Gold Mine (RGM), a wholly-owned subsidiary of the Canadian firm IAMGOLD, remains the only operator. IAMGOLD reported that its earnings for the first quarter of 2009 rose to U.S. $155.48 million, with the Rosebel Gold Mine in Suriname accounting for almost 50% of those earnings (reportedly U.S. $67.48 million, an increase of U.S. $2 million compared to the same period last year). In 2008, the company commenced an expansion program estimated to cost approximately U.S. $40 million. This expansion will include a complete upgrade of its machinery and the installation of a second mill. An investment in exploration also led to RGM increasing its reserves in 2008 by 20% (673,000 troy ounces). A joint venture between SURALCO and Newmont Mining Corporation established Surgold, potentially the second operator in Suriname. Initial exploratory research indicated possible reserves of up to 3 million troy ounces in the Nassau Plateau in southeast Suriname. Surgold commenced negotiations with the government for a production license in 2008, but a downward revision in the estimated reserves in the area put these negotiations on hold.

The sector with the most promising outlook for rapid, near-future expansion is the oil sector. A 2000 study by the U.S. Geological Survey estimates 15 billion barrels of oil in the Guyana Plateau. The state-owned oil company, Staatsolie, is by law the only company with the right to operate in Suriname’s oil sector. Other companies can only access the market through production-sharing agreements with Staatsolie. In 2008 Staatsolie produced a record 6 million barrels, which was an increase of 8.5% over 2007. With record high prices for oil in the first half of 2008, the company reported record profits of over half a billion U.S. dollars. In its onshore activities the company commenced a U.S. $60 million exploration program across the coastal area to increase its reserves by 64 million barrels. The design project for the expansion of the Staatsolie refinery entered its final phase, and at a cost of $400 million will expand the company’s refining capacity from 7,000 bpd to 15,000 bpd and expand the company’s product line to include premium diesel and gasoline.

In April 2008 the Spanish Repsol YPF commenced test drilling off Suriname’s coast. In July the company reported that the results of the test drilling were inconclusive, and the complex configuration of the soil made it difficult to assess whether or not oil was present. In November 2008 U.S. company Murphy Oil Corporation and Staatsolie announced that Murphy Oil Corporation had contracted the Geo Celtic, the largest purpose-built seismic vessel in the world, from Fugro Norway in order to conduct 3D seismic research off Suriname’s coast in Block 37. This U.S. $50 million research project was expected to take place between November 2008 and January 2009. A month later, in December 2008, the Japanese oil company Tokeiku announced that it would piggyback on the Geo Celtic’s presence off Suriname’s coast and would commence its 3D seismic research immediately following the completion of Murphy’s research. Results are not available from either study. In November 2008 Staatsolie commenced a bidding round for two blocks offshore, which are expected to be awarded in July 2009.

Suriname has also attracted the attention of international companies interested in extensive development of a tropical hardwoods industry and possible diamond mining. However, proposals for exploitation of the country's tropical forests and undeveloped regions of the interior traditionally inhabited by indigenous and Maroon communities have raised the concerns of environmentalists and human rights activists in Suriname and abroad.

The shortage of affordable energy continues to hamper the expansion of the industrial sector in Suriname. The largest companies in the gold and bauxite sector, as well as larger manufacturing companies, run their operations primarily on diesel-powered generators. SURALCO indicated that any expansion of operations to include mining and refining reserves in western Suriname will depend on Suriname expanding its energy-generating sources. The primary energy sources Suriname has at present are the Afobakka Hydro Dam, with an installed capacity of 180 megawatts (MW); a diesel generator power plant owned by the State Electricity Company with a capacity of 45 MW; and a diesel generator plant owned by Staatsolie with a current capacity of 14 MW, which Staatsolie plans to expand to 18 MW. There is no indication that the Ministry of Natural Resources has any immediate plans to work on the expansion of the energy supply of the country.

Suriname’s tourism sector has seen growth. In the past seven years the number of hotels has grown by 200%, while the number of tour operators has grown by 170%. In 2007 approximately 163,000 tourists visited Suriname, with the majority coming from the Netherlands. Nearly 190,000 tourists arrived in Suriname in 2008, with the majority from the Netherlands but a growing number of “weekend tourists” from French Guiana. Suriname, French Guiana, and the three Brazilian states Amapa, Para, and Amazones entered into an Amazon Tourism Agreement that focuses on joint promotion of the Amazon as a tourism destination. Through the Tourism Foundation, the government is making significant efforts to structure this sector. Two major hotel chains, Marriot and Wyndham, are opening franchises in Suriname (Marriot: 2009; Wyndham: 2010). Major regional airlines, Caribbean Airlines and Insel Air, have increased their flights to Suriname, while the national carrier, Surinam Airways, is expanding its fleet and developing new destinations.

The government’s efforts to privatize three parastatals stagnated. Both the wood processing company Bruynzeel and the rice company SML were taken off the market. Privatization of the banana company, SBBS, may still move forward. After putting SBBS up for bid, the government entered into negotiation with the Belgian international fruits and vegetables conglomerate Univeg Group.

FOREIGN RELATIONS
Since gaining independence, Suriname has become a member of the United Nations, the Organization of American States, the Organization of the Islamic Conference, and the Non-Aligned Movement. Suriname is a member of the Caribbean Community and Common Market and the Association of Caribbean States; it is associated with the European Union through the Lome Convention. The Netherlands remains Suriname's biggest donor, but it has been surpassed by the U.S. as a trade partner. Suriname participates in the Amazonian Pact, a grouping of the countries of the Amazon Basin that focuses on protection of the Amazon region's natural resources from environmental degradation. Reflecting its status as a major bauxite producer, Suriname is also a member of the International Bauxite Association. The country also belongs to the Economic Commission for Latin America, the Inter-American Development Bank, the Islamic Development Bank, the International Finance Corporation, the World Bank, and the International Monetary Fund. In 2008, Suriname signed the Rome Statute of the International Criminal Court.

At independence, Suriname signed an agreement with the Netherlands providing for about $1.5 billion in development assistance grants and loans over a 10- to 15-year period. Initial disbursements amounted to about $100 million per year, but were discontinued during military rule. After the return to a democratically elected government in 1991, Dutch aid resumed. The Dutch relationship continued to be an important factor in the economy, with the Dutch insisting that Suriname undertake economic reforms and produce specific plans acceptable to the Dutch for projects on which aid funds could be spent. In 2000, the Dutch revised the structure of their aid package and signaled to the Surinamese authorities their decision to disburse aid by sectoral priorities as opposed to individual projects. In 2001 both governments agreed to spend the remaining development funds to finance programs in 6 different sectors: health care, education, environment, agriculture, housing, and governance.

Bilateral cooperation agreements with several countries in the region have underscored the government's interest in strengthening regional ties. The return to Suriname from French Guiana of about 8,000 refugees from the 1986-91 Interior War between the military and domestic insurgents has improved relations with French authorities. Longstanding border disputes with Guyana and French Guiana remain unresolved. Negotiations with the Government of Guyana brokered by the Jamaican Prime Minister in 2000 did not produce an agreement, but the countries agreed to restart talks after Guyanese national elections in 2001. In January 2002, the presidents of Suriname and Guyana met in Suriname and agreed to resume negotiations, establishing the Suriname-Guyana border commission. In 2004 Guyana brought a complaint against Suriname under the United Nations Convention on the Law of the Sea (UNCLOS) regarding their maritime border dispute. In 2007, the UN International Tribunal on the Law of the Sea (ITLOS) ruled that both Suriname and Guyana are entitled to their share of the disputed offshore basin which is believed to be rich in oil and gas deposits. Using the equidistance line, the tribunal awarded Suriname 6,900 sq. miles and Guyana 12,800 sq. miles of this basin. Suriname's earlier dispute with Brazil ended amicably after formal demarcation of their shared border.

U.S.-SURINAMESE RELATIONS
Since the reestablishment of a democratic, elected government in 1991, the United States has maintained positive and mutually beneficial relations with Suriname based on the principles of democracy, respect for human rights, rule of law, and civilian authority over the military. To further strengthen civil society and bolster democratic institutions, the U.S. has provided training to selected Surinamese military officers and policy leaders on appropriate roles for the military in civil society and other relevant topics. To assist Suriname in the fight against drugs and associated criminal activity, the U.S. has provided support to include training Surinamese anti-drug squads, police uniform patrol, military police, and customs officials. The U.S. and Suriname also have significant partnerships in fighting trafficking in persons and money laundering.

Since 2000, the U.S. has donated a criminal records database to the police as well as computers, vehicles, and radio equipment. Projects through which the U.S. has supported the judicial system include case management and computer hardware donations. Along with training projects, these programs have led to a strong relationship with law enforcement entities in Suriname. The United States also has worked with the Surinamese Ministries of Health, Education, and Defense to execute humanitarian engineering and health projects throughout the country.

Peace Corps Suriname works with the Ministry of Regional Development, the Ministry of Health, and local and national groups to encourage healthy lifestyles and sound business practices in the interior and districts of Suriname (www.peacecorps.gov).

Suriname is densely forested, and increased interest in large-scale commercial logging and mining in Suriname's interior have raised environmental concerns. The U.S. Forest Service, the Smithsonian, and numerous non-governmental environmental organizations have promoted technical cooperation with the Surinamese Government to prevent destruction of the country's tropical rain forest, one of the most diverse ecosystems in the world. U.S. experts have worked closely with local natural resource officials to encourage sustainable development of the interior and alternatives such as ecotourism. On December 1, 2000, UNESCO designated the 1.6 million hectare Central Suriname Nature Reserve a World Heritage site. Suriname's tourism sector remains a minor part of the economy, and tourist infrastructure is limited (in 2004, some 145,000 foreign tourists visited Suriname).

Suriname's efforts in recent years to liberalize its economic policy created new possibilities for U.S. exports and investments. The U.S. remains one of Suriname's principal trading partners, largely due to ALCOA's longstanding investment in Suriname's bauxite mining and processing industry. Several U.S. corporations represented by Surinamese firms acting as dealers are active in Suriname, largely in the mining, consumer goods, and service sectors. Principal U.S. exports to Suriname include chemicals, vehicles, machine parts, meat, and wheat. U.S. consumer products are increasingly available through Suriname's many trading companies. Opportunities for U.S. exporters, service companies, and engineering firms probably will expand over the next decade.

Suriname is looking to U.S. and other foreign investors to assist in the commercial development of its vast natural resources and to help finance infrastructure improvements. In 2001 Suriname introduced and enacted an investment law. The IMF advised the government in 2003 to revise the law in order to increase its attractiveness to investors. The law was recalled for review, and provisions for new investments are available on a case-by-case basis with the permission of the Minister of Finance.

Principal U.S. Embassy Officials
Ambassador--Lisa Bobbie Schreiber Hughes
Deputy Chief of Mission--Susan Bell
Military Liaison Officer-- LCDR Waymon Jackson
Political/Economic Officer--Geneve Menscher
Management Officer--Jennifer Christenson
Consular Officer--Liza Ybarra
Police Attaché--Susan Nave
Regional Security Officer--Douglas Marvin
Peace Corps Country Director--Ann Conway

The U.S. Embassy in Paramaribo is located at Dr. Sophie Redmondstraat 129, P.O. Box 1821, Paramaribo, Suriname (tel. 597-472900, 597-476459; fax: 597- 410025).

Other Contact Information
U.S. Department of Commerce
International Trade Administration
Office of Latin America and the Caribbean
14th and Constitution, NW
Washington, DC 20230
Tel: 202-482-1658, 202-USA-TRADE
Fax: 202-482-0464

Caribbean Central American Action (CCAA)
1818 N Street, NW Suite 310
Washington, DC 20036
Tel: 202-466-7464
Fax: 202-822-0075

U.S. Department of State
Bureau of Western Hemisphere Affairs
Office of Caribbean Affairs
2201 C Street, NW
Washington, DC
Tel: 202-647-4719

TRAVEL AND BUSINESS INFORMATION
The U.S. Department of State's Consular Information Program advises Americans traveling and residing abroad through Country Specific Information, Travel Alerts, and Travel Warnings. Country Specific Information exists for all countries and includes information on entry and exit requirements, currency regulations, health conditions, safety and security, crime, political disturbances, and the addresses of the U.S. embassies and consulates abroad. Travel Alerts are issued to disseminate information quickly about terrorist threats and other relatively short-term conditions overseas that pose significant risks to the security of American travelers. Travel Warnings are issued when the State Department recommends that Americans avoid travel to a certain country because the situation is dangerous or unstable.

For the latest security information, Americans living and traveling abroad should regularly monitor the Department's Bureau of Consular Affairs Internet web site at http://www.travel.state.gov, where the current Worldwide Caution, Travel Alerts, and Travel Warnings can be found. Consular Affairs Publications, which contain information on obtaining passports and planning a safe trip abroad, are also available at http://www.travel.state.gov. For additional information on international travel, see http://www.usa.gov/Citizen/Topics/Travel/International.shtml.

The Department of State encourages all U.S. citizens traveling or residing abroad to register via the State Department's travel registration website or at the nearest U.S. embassy or consulate abroad. Registration will make your presence and whereabouts known in case it is necessary to contact you in an emergency and will enable you to receive up-to-date information on security conditions.

Emergency information concerning Americans traveling abroad may be obtained by calling 1-888-407-4747 toll free in the U.S. and Canada or the regular toll line 1-202-501-4444 for callers outside the U.S. and Canada.

The National Passport Information Center (NPIC) is the U.S. Department of State's single, centralized public contact center for U.S. passport information. Telephone: 1-877-4-USA-PPT (1-877-487-2778); TDD/TTY: 1-888-874-7793. Passport information is available 24 hours, 7 days a week. You may speak with a representative Monday-Friday, 8 a.m. to 10 p.m., Eastern Time, excluding federal holidays.

Travelers can check the latest health information with the U.S. Centers for Disease Control and Prevention in Atlanta, Georgia. A hotline at 800-CDC-INFO (800-232-4636) and a web site at http://wwwn.cdc.gov/travel/default.aspx give the most recent health advisories, immunization recommendations or requirements, and advice on food and drinking water safety for regions and countries. The CDC publication "Health Information for International Travel" can be found at http://wwwn.cdc.gov/travel/contentYellowBook.aspx.

Further Electronic Information
Department of State Web Site. Available on the Internet at http://www.state.gov, the Department of State web site provides timely, global access to official U.S. foreign policy information, including Background Notes and daily press briefings along with the directory of key officers of Foreign Service posts and more. The Overseas Security Advisory Council (OSAC) provides security information and regional news that impact U.S. companies working abroad through its website http://www.osac.gov

Export.gov provides a portal to all export-related assistance and market information offered by the federal government and provides trade leads, free export counseling, help with the export process, and more.

STAT-USA/Internet, a service of the U.S. Department of Commerce, provides authoritative economic, business, and international trade information from the Federal government. The site includes current and historical trade-related releases, international market research, trade opportunities, and country analysis and provides access to the National Trade Data Bank.

Background Note: Comoros

Bureau of African Affairs

PROFILE

OFFICIAL NAME:
Union of the Comoros

Geography
Area: 2,171 sq. km. (838 sq. mi.); slightly less than half the size of Delaware. Major islands--Grande Comore (1,025 sq. km.), Anjouan (424 sq. km.), Mayotte (374 sq. km.), and Moheli (211 sq. km.).
Cities: Capital--Moroni (pop. 30,000); Mutsamudu (pop. 20,000).
Terrain: Rugged.
Climate: Tropical marine.

People
Nationality: Noun and adjective--Comoran(s).
Population (July 2009 est.): 752,438. Mayotte (1990 est.)--70,000.
Annual growth rate (2009 est.): 2.766%.
Ethnic groups: Antalote, Cafre, Makoa, Oimatsaha, Sakalava.
Religions: Sunni Muslim 98%, Roman Catholic 2%.
Languages: Shikomoro (a Swahili-Arabic blend), Arabic (official), French (official).
Education: Attendance--60% primary, 34% secondary. Literacy--56.5%.
Health: Life expectancy--63.47 yrs. Infant mortality rate--66.57/1,000.
Work force (1996): 144,500. Agriculture--80%.

Government
Type: Republic.
Independence: July 6, 1975 (Mayotte remains under French administration).
Constitution: Adopted by referendum on December 23, 2001.
Branches: Executive--national president; regional island presidents. Legislative--National Assembly. Judicial--traditional Muslim and codified law from French sources.
Political parties: 17 political parties.
Suffrage: Universal adult.

Economy
GDP (purchasing power parity, 2008 est.): $741.4 million.
Annual growth rate: 0.5%.
GDP per capita (2008 est.): $1,000.
Agriculture (40% of GDP): Products--vanilla, cloves, perfume essences, copra, banana, cassava, coconuts.
Services (56% of GDP): Commerce, tourism.
Industry (4% of GDP): Types--perfume distillation.
Trade: Exports (2006 est.)--$32 million f.o.b.: vanilla, cloves, perfume essences, copra. Major markets--Turkey, France, Singapore, Saudi Arabia. Imports (2006 est.)--$143 million: rice and other foodstuffs, consumer goods, petroleum, cement, transport equipment. Major suppliers--France 18.2%, U.A.E. 10.8%, South Africa 8.5%, Pakistan 7.2%, Kenya 5.7%, China 5.4%, India 5%.

PEOPLE
The Comorans inhabiting Grande Comore, Anjouan, and Moheli (86% of the population) share African-Arab origins. Islam is the dominant religion, and Koranic schools for children reinforce its influence. Although Arab culture is firmly established throughout the archipelago, a substantial minority of the citizens of Mayotte (the Mahorais) are Catholic and have been strongly influenced by French culture.

The most common language is Shikomoro, a Swahili dialect. French and Arabic also are spoken. About 57% of the population is literate.

HISTORY
Over the centuries, the islands were invaded by a succession of diverse groups from the coast of Africa, the Persian Gulf, Indonesia, and Madagascar. Portuguese explorers visited the archipelago in 1505. "Shirazi" Arab migrants introduced Islam at about the same time. Between 1841 and 1912, France established colonial rule over Grande Comore, Anjouan, Mayotte, and Moheli and placed the islands under the administration of the governor general of Madagascar. Later, French settlers, French-owned companies, and wealthy Arab merchants established a plantation-based economy that now uses about one-third of the land for export crops. After World War II, the islands became a French overseas territory and were represented in France's National Assembly. Internal political autonomy was granted in 1961. Agreement was reached with France in 1973 for Comoros to become independent in 1978. On July 6, 1975, however, the Comoran parliament passed a resolution declaring unilateral independence. The deputies of Mayotte abstained. As a result, the Comoran Government has effective control over only Grande Comore, Anjouan, and Moheli. Mayotte remains under French administration.

GOVERNMENT AND POLITICAL CONDITIONS
The Union of Comoros is ruled by President Ahmed Abdallah Sambi. Comoros has been plagued by political instability and civil strife following numerous coups and secession attempts since independence from France in 1975. Former President Azali seized power in a bloodless coup in April 1999, overthrowing interim President Tadijiddine Ben Said Massounde, who himself had held the office since the death of democratically elected President Mohamed Taki Abdoulkarim in November 1998. In May 1999, Azali decreed a constitution that gave him both executive and legislative powers. When Azali took power, he had pledged to step down in 2000 and relinquish control to a democratically elected president. Instead, in 2001, Azali resigned from the military and ran as a civilian candidate for the national presidency. He was elected in 2002 in flawed but fair elections.

On May 26, 2006, following a two-stage electoral process that was generally free and fair, Ahmed Abdallah Mohamed Sambi was installed as the new President of the Union of the Comoros. The inauguration of President Sambi in June 2006 marked the first democratic transition of power in Comoran history. In June 2007, individual island elections on Grande Comore and Moheli were held on schedule and judged to have been free and fair. On Anjouan, however, island governor Mohamed Bacar refused to step down, held a sham election and declared himself Island Governor for another term. In March 2008, Comoran and African Union (AU) forces restored constitutional rule on Anjouan. A new election for island governor was held peacefully in June 2008.

Principal Government Officials
President--Ahmed Abdallah Sambi
Minister of Foreign Affairs--Ahmed Ben Said Jaffar
Ambassador to the United States and to the United Nations--Mohamed Toihiri

Comoros maintains a mission to the United States at 866 United Nations Plaza, Suite 418 New York, NY 10017 (tel. 212-750-1637).

ECONOMY
Comoros, with an estimated gross domestic product (GDP) per capita income of about $1,000, is among the world's poorest and least developed nations. Although the quality of the land differs from island to island, most of the widespread lava-encrusted soil formations are unsuited to agriculture. As a result, most of the inhabitants make their living from subsistence agriculture and fishing.

Agriculture, involving more than 80% of the population and 40% of the gross domestic product, provides virtually all foreign exchange earnings. Services including tourism, construction, and commercial activities constitute the remainder of the GDP. Plantations engage a large proportion of the population in producing the islands' major cash crops for export: vanilla, cloves, perfume essences, and copra. Comoros is the world's leading producer of essence of ylang-ylang, used in manufacturing perfume. It also is the world's second-largest producer of vanilla. Principal food crops are coconuts, bananas, and cassava. Foodstuffs constitute 32% of total imports.

The country lacks the infrastructure necessary for development. Some villages are not linked to the main road system or at best are connected by tracks usable only by four-wheel-drive vehicles. The islands' ports are rudimentary, although a deepwater facility functions in Anjouan. Only small vessels can approach the existing quays in Moroni on Grande Comore, despite improvements. Long-distance, ocean-going ships must lie offshore and be unloaded by smaller boats; during the cyclone season, this procedure is dangerous, and ships are reluctant to call at the island. Most freight is sent first to Mombasa, Kenya or the island of Reunion and transshipped from there.

France, Comoros' major trading partner, finances small projects only. The United States receives a growing percentage of Comoros' exports but supplies only a negligible fraction of its imports (less than 1%).

Comoros has an international airport at Hahaya on Grande Comore. Comoros has its own currency, the Comorian Franc, which is currently valued at 361.4 CF = U.S. $1.

NATIONAL SECURITY
The military resources of the Comoros consist of a small standing army and a 500-member police force, as well as a 500-member defense force. A defense treaty with France provides naval resources for protection of territorial waters, training of Comorian military personnel, and air surveillance. France maintains a small maritime base and a Foreign Legion contingent on Mayotte.

FOREIGN RELATIONS
In November 1975, Comoros became the 143rd member of the United Nations. The new nation was defined as consisting of the entire archipelago, despite the fact that France maintains control over Mayotte.

Comoros also is a member of the African Union, the European Development Fund, the World Bank, the International Monetary Fund, the Indian Ocean Commission, and the African Development Bank.

U.S.-COMORIAN RELATIONS
The United States recognized the Comoran Government in 1977. The two countries enjoy friendly relations. The U.S. closed its Embassy in Moroni in 1993 and is now represented by a nonresident Ambassador in neighboring Madagascar.

Principal U.S. Embassy Officials (all officers resident in Antananarivo, Madagascar)
Ambassador--R. Niels Marquardt
Deputy Chief of Mission--Eric Stromayer
Chief Political-Economic Officer--vacant
Management Officer--Stephen Dodson
Public Affairs Officer--Rodney Ford
Consular Officer--Melanie Rubenstein

The address of the U.S. Embassy in Madagascar is 14-16 Rue Rainitovo, Antsahavola, Antananarivo. The mailing address is B.P. 620, Antsahavola, Antananarivo, Madagascar (tel: 261-20-22-212-57; fax: 261-20-22-345-39; E-mail: uswebmaster@wanadoo.mg).

TRAVEL AND BUSINESS INFORMATION
The U.S. Department of State's Consular Information Program advises Americans traveling and residing abroad through Country Specific Information, Travel Alerts, and Travel Warnings. Country Specific Information exists for all countries and includes information on entry and exit requirements, currency regulations, health conditions, safety and security, crime, political disturbances, and the addresses of the U.S. embassies and consulates abroad. Travel Alerts are issued to disseminate information quickly about terrorist threats and other relatively short-term conditions overseas that pose significant risks to the security of American travelers. Travel Warnings are issued when the State Department recommends that Americans avoid travel to a certain country because the situation is dangerous or unstable.

For the latest security information, Americans living and traveling abroad should regularly monitor the Department's Bureau of Consular Affairs Internet web site at http://www.travel.state.gov, where the current Worldwide Caution, Travel Alerts, and Travel Warnings can be found. Consular Affairs Publications, which contain information on obtaining passports and planning a safe trip abroad, are also available at http://www.travel.state.gov. For additional information on international travel, see http://www.usa.gov/Citizen/Topics/Travel/International.shtml.

The Department of State encourages all U.S. citizens traveling or residing abroad to register via the State Department's travel registration website or at the nearest U.S. embassy or consulate abroad. Registration will make your presence and whereabouts known in case it is necessary to contact you in an emergency and will enable you to receive up-to-date information on security conditions.

Emergency information concerning Americans traveling abroad may be obtained by calling 1-888-407-4747 toll free in the U.S. and Canada or the regular toll line 1-202-501-4444 for callers outside the U.S. and Canada.

The National Passport Information Center (NPIC) is the U.S. Department of State's single, centralized public contact center for U.S. passport information. Telephone: 1-877-4-USA-PPT (1-877-487-2778); TDD/TTY: 1-888-874-7793. Passport information is available 24 hours, 7 days a week. You may speak with a representative Monday-Friday, 8 a.m. to 10 p.m., Eastern Time, excluding federal holidays.

Travelers can check the latest health information with the U.S. Centers for Disease Control and Prevention in Atlanta, Georgia. A hotline at 800-CDC-INFO (800-232-4636) and a web site at http://wwwn.cdc.gov/travel/default.aspx give the most recent health advisories, immunization recommendations or requirements, and advice on food and drinking water safety for regions and countries. The CDC publication "Health Information for International Travel" can be found at http://wwwn.cdc.gov/travel/contentYellowBook.aspx.

Further Electronic Information
Department of State Web Site. Available on the Internet at http://www.state.gov, the Department of State web site provides timely, global access to official U.S. foreign policy information, including Background Notes and daily press briefings along with the directory of key officers of Foreign Service posts and more. The Overseas Security Advisory Council (OSAC) provides security information and regional news that impact U.S. companies working abroad through its website http://www.osac.gov

Export.gov provides a portal to all export-related assistance and market information offered by the federal government and provides trade leads, free export counseling, help with the export process, and more.

STAT-USA/Internet, a service of the U.S. Department of Commerce, provides authoritative economic, business, and international trade information from the Federal government. The site includes current and historical trade-related releases, international market research, trade opportunities, and country analysis and provides access to the National Trade Data Bank.

Background Note: Vietnam

Bureau of East Asian and Pacific Affairs

PROFILE

OFFICIAL NAME:
Socialist Republic of Vietnam

Geography
Area: 331,114 sq. km. (127,243 sq. mi.); equivalent in size to Ohio, Kentucky, and Tennessee combined.
Cities (2008): Capital--Hanoi (pop. 6.449 million). Other cities--Ho Chi Minh City (formerly Saigon; pop. 7.123 million), Haiphong (pop. 1.837 million), Danang (pop. 887,069), Can Tho (pop. 1.187 million).
Terrain: Varies from mountainous to coastal delta.
Climate: Tropical monsoon.

People
Nationality: Noun and adjective--Vietnamese (sing. and pl.).
Population (2009): 85.79 million.
Annual growth rate (2007): 1.188%.
Ethnic groups (2003): 54 groups including Vietnamese (Kinh) (85.73%), Tay (1.97%), Thai (1.79%), Muong (1.52%), Khmer (1.37%), Chinese (1.13%), Nung (1.13%), Hmong (1.11%).
Religions (2008): Buddhism (approx. 50%), Catholicism (8%-10%), Cao Dai (1.5%-3%), Protestantism (0.5%-2%), Hoa Hao (1.5%-4%), Islam (>0.1%), and other animist religions.
Languages: Vietnamese (official), English (increasingly favored as a second language), some French, Chinese, and other ethnic minority languages.
Education (2006): Literacy--90%.
Health (2008 estimate): Birth rate--16.7 births/1000 population. Infant mortality rate--15/1,000. Life expectancy--72.2 yrs. Death rate--4.9/1,000.

Government
Type: Single-party constitutional republic (Communist Party).
Independence: September 2, 1945.
New constitution: April 15, 1992.
Branches: Executive--president (head of state and chair of National Defense and Security Council) and prime minister (heads cabinet of ministries and commissions). Legislative--National Assembly. Judicial--Supreme People's Court; Prosecutorial Supreme People's Procuracy.
Administrative subdivisions: 58 provinces, 5 municipalities (Can Tho, Haiphong, Danang, Hanoi, Ho Chi Minh City).
Political party: Communist Party of Vietnam (CPV) with over 3 million members, formerly (1951-76) Vietnam Worker's Party, itself the successor of the Indochinese Communist Party founded in 1930.
Suffrage: Universal over 18.

Economy
GDP (2008): $84.98 billion.
Real growth rate: 6.23% (2008); 3.9% (the first 6 months of 2009 year-on-year).
Per capita income (2008): $1,024.
Inflation rate (January 2009): 17.48% year-on-year.
External debt (2008): 29.8% of GDP, $21.8 billion.
Natural resources: Coal, crude oil, zinc, copper, silver, gold, manganese, iron.
Agriculture, forestry, and fisheries (21.99% of GDP, 2008): Principal products--rice, coffee, cashews, maize, pepper (spice), sweet potato, pork, peanut, cotton, plus extensive aquaculture of both fish and shellfish species. Cultivated land--12.2 million hectares. Land use--21% arable; 28% forest and woodland; 51% other.
Industry and construction (39.86% of GDP, 2008): Principal types--mining and quarrying, manufacturing, electricity, gas, water supply, cement, phosphate, and steel.
Services (38.10% of GDP, 2008): Principal types--tourism, wholesale and retail, repair of vehicles and personal goods, hotel and restaurant, transport storage, telecommunications.
Trade (2008): Exports--$62.9 billion (first 8 months 2009: $37.3 billion, down by 14.2% year-on-year). Principal exports--crude oil, garments/textiles, footwear, fishery and seafood products, rice (world’s second-largest exporter), pepper (spice; world’s largest exporter), wood products, coffee, rubber, handicrafts. Major export partners--U.S., EU, Japan, China, Australia, Singapore, Germany, and the United Kingdom. Imports--$80.4 billion (first 8 months of 2009: $42.4 billion, down by 28.2% year-on-year). Principal imports--machinery, oil and gas, iron and steel, garment materials, plastics. Major import partners--China, Japan, Singapore, Taiwan, South Korea, Hong Kong, and Thailand. Exports to U.S. (2008)--$12.9 billion. Imports from U.S. (2008)--$2.8 billion.

PEOPLE
Originating in what is now southern China and northern Vietnam, the Vietnamese people pushed southward over 2 millennia to occupy the entire eastern seacoast of the Indochinese Peninsula. Vietnam has 54 ethnic groups; ethnic Vietnamese or Kinh constitute approximately 85% of Vietnam's population. The next largest groups are ethnic Tay and Thai, which account for 1.97% and 1.79% of Vietnam's population and are concentrated in the country's northern uplands.

With a population of more than 900,000, Vietnam's Chinese community has historically played an important role in the Vietnamese economy. Restrictions on economic activity following reunification of the north and south in 1975 and a general deterioration in Vietnamese-Chinese relations caused increasing anxiety within the Chinese-Vietnamese community. As tensions between Vietnam and China reached their peak in 1978-79, culminating in a brief but bloody war in February-March 1979, some 450,000 ethnic Chinese left Vietnam by boat as refugees (many officially encouraged and assisted) or were expelled across the land border with China.

Other significant ethnic minority groups include central highland peoples (formerly collectively termed Montagnards) such as the Gia Rai, Bana, Ede, Xo Dang, Gie Trieng, and the Khmer Krom (Cambodians), who are concentrated near the Cambodian border and at the mouth of the Mekong River. Taken collectively, these groups made up a majority of the population in much of Vietnam's central highlands until the 1960s and 1970s. They now compose a significant minority of 25% to 35% of the provinces in that region.

Vietnamese is the official language of the country. It is a tonal language with influences from Thai, Khmer, and Chinese. Since the early 20th century, the Vietnamese have used a Romanized script introduced by the French. Previously, Chinese characters and an indigenous phonetic script were both used.

HISTORY
Vietnam's identity has been shaped by long-running conflicts, both internally and with foreign forces. In 111 BC, China's Han dynasty conquered northern Vietnam's Red River Delta and the ancestors of today's Vietnamese. Chinese dynasties ruled Vietnam for the next 1,000 years, inculcating it with Confucian ideas and political culture, but also leaving a tradition of resistance to foreign occupation. In 939 AD, Vietnam achieved independence under a native dynasty. After 1471, when Vietnam conquered the Champa Kingdom in what is now central Vietnam, the Vietnamese moved gradually southward, finally reaching the agriculturally rich Mekong Delta, where they encountered previously settled communities of Cham and Cambodians. As Vietnam's Le dynasty declined, powerful northern and southern families, the Trinh and Nguyen, fought civil wars in the 17th and 18th centuries. A peasant revolt originating in the Tay Son region of central Vietnam defeated both the Nguyen and the Trinh and unified the country at the end of the 18th century, but was itself defeated by a surviving member of the Nguyen family, who founded the Nguyen dynasty as Emperor Gia Long in 1802.

French Rule and the Anti-Colonial Struggle
In 1858, the French began their conquest of Vietnam starting in the south. They annexed all of Vietnam in 1885, governing the territories of Annan, Tonkin, and Cochin China, together with Cambodia and Laos, as French Indochina. The French ruled Cochin China directly as a French colony; Annan and Tonkin were established as French "protectorates." Vietnam's emperors remained in place in Hue, but their authority was strictly limited as French officials assumed nearly all government functions. In the early 20th century, Vietnamese intellectuals, many of them French educated, organized nationalist and communist-nationalist anti-colonial movements.

Japan's military occupation of Vietnam during World War II further stirred nationalist sentiment, as well as antipathy toward the French Vichy colonial regime, which took its direction from the Japanese until the Japanese took direct control in March 1945. Vietnamese communists under Ho Chi Minh organized a coalition of anti-colonial groups, the Viet Minh, though many anti-communists refused to join. The Viet Minh took advantage of political uncertainty in the weeks following Japan's surrender to take control of Hanoi and much of northern Vietnam. Ho Chi Minh announced the independence of the Democratic Republic of Vietnam on September 2, 1945.

North and South Partition
France's determination to reassert colonial authority in Vietnam led to failed talks and, after armed hostilities broke out in Haiphong at the end of 1946, an 8-year guerrilla war between the communist-led Viet Minh on one side and the French and their anti-communist nationalist allies on the other. Following a humiliating defeat at Dien Bien Phu in May 1954, France and other parties, including Britain, China, the Soviet Union, the United States, and representatives of the Viet Minh and Bao Dai governments convened in Geneva, Switzerland for peace talks. On July 29, 1954, an Agreement on the Cessation of Hostilities in Vietnam was signed between France and the Democratic Republic of Vietnam. The United States observed, but did not sign, the agreement. French colonial rule in Vietnam ended.

The 1954 Geneva agreement provided for a cease-fire between communist and anti-communist nationalist forces, the temporary division of Vietnam at approximately the 17th parallel, provisional northern (communist) and southern (noncommunist) zone governments, and the evacuation of anti-communist Vietnamese from northern to southern Vietnam, as well as the movement of a smaller number of former communist-led Viet Minh anti-colonial fighters to the north. The agreement also called for an election to be held by July 1956 to bring the two provisional zones under a unified government, a provision that the South Vietnamese Government refused to accept, arguing that conditions for free elections throughout Vietnam were not present. On October 26, 1955, South Vietnam declared itself the Republic of Vietnam.

After 1954, North Vietnamese communist leaders consolidated their power and instituted a harsh agrarian reform and socialization program. During this period, some 450,000 Vietnamese, including a large number of Vietnamese Catholics, fled from the north to the south, while a much smaller number, mostly consisting of former Viet Minh fighters, relocated north. In the late 1950s, North Vietnamese leaders reactivated the network of communist guerrillas that had remained behind in the south. These forces--commonly known as the Viet Cong--aided covertly by the north, started an armed campaign against officials and villagers who refused to support the communist reunification cause.

American Assistance to the South
In December 1961, at the request of South Vietnamese President Ngo Dinh Diem, President Kennedy sent U.S. military advisers to South Vietnam to help the government there deal with the Viet Cong campaign. In the wake of escalating political turmoil in the south after a November 1963 generals' coup against President Diem, which resulted in his death, the United States increased its military support for South Vietnam. In March 1965, President Johnson sent the first U.S. combat forces to Vietnam. The American military role peaked in 1969 with an in-country force of 534,000. The Viet Cong's surprise Tet Offensive in January 1968 weakened the Viet Cong infrastructure and damaged American and South Vietnamese morale. In January 1969, the United States, governments of South and North Vietnam, and the Viet Cong met for the first plenary session of peace talks in Paris, France. These talks, which began with much hope, moved slowly. They finally concluded with the signing of a peace agreement, the Paris Accords, on January 27, 1973. As a result, the south was divided into a patchwork of zones controlled by the South Vietnamese Government and the Viet Cong. The United States withdrew its forces, although reduced levels of U.S. military assistance continued, administered by the Defense Attaché Office.

Reunification
In early 1975, North Vietnamese regular military forces began a major offensive in the south, inflicting great damage to the south's forces. The communists took Saigon on April 30, 1975, and announced their intention to reunify the country. The Democratic Republic of Vietnam (north) absorbed the former Republic of Vietnam (south) to form the Socialist Republic of Vietnam on July 2, 1976.

After reunification, the government confiscated privately owned land and forced citizens to adopt collectivized agricultural practices. Hundreds of thousands of former South Vietnamese government and military officials, as well as intellectuals previously opposed to the communist cause, were sent to study socialist doctrine in re-education camps, where they remained for periods ranging from months to over 10 years.

Expectations that reunification of the country and its socialist transformation would be condoned by the international community were quickly dashed as the international community expressed concern over Vietnam's internal practices and foreign policy. Vietnam's 1978 invasion of Cambodia in particular, together with its increasingly tight alliance with the Soviet Union, appeared to confirm suspicions that Vietnam wanted to establish a Soviet-backed hegemony in Indochina.

Vietnam's invasion of Cambodia also heightened tensions that already existed between Vietnam and China. Beijing, which had long backed the Khmer Rouge regime in Cambodia, retaliated in early 1979 by initiating a brief, but bloody border war with Vietnam.

Vietnam's tensions with its neighbors, internal repression, and a stagnant economy contributed to a massive exodus from Vietnam. Fearing persecution, many Chinese in particular fled Vietnam by boat to nearby countries. Later, hundreds of thousands of other Vietnamese nationals fled as well, seeking temporary refuge in camps throughout Southeast Asia.

The continuing grave condition of the economy and the alienation from the international community became focal points of party debate. In 1986, at the Sixth Party Congress, there was an important easing of communist agrarian and commercial policies.

GOVERNMENT AND POLITICAL CONDITIONS
A new state constitution was approved in April 1992, reaffirming the central role of the Communist Party of Vietnam (CPV) in politics and society, and outlining government reorganization and increased economic freedom. Though Vietnam remains a one-party state, adherence to ideological orthodoxy has become less important than economic development as a national priority.

The most important powers within the Vietnamese Government--in addition to the Communist Party--are the executive agencies created by the 1992 constitution: the offices of the president and the prime minister. The Vietnamese President, presently Nguyen Minh Triet, functions as head of state but also serves as the nominal commander of the armed forces and chairman of the Council on National Defense and Security. The Prime Minister of Vietnam, presently Nguyen Tan Dung, heads a cabinet currently composed of five deputy prime ministers and the heads of 22 ministries and agencies, all confirmed by the National Assembly.

Notwithstanding the 1992 constitution's reaffirmation of the central role of the Communist Party, the National Assembly, according to the constitution, is the highest representative body of the people and the only organization with legislative powers. It has a broad mandate to oversee all government functions. Once seen as little more than a rubber stamp, the National Assembly has become more vocal and assertive in exercising its authority over lawmaking, particularly in recent years. However, the National Assembly is still subject to Communist Party direction. More than 90% of the deputies in the National Assembly are party members. The assembly meets twice yearly for 7-10 weeks each time; elections for members are held every 5 years, although its Standing Committee meets monthly and there are now over 100 "full-time" deputies who function on various committees. In 2007, the assembly introduced parliamentary "question time," in which cabinet ministers must answer often pointed questions from National Assembly members. There is a separate judicial branch, but it is still relatively weak. There are few lawyers and trial procedures are rudimentary.

The present 15-member Politburo, selected at the Tenth Party Congress of the Communist Party of Vietnam in April 2006 and headed by Communist Party General Secretary Nong Duc Manh, determines government policy; its Secretariat, headed by Truong Tan Sang, oversees day-to-day policy implementation. In addition, the Communist Party's Central Military Commission, which is composed of select Politburo members and additional military leaders, determines military policy.

A Party Congress meets every 5 years to set the direction of the party and the government. The most recent Congress, the Tenth, met in April 2006 and comprised 1,176 delegates. The Eleventh Party Congress is scheduled to convene in January 2011. The 160-member Central Committee (with an additional 21 alternate members), is elected by the Party Congress and usually meets at least twice a year. The most recent Central Committee Plenum met in July 2009.

Principal Government Officials
President--Nguyen Minh Triet
Prime Minister--Nguyen Tan Dung
National Assembly Chairman--Nguyen Phu Trong
Deputy Prime Minister and Minister of Foreign Affairs--Pham Gia Khiem
Ambassador to the United States--Le Cong Phung
Ambassador to the United Nations--Le Luong Minh

Politburo
(Tenth Party Congress Politburo, named April 25, 2006; listed in the order it was announced, including the individuals' current positions.)

General Secretary of CPV Central Committee, 10th Party Congress--Nong Duc Manh
Minister of Public Security--Le Hong Anh
Prime Minister--Nguyen Tan Dung
State President--Nguyen Minh Triet
Standing Secretariat Member--Truong Tan Sang
National Assembly Chairman--Nguyen Phu Trong
Deputy Prime Minister and Minister of Foreign Affairs--Pham Gia Khiem
Minister of Defense, General Chief of Staff--Phung Quang Thanh
Deputy Prime Minister and Chairman, Party Internal Affairs Commission--Truong Vinh Trong
Secretary of HCMC Party's Committee--Le Thanh Hai
Standing Deputy Prime Minister--Nguyen Sinh Hung
Secretary of Hanoi Party's Committee--Pham Quang Nghi
Chairman, Party Organization and Personnel Commission--Ho Duc Viet
Chairman, Party Control Commission--Nguyen Van Chi
Chairman, Party Education and Propaganda Commission--To Huy Rua

Vietnam maintains an embassy in the U.S. at 1233 20th Street, NW, #400, Washington DC 20036 (tel. 202-861-0737; fax 202-861-0917); Internet home page: www.vietnamembassy-usa.org/. There is also a consulate general located in San Francisco at 1700 California Street, Suite 430, San Francisco, CA 94109 (tel. 415-922-1707; fax 415-922-1848; Internet homepage: http://www.vietnamconsulate-sf.org/.

ECONOMY
Following economic stagnation after reunification from 1975 to 1985, the 1986 Sixth Party Congress approved broad economic reforms (known as "Doi Moi" or renovation) that introduced market reforms, opened up the country for foreign investment, and dramatically improved Vietnam's business climate. Vietnam became one of the fastest-growing economies in the world, averaging around 8% annual gross domestic product (GDP) growth from 1990 to 1997 and 6.5% from 1998-2003. From 2004 to 2007, GDP grew over 8% annually, slowing slightly to 6.2% in 2008. Viewed over time, foreign trade and foreign direct investment (FDI) have improved significantly. Average annual foreign investment commitment has risen sharply since foreign investment was authorized in 1988, although the global economic crisis has affected FDI in 2009. As of August 2009, registered FDI (including new and additional capital) was $10.4 billion, a fall of about 82% from the same period in 2008. Disbursed FDI capital totaled $6.5 billion by August 2009, down 8.5% from the same period in 2008. In 2008, registered FDI was $71.7 billion and actual FDI $11.5. From 1990 to 2005, agricultural production nearly doubled, transforming Vietnam from a net food importer to the world's second-largest exporter of rice. As of August 2009, Vietnam’s exports ($37.3 billion) were down by 14%--a much lower drop than had been expected. Vietnam’s imports ($42.4 billion) were down by 28% from 2008, but the country is still running a $5 billion trade deficit.

The shift away from a centrally planned economy to a more market-oriented economic model has improved the quality of life for many Vietnamese. Per capita income rose from $220 in 1994 to $1,024 in 2008. Inflation in 2008 was 23% year-on-year, but most estimates predict inflation will be restrained to less than 7% for 2009. The average Vietnamese savings rate is about 30%. Urban unemployment has been rising in recent years, and both urban and rural underemployment, estimated to be between 25% and 35% during non-harvest periods, is significant.

The Vietnamese Government still holds a tight rein over major sectors of the economy through large state-owned enterprises and the banking system. The government has plans to reform key sectors and partially privatize state-owned enterprises, but implementation has been gradual and the state sector still accounts for approximately 36% of GDP. Greater emphasis on private sector development is critical for job creation.

The 2001 entry-into-force of the Bilateral Trade Agreement (BTA) between the U.S. and Vietnam was a significant milestone for Vietnam's economy and for normalization of U.S.-Vietnam relations. Bilateral trade between the United States and Vietnam has expanded dramatically, rising from $2.91 billion in 2002 to $15.7 billion in 2008. Total bilateral trade ($7.7 billion) was down by 5% for the period January-July 2009. The U.S. is Vietnam's second-largest trade partner overall (after China).

Implementation of the BTA, which includes provisions on trade in goods and services, enforcement of intellectual property rights, protection for investments, and transparency, fundamentally changed Vietnam's trade regime and helped it prepare to accede to the World Trade Organization (WTO) in 2007.

Vietnam was granted unconditional normal trade relations (NTR) status by the United States in December 2006. To meet the obligations of WTO membership, Vietnam revised nearly all of its trade and investment laws and guiding regulations and opened up large sectors of its economy to foreign investors and exporters.

A U.S.-Vietnam Trade and Investment Framework Agreement (TIFA), a bridge to future economic cooperation, was signed in 2007 during President Triet's visit to the United States. The first TIFA Council occurred in December 2007 in Washington, and there have been five TIFA meetings since then. During Prime Minister Dung's June 2008 visit, the United States and Vietnam committed to undertake Bilateral Investment Treaty (BIT) negotiations. The first round of BIT talks took place in December 2008, with a second round in June 2009 in Washington.

Agriculture and Industry
Besides rice, key exports are coffee, pepper (spice), cashews, tea, rubber, wood products, and fisheries products. In 2008, Vietnam was ranked 17 among all suppliers of food and agricultural products to the United States, a strong indicator of Vietnam’s growing importance as a global supplier of key agricultural commodities. Agriculture's share of economic output has declined, falling as a share of GDP from 42% in 1989 to 21.99% in 2008, as production in other sectors of the economy has risen.

Vietnam's industrial production has also grown. Industry and construction contributed 39.86% of GDP in 2008, up from 27.3% in 1985. Subsidies have been cut. The government is also in the process of "equitizing" (e.g., transforming state enterprises into shareholding companies and distributing a portion of the shares to management, workers, and private foreign and domestic investors) a significant number of state enterprises. However, to date the government continues to maintain control of the largest and most important companies. Despite reforms, the state share of GDP has remained relatively constant since 2000, at 36%-40%.

Trade and Balance of Payments
To compensate for drastic cuts in Soviet-bloc support after 1989, Vietnam liberalized trade, devalued its currency to increase exports, and embarked on a policy of regional and international economic re-integration. Vietnam has demonstrated its commitment to trade liberalization in recent years, and integration with the world economy has become one of the cornerstones of its reform program. Vietnam has locked in its intention to create a more competitive and open economy by committing to several comprehensive international trade agreements, including the Association of Southeast Asian Nations (ASEAN) Free Trade Area (AFTA) and the U.S.-Vietnam Bilateral Trade Agreement (BTA). Vietnam's accession to the World Trade Organization further integrated Vietnam into the global economy. In February 2009, Vietnam officially joined the Trans-Pacific Partnership (TPP) as an “associate member.”

As a result of these reforms, exports expanded significantly, growing by as much as 20%-30% in some years. In 2008, exports accounted for 72% of GDP. Imports have also grown rapidly, and Vietnam had a significant trade deficit in 2008 ($17.5 billion). Vietnam's total external debt, amounting to 29.8% of GDP in 2008, was estimated at around $21.8 billion.

FOREIGN RELATIONS
During the second Indochina war (1954-75), North Vietnam sought to balance relations with its two major allies, the Soviet Union and China. Tensions with China began to grow during the Chinese Cultural Revolution, and by 1975, Beijing had become increasingly critical of Hanoi's growing ties with Moscow. Over the next four years, Beijing's growing support for Cambodia's Khmer Rouge, which in 1978 initiated bloody attacks across its border with Vietnam, sparked Vietnamese suspicions of China's motives.

Vietnam-China relations deteriorated significantly after Hanoi instituted a ban in March 1978 on private trade, mostly affecting Sino-Vietnamese. Following Vietnam's December 1978 invasion of Cambodia, China in February 1979 launched a month-long retaliatory incursion over Vietnam's northern border. Faced with severance of Chinese aid and strained international relations, Vietnam established even closer ties with the Soviet Union and its allies in the Council for Mutual Economic Assistance (Comecon). Through the 1980s, Vietnam received nearly $3 billion a year in economic and military aid from the Soviet Union and conducted most of its trade with that country and with other Comecon countries. However, Soviet and East bloc economic aid declined during the perestroika era and ceased completely after the breakup of the Soviet Union.

Vietnam did not begin to emerge from international isolation until it withdrew its troops from Cambodia in 1989. Within months of the 1991 Paris Agreements, Vietnam established diplomatic and economic relations with ASEAN, as well as with most of the countries of Western Europe and Northeast Asia. China reestablished full diplomatic ties with Vietnam in 1991, and the two countries began joint efforts to demarcate their land and sea borders, expand trade and investment ties, and build political relations.

Over the past decade, Vietnam has recognized the increasing importance of growing global economic interdependence and has made concerted efforts to adjust its foreign relations to reflect the evolving international economic and political situation in Southeast Asia. The country has begun to integrate itself into the regional and global economy by joining international organizations. Vietnam has stepped up its efforts to attract foreign capital from the West and regularize relations with the world financial system. In the 1990s, following the lifting of the American veto on multilateral loans to the country, Vietnam became a member of the World Bank, the International Monetary Fund, and the Asian Development Bank. The country has expanded trade with its East Asian neighbors as well as with countries in Western Europe and North America. Of particular significance was Vietnam's acceptance into the Association of Southeast Asian Nations (ASEAN) in July 1995. In recent years, Vietnam's influence in ASEAN has expanded significantly; the country will serve as Chairman of ASEAN in 2010. In addition, Vietnam joined the Asia-Pacific Economic Cooperation forum (APEC) in November 1998 and hosted the ASEAN summit in 2001 and APEC in 2006. In October 2007, Vietnam was elected for the first time to the United Nations Security Council, to serve a two-year term starting January 1, 2008.

While Vietnam has not experienced war since its withdrawal from Cambodia, tensions have periodically flared between Vietnam and China, primarily over their overlapping maritime claims in the South China Sea. Vietnam and China each assert claims to the Spratly and Paracel Islands, archipelagos in the potentially oil-rich area of the South China Sea. Malaysia, the Philippines, Brunei, and Taiwan also claim all or part of the South China Sea. Over the years, conflicting claims have produced small-scale armed altercations in the area; in 1988, 70 Vietnamese sailors died in a confrontation with China in the Spratlys. China's assertion of "indisputable sovereignty" over the Spratly Islands and the entire South China Sea has elicited concern from Vietnam and its Southeast Asia neighbors. Tensions escalated in the latter half of 2007, as China pressured foreign oil companies, notably BP, to abandon their oil and gas exploration contracts with Vietnam in the South China Sea. Press reports in July 2008 also cited Chinese pressure on U.S. firm ExxonMobil to drop an exploration agreement with Vietnam in the same waters. Vietnamese students staged several anti-China demonstrations in response, prompting a warning from the Chinese Foreign Ministry spokesman that Hanoi's failure to quell the demonstrations was harming relations. China's efforts in the summer of 2009 to strictly enforce its unilateral fishing ban in disputed waters led to the detention for several weeks of more than two dozen Vietnamese fishermen.

In contrast, Vietnam has made significant progress with China in delineating its northern land border and the Gulf of Tonkin, pursuant to a Land Border Agreement signed in December 1999, and an Agreement on Borders in the Gulf of Tonkin signed in December 2000. The two sides completed demarcation of their land border in December 2008 and have reached understanding on maritime boundaries in the mouth of the Tonkin Gulf.

U.S.-VIETNAM RELATIONS
President Bill Clinton announced the formal normalization of diplomatic relations with the Socialist Republic of Vietnam on July 11, 1995. Subsequent to President Clinton's normalization announcement, in August 1995, both nations upgraded their Liaison Offices opened in January 1995 to embassy status. As diplomatic ties between the nations grew, the United States opened a consulate general in Ho Chi Minh City, and Vietnam opened a consulate general in San Francisco. In 2009, Vietnam opened a consulate in Houston; the United States received permission to open a consulate in Danang.

U.S. relations with Vietnam have become increasingly cooperative and broad-based in the years since political normalization. A series of bilateral summits have helped drive the improvement of ties, including President George W. Bush's visit to Hanoi in November 2006, President Triet's visit to Washington in June 2007, and Prime Minister Dung's visit to Washington in June 2008. The two countries hold an annual dialogue on human rights, which resumed in 2006 after a two-year hiatus. Vietnam and the United States signed a Bilateral Trade Agreement in July 2000, which went into force in December 2001. In 2003, the two countries signed a Counternarcotics Letter of Agreement (amended in 2006), a Civil Aviation Agreement, and a textile agreement. In January 2007, Congress approved Permanent Normal Trade Relations (PNTR) for Vietnam. In October 2008, the U.S. and Vietnam inaugurated annual political-military talks and policy planning talks to consult on regional security and strategic issues. Bilateral and regional diplomatic engagement expanded at ASEAN, which Vietnam will chair in 2010, and continues through APEC. The two sides have consulted regularly on a broad range of international issues at the UN Security Council, where Vietnam has a seat (January 2008-December 2009) as a non-permanent member.

Vietnam's suppression of political dissent has continued to be a main issue of contention in relations with the United States, drawing criticism from successive administrations, as well as from members of Congress and the U.S. public. Since spring 2007, Vietnam's government has arrested dozens of political dissidents, and in 2008 and 2009 further tightened controls over the press and freedom of speech. Over the past year, two journalists were arrested and convicted in connection with their reporting on high-level corruption, and several journalists and editors at leading newspapers have been fired. Several Internet bloggers were also jailed after writing about corruption and protesting China's actions in the disputed Spratly and Paracel Islands; one was convicted and sent to prison.

In contrast, Vietnam has continued to make significant progress on expanding religious freedom. In 2005, Vietnam passed comprehensive religious freedom legislation, outlawing forced renunciations and permitting the official recognition of new denominations. Since that time, the government has granted official national recognition to a number of religions and religious groups, including seven more Protestant denominations, and has registered hundreds of local congregations. As a result, in November 2006, the Department of State lifted the designation of Vietnam as a "Country of Particular Concern," based on a determination that the country was no longer a serious violator of religious freedoms, as defined by the International Religious Freedom Act. This decision was reaffirmed by the Department of State in 2007, 2008, and 2009. Nevertheless, there is room for further progress. The government's slow pace of church registration and harassment of certain religious leaders for their political activism, including leaders of the unrecognized United Buddhist Church of Vietnam, were an ongoing source of U.S. concern, as was violence against the Plum Village order at Bat Nha Pagoda in Lam Dong.

As of September 15, 2009, the U.S. Government listed 1,731 Americans unaccounted for in Southeast Asia, including 1,319 in Vietnam. Since 1973, 915 Americans have been accounted for, including 649 in Vietnam.

Additionally, the Department of Defense has confirmed that of the 196 individuals who were "last known alive" (LKA) in Vietnam, the U.S. Government has determined the fate of all but 27. The Joint POW/MIA Accounting command (JPAC) conducts four major investigation and recovery periods a year in Vietnam, during which specially trained U.S. military and civilian personnel investigate and excavate hundreds of cases in pursuit of fullest possible accounting. Accessing restricted areas by using unilateral Vietnamese investigation and recovery teams has been a recent highlight of cooperation by the Socialist Republic of Vietnam, as was the June 2009 coastal search mission by the oceanographic survey ship USNS Heezen, the first of its kind. The U.S. would still like to see the provision of archival documents related to U.S. losses along the wartime Ho Chi Minh Trail, as well as more openness in general with regard to Vietnam’s wartime archives. The United States considers achieving the fullest possible accounting of Americans missing and unaccounted for in Indochina to be one of its highest priorities with Vietnam.

Since entry into force of the U.S.-Vietnam Bilateral Trade Agreement on December 10, 2001, increased trade between the U.S. and Vietnam, combined with large-scale U.S. investment in Vietnam, evidence the maturing U.S.-Vietnam economic relationship. In 2008, the United States exported $2.8 billion of goods to Vietnam and imported $12.9 billion of goods from Vietnam. Similarly, U.S. companies continue to invest directly in the Vietnamese economy. During 2008, the U.S. private sector committed $1.49 billion to Vietnam in foreign direct investment. Another sign of the expanding bilateral relationship is the signing of a Bilateral Air Transport Agreement in December 2003. Several U.S. carriers already have third-party code sharing agreements with Vietnam Airlines. Direct flights between Ho Chi Minh City and San Francisco began in December 2004. The Bilateral Air Transport Agreement was amended in October 2008 to fully open markets for cargo air transportation. Vietnam and the United States also signed a Bilateral Maritime Agreement in March 2007 that opened the maritime transport and services industry of Vietnam to U.S. firms.

The United States and Vietnam engage in a wide range of cooperative activities in the areas of peacekeeping, humanitarian assistance and disaster relief, search and rescue, maritime and border security, law enforcement, and nonproliferation. In June 2008, Prime Minister Dung announced plans to take part in the multinational Global Peace Operations Initiative (GPOI) to train international peacekeepers. Many of these topics are discussed in annual bilateral defense discussions. In April 2009, senior officials from Vietnam's Navy and Air Force toured the U.S. nuclear-powered aircraft carrier USS John C. Stennis, which was berthed in international waters 270 miles off the southern coast of Vietnam. In June 2008, Vietnam hosted a port call to Nha Trang by the hospital ship USNS Mercy, providing medical and dental treatment to over 11,000 Vietnamese patients. This followed Vietnam's hosting of visits by five U.S. Navy vessels in 2007, including a port call to Danang by the humanitarian supply ship USS Peleliu, whose personnel carried out numerous medical and engineering projects. Vietnam continues to observe multinational exercises such as the Cooperation Afloat Readiness and Training (CARAT), organized by the U.S. Pacific Fleet. An active partner in nonproliferation regimes, Vietnam also takes full advantage of expertise, equipment, and training available under the Export Control and Related Border Security (EXBS) program.

Principal U.S. Embassy Official
Ambassador--Michael W. Michalak

The U.S. Embassy in Vietnam is located at 7 Lang Ha, Ba Dinh District, Hanoi, Socialist Republic of Vietnam (tel. 84-4-850-5000; fax 84-4-850-5010).

Principal U.S. Consulate General Official
Consul General--Kenneth J. Fairfax

The U.S. Consulate General in Ho Chi Minh City is located at 4 Le Duan, District 1, Ho Chi Minh City, Socialist Republic of Vietnam (tel. 84-8-822-9433; fax 84-8-822-9434).

TRAVEL AND BUSINESS INFORMATION
The U.S. Department of State's Consular Information Program advises Americans traveling and residing abroad through Country Specific Information, Travel Alerts, and Travel Warnings. Country Specific Information exists for all countries and includes information on entry and exit requirements, currency regulations, health conditions, safety and security, crime, political disturbances, and the addresses of the U.S. embassies and consulates abroad. Travel Alerts are issued to disseminate information quickly about terrorist threats and other relatively short-term conditions overseas that pose significant risks to the security of American travelers. Travel Warnings are issued when the State Department recommends that Americans avoid travel to a certain country because the situation is dangerous or unstable.

For the latest security information, Americans living and traveling abroad should regularly monitor the Department's Bureau of Consular Affairs Internet web site at http://www.travel.state.gov, where the current Worldwide Caution, Travel Alerts, and Travel Warnings can be found. Consular Affairs Publications, which contain information on obtaining passports and planning a safe trip abroad, are also available at http://www.travel.state.gov. For additional information on international travel, see http://www.usa.gov/Citizen/Topics/Travel/International.shtml.

The Department of State encourages all U.S. citizens traveling or residing abroad to register via the State Department's travel registration website or at the nearest U.S. embassy or consulate abroad. Registration will make your presence and whereabouts known in case it is necessary to contact you in an emergency and will enable you to receive up-to-date information on security conditions.

Emergency information concerning Americans traveling abroad may be obtained by calling 1-888-407-4747 toll free in the U.S. and Canada or the regular toll line 1-202-501-4444 for callers outside the U.S. and Canada.

The National Passport Information Center (NPIC) is the U.S. Department of State's single, centralized public contact center for U.S. passport information. Telephone: 1-877-4-USA-PPT (1-877-487-2778); TDD/TTY: 1-888-874-7793. Passport information is available 24 hours, 7 days a week. You may speak with a representative Monday-Friday, 8 a.m. to 10 p.m., Eastern Time, excluding federal holidays.

Travelers can check the latest health information with the U.S. Centers for Disease Control and Prevention in Atlanta, Georgia. A hotline at 800-CDC-INFO (800-232-4636) and a web site at http://wwwn.cdc.gov/travel/default.aspx give the most recent health advisories, immunization recommendations or requirements, and advice on food and drinking water safety for regions and countries. The CDC publication "Health Information for International Travel" can be found at http://wwwn.cdc.gov/travel/contentYellowBook.aspx.

Further Electronic Information
Department of State Web Site. Available on the Internet at http://www.state.gov, the Department of State web site provides timely, global access to official U.S. foreign policy information, including Background Notes and daily press briefings along with the directory of key officers of Foreign Service posts and more. The Overseas Security Advisory Council (OSAC) provides security information and regional news that impact U.S. companies working abroad through its website http://www.osac.gov

Export.gov provides a portal to all export-related assistance and market information offered by the federal government and provides trade leads, free export counseling, help with the export process, and more.

STAT-USA/Internet, a service of the U.S. Department of Commerce, provides authoritative economic, business, and international trade information from the Federal government. The site includes current and historical trade-related releases, international market research, trade opportunities, and country analysis and provides access to the National Trade Data Bank.

Background Note: Zambia

Bureau of African Affairs

PROFILE

OFFICIAL NAME:
Republic of Zambia

Geography
Area: 752,612 sq. km. (290,585 sq. mi.); slightly larger than Texas.
Cities: Capital--Lusaka (pop. approx. 1.7 million).
Other cities: Kitwe, Ndola, Livingstone, Kabwe.
Terrain: Varies; mostly plateau savanna.
Climate: Generally dry and temperate.

People
Nationality: Noun and adjective--Zambian(s).
Population (mid-2009 est.): Approx. 12.9 million.
Annual growth rate (2009): 2.9%.
Ethnic groups: More than 70 ethnic groups.
Religions: Christian, indigenous beliefs, Muslim, Hindu.
Languages: English (official), about 70 local languages and dialects, including Bemba, Lozi, Kaonde, Lunda, Luvale, Tonga, and Nyanja.
Education: No compulsory education; seven years free education. Literacy--women: 60.6%; men: 81.6%.
Health: Infant mortality rate--70/1,000. Life expectancy--38.63 years. HIV prevalence (15-49)--14.3%.
Work force: Agriculture--75%; mining and manufacturing--6%; services--19%.

Government
Type: Republic.
Independence: October 24, 1964.
Constitution: 1991 (as amended in 1996).
Branches: Executive--president (chief of state and head of government), cabinet. Legislative--unicameral National Assembly. Judicial--Supreme Court, high court, magistrate courts, and local courts.
Ruling political party: Movement for Multi-party Democracy (MMD).
Suffrage: Universal adult.
Subdivisions: Nine provinces subdivided into 72 districts.

Economy
GDP (2008, purchasing power parity): $17.39 billion.
Annual growth rate (2009, projected): 4.3%.
Per capita GDP (2008, current prices): $1,500.
Natural resources: Copper, cobalt, zinc, lead, coal, emeralds, gold, silver, uranium, hydroelectric power, fertile land.
Agriculture: Products--corn, sorghum, rice, groundnuts, sunflower seeds, vegetables, fruits, flowers, tobacco, cotton, sugarcane, livestock, coffee, and soybeans.
Industry: Types--mining, transport, construction, foodstuffs, beverages, chemicals, and textiles.
Trade (2008 est.): Exports--$5.08 billion: copper, cobalt, lead, and zinc, cut vegetables, cotton, tobacco. Major markets--Switzerland, China, Pakistan, Democratic Republic of the Congo, South Africa, Malawi. Imports--$5.06 billion: crude oil, refined petroleum products, manufactured goods, machinery, transport equipment, foodstuffs, chemicals. Major suppliers--South Africa, China, Democratic Republic of the Congo, United Kingdom.
Major donors: Donor contributions totaled $989 million in 2008, as reported by Ministry of Finance and National Planning. The World Bank is Zambia's largest multilateral donor. Other key multilateral donors include the International Monetary Fund (IMF), the European Union, UN agencies, and the African Development Bank. Counting direct bilateral assistance and assistance through multilateral agencies, the United States is Zambia's largest country donor, amounting to approximately $330 million in 2008.

PEOPLE
Zambia's population comprises more than 70 Bantu-speaking ethnic groups. Some ethnic groups are small, and only two have enough people to constitute at least 10% of the population. Most Zambians are subsistence farmers. The predominant religion is a blend of traditional beliefs and Christianity; Christianity is the official national religion. Expatriates, a majority of whom are British (about 15,000) and South African, live mainly in Lusaka and in the Copperbelt in northern Zambia, where they are employed in mines and related activities. Zambia also has a small but economically important Asian population, most of whom are Indians. The HIV/AIDS epidemic is ravaging Zambia. Approximately 14.3% of Zambians are infected by HIV. Over 800,000 Zambian children have lost one or both of their parents due to HIV/AIDS. Life expectancy at birth is 38.63 years.

HISTORY
The indigenous hunter-gatherer occupants of Zambia began to be displaced or absorbed by more advanced migrating tribes about 2,000 years ago. The major waves of Bantu-speaking immigrants began in the 15th century, with the greatest influx between the late 17th and early 19th centuries. They came primarily from the Luba and Lunda tribes of southern Democratic Republic of Congo and northern Angola but were joined in the 19th century by Ngoni peoples from the south. By the latter part of that century, the various peoples of Zambia were largely established in the areas they currently occupy.

Except for an occasional Portuguese explorer, the area lay untouched by Europeans for centuries. After the mid-19th century, it was penetrated by Western explorers, missionaries, and traders. David Livingstone, in 1855, was the first European to see the magnificent waterfalls on the Zambezi River. He named the falls after Queen Victoria, and the Zambian town near the falls is named after him.

In 1888, Cecil Rhodes, spearheading British commercial and political interests in Central Africa, obtained a mineral rights concession from local chiefs. In the same year, Northern and Southern Rhodesia (now Zambia and Zimbabwe, respectively) were proclaimed a British sphere of influence. Southern Rhodesia was annexed formally and granted self-government in 1923, and the administration of Northern Rhodesia was transferred to the British colonial office in 1924 as a protectorate.

In 1953, both Rhodesias were joined with Nyasaland (now Malawi) to form the Federation of Rhodesia and Nyasaland. Northern Rhodesia was the center of much of the turmoil and crisis that characterized the federation in its last years. At the core of the controversy were insistent African demands for greater participation in government and European fears of losing political control.

A two-stage election held in October and December 1962 resulted in an African majority in the legislative council and an uneasy coalition between the two African nationalist parties. The council passed resolutions calling for Northern Rhodesia's secession from the federation and demanding full internal self-government under a new constitution and a new national assembly based on a broader, more democratic franchise. On December 31, 1963, the federation was dissolved, and Northern Rhodesia became the Republic of Zambia on October 24, 1964.

At independence, despite its considerable mineral wealth, Zambia faced major challenges. Domestically, there were few trained and educated Zambians capable of running the government, and the economy was largely dependent on foreign expertise. Abroad, three of its neighbors--Southern Rhodesia and the Portuguese colonies of Mozambique and Angola--remained under white-dominated rule. Rhodesia's white-ruled government unilaterally declared independence in 1965. In addition, Zambia shared a border with South African-controlled South-West Africa (now Namibia). Zambia's sympathies lay with forces opposing colonial or white-dominated rule, particularly in Southern Rhodesia. During the next decade, it actively supported movements such as the Union for the Total Liberation of Angola (UNITA), the Zimbabwe African People's Union (ZAPU), the African National Congress of South Africa (ANC), and the South-West Africa People's Organization (SWAPO).

Conflicts with Rhodesia resulted in the closing of Zambia's borders with that country and severe problems with international transport and power supply. However, the Kariba hydroelectric station on the Zambezi River provided sufficient capacity to satisfy the country's requirements for electricity. A railroad to the Tanzanian port of Dar es Salaam, built with Chinese assistance, reduced Zambian dependence on railroad lines south to South Africa and west through an increasingly troubled Angola.

By the late 1970s, Mozambique and Angola had attained independence from Portugal. Zimbabwe achieved independence in accordance with the 1979 Lancaster House agreement, but Zambia's problems were not solved. Civil war in the former Portuguese colonies generated refugees and caused continuing transportation problems. The Benguela Railroad, which extended west through Angola, was essentially closed to traffic from Zambia by the late 1970s. Zambia's strong support for the ANC, which had its external headquarters in Lusaka, created security problems as South Africa raided ANC targets in Zambia.

In the mid-1970s, the price of copper, Zambia's principal export, suffered a severe decline worldwide. Zambia turned to foreign and international lenders for relief, but as copper prices remained depressed, it became increasingly difficult to service its growing debt.

In response to growing popular demand, and after lengthy, difficult negotiations between the Kaunda government and opposition groups, Zambia enacted a new constitution in 1991 and shortly thereafter became a multi-party democracy. Kaunda's successor, Frederick Chiluba, made efforts to liberalize the economy and privatize industry, but allegations of massive corruption characterized the latter part of his administration. By the mid-1990s, despite limited debt relief, Zambia's per capita foreign debt remained among the highest in the world.

Although poverty continues to be a significant problem in Zambia, its economy has stabilized, attaining single-digit inflation in 2006-2007, real GDP growth, decreasing interest rates, and increasing levels of trade. Much of its growth is due to foreign investment in Zambia's mining sector and higher copper prices on the world market. In 2005, Zambia qualified for debt relief under the Heavily Indebted Poor Countries (HIPC) initiative, consisting of approximately U.S. $6 billion in debt relief.

GOVERNMENT
Zambia became a republic immediately upon attaining independence in October 1964. The constitution promulgated on August 25, 1973, abrogated the original 1964 constitution. The new constitution and the national elections that followed in December 1973 were the final steps in achieving what was called a "one-party participatory democracy."

The 1973 constitution provided for a strong president and a unicameral National Assembly. National policy was formulated by the Central Committee of the United National Independence Party (UNIP), the sole legal party in Zambia. The cabinet executed the central committee's policy.

In accordance with the intention to formalize UNIP supremacy in the new system, the constitution stipulated that the sole candidate in elections for the office of president was the person selected to be the president of UNIP by the party's general conference. The second-ranking person in the Zambian hierarchy was UNIP's secretary general.

In December 1990, at the end of a tumultuous year that included riots in the capital and a coup attempt, President Kenneth Kaunda signed legislation ending UNIP's monopoly on power. Zambia enacted a new constitution in August 1991, which enlarged the National Assembly from 136 members to a maximum of 158 members, established an electoral commission, and allowed for more than one presidential candidate who no longer had to be a member of UNIP. The constitution was amended again in 1996 to set new limits on the presidency (including a retroactive two-term limit, and a requirement that both parents of a candidate be Zambian-born). The National Assembly is comprised of 150 directly elected members, up to eight presidentially-appointed members, and a speaker. Zambia is divided into nine provinces, each administered by an appointed deputy minister who essentially performs the duties of a governor.

The Supreme Court is the highest court and the court of appeal; below it are the high court, magistrate's court, and local courts.

Principal Government Officials
President--Rupiah Banda
Vice President and Minister of Justice--George Kunda
Minister of Foreign Affairs--Kabinga Pande
Minister of Defense--Kalombo Mwansa
Minister of Finance--Situmbeko Musokotwane
Minister of Health--Kapembwa Simbao
Ambassador to the United States--Inonge Mbikusita-Lewanika
Ambassador to the United Nations--Lazarous Kapambwe

Zambia maintains an embassy in the United States at 2419 Massachusetts Avenue, NW, Washington, DC 20008 (tel: 202-265-9717/8/9).

POLITICAL CONDITIONS
The major figure in Zambian politics from 1964 to 1991 was Kenneth Kaunda, who led the campaign for independence and successfully bridged the rivalries among the country's various regions and ethnic groups. Kaunda tried to base government on his philosophy of "humanism," which condemned human exploitation and stressed cooperation among people, but not at the expense of the individual.

Kaunda's political party--the United National Independence Party (UNIP)--was founded in 1959 and was in power under Kaunda's leadership from 1964 to 1991. Before 1972, Zambia had three significant political parties, but only UNIP had a nationwide following.

In December 1972, Zambian law established a one-party state, and all other political parties were banned; this was later enshrined in the 1973 constitution. Kaunda, the sole candidate, was elected President in the 1973 elections. Elections also were held for the National Assembly. Only UNIP members were permitted to run, but these seats were sharply contested. President Kaunda's mandate was renewed in December 1978, October 1983, and October 1988 in a "yes" or "no" vote on his candidacy.

Growing opposition to UNIP's monopoly on power led to the rise in 1990 of the Movement for Multiparty Democracy (MMD). The MMD assembled an increasingly impressive group of important Zambians, including prominent UNIP defectors and labor leaders. Zambia's first multi-party elections for parliament and the presidency were held on October 31, 1991. MMD candidate Frederick Chiluba resoundingly carried the presidential election over Kenneth Kaunda with 81% of the vote. To add to the MMD landslide, in the parliamentary elections, the MMD won 125 of the 150 elected seats, and UNIP won the remaining 25.

By the end of Chiluba's first term as President (1996), the MMD's commitment to political reform had faded in the face of re-election aspirations. A number of prominent supporters founded opposing parties. Relying on the MMD's overwhelming majority in parliament, President Chiluba in May 1996 pushed through constitutional amendments that eliminated former President Kaunda and other prominent opposition leaders from the 1996 presidential elections. In the presidential and parliamentary elections held in November 1996, Chiluba was re-elected, and the MMD won 131 of the 150 seats in the National Assembly. Kaunda's UNIP party boycotted the parliamentary polls to protest the exclusion of its leader from the presidential race, alleging in addition that the outcome of the election had been predetermined due to a faulty voter registration exercise. As President Chiluba began his second term in 1997, the opposition and civil society challenged the results of the election amid international efforts to encourage the MMD and the opposition to resolve their differences through dialogue.

Early in 2001, supporters of President Chiluba mounted a campaign to amend the constitution to enable Chiluba to seek a third term of office. Civil society, opposition parties, and many members of the ruling party exerted sufficient pressure on Chiluba to force him to back away from any attempt at a third term.

Presidential, parliamentary, and local government elections were held on December 27, 2001. Eleven parties contested the elections. The elections encountered numerous administrative problems. Opposition parties alleged that serious irregularities occurred. Nevertheless, MMD presidential candidate Levy Mwanawasa, having garnered a plurality of the vote (29%), was declared the victor by a narrow margin, and he was sworn into office on January 2, 2002. Opposition parties won a majority of parliamentary seats in the December 2001 election, but subsequent by-elections gave the ruling MMD a majority in parliament.

During his first months in office, President Mwanawasa encouraged the Zambian Anticorruption Commission to aggressively pursue its mandate. In July 2002, in a speech before the Zambian National Assembly, President Mwanawasa provided details on a number of corruption allegations targeting former President Chiluba, and called for parliament to consider lifting Chiluba's immunity from prosecution.

On May 4, 2007, a British court found former president Chiluba and several others liable in a civil suit for misappropriating as much as $58 million of public resources, but the case has not yet been registered in Zambian courts and enforced. The government's Task Force on Corruption (originally established by former president Mwanwasa) has successfully prosecuted several cases of abuse of office and high-level corruption. In August 2009, and after 8 years, a Zambian magistrate acquitted Chiluba of corruption and the Government of Zambia decline to appeal the acquittal.

In February 2006 the government agreed to allow the formation of a Constituent Assembly to consider and adopt the draft constitution, subject to certain conditions. In August 2007, the Zambian parliament passed a government-sponsored law creating a National Constitutional Conference (NCC) charged with drafting a new constitution. The NCC, which is comprised of over 500 members drawn from parliament, political parties, civil society, and government, began meeting in late December 2007 and has had its mandate extended into 2010. Some members of civil society have refused to participate in the NCC, saying that its membership is too heavily stacked in the government's favor and pushing instead for the promised Constituent Assembly.

The Government of Zambia introduced very limited legislative changes to electoral procedures in mid-2006, including an electoral code of conduct and limits on politically-motivated donations and handouts. However, in parliamentary by-elections held in 2009, candidates from all parties violated the code of conduct, and the Electoral Commission of Zambia had insufficient capacity to enforce it.

President Mwanawasa died August 19, 2008 in a Paris hospital from complications of a stroke suffered June 29. In accordance with the constitution, Vice President Rupiah Banda assumed presidential powers but was required to hold elections within 90 days of Mwanawasa's death. Elections were held on October 30, 2008. Banda was declared the winner after narrowly defeating Michael Sata of the opposition Patriotic Front party by only 30,000 votes. International observers were satisfied overall with the conduct of the election and the management of the Electoral Commission of Zambia, although no voters had been registered since late 2005. Banda was sworn in on November 2, 2008 and announced new cabinet members on November 14. Banda has vowed to continue the business-friendly and corruption-fighting policies of his predecessor, but emerging corruption scandals in the Zambian Government and the acquittal of former President Chiluba have raised speculation about President Banda’s initial commitments to promote fiscal transparency and accountability and about his overall commitment to fighting corruption. Presidential and parliamentary elections are currently slated for 2011.

ECONOMY
About two-thirds of Zambians live in poverty. Per capita annual incomes are well below their levels at independence and, at $1,500, place the country among the world's poorest nations. Social indicators continue to decline, particularly in measurements of life expectancy at birth (about 39 years) and maternal mortality (101 per 1,000 live births). The country's rate of economic growth cannot support rapid population growth or the strain which HIV/AIDS-related issues (i.e., rising medical costs, decline in worker productivity) place on government resources. Zambia is also one of Sub-Saharan Africa's most highly urbanized countries. Over one-third of the country's 12.9 million people are concentrated in a few urban zones strung along the major transportation corridors, while rural areas are underpopulated. Unemployment and underemployment are serious problems.

HIV/AIDS is the nation's greatest challenge, with 14.3% prevalence among the adult population. HIV/AIDS will continue to ravage Zambian economic, political, cultural, and social development for the foreseeable future.

Once a middle-income country, Zambia began to slide into poverty in the 1970s when copper prices declined on world markets. The socialist government made up for falling revenue by increasing borrowing. After democratic multi-party elections, the Chiluba government (1991-2001) came to power in November 1991 committed to an economic reform program. The government was successful in some areas, such as privatization of most of the parastatals, maintenance of positive real interest rates, the elimination of exchange controls, and endorsement of free market principles. Corruption grew dramatically under the Chiluba government. Zambia has yet to address effectively issues such as reducing the size of the public sector and improving Zambia's social sector delivery systems.

For 30 years, copper production declined steadily from a 1973 high of 700,000 metric tons to a 2000 low of 226,192 metric tons. The decline was the result of poor management of state-owned mines and lack of investment. With the privatization of the mines in April 2000, the downward trend in production and exports was reversed as a result of investments in plant rehabilitation, expansion, increased exploration, and high copper prices on the international market. Copper production rose to 535,000 metric tons in 2007, but slumping copper prices in late 2008 put significant pressure on the mining companies and government revenue. Zambia experienced positive economic growth for the eleventh consecutive year in 2009, with a real growth rate of 4.3% (as projected by the government). The rate of inflation dropped from 30% in 2000 to single-digit inflation of 8.9% by December 2007 due to fiscal and monetary discipline and the growth of the domestic food supply. Year-on-year inflation rose above 14% in 2009, due to rising fuel and food prices.

In April 2005, the International Monetary Fund (IMF) and the World Bank's International Development Association (IDA) provided Zambia significant debt service relief and debt forgiveness under the Heavily Indebted Poor Countries (HIPC) initiative. Zambia was the 17th country to reach the HIPC completion point and has benefited from approximately U.S. $6 billion in debt relief. In July 2005, the G-8 agreed on a proposal to cancel 100% of outstanding debt of eligible HIPC countries to the IMF, African Development Fund, and IDA. Zambia is among the beneficiaries of this additional multilateral debt relief. Zambia also completed a Poverty Reduction and Growth Facility (PRGF) arrangement with the IMF for the period 2008-2011. The Zambian Government is pursuing an economic diversification program to reduce the economy's reliance on the copper industry. This initiative seeks to exploit other components of Zambia's rich resource base by promoting agriculture, tourism, gemstone mining, and hydropower. The government is also seeking to create an environment that encourages entrepreneurship and private-sector led growth.

Zambia's economy has weathered the effects of the global economic crisis and a subsequent fall in world copper prices. High inflation, currency volatility, rising unemployment, and restricted access to capital dampened Zambia’s economic performance in early 2009; however, copper prices have nearly returned to more stable, profit-yielding levels.

DEFENSE
The Zambian Defense Force (ZDF) consists of the army, the air force, and Zambian National Service (ZNS). The ZNS, while operating under the Ministry of Defense, is responsible primarily for public works projects. The ZDF is designed primarily for internal defense. The HIV/AIDS epidemic has hit the ZDF especially hard.

The ZDF has contributed to African Union and United Nations peacekeeping operations in Africa, and in 2005 became a partner in the African Contingency Operations and Training Assistance (ACOTA) program. The first iteration of ACOTA peacekeeper training took place in 2007, but subsequent training sessions have been delayed.

FOREIGN RELATIONS
Zambia is a member of the Non-Aligned Movement (NAM), the African Union, the Southern African Development Community (SADC), and the Common Market for Eastern and Southern Africa (COMESA), which is headquartered in Lusaka.

President Kaunda was a persistent and visible advocate of change in southern Africa, supporting liberation movements in Angola, Mozambique, Namibia, Southern Rhodesia (Zimbabwe), and South Africa. Many of these liberation organizations were based in Zambia during the 1970s and 1980s.

President Chiluba assumed a visible international role in the mid- and late 1990s. His government sponsored Angola peace talks that led to the 1994 Lusaka Protocols. Zambia provided troops to UN peacekeeping initiatives in Mozambique, Rwanda, Angola, and Sierra Leone. Zambia was the first African state to cooperate with the International Tribunal investigation of the 1994 genocide in Rwanda.

In 1998, Zambia took the lead in efforts to establish a cease-fire in Democratic Republic of the Congo. After the signing of a cease-fire agreement in Lusaka in July and August 1999, Zambia was active in supporting the Congolese peace effort, although activity diminished considerably after the Joint Military Commission tasked with implementing the ceasefire relocated to Kinshasa in September 2001.

During President Mwanawasa's administration, Zambia contributed troops to support UN peacekeeping operations in southern Sudan. During his tenure as SADC Chair, President Mwanawasa brought the issue of Zimbabwe to the fore in the SADC, taking a lead role in pressuring President Mugabe for reforms in his country. Zambia's history of stability and its commitment to regional peace has made it a haven for large numbers of refugees. Currently, Zambia hosts approximately 73,000 refugees (down from a high of 203,000 in 2002), including roughly 37,000 Congolese, 26,000 Angolans, and 9,000 other nationalities (mainly Rwandans, Burundians, and Somalis). In recent years, Zambia has made serious efforts to repatriate many of these refugees, including approximately 27,000 Congolese refugees in the past three years.

U.S.-ZAMBIAN RELATIONS
The United States and Zambia enjoy cordial relations. The United States works closely with the Zambian Government to defeat the HIV/AIDS pandemic that is ravaging Zambia, to promote economic growth and development, and to bring about political reform by promoting democratic principles and responsible government. The United States is also supporting the government's efforts to root out corruption. Zambia is a beneficiary of the African Growth and Opportunity Act (AGOA) and in December 2008 became eligible for a Millennium Challenge Account (MCA) compact. The U.S. Government provides a variety of additional technical assistance and support that is managed by the Department of State, in cooperation with the U.S. Agency for International Development, the Centers for Disease Control, the Department of Treasury, the Department of Defense, the Department of Justice, and the Peace Corps. The majority of U.S. assistance is provided through the President's Emergency Plan for AIDS Relief (PEPFAR) in support of the fight against HIV/AIDS.

In addition to supporting development projects, the United States has provided considerable emergency food aid during periods of drought and flooding through the World Food Program (WFP) and is a major contributor to refugee programs in Zambia through the UN High Commission for Refugees and other agencies.

U.S. Agency for International Development (USAID)
In 2008 USAID assistance to Zambia exceeded $210 million, including over $144 million for HIV/AIDS programs utilizing PEPFAR funding and $15 million to fight malaria. Other major programs include training and technical assistance to: promote economic growth with a focus on agriculture-related policy, trade, and production technologies; create health and educational opportunities to improve lives; and reduce the impact of HIV/AIDS through multi-sectoral responses. In addition, USAID helps build the capacity of the Government of Zambia to respond to emergency needs.

Peace Corps
A country agreement inviting the Peace Corps to work in Zambia was signed by the United States and Zambia on September 14, 1993. The first group of volunteers was sworn in on April 7, 1994. In 2009, the Peace Corps program in Zambia continued to increase understanding between Zambians and Americans. More than 160 two-year Volunteers and as many as 10 extension and Peace Corps Response Volunteers promote sustainable development through their activities in agricultural and natural resource management, health, rural education, and humanitarian assistance. Volunteers are working in eight of Zambia's nine provinces building local capacity to manage family fish farms, to promote food security and positive resource management practices near forest reserves, to implement health reforms at the village level, to promote and support rural education, and to extend HIV/AIDS education and prevention efforts through full participation in PEPFAR. Volunteers live primarily in rural villages in remote parts of the country without running water, electricity, or other amenities. New trainees undertake training in local language, culture, and the relevant technical specialty for 9 weeks at a center in the Chongwe district of Lusaka province.

Principal U.S. Officials
Ambassador--Donald E. Booth
Deputy Chief of Mission--Michael Koplovsky
Public Affairs Officer--Priscilla Hernandez
Political/Economic Section Chief--Pamela Tremont
Consular Officer--Kate McGeary
Defense Attaché--Lt. Col. Derek West
Centers for Disease Control and Prevention--Lawrence Marum
USAID Mission Director--Melissa Williams
Peace Corps Director--Tom Kennedy

The U.S. Embassy in Zambia is at the corner of Independence and United Nations Avenues (P.O. Box 31617), Lusaka (tel: 260-1- 250955; fax 260-1-252225).

TRAVEL AND BUSINESS INFORMATION
The U.S. Department of State's Consular Information Program advises Americans traveling and residing abroad through Country Specific Information, Travel Alerts, and Travel Warnings. Country Specific Information exists for all countries and includes information on entry and exit requirements, currency regulations, health conditions, safety and security, crime, political disturbances, and the addresses of the U.S. embassies and consulates abroad. Travel Alerts are issued to disseminate information quickly about terrorist threats and other relatively short-term conditions overseas that pose significant risks to the security of American travelers. Travel Warnings are issued when the State Department recommends that Americans avoid travel to a certain country because the situation is dangerous or unstable.

For the latest security information, Americans living and traveling abroad should regularly monitor the Department's Bureau of Consular Affairs Internet web site at http://www.travel.state.gov, where the current Worldwide Caution, Travel Alerts, and Travel Warnings can be found. Consular Affairs Publications, which contain information on obtaining passports and planning a safe trip abroad, are also available at http://www.travel.state.gov. For additional information on international travel, see http://www.usa.gov/Citizen/Topics/Travel/International.shtml.

The Department of State encourages all U.S. citizens traveling or residing abroad to register via the State Department's travel registration website or at the nearest U.S. embassy or consulate abroad. Registration will make your presence and whereabouts known in case it is necessary to contact you in an emergency and will enable you to receive up-to-date information on security conditions.

Emergency information concerning Americans traveling abroad may be obtained by calling 1-888-407-4747 toll free in the U.S. and Canada or the regular toll line 1-202-501-4444 for callers outside the U.S. and Canada.

The National Passport Information Center (NPIC) is the U.S. Department of State's single, centralized public contact center for U.S. passport information. Telephone: 1-877-4-USA-PPT (1-877-487-2778); TDD/TTY: 1-888-874-7793. Passport information is available 24 hours, 7 days a week. You may speak with a representative Monday-Friday, 8 a.m. to 10 p.m., Eastern Time, excluding federal holidays.

Travelers can check the latest health information with the U.S. Centers for Disease Control and Prevention in Atlanta, Georgia. A hotline at 800-CDC-INFO (800-232-4636) and a web site at http://wwwn.cdc.gov/travel/default.aspx give the most recent health advisories, immunization recommendations or requirements, and advice on food and drinking water safety for regions and countries. The CDC publication "Health Information for International Travel" can be found at http://wwwn.cdc.gov/travel/contentYellowBook.aspx.

Further Electronic Information
Department of State Web Site. Available on the Internet at http://www.state.gov, the Department of State web site provides timely, global access to official U.S. foreign policy information, including Background Notes and daily press briefings along with the directory of key officers of Foreign Service posts and more. The Overseas Security Advisory Council (OSAC) provides security information and regional news that impact U.S. companies working abroad through its website http://www.osac.gov

Export.gov provides a portal to all export-related assistance and market information offered by the federal government and provides trade leads, free export counseling, help with the export process, and more.

STAT-USA/Internet, a service of the U.S. Department of Commerce, provides authoritative economic, business, and international trade information from the Federal government. The site includes current and historical trade-related releases, international market research, trade opportunities, and country analysis and provides access to the National Trade Data Bank.

Background Note: Ecuador

Bureau of Western Hemisphere Affairs

PROFILE

OFFICIAL NAME:
Republic of Ecuador

Geography
Area: 276,840 sq. km; about the size of Colorado.
Cities: Capital--Quito (pop. 2 million). Other major cities--Guayaquil (2.28 million).
Terrain: Jungle east of the Andes, a rich agricultural coastal plain west of the Andes, high-elevation valleys through the mountainous center of the country and an archipelago of volcanic islands in the Pacific Ocean.
Climate: Varied, mild year-round in the mountain valleys; hot and humid in coastal and Amazonian jungle lowlands.

People
Nationality: Noun and adjective--Ecuadorian(s).
Population (Jan. 2009): 14,573,101.
Annual population growth rate (2009 est.): 1.497%.
Ethnic groups: Mestizo (mixed Amerindian and Spanish) 65%, Indigenous 25%, Caucasian and others 7%, African 3%.
Religion: Predominantly Roman Catholic (95%), but religious freedom recognized.
Languages: Spanish (official), indigenous languages, especially Quichua, the Ecuadorian dialect of Quechua. Quichua and Shuar are official languages of intercultural communication.
Education: Years compulsory--ages 5-18. Attendance (through 6th grade)--77% urban, 78% rural. Literacy—97.3%.
Health: Infant mortality rate--22.1/1,000. Life expectancy--76.62 yrs.

Government
Type: Republic.
Independence: May 24, 1822 (from Spain).
Constitution: October 20, 2008.
Branches: Executive--President and 39 cabinet ministers (7 coordinating ministries, 21 ministries, and 11 secretariats). Legislative--unicameral Congress. Judicial--Supreme Court, Constitutional Court, Supreme Electoral Tribunal, Provincial Courts, and ordinary civil and criminal judges.
Administrative subdivisions: 24 provinces.
Major political parties: Over a dozen political parties; President Correa's Proud and Sovereign Fatherland (PAIS) movement is predominant.
Suffrage: Obligatory for literate citizens 18-65 yrs. of age; optional for other eligible voters.

Economy
GDP: (2008 preliminary) $54.6 billion; (2007 provisional) $45.8 billion; (2006) $41.8 billion.
Real annual growth rate: (2008 preliminary) 6.5%; (2007) 2.5%; (2006) 3.9%.
Per capita GDP: (2008) $3,961; (2007) $3,366; (2006) $3,115.
Natural resources: Petroleum, fish, shrimp, timber, gold, copper.
GDP by activity (2008): Oil and mining 26.8%: Includes oil and natural gas extraction, and mining; Commercial trade (wholesale and retail) 11.7%; Construction 9.8%; and Industry 9.2%: Types-- food processing, wood products, textiles, chemicals, and pharmaceuticals.
Other Major contributors to GDP (2008): Agriculture, including seafood 6.3%: Products--bananas, seafood, flowers, coffee, cacao, sugar, tropical fruits, palm oil, palm hearts, rice, corn, and livestock; and Transportation/warehousing 6.0%.
Trade: Exports--$18.5 billion (2008); $14.3 billion (2007). Types--petroleum, bananas, shrimp, cacao, coffee, cut flowers, wood, canned fish. Major markets (2008)--U.S. 45%, Latin America excluding Andean Community 32%, Andean Community 17%, European Union (EU) 11%, and Asia 3%. Imports--$17.6 billion (2008); $12.9 billion (2007). Types--industrial materials, fuels and lubricants, nondurable consumer goods, industrial capital goods. Major suppliers (2008)--Latin America excluding Andean Community 47%, Andean Community 27%, U.S. 19%, Asia 20%, and EU 8%.
Currency: U.S. dollar.

PEOPLE
Ecuador's population is ethnically mixed. A large majority of the population is mestizo (mixed Indian-Caucasian), followed by smaller percentages of indigenous, Afro-Ecuadorian, and European descendent criollos. Although Ecuadorians were heavily concentrated in the mountainous central highland region a few decades ago, today's population is divided about equally between that area and the coastal lowlands. Migration toward cities--particularly larger cities--in all regions has increased the urban population to over 60%. The tropical forest region (or Amazon region) to the east of the mountains remains sparsely populated and contains only about 3% of the population. Due to an economic crisis in the late 1990s, more than 600,000 Ecuadorians emigrated to the U.S. and Europe from 2000 to 2001. According to the 2000 U.S. census there were 323,000 persons who claimed Ecuadorian ancestry. Including undocumented migrants, it is unofficially estimated that there are approximately one to two million Ecuadorians currently residing in the U.S.

HISTORY, GOVERNMENT, AND POLITICAL CONDITIONS

The Inca Empire and Spanish Conquest
Advanced indigenous cultures flourished in Ecuador long before the area was conquered by the Inca Empire in the 15th century. In 1534, the Spanish arrived and defeated the Inca armies, and Spanish colonists became the new elite. The indigenous population was decimated by disease in the first decades of Spanish rule--a time when the natives also were forced into the "encomienda" labor system for Spanish landlords. In 1563, Quito became the seat of a royal "audiencia" (administrative district) of Spain.

Independence and Historical Developments
After independence forces defeated the royalist army in 1822, Ecuador joined Simon Bolivar's Republic of Gran Colombia, only to become a separate republic in 1830. The 19th century was marked by instability, with a rapid succession of rulers. The conservative Gabriel Garcia Moreno unified the country in the 1860s with the support of the Catholic Church. In the late 1800s, world demand for cocoa tied the economy to commodity exports and led to migrations from the highlands to the agricultural frontier on the coast.

A coastal-based liberal revolution in 1895 under Eloy Alfaro reduced the power of the clergy and opened the way for capitalist development. The end of the cocoa boom produced renewed political instability and a military coup in 1925. The 1930s and 1940s were marked by populist politicians, such as five-time President Jose Velasco Ibarra. In January 1942, Ecuador signed the Rio Protocol to end a brief war with Peru the year before. Ecuador agreed to a border that conceded to Peru much territory Ecuador had previously claimed in the Amazon region. After World War II, a recovery in the market for agricultural commodities and the growth of the banana industry helped restore prosperity and political peace. From 1948-60, three presidents--beginning with Galo Plaza--were freely elected and completed their terms. Political turbulence returned in the 1960s, followed by a period of military dictatorship between 1972 and 1979. The 1980s and beginning of the 1990s saw a return to democracy, but instability returned by the middle of the decade.

Political Instability (1997-2006)
Abdala Bucaram, from the Guayaquil-based Ecuadorian Roldosista Party (PRE), won the presidency in 1996 on a platform that promised populist economic and social policies, and challenged what Bucaram termed as the power of the nation's oligarchy. During his short term of office, Bucaram's administration was severely criticized for corruption. Bucaram was deposed by the Congress in February 1997 on grounds of alleged mental incompetence. In his place, Congress named Fabian Alarcon interim president. Alarcon's presidency was endorsed by a May 1997 popular referendum.

Quito Mayor Jamil Mahuad of the Popular Democracy party was elected president by a narrow margin in July 1998. Mahuad concluded an historic peace agreement with Peru on October 26, 1998, but increasing economic, fiscal, and financial difficulties drove his popularity steadily lower. On January 21, 2000, during demonstrations in Quito by indigenous groups, the military and police refused to enforce public order. Demonstrators entered the National Assembly building and declared a three-person "junta" in charge of the country. Field-grade military officers declared their support for the concept. During a night of confusion and negotiations, President Mahuad fled the presidential palace. Vice President Gustavo Noboa took charge and Mahuad went on national television to endorse Noboa as his successor. Congress met in emergency session in Guayaquil the same day, January 22, and ratified Noboa as President of the Republic.

Completing Mahuad's term, Noboa restored some stability to Ecuador. He implemented the dollarization of the economy that Mahuad had announced and obtained congressional authorization for the construction of Ecuador's second major oil pipeline, this one financed by a private consortium. Noboa turned over the government on January 15, 2003, to his successor, Lucio Gutierrez, a former army colonel who first came to public attention as a member of the short-lived "junta" of January 21, 2000. Gutierrez' campaign featured an anti-corruption and leftist, populist platform. After taking office, however, Gutierrez adopted relatively conservative fiscal policies and defensive tactics, including replacing the Supreme Court and declaring a state of emergency in the capital to combat mounting opposition. The situation came to a head on April 20, 2005, when political opponents and popular uprisings in Quito prompted Congress to strip Gutierrez of the presidency for allegedly "abandoning his post." When the military withdrew its support, Gutierrez went into temporary exile. Congress declared Vice President Alfredo Palacio the new president. A semblance of stability returned, but the Palacio administration failed to achieve congressional support for major reforms.

The Correa Administration (2007-present)
In presidential elections in October 2006, third-time candidate Alvaro Noboa won the first round. However, Rafael Correa, Palacio's former finance minister, running on an anti-establishment reform platform and by successfully presenting himself as the "change" candidate, bested Noboa in the second round presidential runoff in November 2006. Election observers characterized the elections as generally free, fair, and transparent. Noboa's National Institutional Renovation and Action Party won the largest bloc in Congress in 2006 elections, followed by Gutierrez's Patriotic Society Party; Correa's Proud and Sovereign Fatherland (PAIS) Alliance movement did not field any congressional candidates. Traditional parties saw their congressional representation cut in half.

The new Congress took office January 5, 2007 and Correa was sworn in as President on January 15, 2007. In March 2007, 57 members of Congress were dismissed on the grounds that they violated campaign laws. Following that, the Congress was largely deadlocked and later effectively replaced by a constituent assembly that was voted into power on September 30, 2007. The assembly, which was inaugurated on November 29, 2007, drafted a new constitution that voters approved in a referendum and that went into effect in October, 2008. This new constitution is Ecuador's 20th since independence.

As required under the new constitution, elections for the president, vice president, members of the National Assembly, and provincial and local offices were held in April 2009, two years into Correa's term. President Correa was re-elected in the first round, taking 52 per cent of the vote, compared to 28 percent for former president Lucio Gutierrez, his nearest rival. Correa's Proud and Sovereign Fatherland (PAIS) movement also won the largest legislative block in the new National Assembly, although not a majority.

While the Correa administration has occasionally used the term “21^st Century Socialism” to describe its ideas on Latin American regionalization, the economy and politics, it has been careful to note that its version is distinct from the new socialist policies of Mexican-based German academic Heinz Dietrich, and is specific to Ecuador. Correa has asserted that his political project intends to search for social justice and reassert the supremacy of human labor over capital.

GOVERNMENT
The 2008 constitution provides for four-year terms of office for the president, vice president, and members of the National Assembly. Presidents may be consecutively re-elected for an additional term. The executive branch currently includes 39 cabinet members, (including coordinating ministries with inter-governmental responsibility). Provincial leaders (called prefects) and councilors, like mayors, city councilors, and rural parish boards, are directly elected. The National Assembly elected in April 2009 replaced the interim Legislative Commission on July 31, 2009. The National Assembly is unicameral with 124 total legislators. Justices of the National Court of Justice will be selected by a Judicial Council through a merit-based process for a nine-year term with no immediate reappointment. A special committee, composed of members selected by all branches of government, will appoint the members of the Constitutional Court to serve a nine-year term, with no reappointment.

Principal Government Officials
President--Rafael CORREA
Vice President--Lenin MORENO
Minister of Foreign Affairs--Fander FALCONI
Minister of Defense--Javier PONCE
Ambassador to the United States--Luis GALLEGOS Chiriboga
Ambassador to the Organization of American States—Francisco PROAÑO Arandi
Ambassador-Designate to the United Nations—Francisco CARRION Mena

Ecuador maintains an embassy in the United States at 2535 15th Street NW, Washington, DC 20009 (tel. 202-234-7200). Consulates are located in Los Angeles, Chicago, Houston, Miami, Newark, New York, San Francisco, and San Juan, Puerto Rico. Honorary Consuls are located in Atlanta, Boston, Dallas, Las Vegas, Minneapolis, and West Palm Beach.

Political Conditions
Ecuador has been caught in cycles of political instability, reflecting popular disillusionment with traditional power structures and weak institutions. Ecuador's political parties have historically been small, loose organizations that depend more on populist, often charismatic, leaders to retain support than on programs or ideology. Frequent internal splits have produced great factionalism. Beginning with the 1996 election, the indigenous population abandoned its traditional policy of shunning the official political system and participated actively. The indigenous population established itself as a force in Ecuadorian politics, and participated in the Gutierrez administration before joining the opposition.

Rafael Correa is the first president since the 1979 return to democracy to enjoy sustained popularity in all regions of the country and among a broad array of class and demographic groups. President Correa has criticized the traditional political parties. As a result of this criticism and their weak showings in recent elections, opposition parties are weakened and seeking ways to revive themselves. As of October 2009, President Correa's Proud and Sovereign Fatherland (PAIS) Alliance movement was the predominant political force in Ecuador, though PAIS did not hold an outright majority of seats in the new National Assembly.

ECONOMY
The Ecuadorian economy is based on petroleum production, manufacturing primarily for the domestic market, and agricultural production for domestic consumption and export. Principal exports are petroleum, bananas, shrimp, flowers, and other primary agricultural products. In 2008, crude and refined petroleum products accounted for 63% of total export earnings. Ecuador is the world's largest exporter of bananas and plantains (about $1.6 billion) and a major exporter of shrimp ($674 million). Exports of nontraditional products such as flowers ($566 million), canned fish ($815 million) and automobiles ($408 million) have grown in recent years.

Ecuador adopted the dollar as its national currency in 2000, following a major banking crisis and recession in 1999. Dollarization led to stability, which helped Ecuador achieve solid economic performance through 2006. Growth averaged 4.6% per year, supported by high oil prices, strong domestic consumer demand, increased non-traditional exports, and growing remittances ($3 billion a year) from Ecuadorians living abroad. Per capita income increased from $1,296 in 2000 to an estimated $3,961 in 2008, while the poverty rate fell from 51% in 2000 to 38% in 2006. In 2007, economic growth slowed, constrained by declining petroleum production and reduced private sector investment, but recovered in 2008 due to higher oil prices, increased government spending and strong domestic demand.

President Correa's economic policies include higher social spending, increased government control over strategic sectors, and a greater share of natural resource revenues for the state. After two-plus years in office, the overall direction of economic policy is unclear, creating uncertainty for the business community. One example of uncertain direction is debt policy, where the government initially suggested it might default, then honored the debt for almost two years.

In December 2008 the government defaulted on certain debt issuances (its 2012 and 2030 Global bonds). In June 2009, the government purchased 91% of these bonds (with a total face value of approximately US$ 2.9 billion) at a 65-70% discount in a modified Dutch auction. The government is taking a number of new measures to adjust to falling petroleum revenues, and the full scope and effectiveness of those measures were unknown as of the middle of 2009. Policies for the petroleum and mining sector are also still not fully defined.

By the end of 2008, it was clear that the global financial crisis and economic downturn led to falling remittances and oil prices for Ecuador. In January 2009, the government invoked the World Trade Organization (WTO) balance of payments safeguard provisions to restrict imports of consumer goods. Following consultations with the WTO Balance of Payments Committee, the Ecuadoran government converted import quotas to tariffs that are within WTO bindings. In July 2009, the government applied exchange safeguards to Colombian imports, claiming that devaluation of the Colombian currency had reduced Ecuador's competitiveness. The GOE is reducing these safeguards in compliance with a ruling in August 2009 by the Andean Community Secretariat. The government also announced that it is cutting or restricting public sector spending, although it did not provide many specifics on how it would do so. To meet its financing needs and cover the fiscal deficit, Ecuador has obtained loans from international organizations and negotiated advance payments from China for the sale of future oil production.

Ecuador is rich in natural resources, with significant oil and mineral reserves, although its mineral sector is largely undeveloped. Oil production is carried out by both government and private companies. The state oil company, which is viewed as inefficient, operates mature oil fields that were developed by private companies in the 1970s. It has assumed the operation of an oil field that was seized from a U.S. oil company when that company's contract was cancelled in 2006 for alleged contract violations, an action that is being challenged in international arbitration. Starting in 2006, the government, through laws and decrees, has sought to change the terms for private sector oil production contracts. In August 2009 the government announced its intention to start service contract negotiations in September with those companies still operating under production-sharing arrangements. Ecuador has signed new temporary contracts with Repsol, Petrobras and Andes Petroleum, to improve state participation. In August 2009, the Ministry of Energy announced that in September Ecuador would start the renegotiation of contracts to establish service contracts. The contractual uncertainty has contributed to a drop in private sector investment in the oil sector. Overall oil production has continued to fall since 2006. Although State oil company production increased by 7% during the first six months of 2009 compared with the same period in 2008, private production declined by 14% resulting in a 3% overall drop in oil production. The World Economic Forum's Global Competitiveness Index rated Ecuador 105th out of 133 countries for 2009.

FOREIGN RELATIONS
Ecuador always has placed great emphasis on multilateral approaches to international problems. Ecuador is a member of the United Nations (and most of its specialized agencies), the Organization of American States (OAS), and many regional groups, including the Rio Group, the Latin American Energy Organization, the Union of South American Nations (UNASUR), and the Community of Andean Nations (CAN). In August 2009, Ecuador assumed the one-year rotational presidency of UNASUR.

Under the Correa administration, Ecuador has increased its efforts to strengthen and diversify its political and economic ties with countries within Latin American, Europe, and Asia. In Latin America, President Correa has traveled to Peru, Chile, Brazil, Argentina, Venezuela, and Cuba, for example, where his government has signed agreements to promote economic cooperation. Similarly, outside the region, Correa has visited Spain, Italy, and France, as well as China, Iran, and Russia, among other countries.

In October 1998, Ecuador and Peru reached a peace agreement to settle their border differences, which had festered since the signing of the 1942 Rio Protocol. This long-running border dispute occasionally erupted into armed hostility along the undemarcated sections, with the last conflict occurring in 1995. The U.S. Government, as one of the four guarantor nations (the others were Argentina, Brazil and Chile), played an important role in bringing the conflict to an end. The peace agreement brokered by the four guarantors in February 1995 led to the cessation of hostilities and a Military Observers Mission to Ecuador-Peru (MOMEP) which monitored the zone. In addition to helping broker the peace accord, the U.S. has been active in demining the former area of conflict and supporting welfare and economic projects in the border area.

The ongoing conflict in Colombia and security along the 450-mile-long northern border are important issues in Ecuador's foreign relations with Colombia. The instability of border areas and frequent encroachments of Colombian guerillas into Ecuadorian territory has led the Ecuadorian army to deploy more troops to the region. Although Ecuadorian officials have stated that Colombian guerrilla activity will not be tolerated on the Ecuadorian side of the border, guerrilla bands have been known to intimidate the local population, demanding extortion payments and practicing vigilante justice. The Correa administration is pursuing a policy known as Plan Ecuador to develop the northern border region and protect citizens from the drug threat. A Colombian military incursion into Ecuador in March 2008 caused the Government of Ecuador to break diplomatic relations. In October 2009, Ecuador and Colombia agreed to re-establish diplomatic relations at the chargé d'affaires level.

U.S.-ECUADORIAN RELATIONS
The United States and Ecuador have mutual interests in combating narcotrafficking and cooperating in fostering Ecuador's economic development and reducing poverty. Ties have been strengthened by the presence of an estimated one million to two million Ecuadorians living in the United States, by 150,000 U.S. citizens visiting Ecuador annually, and by approximately 20,000 U.S. citizens residing in Ecuador. More than 100 U.S. companies are doing business in Ecuador. In February 2009, the Government of Ecuador expelled two U.S. Embassy officials who administered U.S. assistance to specialized police units. A Department of State spokesperson rejected any suggestion of wrongdoing by Embassy staff.

The U.S. launched a Bilateral Dialogue with Ecuador in November 2008, during which cooperation in human development and poverty reduction, economic development, commerce and investment, and migratory issues was discussed. The second plenary meeting is planned for late 2009, and will include a discussion of security-related issues, in addition to continuing initiatives begun in the first plenary meeting.

The United States assists Ecuador's economic development directly through the Agency for International Development (USAID), through multilateral organizations such as the Inter-American Development Bank, and through trade and technology transfers facilitated by the Foreign Commercial Service (FCS). In addition, the U.S. Peace Corps and the State Department's Narcotic Affairs Section operate sizable programs in Ecuador. Total U.S. assistance to Ecuador amounted to over $40 million in 2008.

The United States is Ecuador's principal trading partner. In 2008, Ecuador exported about $8.4 billion in products to the U.S. For over 10 years Ecuador has benefited from duty-free entry for many of its exports under the Andean Trade Preferences Act (ATPA) and received additional trade benefits under the Andean Trade Promotion and Drug Eradication Act (ATPDEA) in 2002. The U.S. Congress approved a number of extensions of those benefits, now set to expire on December 31, 2009. In May 2004 Ecuador entered into negotiations for an Andean free trade agreement with the U.S., Colombia, and Peru, but negotiations between the U.S. and Ecuador have not resumed since the Government of Ecuador announced controversial reforms to hydrocarbons legislation in April 2006. The Correa administration has stated it has no interest in negotiating a free trade agreement with the United States.

The United States exported $3.32 billion in goods to Ecuador in 2008, a slight increase over 2007, which accounts for just over 19% of Ecuador's imports. Ecuador is the 46^th-largest market for U.S. exports. Major U.S. exports to Ecuador include machinery, chemicals and fertilizers, computers and electronic equipment, petroleum products, transportation equipment, and paper. The best prospects for U.S. firms are in the plastics, decontamination equipment, franchising, and medical equipment and devices sectors. U.S. firms remain competitive and successful in many sectors of the market.

Although there are problems with money laundering, border controls, and illegal immigration, Ecuador shares U.S. concern over narcotrafficking and the activities of illegal armed groups. The government has maintained Ecuador virtually free of coca production since the mid-1980s, and is working to combat money laundering and the transshipment of drugs and chemicals essential to the processing of cocaine (with U.S. support). Ecuador also gives priority to combating child labor and trafficking in persons.

Ecuador and the U.S. agreed in 1999 to a 10-year arrangement whereby U.S. military surveillance aircraft could use the airbase at Manta, Ecuador, as a Forward Operating Location (FOL) to detect drug trafficking flights through the region. The Ecuadorian Government informed the United States in July 2008 that it will not renew the lease for the Forward Operating Location when it expires in November 2009. The U.S. ceased these counternarcotics flights in July and fully departed the FOL in September 2009.

Ecuador claims a 320-kilometer-wide (200-mi.) territorial sea. The United States, in contrast, claims a 12-mile boundary and jurisdiction for the management of coastal fisheries up to 320 kilometers (200 mi.) from its coast, but excludes highly migratory species. Although successive Ecuadorian governments have declared a willingness to explore possible solutions to this issue, the U.S. and Ecuador have yet to resolve fundamental differences concerning the recognition of territorial waters.

Principal U.S. Embassy Officials
Ambassador--Heather Hodges
Deputy Chief of Mission--Andrew Chritton
Political Counselor--Nan Fife
Economic Counselor--Christopher Landberg
Consul General-- Jennifer Savage
Commercial Attaché--Eric Olson
Management Counselor--Melissa Garza
Public Affairs Counselor--Wes Carrington
Regional Security Officer--Fernando Matus
USAID Director, Acting—Daniel Sanchez-Bustamante
Narcotics Affairs Section Director--Drew Schufletowski

Guayaquil Consulate
Consul General--Francisco Fernandez
Chief, Consular Section--Phillip Linderman

U.S. Embassy
Avigiras E12-170 y Eloy Alfaro
Quito, Ecuador
(tel. (593)(2) 398-5000)
The mailing address is DPO AA 34039

U.S. Consulate
9 de Octubre and Garcia Moreno
Guayaquil, Ecuador
(tel. (593)(4) 232-3570)

Consular Agent for the Galapagos
Puerto Ayora
(tel. (593) (5) 526-330 or (593) (5) 526-296)

Other Contact Information
U.S. Department of State
2201 C Street, NW
Washington, DC 20520
Main Switchboard: (202)-647-4000 (http://www.state.gov)

U.S. Department of Commerce, Trade Information Center, International Trade Administration
1401 Constitution Avenue
Washington, DC 20230
(tel: 800-USA-TRADE, Internet: http://trade.gov)

Ecuadorian-American Chamber of Commerce--Quito
Edificio Multicentro, 4 Piso
La Nina y Avenida 6 de Diciembre
Quito, Ecuador
Tel: (593) (2) 250-7450
Fax: (593) (2) 250-4571
E-mail: info@ecamcham.com
Website: www.ecamcham.com/default_en.htm
(Branches: Ambato, Cuenca and Manta)

Ecuadorian-American Chamber of Commerce--Guayaquil
Av. Francisco de Orellanda y Alberto Borges
Edificio Centrum, Piso 6, Oficina 5
Tel: 593-(4)-269-3470 or 593-4-269-3471
Fax: 593-(4)-269-3465
Email: infocenter@amchamecuador.org
Website: www.amchamecuador.org

TRAVEL AND BUSINESS INFORMATION
The U.S. Department of State's Consular Information Program advises Americans traveling and residing abroad through Country Specific Information, Travel Alerts, and Travel Warnings. Country Specific Information exists for all countries and includes information on entry and exit requirements, currency regulations, health conditions, safety and security, crime, political disturbances, and the addresses of the U.S. embassies and consulates abroad. Travel Alerts are issued to disseminate information quickly about terrorist threats and other relatively short-term conditions overseas that pose significant risks to the security of American travelers. Travel Warnings are issued when the State Department recommends that Americans avoid travel to a certain country because the situation is dangerous or unstable.

For the latest security information, Americans living and traveling abroad should regularly monitor the Department's Bureau of Consular Affairs Internet web site at http://www.travel.state.gov, where the current Worldwide Caution, Travel Alerts, and Travel Warnings can be found. Consular Affairs Publications, which contain information on obtaining passports and planning a safe trip abroad, are also available at http://www.travel.state.gov. For additional information on international travel, see http://www.usa.gov/Citizen/Topics/Travel/International.shtml.

The Department of State encourages all U.S. citizens traveling or residing abroad to register via the State Department's travel registration website or at the nearest U.S. embassy or consulate abroad. Registration will make your presence and whereabouts known in case it is necessary to contact you in an emergency and will enable you to receive up-to-date information on security conditions.

Emergency information concerning Americans traveling abroad may be obtained by calling 1-888-407-4747 toll free in the U.S. and Canada or the regular toll line 1-202-501-4444 for callers outside the U.S. and Canada.

The National Passport Information Center (NPIC) is the U.S. Department of State's single, centralized public contact center for U.S. passport information. Telephone: 1-877-4-USA-PPT (1-877-487-2778); TDD/TTY: 1-888-874-7793. Passport information is available 24 hours, 7 days a week. You may speak with a representative Monday-Friday, 8 a.m. to 10 p.m., Eastern Time, excluding federal holidays.

Travelers can check the latest health information with the U.S. Centers for Disease Control and Prevention in Atlanta, Georgia. A hotline at 800-CDC-INFO (800-232-4636) and a web site at http://wwwn.cdc.gov/travel/default.aspx give the most recent health advisories, immunization recommendations or requirements, and advice on food and drinking water safety for regions and countries. The CDC publication "Health Information for International Travel" can be found at http://wwwn.cdc.gov/travel/contentYellowBook.aspx.

Further Electronic Information
Department of State Web Site. Available on the Internet at http://www.state.gov, the Department of State web site provides timely, global access to official U.S. foreign policy information, including Background Notes and daily press briefings along with the directory of key officers of Foreign Service posts and more. The Overseas Security Advisory Council (OSAC) provides security information and regional news that impact U.S. companies working abroad through its website http://www.osac.gov

Export.gov provides a portal to all export-related assistance and market information offered by the federal government and provides trade leads, free export counseling, help with the export process, and more.

STAT-USA/Internet, a service of the U.S. Department of Commerce, provides authoritative economic, business, and international trade information from the Federal government. The site includes current and historical trade-related releases, international market research, trade opportunities, and country analysis and provides access to the National Trade Data Bank.

Background Note: Estonia

Bureau of European and Eurasian Affairs

PROFILE

OFFICIAL NAME:
Republic of Estonia

Geography
Area: 45,226 sq. km. (17,462 sq. mi.); slightly smaller than New Hampshire and Vermont combined.
Cities: Capital--Tallinn (2008 pop. 397,617), situated in the north of the country, on the Gulf of Finland. Other cities--university town of Tartu (102,414); the primarily Russian-speaking industrial towns of Narva (66,435) and Kohtla-Järve (45,093) in the north-east of Estonia; Pärnu on the western coast (44,016); and Viljandi in the rural south (20,117). The last population census was held in 2000.
Terrain: Mostly flat, with some undulating terrain in the east and southeast, average elevation 50 m. Steep limestone banks and 1,520 islands mark the coastline. Land use--12.05% arable land, 47.4% forest and woodland, 22% swamps and bogs, 18.55% other. Coastal waters are somewhat polluted.
Climate: Temperate, with four seasons. Annual precipitation averages 50-75 cm.

People
Nationality: Noun and adjective--Estonian(s).
Population (2008): 1.340 million.
Annual growth rate (2008): -0.48%. Birth rate (2008)--11.96/1,000. Death rate (2008)--12.44/1,000. Net migration (2008)--3.2 migrant(s)/1,000 population. Density--31/sq. km. Urban dwellers--70%.
Ethnic groups: Estonians 68.6%, Russians 24.9%, Ukrainians 2.1%, Belarusians 1.2%, Finns 0.8%, other 2.4%.
Religions: Evangelical Lutheran; the Estonian Apostolic Orthodox, subordinated to Constantinople; the Estonian Orthodox, subordinated to the Moscow Patriarchate; Roman Catholic; Baptist; and other.
Languages (2000 census): Estonian (official) 67.3%, Russian 29.7%, other 2.3%, unknown 0.7%.
Education: Years compulsory--9. Attendance--218,600 students at 550 schools, plus 50,800 university students. Literacy--99.8%.
Health: Infant mortality rate (2008)--5 deaths/1,000 live births. Life expectancy (2007)--67.1 yrs. men, 78.7 yrs. women.
Work force (2008): 695,000.

Government
Type: Parliamentary democracy.
Constitution: On June 28, 1992 Estonia ratified its constitution based on its 1938 model, offering legal continuity to the Republic of Estonia prior to Soviet occupation.
Branches: Executive--president (head of state), elected indirectly every 5 years; prime minister (head of government). Legislative--Riigikogu (Parliament--101 members, 4-year term). Judicial--Supreme Court.
Administrative regions: 15 counties, 33 towns, and 194 municipalities (local elections data, 2005).
Political parties: Six parties are presently represented in the parliament: the Estonian Center Party; Estonian Reform Party; Pro Patria-Res Publica Union; Estonian People's Union; Estonian Social Democratic Party; and the Estonian Greens. Other parties include: the Russian Party of Estonia; Estonian Independence Party; Estonian Christian Democratic Party; Estonian United Left Party.
Suffrage: Universal at 18 years of age; noncitizen residents may vote in municipal elections.
Government budget: $9.3 billion.
Defense: 1.8% of GDP.
National holidays: Jan. 1 (New Year's Day), Feb. 24 (Independence Day), Good Friday, Easter Sunday, May 1 (May Day), Whitsunday, June 23 (Victory Day--anniversary of Battle of Vonnu in 1919), June 24 (Midsummer Day), Aug. 20 (Day of Restoration of Independence), Dec. 24 (Christmas Eve); Dec. 25 (Christmas Day), Dec. 26 (Boxing Day).
Government of Estonia web site: http://www.eesti.ee/eng/

Economy
GDP (2008): $23.2 billion.
Real GDP growth rate (2008): -3.6%.
Per capita GDP (2008): $17,300.
Inflation (July 2009): -0.7%.
Unemployment rate (June 2009): 17%.
Natural resources: Oil shale, phosphorus, limestone, blue clay.
Agriculture (2.6% % of 2008 GDP): Products--livestock production (milk, meat, eggs) and crop production (cereals and legumes, potatoes, forage crops). Arable land--433,100 hectares.
Industry (17.9% of 2008 GDP): Types--engineering, electronics, wood and wood products, and textiles.
Services (60.9% of 2008 GDP): Transit, information technology (IT), telecommunications, business services, retail, construction, real estate.
Public sector (18.6% of 2008 GDP): Public services, education, healthcare, social services.
Trade: Exports (2008)--$12.4 billion. Partners--Finland 18%, Sweden 14%, Latvia 10%, Russia 10%, Lithuania 5.7%, Germany 5%, U.S. 5%. Imports (2008)--$16 billion. Partners--Finland 14%, Germany 13%, Sweden 10%, Latvia 9%, Lithuania 9%, Russia 8%.
Exchange rate (2008): 10.7 kroon (EEK)=U.S.$1.
Foreign direct investment (March 2009): Sweden 39.9%, Finland 22.3%, Netherlands 7.3%, Denmark 3.7%, Russia 3.5%, Norway 3.3%, Germany 1.9%, Cyprus 2.1%, Luxembourg 1.7%, U.K. 2.2%, France 1.5%, U.S. 1.4%.

GEOGRAPHY
Between 57.3 and 59.5 degrees latitude and 21.5 and 28.1 degrees longitude, Estonia lies on the eastern shores of the Baltic Sea on the level, northwestern part of the rising East European platform. Average elevation reaches only 50 meters (160 ft.).

The climate resembles New England's. Oil shale and limestone deposits, along with forests that cover 47% of the land, play key economic roles in this generally resource-poor country. Estonia boasts more than 1,500 lakes, numerous bogs, and 3,794 kilometers of coastline marked by numerous bays, straits, and inlets. Tallinn's Muuga port offers one of Europe's finest warm water harbor facilities.

Estonia's strategic location has precipitated many wars fought on its territory between other rival powers at its expense. In 1944, the Union of Soviet Socialist Republics (U.S.S.R.) granted Russia the trans-Narva and Petseri regions on Estonia's eastern frontier. Russia and Estonia signed a border treaty in 2005 recognizing the current border. Estonia ratified the treaty in June 2005, but Russia subsequently revoked its signature to the treaty, due to a reference the Estonian Parliament inserted regarding the Peace Treaty of Tartu.

PEOPLE
Estonians belong to the Balto-Finnic group of the Finno-Ugric peoples, as do the Finns and the Hungarians. Archaeological research confirms the existence of human activity in the region as early as 8000 BC, but by 3500 BC the principal ancestors of the Estonians had arrived from the east.

Estonians have strong ties to the Nordic countries today stemming from deep cultural and religious influences gained over centuries during Scandinavian colonization and settlement. This highly literate society places great emphasis upon education, which is free and compulsory until age 16. About 20% of the population belongs to the following churches registered in Estonia: Estonian Evangelical Lutheran Church, Estonian Apostolic Orthodox Church, Estonian Orthodox Church subordinated to the Moscow Patriarchate, Baptist Church, Roman Catholic Church, and others.

As of January 2, 2009, 83.8% of Estonia's population held Estonian citizenship, 7.9% were citizens of other countries (primarily Russia), and 8.2% were of undetermined citizenship.

Written with the Latin alphabet, Estonian is the language of the Estonian people and the official language of the country. Estonian is one of the world's most difficult languages to learn for English-speakers: it has fourteen cases, which can be a challenge even for skilled linguists. During the Soviet era, the Russian language was imposed for official use.

HISTORY

Ancient
Estonians are one of the longest-settled European peoples and have lived along the Baltic Sea for over 5,000 years. The Estonians were an independent nation until the 13th century A.D. The country was then subsequently conquered by Denmark, Germany, Poland, Sweden, and finally Russia, whose defeat of Sweden in 1721 resulted in the Uusikaupunki Peace Treaty, granting Russia rule over what became modern Estonia.

First Period of Independence
Independence remained out of reach for Estonia until the collapse of the Russian empire during World War I. Estonia declared itself an independent democratic republic on February 24, 1918. In 1920, by the Peace Treaty of Tartu, Soviet Russia recognized Estonia's independence and renounced in perpetuity all rights to its territory.

The first constitution of the Republic of Estonia was adopted in 1920 and established a parliamentary form of government. Estonia's independence would last for 22 years, during which time Estonia guaranteed cultural autonomy to all minorities, including its small Jewish population, an act that was unique in Western Europe at the time.

Soviet Period
Leading up to World War II (WWII), Estonia pursued a policy of neutrality. However, the Soviet Union forcibly incorporated Estonia as a result of the Molotov-Ribbentrop Pact of 1939, in which Nazi Germany gave control of Estonia, Latvia, and Lithuania to the Soviet Union in return for control of much of Poland. In August 1940, the U.S.S.R. proclaimed Estonia a part of the Soviet Union as the Estonian Soviet Socialist Republic (E.S.S.R.). The United States never recognized Soviet sovereignty over Estonia, Latvia, or Lithuania.

During World War II, between 1939 and 1945, through both the Nazi and Soviet occupations, Estonia's direct human losses reached 180,000 residents, which amounted to 17% of its total population. During the Nazi occupation from 1941 to 1944, 7,800 citizens of the Republic of Estonia (70% ethnic Estonians, 15% ethnic Russians, 12.8% Estonian Jews, and 2.2% representing other nationalities) were executed in Nazi prison camps. Of the total number executed during the period of Nazi occupation, an estimated 1,000 were Estonian Jews--or roughly 25% of the pre-war Jewish population of Estonia. Additionally, an estimated 10,000 Jews were transported to Estonia from elsewhere in Eastern Europe and killed there.

Re-establishing Independence
In the late 1980s, looser controls on freedom of expression under Soviet leader Mikhail Gorbachev reignited the Estonians' call for self-determination. By 1988, hundreds of thousands of people were gathering across Estonia to sing previously banned national songs in what became known as the "Singing Revolution."

In November 1988, Estonia's Supreme Soviet passed a declaration of sovereignty; in 1990, the name of the Republic of Estonia was restored, and during the August 1991 coup in the U.S.S.R., Estonia declared full independence. The U.S.S.R. Supreme Soviet recognized independent Estonia on September 6, 1991. Unlike the experiences of Latvia and Lithuania, Estonia's revolution ended without blood spilled.

Estonia became a member of the United Nations on September 17, 1991 and is a signatory to a number of UN organizations and other international agreements, including IAEA, ICAO, UNCTAD, WHO, WIPO, UNESCO, ILO, IMF, and WB/EBRD. It is also a member of the Organization for Security and Cooperation in Europe (OSCE). In May 2007, Organization for Economic Cooperation and Development (OECD) ministers invited Estonia to begin accession discussions.

After more than 3 years of negotiations, on August 31, 1994, the armed forces of the Russian Federation withdrew from Estonia.

Modern Period: 1990s - Today
In 1992, a constitutional assembly introduced amendments to the 1938 constitution. After the draft constitution was approved by popular referendum, it came into effect July 3, 1992. Presidential elections were held on September 20, 1992, with Lennart Meri as victor. Lennart Meri served two terms as president, implementing many reforms during his tenure. Meri was constitutionally barred from a third term. Arnold Rüütel became president in 2001, and Toomas Hendrik Ilves in 2006. Since fully regaining independence, Estonia has had 10 governments with 7 different prime ministers elected: Mart Laar, Andres Tarand, Tiit Vähi, Mart Siimann, Siim Kallas, Juhan Parts, and Andrus Ansip.

Estonia began to adopt free-market policies even before it declared independence in mid-1991 and has continued to pursue reform aggressively ever since. For example, the government set privatization as an early priority and has now completed the process of putting most major industries in private hands. After independence the Government of Estonia took steps to simplify the tax system. Tax evasion is now relatively low by regional standards. Income tax is levied at a flat rate, a principle supported by the major parties except for the Center Party, for which a progressive tax system remains a keystone policy. An integral part of Estonia's transition to a market economy during the early 1990s involved reorienting foreign trade to the West and attracting foreign investment to upgrade the country's industry and commerce. In 1990, only 5% of Estonia's foreign trade was with the developed West; only 21% of this trade represented exports. About 87% of Estonia's trade was with the Soviet Union, and of that, 61% was with Russia. Estonia's main foreign trading partners today are Sweden, Finland, Germany and others in the West. Russia's share of Estonia's trade is less than 10%.

The introduction of the Estonian kroon in June 1992, with only U.S. $120 million in gold reserves and no internationally backed stabilization fund, proved decisive in stabilizing foreign trade. For stability, the kroon was pegged by special agreement to the deutsche mark (DM) at EKR8 = DM1 and later to the Euro. The new Estonian currency became the foundation for rational development of the economy. Money began to have clear value; the currency supply could be controlled from Tallinn, not Moscow; and long-term investment decisions could be made with greater confidence by both the state and private enterprise. The central bank is independent of the government but subordinate to the parliament. In addition to its president, the bank is managed by a board of directors, whose chair is also appointed by parliament.

The fall of the Soviet Union and the rapid contraction of Estonia's market to the East during the early 1990s caused Estonia's economy to shrink 36% from 1990 to 1994. But economic reforms in Estonia and the ability of its economy to reorient toward the West allowed Estonia's economy to pick up in 1995 with 4.6% growth and 4.0% growth in 1996. Russia's financial crisis in 1999 led to a relatively small decline in GDP of 0.7%. The current economic crisis has also resulted in economic contraction in both 2008 and 2009 (see below).

In 1999, Estonia joined the World Trade Organization, adding to its previous membership in the International Monetary Fund (IMF), World Bank, and the European Bank for Reconstruction and Development.

In November 2002, Estonia was one of seven Central and East European countries to be invited to join NATO; it officially became a member of NATO on March 29, 2004. Since re-establishing independence, Estonia has proven itself to be an excellent ally, having built a military capable of participating in ever more complex and distant military operations.

European Union (EU) accession negotiations proceeded rapidly, and Estonia joined the EU in May 2004, along with nine other countries, including its Baltic neighbors. The final decision was conditional on the outcome of a national referendum which was held in September 2003 and returned a large majority in favor of membership. Estonia joined the Schengen zone in December 2007 and hopes to accede to the Euro in January 2011.

Estonia has developed into a strong international actor, through its membership in the EU and NATO; it is a capable advocate and promoter of stability and democracy in the former Soviet Union and beyond. Estonian troops have been in Afghanistan since 2002 and were in Iraq 2003 through 2008. It participates in the NATO training mission in Iraq. Estonia also provides peacekeepers for international missions in Bosnia, Kosovo, and Lebanon and contributes to EU battlegroups and NATO Response Force rotations. It supports democratic developments in key countries of the former Soviet Union and beyond by providing training to government and law enforcement officials as well as non-governmental organizations. It has valuable experience to offer new democracies from its own recent history, and it works hard to promote democracy, freedom, and stability worldwide.

From April to May 2007, international cyber attacks targeted government and private sector websites in Estonia, causing significant service disruptions to websites, servers, and routers linked to government, banking, media, and other resources. These highly coordinated attacks captured widespread international media attention. Estonia has taken a leadership role on cyber security within NATO, the European Union (EU), and other organizations, becoming an important player in international cooperation on cyber defense. Estonia hosts a NATO Center of Excellence for Cyber Security in Tallinn.

GOVERNMENT
Estonia is a parliamentary democracy, with a 101-member parliament (the Riigikogu) and a president who is elected indirectly by parliament or, if no candidate wins a two-thirds majority in parliament, by an electoral college composed of members of parliament and of local councils’ representatives. Estonia holds presidential elections every five years. The last presidential election was in 2006. The President serves a maximum of two terms. The President is also the Supreme Commander of the National Defense of Estonia.

Parliamentary elections take place every four years; members are elected by proportional representation. The most recent elections took place on March 4, 2007. A party must gather at least 5% of the votes to take a seat in Parliament. Citizens 18 years of age or older may vote in parliamentary elections and be members of political parties. EU citizens who are 18 years of age or older and registered in the Population Register may vote in European Parliament elections and if they are registered in a local district population register, they may also vote in local elections. In addition, non-citizen long-term residents may vote in local elections, although they may not run for office.

After parliamentary elections, the President traditionally asks the party with the most votes to form a new government. The President chooses the Prime Minister--usually the leader of the largest party or coalition in the Parliament--with the consent of the parliament to supervise the work of the government. The Estonian government has a total of 13 ministers.

At the local level, Estonians elect government councils by proportional representation. The individual councils vary in size, but election laws stipulate minimum size requirements depending on the population of the municipality.

Estonia's Supreme Court, the Riigikohus, has 19 justices, all of whom receive lifetime tenure appointments. The parliament appoints the Chief Justice on nomination by the President.

Estonians may vote via the Internet in local, Estonian parliamentary elections, and European Parliament elections.

POLITICAL CONDITIONS
Currently, half a dozen parties represent Estonia's 1.3 million citizens. The Reform Party and the Pro Patria and Res Publica Union form the current minority government with 31 and 19 seats in parliament, respectively. Other parties in the parliament include the Center Party, the Greens, the Social Democratic Party, and the People's Union.

Reform Party Chairman Andrus Ansip is the current Prime Minister of the coalition government.

Toomas Hendrik llves is the President of Estonia. He was a member of the Social Democrat Party, a former Ambassador to the United States, two-time Minister of Foreign Affairs, a member of the Estonian parliament, and a former member of the European Parliament. President Ilves narrowly defeated incumbent Arnold Rüütel in an electoral-college vote in September 2006, and he took office on October 9, 2006.

Principal Government Officials
President--Toomas Hendrik Ilves
Prime Minister--Andrus Ansip (Reform)
Foreign Affairs--Urmas Paet (Reform)
Interior--Marko Pomerants (Pro Patria and Res Publica Union)
Social Affairs--Hanno Pevkur (Reform)
Education--Tonis Lukas (Pro Patria and Res Publica Union)
Economy and Communications--Juhan Parts (Pro Patria and Res Publica Union)
Justice--Rein Lang (Reform)
Defense--Jaak Aaviksoo (Pro Patria and Res Publica Union)
Environment--Jaak Tamkivi (Reform)
Agriculture--Helir-Valdor Seeder (Pro Patria and Res Publica Union)
Finance--Jurgen Ligi (Reform)
Culture--Laine Janes (Reform)

Minister of Regional Affairs--Siim-Valmar Kiisler (Pro Patria and Res Publica Union)
Riigikogu Chairman--Ene Ergma (Pro Patria and Res Publica Union)

Estonia maintains an embassy in the United States at 2131 Massachusetts Avenue, NW, Washington DC 20008 (tel: [1] (202) 588-0101; fax: [1] (202) 588-0108). It operates a consulate at 600 Third Avenue, 26th Floor, New York, NY 10016-2001 (tel: [1] (212) 883-0636; fax: [1] (212) 883-0648).

ECONOMY
Estonia is considered one of the most liberal economies in the world, ranking 13th in the Heritage Foundation's 2009 Economic Freedom Index. Hallmarks of Estonia's market-based economy have included a balanced budget, a flat-rate income tax system (the first in the world), a fully convertible currency pegged to the Euro, a competitive commercial banking sector, and a hospitable environment for foreign investment, including no tax on reinvested corporate profits (tax is not levied unless a distribution is made).

Estonia's liberal economic policies and macroeconomic stability have fostered exceptionally strong growth and better living standards than those of most new EU member states. After enjoying 8% average annual GDP growth since 2000, the economy started to show signs of cooling in 2007 when GDP growth slowed to 6.3%. In the current economic crisis, GDP fell by 3.6% in 2008 and is shrinking further in 2009.

The economy benefits from strong electronics and telecommunications sectors; the country is so wired that it is nicknamed E-stonia. Many bars and cafes across the country are equipped with wireless connections. Skype, designed by Estonian developers, offers free calls over the Internet to millions of people worldwide. Tourism has also driven Estonia's economic growth, with beautifully restored Tallinn a major Baltic tourist landmark.

By the late 1990s, Estonia's trade regime was so liberal that adoption of EU and World Trade Organization (WTO) norms actually forced Estonia to impose tariffs in certain sectors, such as agriculture, which had previously been tariff-free. Openness to trade, rapid growth in investment, and an appreciating real exchange rate have resulted in large trade deficits in recent years. Estonia supplies more than 90% of its electricity needs with locally mined oil shale; however, it imports all of its natural gas and petroleum (roughly 30% of total energy consumption) from Russia. Alternative energy sources such as wood, peat, and biomass make up about 9% of primary energy production, and Estonia is developing wind farms for clean renewable energy. An undersea electricity cable inaugurated in December 2006 allows Estonia to export electricity to Finland.

Notwithstanding these many achievements, the economy of Estonia still faces challenges. Early estimates for 2009 indicate Estonia's economy may decline more than 12%, and unemployment is rising (17% in June 2009). As the result of sharply declining revenues, Estonia's fiscal deficit could exceed 3% of GDP in 2009, although the government has cut expenditures in an attempt to qualify for joining the Euro zone. Adoption of the Euro is a key government priority.

Foreign Trade
Estonia is part of the European Union, and its trade policy is conducted in Brussels.

Estonia's business attitude toward the United States is positive, and business relations between the two countries are increasing. The primary competition for American companies in the Estonian marketplace is European suppliers, especially Finnish and Swedish companies.

Total U.S. exports to Estonia in 2008 were $225.5 million, forming 1.2% of total Estonian imports. In 2007 the principal imports from the United States were boilers, machinery, vehicles, chemicals, mineral fuels, oils and electronics. Estonian exports to the United States were around $392 million in 2008, making the U.S. Estonia's third--largest export market after the EU and Russia. U.S. imports from Estonia are primarily mineral fuels and oils, electronic machinery, games and sports equipment, and fertilizers.

Estonia's economy benefits from its location at the crossroads of East and West. Estonia lies just south of Finland and across the Baltic Sea from Sweden, both EU members. To the east are the huge potential markets of northwest Russia. Estonia's modern transportation and communication links provide a safe and reliable bridge for trade with former Soviet Union and Nordic countries. Many observers also see a potential role for Estonia as a future link in the supply chain from the Far East into the EU.

Country Commercial Guides are available for U.S. exporters from the National Trade Data Bank's CD-ROM or via the Internet. Please contact STAT-USA at 1-800-STAT-USA for more information. Country Commercial Guides can be accessed via the World Wide Web at the U.S. Department of Commerce's site and at the U.S. Embassy in Tallinn's website at http://estonia.usembassy.gov/root/pdfs/commercial-guide-2009.pdf. They also can be ordered in hard copy or on diskette from the National Technical Information Service (NTIS) at 1-800-553-NTIS. U.S. exporters seeking general export information/assistance and country-specific commercial information should contact the U.S. Department of Commerce, Trade Information Center by phone at 1-800-USA-TRAD(E) or by fax at 1-202-482-4473.

DEFENSE
Estonia's regular armed forces--the Estonian Defense Forces--in peacetime number about 3,800 (Army 3,300, Navy 300, Air Force 200) persons, of whom about 1,500 are conscripts. The President of Estonia is the Commander in Chief of the Estonian Defense Forces. The National Defense Council--composed of the Chairman of the Parliament, the Prime Minister, the Chief of the Defense Forces, the Defense Minister, the Minister of Internal Affairs, the Minister of Foreign Affairs, and the Chairman of the Parliamentary National Defense Committee--advises the President on national defense matters.

Estonia officially became a member of the North Atlantic Treaty Organization on March 29, 2004 after depositing its instruments of treaty ratification in Washington, DC. The United States and Estonia cooperate intensively in the defense and security field.

Estonian defense spending has increased 13% annually since 2001. The Government of Estonia has expressed a firm commitment to meet the NATO goal of spending 2% of GDP by 2010; its current defense budget is 1.8% of GDP. In 2009, Estonia had over 300 military personnel deployed to support UN, NATO, and coalition military operations around the world. That number represents 9% of Estonia's military, a good indication of Estonia's willingness and ability to contribute to global security. Estonia currently has troops in Afghanistan, Kosovo, Bosnia, and Lebanon, and participates in the NATO training mission in Iraq (NTM-I).

FOREIGN RELATIONS
Estonia is party to most major international organizations. It is a UN, EU, and NATO member and a strong ally and partner of the United States on all fronts. It is deeply committed to good transatlantic relations and to promoting democracy and free-market economic policy globally.

In the EU, Estonia's priorities include supporting continued EU enlargement; raising EU competitiveness through innovation; joining the Euro zone; developing a unified European energy policy; enhancing and fostering the European Neighborhood Policy; and improving the EU relationship with Russia.

Estonia has active development assistance programs in many of the former Soviet countries (with a focus on Georgia, Ukraine, and Moldova), as well as in Afghanistan.

U.S.-ESTONIA RELATIONS
The relationship between Estonia and the United States of America has been constant and strong since Estonia first became independent. The United States and Estonia are important allies and partners.

The United States recognized the Republic of Estonia on July 28, 1922. The first Estonian diplomatic mission in the United States was opened in the same year. It continued its activities throughout the period of occupation by the Soviet Union from 1940 to 1991. The U.S. Government recognized Estonia's diplomatic mission as a legal representative of the Republic of Estonia. Indeed, the recognition of the legal continuity of the Republic of Estonia has been the cornerstone of Estonian-U.S. relations.

The U.S. reopened its Embassy in Tallinn on September 4, 1991, soon after the restoration of Estonia's independence on August 20, 1991. Relations between the two countries have since developed at a rapid pace. In November 2006, President George W. Bush became the first sitting U.S. president to visit Estonia. Estonia joined the U.S. Visa Waiver Program on November 17, 2008, increasing security while facilitating entry for legitimate visitors and businesspeople from countries like Estonia.

Vaino Reinart has been Estonia's Ambassador to the United States since September 2007. Estonia also is represented in the United States by a Consulate General in New York and four Honorary Consuls: Jaak Treiman in Los Angeles, Eric Harkna in Chicago, Irja Cilluffo in New Hampshire, and Paul Raidna in Seattle.

Principal U.S. Officials
Chargé d´Affaires a.i.--Karen Decker
Head of Political/Economic Section--Marc Nordberg
Management Officer--Andrew Graves
Legal Attaché--Kirk Striebich
Consular Officer--Patrick McNeil
Public Affairs Officer--James Land
Defense Attaché--Commander Kip Henderson (USN)
Chief of Office of Defense Cooperation--Lieutenant Colonel Robert Williams

The U.S. Embassy in Estonia is located at Kentmanni 20, Tallinn [tel. (372) 66 88 100].

TRAVEL AND BUSINESS INFORMATION
The U.S. Department of State's Consular Information Program advises Americans traveling and residing abroad through Country Specific Information, Travel Alerts, and Travel Warnings. Country Specific Information exists for all countries and includes information on entry and exit requirements, currency regulations, health conditions, safety and security, crime, political disturbances, and the addresses of the U.S. embassies and consulates abroad. Travel Alerts are issued to disseminate information quickly about terrorist threats and other relatively short-term conditions overseas that pose significant risks to the security of American travelers. Travel Warnings are issued when the State Department recommends that Americans avoid travel to a certain country because the situation is dangerous or unstable.

For the latest security information, Americans living and traveling abroad should regularly monitor the Department's Bureau of Consular Affairs Internet web site at http://www.travel.state.gov, where the current Worldwide Caution, Travel Alerts, and Travel Warnings can be found. Consular Affairs Publications, which contain information on obtaining passports and planning a safe trip abroad, are also available at http://www.travel.state.gov. For additional information on international travel, see http://www.usa.gov/Citizen/Topics/Travel/International.shtml.

The Department of State encourages all U.S. citizens traveling or residing abroad to register via the State Department's travel registration website or at the nearest U.S. embassy or consulate abroad. Registration will make your presence and whereabouts known in case it is necessary to contact you in an emergency and will enable you to receive up-to-date information on security conditions.

Emergency information concerning Americans traveling abroad may be obtained by calling 1-888-407-4747 toll free in the U.S. and Canada or the regular toll line 1-202-501-4444 for callers outside the U.S. and Canada.

The National Passport Information Center (NPIC) is the U.S. Department of State's single, centralized public contact center for U.S. passport information. Telephone: 1-877-4-USA-PPT (1-877-487-2778); TDD/TTY: 1-888-874-7793. Passport information is available 24 hours, 7 days a week. You may speak with a representative Monday-Friday, 8 a.m. to 10 p.m., Eastern Time, excluding federal holidays.

Travelers can check the latest health information with the U.S. Centers for Disease Control and Prevention in Atlanta, Georgia. A hotline at 800-CDC-INFO (800-232-4636) and a web site at http://wwwn.cdc.gov/travel/default.aspx give the most recent health advisories, immunization recommendations or requirements, and advice on food and drinking water safety for regions and countries. The CDC publication "Health Information for International Travel" can be found at http://wwwn.cdc.gov/travel/contentYellowBook.aspx.

Further Electronic Information
Department of State Web Site. Available on the Internet at http://www.state.gov, the Department of State web site provides timely, global access to official U.S. foreign policy information, including Background Notes and daily press briefings along with the directory of key officers of Foreign Service posts and more. The Overseas Security Advisory Council (OSAC) provides security information and regional news that impact U.S. companies working abroad through its website http://www.osac.gov

Export.gov provides a portal to all export-related assistance and market information offered by the federal government and provides trade leads, free export counseling, help with the export process, and more.

STAT-USA/Internet, a service of the U.S. Department of Commerce, provides authoritative economic, business, and international trade information from the Federal government. The site includes current and historical trade-related releases, international market research, trade opportunities, and country analysis and provides access to the National Trade Data Bank.

Background Note: Kyrgyzstan

Bureau of South and Central Asian Affairs

PROFILE

OFFICIAL NAME:
Kyrgyz Republic

Geography
Area: 77,181 sq. mi.
Cities: Bishkek (capital), Osh, Cholpon Ata, Karakol.
Terrain: 90% mountainous, with some desert regions. Elevation extremes--lowest point: Kulundy village in the Batken province 401 m; highest point: Jengish Chokusu (Pik Pobedy) 7,439 m.

People
Nationality: Kyrgyzstani.
Population (July 2008): 5,356,869.
Annual growth rate (2008): 1.38%.
Ethnic groups (2007): Kyrgyz 68.9%; Russian 9.1%; Uzbek 14.4%; Dungan (ethnic Chinese Muslims) 1%; Uighurs 1%; Tajik 0.9%, Kazakh 0.8%, Tatars 0.7%; Korean 0.4%, German 0.3%.
Main religions: Islam; Russian Orthodox.
Languages: Kyrgyz (state); Russian (official, 2001).
Education: Nine years compulsory. Literacy--98.7%.
Health (2006): Infant mortality rate--29.2 deaths/1,000 live births. Life expectancy--67.7 years.
Population distribution (2006): Urban 64.7%; rural 35.3%.

Government
Type: Republic.
Independence: August 31, 1991 (from the Soviet Union).
Constitution: May 5, 1993; amended in 1996, 1998, 2003, 2006, and 2007.
Branches: Executive--president, prime minister. Legislative--parliament. Judicial--Supreme Court, Constitutional Court, local courts, Procurator-General.
Administrative subdivisions: Seven oblasts and the municipality of Bishkek.
Political parties and leaders: Ak Jol People's Party, no formal leader, but this is the party of President Bakiyev; Social Democratic Party of Kyrgyzstan, Almazbek Atambayev; Party of Communists of Kyrgyzstan, Iskhak Masaliev; Ar Namys (Dignity) Party, Feliks Kulov; Ata-Meken (Fatherland) Party, Omurbek Tekebaev; Jany Kyrgyzstan Party, Usen Sydykov; Erkindik (Freedom) Party, Shamshibek Utebaev; Zamandash Party, Muktarbek Omurakunov; Ak Shumkar Party, Temir Sariyev; Asaba (Flag), Azimbek Beknazarov; Green Party, Erkin Bulekbayev.

Economy
GDP: 2008 (est.), $4.6 billion; 2007, $3.75 billion; 2006, $2.8 billion; 2003, $1.9 billion.
GDP growth rate in 2008: 7.6%.
Inflation rate at end of 2008: 24.4%.
GDP per capita (2008 est.): $870.
Unemployment rate (as of the end of 2008): 11.1%.
Natural resources: Abundant hydropower; significant deposits of gold and rare earth metals; locally exploitable coal, oil, and natural gas; other deposits of iron, bauxite, copper, tin, molybdenum, mercury, and antimony.
Agriculture: Products--tobacco, cotton, wheat, vegetables (potatoes, sugar beets, beans), fruits (apples, apricots, peaches, grapes), berries, sheep, goats, cattle, wool.
Industry: Types--small machinery (electric motors, transformers), light industry (cotton and wool processing, textiles, food processing), construction materials (cement, glass, slate), shoes, furniture, mining, energy.
Trade: Exports (2008)--$1.6 billion: cotton, wool, meat, tobacco, gold, mercury, uranium, hydropower, machinery, shoes. Partners--Switzerland 27.3%, Russia 19.2%, Uzbekistan 14.3%, Kazakhstan 11.3%, France 6.7%, Afghanistan 2.8%. Imports--$3.3 billion: oil and gas, machinery and equipment, foodstuffs. Partners--Russia 44.3%, China 14.6%, Kazakhstan 11.4%, Uzbekistan 4.4%, U.S. 3.0%.
Total external debt mid-2008 was $3.16 billion, of which $2.19 billion was public debt.

PEOPLE AND HISTORY
According to recent findings of Kyrgyz and Chinese historians, Kyrgyz history dates back to 201 B.C. The earliest descendents of the Kyrgyz people, who are believed to be of Turkic descent, lived in the northeastern part of what is currently Mongolia. Later, some of their tribes migrated to the region that is currently southern Siberia and settled along the Yenisey River, where they lived from the 6th until the 8th centuries. They spread across what is now the Tuva region of the Russian Federation, remaining in that area until the rise of the Mongol Empire in the 13th century, when the Kyrgyz began migrating south. In the 12th century, Islam became the predominant religion in the region. Most Kyrgyz are Sunni Muslims of the Hanafi school.

During the 15th-16th centuries, the Kyrgyz people settled in the territory currently known as the Kyrgyz Republic. In the early 19th century, the southern territory of the Kyrgyz Republic came under the control of the Khanate of Kokand, and the territory was formally incorporated into the Russian Empire in 1876. The Russian takeover instigated numerous revolts against tsarist authority, and many Kyrgyz opted to move into the Pamir mountains or to Afghanistan. The suppression of the 1916 rebellion in Central Asia caused many Kyrgyz to migrate to China.

Soviet power was initially established in the region in 1918, and in 1924, the Kara-Kyrgyz Autonomous Oblast was created within the Russian Federal Socialist Republic. (The term Kara-Kyrgyz was used until the mid-1920s by the Russians to distinguish them from the Kazakhs, who were also referred to as Kyrgyz.) In 1926, it became the Kyrgyz Autonomous Soviet Socialist Republic. On December 5, 1936, the Kyrgyz Soviet Socialist Republic (SSR) was established as a full Union Republic of the U.S.S.R.

During the 1920s, the Kyrgyz Republic saw considerable cultural, educational, and social change. Economic and social development also was notable. Literacy increased, and a standard literary language was introduced. The Kyrgyz language belongs to the Southern Turkic group of languages. In 1924, an Arabic-based Kyrgyz alphabet was introduced, which was replaced by Latin script in 1928. In 1941 Cyrillic script was adopted. Many aspects of the Kyrgyz national culture were retained despite suppression of nationalist activity under Joseph Stalin, who controlled the Soviet Union from the late 1920s until 1953.

The early years of glasnost in the late 1980s had little effect on the political climate in the Kyrgyz Republic. However, the republic's press was permitted to adopt a more liberal stance and to establish a new publication, Literaturny Kirghizstan, by the Union of Writers. Unofficial political groups were forbidden, but several groups that emerged in 1989 to deal with an acute housing crisis were permitted to function.

In June 1990, ethnic tensions between Uzbeks and Kyrgyz surfaced in an area of the Osh Oblast, where Uzbeks form a majority of the population. Violent confrontations ensued, and a state of emergency and curfew were introduced. Order was not restored until August 1990.

The early 1990s brought measurable change to the Kyrgyz Republic. The Kyrgyzstan Democratic Movement (KDM) had developed into a significant political force with support in parliament. In an upset victory, Askar Akayev, the president of the Kyrgyz Academy of Sciences, was elected to the presidency in October 1990. The following January, Akayev introduced new government structures and appointed a new government comprised mainly of younger, reform-oriented politicians. In December 1990, the Supreme Soviet voted to change the republic's name to the Republic of Kyrgyzstan. (In 1993, it became the Kyrgyz Republic.) In February 1991, the name of the capital, Frunze, was changed back to its pre-revolutionary name--Bishkek.

Despite these moves toward independence, economic realities seemed to work against secession from the U.S.S.R. In a referendum on the preservation of the U.S.S.R. in March 1991, 88.7% of the voters approved a proposal to retain the U.S.S.R. as a "renewed federation."

On August 19, 1991, when the State Committee for the State of Emergency (SCSE) assumed power in Moscow, there was an attempt to depose Akayev in Kyrgyzstan. After the coup collapsed the following week, Akayev and Vice President German Kuznetsov announced their resignations from the Communist Party of the Soviet Union (CPSU), and the entire politburo and secretariat resigned. This was followed by the Supreme Soviet vote declaring independence from the U.S.S.R. on August 31, 1991. Kyrgyz was announced as the state language in September 1991. (In December 2001, through a constitutional amendment, the Russian language was given official status.)

In October 1991, Akayev ran unopposed and was elected President of the new independent republic by direct ballot, receiving 95% of the votes cast. Together with the representatives of seven other republics, he signed the Treaty of the New Economic Community that same month. On December 21, 1991, the Kyrgyz Republic formally entered the new Commonwealth of Independent States (CIS).

In 1993, allegations of corruption against Akayev's closest political associates blossomed into a major scandal. One of those accused of improprieties was Prime Minister Chyngyshev, who was dismissed for ethical reasons in December. Following Chyngyshev's dismissal, Akayev dismissed the government and called upon the last communist premier, Apas Djumagulov, to form a new one. In January 1994, Akayev initiated a referendum asking for a renewed mandate to complete his term of office. He received 96.2% of the vote.

A new constitution was passed by the parliament in May 1993. In 1994, however, the parliament failed to produce a quorum for its last scheduled session prior to the expiration of its term in February 1995. President Akayev was widely accused of having manipulated a boycott by a majority of the parliamentarians. Akayev, in turn, asserted that the communists had caused a political crisis by preventing the legislature from fulfilling its role. Akayev scheduled an October 1994 referendum, overwhelmingly approved by voters, which proposed two amendments to the constitution--one that would allow the constitution to be amended by means of a referendum, and the other creating a new bicameral parliament called the Jogorku Kenesh.

Elections for the two legislative chambers--a 35-seat full-time assembly and a 70-seat part-time assembly--were held in February 1995 after campaigns considered remarkably free and open by most international observers, although the election-day proceedings were marred by widespread irregularities. Independent candidates won most of the seats, suggesting that personalities prevailed over ideologies. The new parliament convened its initial session in March 1995. One of its first orders of business was the approval of the precise constitutional language on the role of the legislature.

On December 24, 1995, President Akayev was reelected for another 5-year term with wide support (75% of vote) over two opposing candidates. President Akayev used government resources and state-owned media to carry out his campaign. Three (out of six) candidates were de-registered shortly before the election.

A February 1996 referendum--in violation of the constitution and the law on referendums--amended the constitution to give President Akayev more power. Although the changes gave the president the power to dissolve parliament, it also more clearly defined the parliament's powers. Since that time, the parliament has demonstrated real independence from the executive branch.

An October 1998 referendum approved constitutional changes, including increasing the number of deputies in the lower house, reducing the number of deputies in the upper house, providing for 25% of lower house deputies to be elected by party lists, rolling back parliamentary immunity, introducing private property, prohibiting adoption of laws restricting freedom of speech and mass media, and reforming the state budget.

Two rounds of parliamentary elections were held on February 20, 2000 and March 12, 2000. With the full backing of the United States, the Organization for Security and Cooperation in Europe (OSCE) reported that the elections failed to comply with commitments to free and fair elections and hence were invalid. Questionable judicial proceedings against opposition candidates and parties limited the choice of candidates available to Kyrgyz voters, while state-controlled media only reported favorably on official candidates. Government officials put pressure on independent media outlets that favored the opposition. The presidential election that followed later in 2000 also was marred by irregularities and was not declared free and fair by international observers.

March 2002 events in the southern district of Aksy, where six people protesting the arbitrary arrest of an opposition politician were shot dead by police, engendered nationwide protests. President Akayev initiated a constitutional reform process, which initially included the participation of a broad range of government, civil, and social representatives in an open dialogue. The reform process resulted in a February 2003 referendum, which was marred by voting irregularities. The amendments to the constitution approved by the referendum resulted in further control by the president and weakened the parliament and the Constitutional Court. Under the new constitution, the previously bicameral parliament became a 75-seat unicameral legislature following the 2005 parliamentary elections.

Parliamentary elections were held February 27 and March 13, 2005. The United States agreed with the findings of the OSCE that while the elections failed to comply with commitments to free and fair elections, there were improvements over the 2000 elections, notably the use of indelible ink, transparent ballot boxes, and generally good access by election observers.

Sporadic protests against widespread fraud during the parliamentary runoff elections in March 2005 erupted into calls for the government to resign. By March 24, 15,000 pro-opposition demonstrators called for the resignation of the president and his regime in Bishkek. Some injuries were reported when opposition demonstrators were attacked by police and pro-government thugs. Protestors seized the presidential administration building, after which President Akayev left the country for Kazakhstan, and then Russia. Looting broke out in parts of Bishkek on the evening of March 24, causing an estimated $100 million in damage.

Opposition leaders, caught by surprise by developments, moved to form a broadly inclusive "Committee of National Unity." Opposition leader Kurmanbek Bakiyev was named acting President and Prime Minister. Bakiyev formed an alliance with primary rival Feliks Kulov whereby Kulov agreed to drop out of the presidential race if Bakiyev appointed him Prime Minister upon winning the elections.

Bakiyev easily won the July 10, 2005 presidential elections with over 88% of the vote. An unprecedented number of domestic and international observers monitored the elections and noted significant improvements in the electoral process over the parliamentary elections, although there were some reports of irregularities.

Opposition groups held a series of demonstrations in 2006, including the entire first week of November, to protest the lack of progress on reform, in particular of the constitution, promised by President Bakiyev in 2005. The Kyrgyz parliament adopted amendments to the constitution and President Bakiyev signed the amended constitution on November 9, 2006, which limited the powers of the president and increased the role of parliament. After the government resigned on December 19, the Kyrgyz parliament voted on December 30 to adopt new amendments restoring some of the presidential powers lost in November. President Bakiyev signed the changes into law January 15, 2007.

In March 2007, President Bakiyev appointed opposition leader Almaz Atambayev as Prime Minister. A week-long opposition protest in April 2007 ended when police cleared the main Ala-Too Square in Bishkek.

In September 2007, the Constitutional Court invalidated the November 2006 and December 2006 versions of the constitution. President Bakiyev then called a snap national referendum on a new version of the constitution, which strengthened the powers of the president and provided for a parliament elected by party lists. The new constitution was approved in an October 2007 referendum that was marked by serious irregularities, including massive inflation of turnout figures. President Bakiyev then dissolved the parliament, calling for new elections. The December 2007 elections were deeply flawed, with the new pro-presidential Ak Jol party gaining 71 out of 90 seats. The largest opposition party, Ata Meken, did not gain any seats, despite probably receiving enough votes to meet the regional thresholds required to enter parliament. Following the elections, a government was formed headed by the former energy minister, Igor Chudinov, as Prime Minister.

On July 23, 2009 President Bakiyev was overwhelmingly re-elected with 76% of the vote, although the OSCE noted numerous voting irregularities. In October 2009, Daniyar Usenov was nominated as Prime Minister.

GOVERNMENT AND POLITICAL CONDITIONS
The 1993 constitution defines the form of government as a democratic republic. The executive branch includes a president and prime minister. The judicial branch comprises a Supreme Court, a Constitutional Court, local courts, and a Procurator-General. The legislative branch is composed of a 90-member unicameral parliament.

President Bakiyev made constitutional reform a key element of his campaign in 2005, and the November 2006 protests stemmed in part from members of parliament's demands for action on that reform. Following parliamentary elections in December 2007, President Bakiyev announced that political reform was complete and that the government would focus on economic growth and privatization.

Principal Government Officials
President--Kurmanbek Bakiyev
Minister of Foreign Affairs--Kadyrbek Sarbayev
Ambassador to the U.S.--Zamira Sydykova

The Kyrgyz Republic maintains an embassy in the United States at 2360 Massachusetts Ave, NW, Washington, DC 20008 (tel.: (202) 338-5141; fax: (202) 386-7550).

ECONOMY
Despite the backing of major Western donors, including the International Monetary Fund (IMF), the Kyrgyz Republic has had economic difficulties following independence. Initially, these were a result of the breakup of the Soviet trading bloc and resulting loss of markets, which impeded the republic's transition to a free market economy. The government has reduced expenditures, ended most price subsidies, and introduced a value-added tax. Overall, the government appears committed to the transition to a market economy. Through economic stabilization and reform, the government seeks to establish a pattern of long-term consistent growth. Reforms led to the Kyrgyz Republic's accession to the World Trade Organization (WTO) on December 20, 1998.

The Kyrgyz Republic's economy was severely affected by the collapse of the Soviet Union and the resulting loss of its vast market. In 1990, some 98% of Kyrgyz exports went to other parts of the Soviet Union. Thus, the nation's economic performance in the early 1990s was worse than any other former Soviet republic except war-torn Armenia, Azerbaijan, and Tajikistan. While economic performance has improved in the last few years, difficulties remain in securing adequate fiscal revenues and providing a sufficient social safety net.

Agriculture is an important sector of the economy in the Kyrgyz Republic. By the early 1990s, the private agricultural sector provided between one-third and one-half of some harvests. In 2002 agriculture accounted for 35.6% of GDP and about half of employment. The Kyrgyz Republic's terrain is mountainous, which accommodates livestock raising, the largest agricultural activity. Main crops include wheat, sugar beets, cotton, tobacco, vegetables, and fruit. Wool, meat, and dairy products also are major commodities.

Agricultural processing is a key component of the industrial economy, as well as one of the most attractive sectors for foreign investment. The Kyrgyz Republic is rich in mineral resources but has negligible petroleum and natural gas reserves; it imports petroleum and gas. Among its mineral reserves are substantial deposits of coal, gold, uranium, antimony, and other rare-earth metals. The government hopes to attract foreign investment in mining and metallurgy, but local business conditions are very challenging to most companies. The Kyrgyz Republic's plentiful water resources and mountainous terrain enable it to produce and export large quantities of hydroelectric energy.

The Kyrgyz Republic's principal exports are nonferrous metals and minerals, woolen goods and other agricultural products, electric energy, and certain engineering goods. Its imports include petroleum and natural gas, ferrous metals, chemicals, most machinery, wood and paper products, some foods, and some construction materials. Its leading trade partners include Switzerland, Russia, China, and neighboring Kazakhstan and Uzbekistan.

The Kyrgyz Republic exports antimony, mercury, rare-earth metals, and chemical products to the United States. It imports grain, medicine and medical equipment, vegetable oil, paper products, rice, machinery, agricultural equipment, and meat from the United States. In 2008 Kyrgyz exports to the U.S. totaled $2.5 million; 2008 Kyrgyz imports from the U.S. totaled $44.3 million, much of which was equipment, food products, and commodities provided by assistance programs.

FOREIGN RELATIONS
The Kyrgyz Republic maintains close relations with other former Soviet countries, particularly with Kazakhstan and Russia. Recognizing Russia's concerns about the Russian-speaking minority in the Kyrgyz Republic, President Akayev was sensitive to potential perceptions of discrimination. For example, although the 1993 constitution designates Kyrgyz as the state language, an amendment to the constitution in 2001 granted official status to the Russian language. The amended December 30, 2006 constitution reaffirmed the status of the two languages.

While the Kyrgyz Republic initially remained in the ruble zone, stringent conditions set by the Russian Government prompted the Kyrgyz Republic to introduce its own currency, the som, in May 1993. Withdrawal from the ruble zone was done with little prior notification and initially caused tensions in the region. Both Kazakhstan and Uzbekistan temporarily suspended trade, and Uzbekistan even introduced restrictions tantamount to economic sanctions. Both nations feared an influx of rubles and an increase in inflation. Uzbekistan and Kazakhstan's hostility toward the Kyrgyz Republic was short-lived, and the three nations signed an agreement in January 1994 creating an economic union. Economic cooperation within the region, though, is still hampered by unilateral barriers created by the Kyrgyz Republic's neighbors. The Kyrgyz Republic has been active in furthering regional cooperation, such as joint military exercises with Uzbek and Kazakh troops.

Turkey has sought to capitalize on its cultural and ethnic links to the region and has found the Kyrgyz Republic receptive to cultivating bilateral relations. The Kyrgyz Republic is a member of the OSCE, the CIS, the Shanghai Cooperation Organization (SCO), the WTO, and the United Nations.

Since December 2001, the Kyrgyz Republic has hosted Manas Transit Center, an important logistical hub for the coalition effort in Afghanistan.

U.S.-KYRGYZ RELATIONS
The U.S. Government provides humanitarian assistance, non-lethal military assistance, and assistance to support economic and political reforms. It also has supported the Kyrgyz Republic's requests for assistance from international organizations.

The United States helped the Kyrgyz Republic accede to the WTO in December 1998. U.S. assistance aids the Kyrgyz Republic in implementing necessary economic, health sector, and educational reforms, and supports economic development and conflict resolution in the Ferghana Valley.

[Also see fact sheet on FY 2008 U.S. assistance to Kyrgyz Republic.]

Principal U.S. Officials
Ambassador--Tatiana Gfoeller
Deputy Chief of Mission--Larry Memmott
Political-Economic Officer--David McCormick
Management Officer--Patrick Fenning
USAID Director--Patricia Shapiro

The U.S. Embassy in the Kyrgyz Republic is located at 171 Prospect Mira 720016 Bishkek (tel.: 996-312-55-12-41; fax: 996-312-55-12-64).

TRAVEL AND BUSINESS INFORMATION
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For the latest security information, Americans living and traveling abroad should regularly monitor the Department's Bureau of Consular Affairs Internet web site at http://www.travel.state.gov, where the current Worldwide Caution, Travel Alerts, and Travel Warnings can be found. Consular Affairs Publications, which contain information on obtaining passports and planning a safe trip abroad, are also available at http://www.travel.state.gov. For additional information on international travel, see http://www.usa.gov/Citizen/Topics/Travel/International.shtml.

The Department of State encourages all U.S. citizens traveling or residing abroad to register via the State Department's travel registration website or at the nearest U.S. embassy or consulate abroad. Registration will make your presence and whereabouts known in case it is necessary to contact you in an emergency and will enable you to receive up-to-date information on security conditions.

Emergency information concerning Americans traveling abroad may be obtained by calling 1-888-407-4747 toll free in the U.S. and Canada or the regular toll line 1-202-501-4444 for callers outside the U.S. and Canada.

The National Passport Information Center (NPIC) is the U.S. Department of State's single, centralized public contact center for U.S. passport information. Telephone: 1-877-4-USA-PPT (1-877-487-2778); TDD/TTY: 1-888-874-7793. Passport information is available 24 hours, 7 days a week. You may speak with a representative Monday-Friday, 8 a.m. to 10 p.m., Eastern Time, excluding federal holidays.

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Further Electronic Information
Department of State Web Site. Available on the Internet at http://www.state.gov, the Department of State web site provides timely, global access to official U.S. foreign policy information, including Background Notes and daily press briefings along with the directory of key officers of Foreign Service posts and more. The Overseas Security Advisory Council (OSAC) provides security information and regional news that impact U.S. companies working abroad through its website http://www.osac.gov

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STAT-USA/Internet, a service of the U.S. Department of Commerce, provides authoritative economic, business, and international trade information from the Federal government. The site includes current and historical trade-related releases, international market research, trade opportunities, and country analysis and provides access to the National Trade Data Bank.

Background Note: Nepal

Bureau of South and Central Asian Affairs

PROFILE

OFFICIAL NAME:
Federal Democratic Republic of Nepal

Geography
Area: 147,181 sq. km. (56,136 sq. mi.), about the size and shape of Tennessee, bordering China and India.
Cities: Capital--Kathmandu (3 districts) (pop. 2.2 million est.). Other cities--Biratnagar, Patan, Pokhara, Birgunj, Dharan, Nepalgunj.
Terrain: Flat and fertile in the southern Terai region; terraced cultivation and swiftly flowing mountain rivers in the central hills; and the high Himalayas in the north. Eight of the world's ten highest peaks are in Nepal, including Mount Everest. Kathmandu, the capital, is in a broad valley at 1,310 meters (4,300 ft.) elevation.
Climate: Ranging from subtropical in the south to temperate in the hills to arctic at high altitudes. The monsoon season is from June to September, during which showers occur almost every day, bringing 75 to 150 centimeters (30-60 in.) of rain.
Time zone: Nepal is 10 hours and 45 minutes ahead of Eastern Standard Time and does not observe daylight saving time.

People
Nationality: Noun--Nepali (sing.) or Nepalese (plural). Adjective--Nepalese or Nepali.
Population (2007 estimate): 29 million.
Annual growth rate (2007 estimate): 2.132%.
Population breakdown/distribution: Rural (86%); female (50%); in the southern Terai region (49%); in the hills (44%); in the mountains (7%).
Ethnic groups (caste and ethnicity are often used interchangeably): Brahman, Chetri, Newar, Gurung, Magar, Tamang, Rai, Limbu, Sherpa, Tharu, and others.
Religions: Hinduism (81%), Buddhism (11%), Islam (4%), and others (4%).
Languages: Nepali and more than 100 regional and indigenous languages.
Education: Years compulsory--0. Attendance--primary 80.4%, secondary 20%. Literacy--49% (63% male, 35% female).
Health: Infant mortality rate (2007 estimate)--63.7 deaths/1,000 live births. Life expectancy (2007 estimate)--61.9 years for males and 65.5 years for females.
Work force: Agriculture--71%; industry--3%; services--11%; other--1%.

Government
Type: Representative democracy.
Constitution: Interim constitution promulgated on January 15, 2007. Constituent Assembly convened May 2008 to draft a new constitution.
Branches: Executive--President (head of state), Prime Minister (head of government). Legislative--The Constituent Assembly is a unicameral Parliament, consisting of 601 members; 240 members were elected through a direct electoral process representing single-member constituencies across the country; 335 members were nominated from party lists through a proportional representation system; and 26 were nominated by the cabinet as representatives of ethnic and indigenous communities. Judicial--Supreme Court, 16 appellate courts, 75 district courts.
Subdivisions: 5 development regions, 14 zones, and 75 districts. 75 district development committees, 58 municipalities, 3,913 village development committees, and 36,023 ward committees.
Political parties: United Communist Party of Nepal-Maoist (UCPN-M), formerly known as the Communist Party of Nepal-Maoist (CPN-M), (on the U.S. terrorist exclusion list); Nepali Congress (NC); Communist Party of Nepal-United Marxist Leninist (CPN-UML); Madhesi People's Rights Forum (MPRF); Madhesi People’s Right Forum-Democratic (MPRF-D); Tarai Madhes Democratic Party (TMDP); Sadhbavana Party (SP); Rastriya Prajatantra Party (RPP); and 17 others.
Elections: Constituent Assembly election held on April 10, 2008.
Suffrage: Universal over 18.
Defense/police (FY 2007/2008): $314 million.
National Day: Republic Day, Jestha 15 (May 28); Democracy Day, Falgun 7 (mid-February). (Note: Jestha and Falgun are months of the Nepalese calendar.)

Economy
GDP (2007/2008): $12.69 billion.
Annual growth rate of real GDP (FY 2007/2008): 4.7%.
Per capita income (gross national product, FY 2007/2008): $470.
Avg. inflation rate (Consumer Price Index, mid-October 2008 est.): 14.1%.
Natural resources: Water, hydropower, limited but fertile agricultural land, timber.
Agriculture (32.12% of GDP): Products--rice, wheat, maize, sugarcane, oilseed, jute, millet, potatoes. Cultivated land--25%.
Industry (7.6% of GDP): Types--carpets, pashmina, garments, cement, cigarettes, bricks, sugar, soap, matches, jute, manufactured goods, hydroelectric power.
Trade (2007/2008): Exports--$892 million: carpets, pashmina, garments. Major markets--Germany and the U.S. Imports--$2.79 billion: manufactured goods. Major supplier--India.
Central government budget (FY 2008/2009): $3.14 billion; military allocation $163.43 million.
Official exchange rate (as of September 19, 2008): NPR 75.00 = US$1.00.
Fiscal year: July 16-July 15.

PEOPLE
Perched on the southern slopes of the Himalayan Mountains, Nepal is as ethnically diverse as its terrain. The Nepalese are descendants of three major migrations from India, Tibet, and central Asia.

Among the earliest inhabitants were the Newars of the Kathmandu Valley and aboriginal Tharus in the southern Terai region. The ancestors of the Brahman and Chetri caste groups came from India, while other ethnic groups trace their origins to central Asia and Tibet, including the Gurungs and Magars in the west, Rais and Limbus in the east, and Sherpas and Bhotias in the north.

The Terai, a part of the Ganges Basin with 20% of Nepal's land, is the country's breadbasket. Much of the population is physically and culturally similar to the Indo-Aryan people of northern India. People of Indo-Aryan and Mongoloid origin live in the hill regions. The mountainous highlands are sparsely populated. The Kathmandu Valley, in the middle hill region, constitutes a small fraction of the nation's area but is the most densely populated, with over 7% of the population.

Religion is important in Nepal; the Kathmandu Valley alone has more than 2,700 religious shrines. According to the 2001 census, Nepal is roughly 81% Hindu. Buddhists account for about 11% of the population. The interim constitution, promulgated on January 15, 2007, declared the country a "secular state." Buddhist and Hindu shrines and festivals are respected and celebrated by many. The government celebrates most Hindu and some Buddhist holidays. Nepal also has small Muslim and Christian minorities. Certain animistic practices of old indigenous religions also survive.

Nepali is the official language, although over 100 regional and indigenous languages are spoken throughout the country. Derived from Sanskrit, Nepali is similar to Hindi and is spoken by about 90% of the population (although often as a second or third language). Many Nepalese in government and business also speak Hindi and English.

HISTORY

Early History
Modern Nepal was created in the latter half of the 18th century when Prithvi Narayan Shah, the ruler of the small principality of Gorkha, formed a unified country from a number of independent hill states. The country was frequently called the Gorkha Kingdom, the source of the term "Gurkha" used for Nepali soldiers.

After 1800, the heirs of Prithvi Narayan Shah proved unable to maintain firm political control over Nepal. A period of internal turmoil followed, heightened by Nepal's defeat by the British in a war from 1814 to 1816. Stability was restored after 1846 when the Rana family gained power, entrenched itself through hereditary prime ministers, and reduced the monarch to a figurehead. The Rana regime, a highly centralized autocracy, pursued a policy of isolating Nepal from external influences. This policy helped Nepal maintain its national independence during the colonial era, but also impeded the country's economic development.

In 1950, King Tribhuvan, a direct descendant of Prithvi Narayan Shah, fled his "palace prison" to newly independent India, touching off an armed revolt against the Rana administration. This allowed the return of the Shah family to power and, eventually, the appointment of a non-Rana prime minister. A period of quasi-constitutional rule followed, during which the monarch, assisted by the leaders of fledgling political parties, governed the country. During the 1950s, efforts were made to frame a constitution for Nepal that would establish a representative form of government, based on the British model.

Democracy Develops
In early 1959, King Mahendra, who had succeeded his father Tribhuvan in 1955, issued a new constitution and the first democratic elections for a national assembly were held. The Nepali Congress Party, a moderate socialist group, gained a substantial victory in the election. Its leader, B.P. Koirala, formed a government and served as Prime Minister.

Declaring parliamentary democracy a failure eighteen months later, King Mahendra dismissed the Koirala government and promulgated a new constitution on December 16, 1962. The new constitution established a "partyless" system of panchayats (councils), which King Mahendra claimed was a democratic form of government closer to Nepalese traditions. As a hierarchical structure progressing from village assemblies to a Rastriya Panchayat (National Parliament), the Panchayat system enshrined the absolute power of the monarchy and kept the King as head of state with sole authority over all governmental institutions, including the Cabinet (Council of Ministers) and the Parliament.

King Mahendra was succeeded by his 27-year-old son, King Birendra, in 1972. Amid student demonstrations and anti-regime activities in 1979, King Birendra called for a national referendum to decide the nature of Nepal's government--either the continuation of the Panchayat system with democratic reforms or the establishment of a multiparty system. The referendum was held in May 1980, and the Panchayat system won a narrow victory. The King carried out the promised reforms, including selection of the prime minister by the Rastriya Panchayat.

Movement to Restore Democracy
In 1990, the political parties again pressed the King and the government for change. Leftist parties united under a common banner of the United Left Front and joined forces with the Nepali Congress Party to launch strikes and demonstrations in the major cities of Nepal. This "Movement to Restore Democracy" was initially dealt with severely, with more than 50 persons killed by police gunfire and hundreds arrested. In April, the King capitulated. Consequently, he dissolved the Panchayat system, lifted the ban on political parties, and released all political prisoners.

An interim government was sworn in on April 19, 1990, headed by Krishna Prasad Bhattarai as Prime Minister presiding over a cabinet made up of members of the Nepali Congress Party, the communist parties of Nepal, royal appointees, and independents. The new government drafted and promulgated a new constitution in November 1990, which enshrined fundamental human rights and established Nepal as a parliamentary democracy under a constitutional monarch. International observers characterized the May 1991 elections as free and fair, in which the Nepali Congress Party won 110 out of 205 seats to form the government.

In mid-1994, the Parliament was dissolved due to dissension within the Nepali Congress Party. The subsequent general election held November 15, 1994, gave no party a majority. The 1994 elections resulted in a Nepali Congress Party defeat and a hung Parliament, with a minority government led by the Communist Party of Nepal-United Marxist Leninist (CPN-UML); this made Nepal the world's first communist monarchy, with Man Mohan Adhikary as Prime Minister. The next five years saw five successive unstable coalition governments and the beginning of a Maoist insurgency.

Following the May 1999 general elections, the Nepali Congress Party once again headed a majority government after winning 113 out of 205 seats. But the pattern of short-lived governments persisted. There were three Nepali Congress Party Prime Ministers after the 1999 elections: K.P. Bhattarai (5/31/99-3/17/00); G. P. Koirala (3/20/00-7/19/01); and Sher Bahadur Deuba (7/23/01-10/04/02).

On June 1, 2001, Crown Prince Dipendra reportedly shot and killed his father King Birendra, his mother Queen Aishwarya, his brother, his sister, his father's younger brother Prince Dhirendra, and several aunts before turning the gun on himself. After his death two days later, the late King's surviving brother Gyanendra was proclaimed King.

Maoist Insurgency
In February 1996, the leaders of the Maoist United People's Front began a violent insurgency, waged through killings, torture, bombings, kidnappings, extortion, and intimidation against civilians, police, and public officials in more than 50 of the country's 75 districts. Over 13,000 police, civilians, and insurgents were killed in the conflict. The government and Maoists held peace talks in August, September, and November of 2001, but they were unsuccessful, and the Maoists resumed their violent insurgency. Shortly after the 2001 peace talks failed, King Gyanendra declared a state of emergency, which the Parliament approved by a two-thirds vote. On the recommendation of Prime Minister Sher Bahadur Deuba, the King dissolved the House on May 22, 2002.

Struggle for Democracy Continues
In a sudden turn of events on October 4, 2002, King Gyanendra removed Prime Minister Deuba and assumed executive power. The entire Council of Ministers was also dissolved, and the November 13, 2002 elections to the dissolved House of Representatives were called off. After a week-long consultation with the leaders of various political parties, on October 11, 2002, the King appointed Lokendra Bahadur Chand as Prime Minister with a five-point directive that included creating an environment of peace and security as well as holding elections to the local bodies and the House of Representatives.

Under Chand's premiership, the government and Maoists declared a cease-fire on January 29, 2003. This marked the second cease-fire with the Maoists; the first, in 2001, had been broken by the Maoists. The 2003 cease-fire included an agreement to undertake initiatives to resolve the Maoist problem through dialogue and bring the Communist Party of Nepal (Maoist) back into mainstream politics. After the announcement of the 2003 cease-fire, the Chand government held two rounds of peace talks with the Maoists, in April and May. But in its effort to end political instability, it failed to secure the support of the leading political parties. In the face of growing pressure from political parties and their mass movement, Chand resigned from his post on May 30, 2003, after only seven months in power.

The King appointed Surya Bahadur Thapa as the new Prime Minister on June 4, 2003, amidst opposition from the major political parties. Another round of peace talks was held in mid-August 2003, but on August 27, 2003 the Maoists broke the second cease-fire. Thapa resigned in May 2004 as a result of political pressure. In June 2004, the King reinstated formerly dismissed Sher Bahadur Deuba as Prime Minister.

King's Direct Rule
Citing a steady deterioration of conditions in the country, King Gyanendra dismissed the Cabinet and constituted a Council of Ministers under his own chairmanship on February 1, 2005. He stated that the Council of Ministers (i.e., Cabinet) would try to reactivate multi-party democracy within three years. The King subsequently declared a state of emergency and suspended almost all fundamental rights for nearly three months. His new government was sworn in on February 2, 2005. The Council of Ministers under the King's chairmanship was reshuffled twice during the King's 15 months of direct rule.

People's Movement
In April 2006, the major political parties, in cooperation with the Maoists, organized massive countrywide demonstrations for the restoration of democracy, forcing the King to relinquish power. On April 24, 2006, King Gyanendra reinstated the 1999 Parliament. Former Prime Minister Girija Prasad Koirala of the Nepali Congress Party was selected by the Seven-Party Alliance (SPA) of political parties to again lead the government. The Maoists declared a unilateral cease-fire on April 26, and the new Koirala government announced its own unilateral cease-fire and plans for peace talks with the Maoist insurgents on May 3, 2006. The SPA and the Maoists have since signed a number of agreements, including, in November 2006, a comprehensive peace agreement to end the decade-long insurgency. Both sides also agreed to an arms management process and elections for a Constituent Assembly. On January 15, 2007 a 328-member interim Parliament, including 83 Maoist representatives and other party representatives, was constituted. The first sitting of the Parliament unanimously endorsed an interim constitution, which replaced the constitution of 1990. On April 1, 2007, the ruling eight-party government formed an interim Council of Ministers through political consensus, including five Maoist ministers.

The Constituent Assembly Election
Nepal held its historic Constituent Assembly (CA) election on April 10, 2008. Primarily mandated to draft a new constitution of Nepal, the CA also serves as a Parliament. The Communist Party of Nepal (Maoist), now known as the United Communist Party of Nepal (Maoist), emerged as the largest party securing 229 seats, followed by the Nepali Congress Party with 115 seats, and the Communist Party of Nepal-United Marxist Leninist with 108 seats. The Terai-based Madhesi People's Rights Forum, securing 54 seats emerged as a new political force in Nepalese politics. Twenty-one smaller parties, including 2 independent candidates, received 95 seats.

In August 2008, Prime Minister Pushpa Kamal Dahal--leader of the Communist Party of Nepal (Maoist)--was sworn in as Prime Minister. However, following a dispute over his bid to dismiss the Chief of the Army Staff, Prime Minister Dahal resigned from the government on May 4, 2009. On May 23, members from 22 of the 24 political parties represented in the Constituent Assembly elected veteran Communist Party of Nepal-United Marxist Leninst (UML) leader Madhav Kumar Nepal as Prime Minister. Madhav Kumar Nepal was sworn in on May 25, 2009.

GOVERNMENT AND POLITICAL CONDITIONS
A 10-year Maoist insurgency--punctuated by cease-fires in 2001, 2003, 2005, and 2006--began in 1996. After King Gyanendra announced the reinstatement of Parliament on April 24, 2006, the Maoists declared a three-month unilateral cease-fire on April 26, 2006 which the new Koirala government reciprocated on May 3, 2006. The Seven-Party Alliance (SPA) and the Maoists signed five agreements, culminating in the comprehensive peace agreement of November 21, 2006, effectively ending the insurgency. However, Maoist violence and intimidation continued in spite of the agreement.

The main agenda of the SPA and the Maoists was to hold a Constituent Assembly (CA) election, with the primary responsibility of drafting and promulgating a new constitution defining the future political system in Nepal. The interim constitution, adopted on January 15, 2007, expressed full commitment to democratic ideals and norms, including competitive multi-party democracy, civil liberties, fundamental human rights, adult enfranchisement, periodic elections, press freedom, an independent judiciary, and the rule of law. The interim constitution also guaranteed the basic rights of Nepali citizens to formulate a constitution for themselves and to participate in the Constituent Assembly in an environment free from fear. The interim constitution transferred all powers of the King as head of state to the prime minister and stripped the King of any ceremonial constitutional role. Under the interim constitution, the fate of the monarchy was to be decided by the first meeting of the Constituent Assembly. The interim Parliament was a unicameral house.

After promulgation of the interim constitution, many socially marginalized ethnic communities, including the Madhesis of the lowland Terai, began widespread protests against the proposed proportional representation system incorporated in the new constitution. Bandhs and protests sometimes turned violent, with clashes between police and demonstrators leading to dozens killed and injured. The government eventually agreed to increase the number of directly elected representatives from the Terai and implement quotas ensuring representation of women, Madhesis, janajatis, and other discriminated groups. Constitutional amendments regarding representation were adopted in March and June 2007. (The government signed further agreements with Madhesi and janajati groups agreeing to inclusion in government bodies and institutions as well as commitment to address other issues in August 2007, but these have yet to be fully implemented.)

Five Maoist ministers were appointed to the Nepali Congress-led cabinet on April 2007. The ministers submitted their resignations on September 18, 2007 over the issue of declaring Nepal a republic and adoption of fully proportional representation system for the Constituent Assembly (CA) election. After compromise agreements on these issues were reached--having the Interim Parliament declare Nepal a republic but letting the CA implement the measure, and adoption of a mixed electoral system, the constitution was amended again and the Maoist ministers were reinducted on December 31, 2007.

Twice deferred, Nepal's historic Constituent Assembly (CA) election was finally held on April 10, 2008. None of the parties succeeded in getting a simple majority in the CA. The Communist Party of Nepal (Maoist) won 218 out of 575 elected seats, followed by the Nepali Congress with 109 seats, the Communist Party of Nepal (United Marxist Leninist) with 103 seats, and the Terai-based Madhesi People's Rights Forum with 50 seats. Six constituencies need to hold by-elections, five due to one candidate having won two directly elected seats and one due to the newly elected President resigning his seat. The appointed seats were distributed across the parties in the following manner CPN-M 9, NC 5, UML 5, MPRF 2, SP- 1, CPN-Marxist Leninist 1, People’s Front Nepal 1, Nepal Workers and Peasants Party 1 and TMDP 1.

The final list of members elected under the proportional representation system was released on May 8, 2008. The members of the Constituent Assembly were sworn in on May 27, 2008, and the first session of the CA was convened on May 28, 2008. In this session, the CA voted to declare Nepal a federal democratic republic by abolishing the monarchy. Out of 564 members of the CA who voted, 560 voted in favor and 4 against the motion.

While the CA has the prime responsibility of drafting a new constitution for Nepal, it also functions as a regular Parliament. Through the fourth amendment to the interim constitution of Nepal on May 28, 2008, the CA also established, for the first time, a largely ceremonial President as the constitutional head of state, as well as a Vice President. The Prime Minister continues to be the head of the government.

On January 12, 2009, the Communist Party of Nepal (Maoist) merged with the much smaller Communist Party of Nepal (Unity Center Masal), the formerly underground party of the People’s Front Nepal, to form the United Communist Party of Nepal (Maoist).

Nepal's judiciary is legally separated from the executive and legislative branches and, in practice, has increasingly shown the will to be independent of political influence. However, by asserting executive control over the judiciary, the interim constitution called into question this independence. Under the interim constitution, the Prime Minister appoints the Chief Justice on the recommendation of the Constitutional Council, and the Chief Justice appoints other judges on the recommendation of the Judicial Council. All lower court decisions, including acquittals, are subject to appeal. The Supreme Court is the court of last appeal.

Human Rights
Since political reform began in 1990, some progress has been achieved in the transition to a more open society with greater respect for human rights; however, substantial problems remain. Poorly trained police sometimes use excessive force in quelling violent demonstrations. In addition, there have been reports of torture during detention and widespread reports of custodial abuse. In 2000, the government established the National Human Rights Commission (NHRC), a government-appointed commission with a mandate to investigate human rights violations. However, the government continues to stall in implementing the commission's recommendations and has not been able to enforce accountability for recent and past abuses. The King's February 2005 dismissal of the government, subsequent imposition of emergency rule and suspension of many civil rights--including freedom of expression, assembly, and privacy--was a setback for human rights in Nepal. During this three-month period, censors were deployed to major newspapers, and many political leaders were kept under house arrest. The King's government restricted the media from publishing interviews, articles, or news items against the spirit of the royal proclamation of February 1, 2005 or in support of terrorist or destructive activities. The reinstated government, led by Prime Minister Koirala, reversed these decisions in May 2006. The interim constitution promulgated on January 15, 2007 ensured unrestricted freedom of expression and made the NHRC a constitutional body.

Both the Maoists and security personnel have committed numerous human rights violations. The Maoists have used tactics such as kidnapping, torture, bombings, intimidation, killings, and conscription of children. Within the Nepalese security forces, violations ranged from disappearances to executions. After the royal takeover on February 1, 2005 and subsequent imposition of the state of emergency, the security forces arrested many political leaders, student leaders, journalists, and human rights activists under the Public Security Act of 1989, although all were released by June 2005 when the King ended the state of emergency.

After the April 2006 cease-fire announced by the government and the Maoists, incidents of human rights violations by the government declined substantially while incidents of human rights violations by the Maoists remained relatively unabated. Even after signing a comprehensive peace agreement with the government in November 2006, Maoists' extortion, abduction, and intimidation remained largely unchecked. Although activities by other political parties have increased significantly in the rural parts of Nepal, political party representatives, police, non-governmental organization (NGO) workers, and journalists reported continuous threats and intimidation by Maoist or Young Communist League (YCL) cadres. During the January-February 2007 uprising in the Terai, reports of government security forces using excessive force to quell demonstrations were common.

There are three major daily English-language newspapers, "The Kathmandu Post," "The Himalayan Times" and "The Rising Nepal." The last and its vernacular sister publication are owned by a government corporation. There are hundreds of smaller daily and weekly periodicals that are privately owned and of varying journalistic quality. Views expressed since the 1990 move to democracy are varied and vigorous. Currently, 137 FM radio and eight television stations are privately owned and operated, following liberalization of licensing regulations. Radio Nepal and Nepal Television are government-owned and operated. There are nearly 200 cable television operators nationwide, and satellite dishes to receive television broadcasts abound. However, despite its prominence, the Nepali press is still frequently subject to violence and intimidation by political groups.

Trafficking in women and child labor remain serious problems. While Nepal is primarily a source country for destinations like India and the Middle East, internal trafficking is also a prominent issue. According to the State Department's 2008 Trafficking in Persons Report, 5,000 to 7,000 girls have been trafficked from rural parts of the country to Kathmandu, and there are over 20,000 child indentured domestic workers in Nepal. Lack of prosecution and police complicity in trafficking cases remain major problems. Discrimination against women and lower castes is prevalent.

Principal Government Officials
President--Ram Baran Yadav
Vice President--Parmananda Jha

Cabinet Ministers (Coalition Government)
Prime Minister--Madhav Kumar Nepal, UML
Women, Children and Social Welfare (and Deputy Prime Minister)--Bijay Kumar Gachhedar, MPRF
Finance--Surendra Pandey, UML
Foreign Affairs--Sujata Koirala, NC
Defense--Bidhya Devi Bhandari, UML
Physical Planning and Works--Bijay Kumar Gachchedar, MPRF
Information and Communications--Shankar Pokhrel, UML
Agriculture and Cooperatives--Mrigendra Kumar Singh Yadav, MPRF
Law, Justice and Parliamentary Affairs--Prem Bahadur Singh, Samajwadi Prajatantrik Janata Party
Education--Ramchandra Kushwaha, TMDP
Home Affairs--Bhim Bahadur Rawal, UML
Peace and Reconstruction--Rakam Chemjong, UML
Environment, Science and Technology--Madhav Kumar Nepal, UML
Local Development--Purna Kumar Serma Limbu, NC
Industry--Mahendra Raya Yadav, TMDP
Commerce and Supplies--Rajendra Mahato, SP
Tourism and Civil Aviation--Sarat Singh Bhandari, MPRF
Forest and Soil-Conservation--Deepak Bohara, RPP
Land Reforms and Management--Dambar Shrestha, ML
Youth and Sports--Ganesh Tiwari Nepali, TMDP
Health and Population--Umakanta Chaudhary, NC
Labour and Transport Management--Mohammad Aftab Alam, NC
Irrigation--Bal Krishna Khana, NC
General Administration--Prabhakar Pradhanag (Ravindra Shrestha), UML

Ambassador to the United States--vacant
Ambassador to the United Nations--Madhu Raman Acharya

Nepal maintains an Embassy in the United States at 2131 Leroy Place, NW, Washington, DC 20008 (Tel: 202-667-4550; fax: 202-667- 5534). The Nepalese Mission to the United Nations is at 300 E. 46th Street, New York, NY 10017 (Tel: 212-370-3988/3989).

ECONOMY
Nepal ranks among the world's poorest countries, with a per capita income of around $470 in 2009. Based on national calorie/GNP criteria, an estimated 31% of the population is below the poverty line. An isolated, agrarian society until the mid-20th century, Nepal entered the modern era in 1951 without schools, hospitals, roads, telecommunications, electric power, industry, or a civil service. The country has, however, made progress toward sustainable economic growth since the 1950s and is committed to a program of economic liberalization.

Nepal launched its 10th five-year economic development plan in 2002; its currency has been made convertible; and fourteen state enterprises have been privatized, seven liquidated, and two dissolved. Foreign aid accounts for more than half the development budget. The Government of Nepal has shown an increasing commitment to fiscal transparency, good governance, and accountability. Also in 2002, the government began to prioritize development projects and eliminate wasteful spending. In consultation with civil society and donors, the government cut 160 development projects that were driven by political patronage.

Agriculture remains Nepal's principal economic activity, employing over 71% of the population and providing 32.12% of GDP. Only about 25% of the total area is cultivable; another 33% is forested; most of the rest is mountainous. Rice and wheat are the main food crops. The lowland Terai region produces an agricultural surplus, part of which supplies the food-deficient hill areas. Because of Nepal's dependence on agriculture, the magnitude of the annual monsoon rain strongly influences economic growth.

In FY 2007/2008 Nepal's exports increased by 2.4%, compared to a decrease of 1.4% in FY 2006/2007. Imports grew by 16.1% in FY 2007/2008 as compared to 12% in FY 2006/2007. Exports constrained by political turmoil and a poor investment climate in the last fiscal year grew marginally owing to improvement in the political situation. The trade deficit for FY 2006/2007 was $1.9 billion, which widened to $2.5 billion in FY 2007/2008. Real GDP growth during 1996-2002 averaged less than 5%. According to the revised estimates of the Central Bureau of Statistics, GDP grew 4.68% in FY 2003/2004 and slipped to 3.12% in FY 2004/2005, but again increased marginally to 3.72% in 2005/2006 and slipped to 3.19% in FY 2006/2007.

Despite its growing trade deficit, Nepal traditionally has a balance of payments (BOP) surplus due to remittances from Nepalese working abroad. In FY 2007/2008, Nepal recorded a balance of payments surplus of $452.9 million (0.4% of GDP), as compared to $83.58 million in FY 2006/2007 (0.01% of GDP). Significant rise in workers' remittances and grants assistance contributed to a record level of BOP surplus in FY 2007/2008, however, the BOP surplus covered import trade credit amounting to $232 million in 2007/08, reflecting a rather fragile base. In the previous year, import trade credit was at a lower level of $ 25.95 million. Nepal receives substantial amounts of external assistance from India, the United Kingdom, the United States, Japan, Germany, and the Scandinavian countries. Several multilateral organizations--including the World Bank, the Asian Development Bank, and the UN Development Program--also provide significant assistance. On April 23, 2004, Nepal became the 147th member of the World Trade Organization (WTO).

With eight of the world's ten highest mountain peaks--including Mt. Everest at 8,848 m (29,000 ft)--Nepal is a tourist destination for hikers and mountain climbers. However, the decade-long insurgency and a global economic slowdown threatened the tourism industry. But 2007 witnessed a renewed wave of tourism. Figures from the Department of Immigration showed a 37.2% increase in arrivals in 2007, which surpassed the numbers of tourist arrivals during 1999, the peak tourism year prior to 2006. Since the political parties and Maoists brokered a comprehensive peace agreement in November 2006, renewed tourist arrivals have given relief to the tourism-based hotel, trekking, mountaineering, and aviation industries.

Swift rivers flowing south through the Himalayas have massive hydroelectric potential to service domestic power needs and growing demand from India. Only about 1% of Nepal's hydroelectric potential is currently tapped. Several hydroelectric projects, at Kulekhani and Marsyangdi, were completed in the early to late 1980s. In the early 1990s, one large public-sector project, the Kali Gandaki A (144 megawatts--MW), and a number of private projects were planned; some have been completed. Kali Gandaki A started commercial operation in August 2002. The most significant privately financed hydroelectric projects currently in operation are the Khimti Khola (60 MW) and Bhote Koshi (36 MW) projects.

The environmental impact of Nepal's hydroelectric projects has been limited by the fact that most are "run-of-river," with only one storage project undertaken to date. The planned private-sector West Seti (750 MW) storage project is dedicated to electricity exports. An Australian company signed a power purchase agreement with the Indian Power Trading Corporation in September 2002 and has the lead on the project. Negotiations with India for a power purchase agreement have been underway for several years, but agreement on pricing and capital financing remains a problem. The Government of Nepal has taken up the issue of project financing for the West Seti project with the EXIM Bank of China. Starting in December 2006, the Department of Electricity Development obtained proposals from 14 foreign companies for survey licenses of three projects--600 MW Budhi Gandaki, 402 MW Arun III, and 300 MW Upper Karnali. The Ministry of Water Resources, after delaying the evaluation process for more than a year, finally awarded the 300 MW Upper Karnali to Indian private sector developer GMR Energy Ltd. In March 2008, the 402 MW Arun III was awarded to India's state-owned Sutlej Jal Vidyut Nigam (SJVN). The Department of Electricity Development had invited fresh global tenders for the 600 MW Budhi Gandi project in December 2007, but it failed to attract investors. Currently, domestic demand for electricity is increasing at 8%-10% a year.

Population pressure on natural resources is increasing. Overpopulation is already straining the "carrying capacity" of the middle hill areas, particularly the Kathmandu Valley, resulting in the depletion of forest cover for crops, fuel and fodder, and contributing to erosion and flooding. Additionally, water supplies within the Kathmandu Valley are not considered safe for consumption, and disease outbreaks are not uncommon. Although steep mountain terrain makes exploitation difficult, mineral surveys have found small deposits of limestone, magnesite, zinc, copper, iron, mica, lead, and cobalt.

Progress has been achieved in education, health, and infrastructure. A countrywide primary education system is under development, and Tribhuvan University has several campuses. Although eradication efforts continue, malaria has been controlled in the fertile but previously uninhabitable Terai region in the south. Kathmandu is linked to India and nearby hill regions by an expanding highway network.

DEFENSE
Nepal's military consists of the nearly 95,000-strong Nepalese Army (NA), which is organized into six divisions (Far-Western, Mid-Western, Western, Central, Eastern, and Valley Divisions) with separate Aviation, Parachute, and Security Brigades as well as brigade-sized directorates encompassing air defense, artillery, engineers, logistics, and signals which provide general support to the NA. According to recent amendments to the interim constitution, the President is the Supreme Commander of the NA. General Rookmangud Katawal is Chief of the Army Staff (COAS), and also the senior commissioned officer of the NA. Talks are currently underway to negotiate the integration of the Maoist People's Liberation Army into the NA and other security forces.

Since 1958, the NA has contributed over 50,000 peacekeepers to 28 peacekeeping missions such as the UN Interim Force in Lebanon (UNIFIL), the UN Protection Force (UNPROFOR) in the former Yugoslavia, the UN Operational Mission in Somalia II (UNOSOMII), the UN Mission in Haiti (UNMIH), and the UN Mission of Support in East Timor (UNTAET). NA units are presently serving in the UN Mission in Sierra Leone (UNAMSIL), the UN Mission in the Democratic Republic of the Congo (MONUC), and the UN Mission in Haiti (MINUSTOH), among others. The NA currently has approximately 3,000 peacekeepers deployed and hopes to increase this to 5,000 in the near future. Approximately 3,400 of the world-famous Nepalese Gurkha soldiers serve in the British Army, and 40,000 serve in the Indian Army.

The U.S. Pacific Command (USPACOM) coordinates U.S. military engagement and security assistance with Nepal through the Office of Defense Cooperation. Cumulative U.S. military assistance to the NA has consisted of $20.95 million in grant assistance: $9.9 million in Foreign Military Financing (FMF), $5.37 million in professional and technical training provided under the International Military Education and Training Program (IMET in FY 2009 was $743,000), and approximately $5.6 million for Global Peace Operations Initiative funding to increase the pool of international peacekeepers and promote interoperability. Many NA officers attend U.S. military schools, conferences and seminars such as those provided by the National Defense University (NDU), Marshall Center, and the Asia Pacific Center for Strategic Studies (APCSS).

FOREIGN RELATIONS
As a small, landlocked country wedged between two much larger and far stronger powers, Nepal seeks good relations with both India and China. Nepal formally established relations with China in 1956 and, since then, their bilateral relations have generally been good. Because of strong cultural, religious, linguistic, and economic ties, Nepal's association with India traditionally has been close. India and Nepal restored trade relations in 1990 after a break caused by India's security concerns over Nepal's relations with China. A bilateral trade treaty signed with India in 1991 is renewed every five years. The most recent renewal was on March 6, 2007, which expires on March 5, 2012. A transit treaty with India, which allows Nepal to trade with other countries through the Calcutta/Haldia ports, was extended on March 30, 2006 for seven years.

Nepal played an active role in the formation of the economic development-oriented South Asian Association for Regional Cooperation (SAARC) and is the site of its secretariat. Nepal is also a signatory of the agreement on South Asian Free Trade Area (SAFTA), which came into force on January 1, 2006. A SAFTA tariff liberalization program (TLP) was scheduled to be implemented July 1, 2006. All member countries, except for Nepal, whose TLP started on August 1, 2006, reduced tariffs for each other. However, on July 1, 2006, Pakistan officially toughened its stance of not trading with India under the SAFTA arrangements and did not announce TLP for India. Due to the stalemate between India and Pakistan, the Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation Free Trade Agreement (BIMSTEC-FTA), which was initially scheduled to come into force on July 1, 2006, was deferred indefinitely. The BIMSTEC Summit scheduled for February 8, 2007, in India was also deferred due to political instability in member states, including Nepal, but eventually took place in November 2008. On international issues, Nepal follows a non-aligned policy and often votes with the Non-Aligned Movement in the United Nations. Nepal participates in a number of UN specialized agencies and is a member of the World Trade Organization, World Bank, International Monetary Fund, Colombo Plan, and Asian Development Bank.

U.S.-NEPAL RELATIONS
The United States established official relations with Nepal in 1947 and opened its Kathmandu Embassy in 1959. Relations between the two countries have always been friendly. U.S. policy objectives toward Nepal center on helping Nepal build a peaceful, prosperous, and democratic society.

Since 1951, the United States has provided more than $1 billion in bilateral development assistance to Nepal. In recent years, annual bilateral U.S. assistance through the U.S. Agency for International Development (USAID) and the Department of State has averaged $55 million. U.S. foreign assistance programs support Nepal's peace process and transition to democracy, and promote long-term development through agriculture, health, family planning, environmental protection, and vocational education programs in Nepal. The United States also contributes to international institutions and private voluntary organizations working in Nepal. The Peace Corps temporarily suspended its operations in Nepal in 2004 due to increasing security concerns, and officially terminated its Nepal program in 2006.

Principal U.S. Officials
Ambassador--vacant
Deputy Chief of Mission/Chargé d’Affaires--Jeffrey Moon
USAID Director--Kevin Rushing
Counselor for Management Affairs--Lee Hess
Political and Economic Chief--Timothy Trenkle
Consular Chief--Clay Adler
Public Affairs Officer--Terry White
Regional Security Officer--Bryan Scruggs
Political/Military Chief--John Tasco
Defense Attache--LTC Bryan Chapman
Office of Defense Cooperation--Michael Rembold

The U.S. Embassy in Nepal is located in Maharajgunj, Kathmandu (Tel: [977] (1) 400-7200; fax: [977] (1) 400-7272).

TRAVEL AND BUSINESS INFORMATION
The U.S. Department of State's Consular Information Program advises Americans traveling and residing abroad through Country Specific Information, Travel Alerts, and Travel Warnings. Country Specific Information exists for all countries and includes information on entry and exit requirements, currency regulations, health conditions, safety and security, crime, political disturbances, and the addresses of the U.S. embassies and consulates abroad. Travel Alerts are issued to disseminate information quickly about terrorist threats and other relatively short-term conditions overseas that pose significant risks to the security of American travelers. Travel Warnings are issued when the State Department recommends that Americans avoid travel to a certain country because the situation is dangerous or unstable.

For the latest security information, Americans living and traveling abroad should regularly monitor the Department's Bureau of Consular Affairs Internet web site at http://www.travel.state.gov, where the current Worldwide Caution, Travel Alerts, and Travel Warnings can be found. Consular Affairs Publications, which contain information on obtaining passports and planning a safe trip abroad, are also available at http://www.travel.state.gov. For additional information on international travel, see http://www.usa.gov/Citizen/Topics/Travel/International.shtml.

The Department of State encourages all U.S. citizens traveling or residing abroad to register via the State Department's travel registration website or at the nearest U.S. embassy or consulate abroad. Registration will make your presence and whereabouts known in case it is necessary to contact you in an emergency and will enable you to receive up-to-date information on security conditions.

Emergency information concerning Americans traveling abroad may be obtained by calling 1-888-407-4747 toll free in the U.S. and Canada or the regular toll line 1-202-501-4444 for callers outside the U.S. and Canada.

The National Passport Information Center (NPIC) is the U.S. Department of State's single, centralized public contact center for U.S. passport information. Telephone: 1-877-4-USA-PPT (1-877-487-2778); TDD/TTY: 1-888-874-7793. Passport information is available 24 hours, 7 days a week. You may speak with a representative Monday-Friday, 8 a.m. to 10 p.m., Eastern Time, excluding federal holidays.

Travelers can check the latest health information with the U.S. Centers for Disease Control and Prevention in Atlanta, Georgia. A hotline at 800-CDC-INFO (800-232-4636) and a web site at http://wwwn.cdc.gov/travel/default.aspx give the most recent health advisories, immunization recommendations or requirements, and advice on food and drinking water safety for regions and countries. The CDC publication "Health Information for International Travel" can be found at http://wwwn.cdc.gov/travel/contentYellowBook.aspx.

Further Electronic Information
Department of State Web Site. Available on the Internet at http://www.state.gov, the Department of State web site provides timely, global access to official U.S. foreign policy information, including Background Notes and daily press briefings along with the directory of key officers of Foreign Service posts and more. The Overseas Security Advisory Council (OSAC) provides security information and regional news that impact U.S. companies working abroad through its website http://www.osac.gov

Export.gov provides a portal to all export-related assistance and market information offered by the federal government and provides trade leads, free export counseling, help with the export process, and more.

STAT-USA/Internet, a service of the U.S. Department of Commerce, provides authoritative economic, business, and international trade information from the Federal government. The site includes current and historical trade-related releases, international market research, trade opportunities, and country analysis and provides access to the National Trade Data Bank.

Background Note: Uganda

Bureau of African Affairs

PROFILE

OFFICIAL NAME:
Republic of Uganda

Geography
Area: 241,040 sq. km. (93,070 sq. mi.); about the size of Oregon.
Cities: Capital--Kampala (2002 pop. 1.2 million). Other cities--Jinja, Gulu, Mbale, Mbarara.
Terrain: 18% inland water and swamp; 12% national parks, forest, and game reserves; 70% forest, woodland, grassland.
Climate: In the northeast, semi-arid--rainfall less than 50 cm. (20 in.); in southwest, rainfall 130 cm. (50 in.) or more. Two dry seasons: Dec.-Feb. and June-July.

People
Nationality: Noun and adjective--Ugandan(s).
Population (2007): 30.9 million.
Annual growth rate (2008 est.): 3.3%.
Ethnic groups: Baganda, Banyankole, Bahima, Bakiga, Banyarwanda, Bunyoro, Batoro, Langi, Acholi, Lugbara, Karamojong, Basoga, Bagisu, and others.
Religions (2007): Christian 85%, Muslim 12%, other 2%.
Languages: English (official); Luganda and numerous other local languages. Swahili is generally spoken only among the Ugandan military.
Education: Attendance (2008; primary school completion rate)--54%. Literacy (2003)--70%.
Health (2008 est.): Infant mortality rate--78/1,000. Life expectancy--51 yrs.

Government
Type: Republic.
Constitution: Ratified July 12, 1995; promulgated October 8, 1995.
Independence: October 9, 1962.
Branches: Executive--president, vice president, prime minister, cabinet. Legislative--parliament. Judicial--Magistrate's Court, High Court, Court of Appeals, Supreme Court.
Administrative subdivisions: 80 districts.
Political parties: In 2006, approximately 33 parties were allowed to function, including political parties that existed in 1986, when the National Resistance Movement assumed power.
Suffrage: Universal adult.
National holiday: Independence Day, October 9.

Economy
GDP (nominal, 2008/2009): $14.5 billion.
Inflation rate (annual headline or CPI, 2007/2008): 7%.
Natural resources: Copper, cobalt, limestone, phosphate, oil.
Agriculture: Cash crops--coffee, tea, cotton, tobacco, sugar cane, cut flowers, vanilla. Food crops--bananas, corn, cassava, potatoes, millet, pulses. Livestock and fisheries--beef, goat meat, milk, Nile perch, tilapia.
Industry: Processing of agricultural products (cotton ginning, coffee curing), cement production, light consumer goods, textiles.
Trade: Exports (2008 est.)--$1.72 billion: coffee, fish and fish products, tea, electricity, horticultural products, vanilla, cut flowers, remittances from abroad. Major markets--EU, Kenya, Democratic Republic of the Congo, Sudan, Rwanda, U.K. Imports (2008 est.)--$4.5 billion: capital equipment, vehicles, petroleum, medical supplies, metals, cereals. Major suppliers--U.A.E., Kenya, EU, India, South Africa, China, U.S.
Fiscal year: July 1-June 30.

PEOPLE AND HISTORY
The Baganda are the largest ethnic group in Uganda and comprise approximately 18% of the population. Individual ethnic groups in the southwest include the Banyankole and Bahima, 10%; the Bakiga, 8%; the Banyarwanda, 6%; the Bunyoro, 3%; and the Batoro, 3%. Residents of the north, largely Nilotic, include the Langi, 6%, and the Acholi, 4%. In the northwest are the Lugbara, 4%, and the Karamojong, 2%, occupy the considerably drier, largely pastoral territory in the northeast. The Basoga, 8%, and the Bagisu, 5%, are among ethnic groups in the east.

Uganda's population is predominately rural, and its population density highest in the southern regions. Until 1972, Asians constituted the largest nonindigenous ethnic group in Uganda. In that year, the Idi Amin regime expelled 50,000 Asians, who had been engaged in trade, industry, and various professions. In the years since Amin's overthrow in 1979, Asians have slowly returned and now number around 30,000.

When Arab traders moved inland from their enclaves along the Indian Ocean coast of East Africa and reached the interior of Uganda in the 1830s, they found several African kingdoms with well-developed political institutions dating back several centuries. These traders were followed in the 1860s by British explorers searching for the source of the Nile River. Protestant missionaries entered the country in 1877, followed by Catholic missionaries in 1879.

In 1888, control of the emerging British "sphere of interest" in East Africa was assigned by royal charter to the Imperial British East Africa Company, an arrangement strengthened in 1890 by an Anglo-German agreement confirming British dominance over Kenya and Uganda. In 1894, the Kingdom of Buganda was placed under a formal British protectorate.

Britain granted internal self-government to Uganda in 1961, with the first elections held on March 1, 1961. Benedicto Kiwanuka of the Democratic Party became the first Chief Minister. Uganda maintained its Commonwealth membership. A second round of elections in April 1962 elected members to a new National Assembly. Milton Obote, leader of the majority coalition in the National Assembly, became prime minister and led Uganda to formal independence on October 9, 1962.

In succeeding years, supporters of a centralized state vied with those in favor of a loose federation and a strong role for tribally-based local kingdoms. Political maneuvering climaxed in February 1966, when Prime Minister Milton Obote suspended the constitution, assumed all government powers, and removed the ceremonial president and vice president. In September 1967, a new constitution proclaimed Uganda a republic, gave the president even greater powers, and abolished the traditional kingdoms. On January 25, 1971, Obote's government was ousted in a military coup led by armed forces commander Idi Amin Dada. Amin declared himself president, dissolved the parliament, and amended the constitution to give himself absolute power.

Idi Amin's 8-year rule produced economic decline, social disintegration, and massive human rights violations. The Acholi and Langi ethnic groups were particular objects of Amin's political persecution because they had supported Obote and made up a large part of the army. In 1978, the International Commission of Jurists estimated that more than 100,000 Ugandans had been murdered during Amin's reign of terror; some authorities place the figure much higher.

In October 1978, Tanzanian armed forces repulsed an incursion of Amin's troops into Tanzanian territory. The Tanzanian force, backed by Ugandan exiles, waged a war of liberation against Amin's troops and Libyan soldiers sent to help him. On April 11, 1979, Kampala was captured, and Amin fled with his remaining forces.

After Amin's removal, the Uganda National Liberation Front formed an interim government with Yusuf Lule as president. This government adopted a ministerial system of administration and created a quasi-parliamentary organ known as the National Consultative Commission (NCC). The NCC and the Lule cabinet reflected widely differing political views. In June 1979, following a dispute over the extent of presidential powers, the NCC replaced Lule with Godfrey Binaisa. In a continuing dispute over the powers of the interim presidency, Binaisa was removed in May 1980. Thereafter, Uganda was ruled by a military commission chaired by Paulo Muwanga. December 1980 elections returned the UPC to power under the leadership of President Obote, with Muwanga serving as vice president. Under Obote, the security forces had one of the world's worst human rights records. In their efforts to stamp out an insurgency led by Yoweri Museveni's National Resistance Army (NRA), they laid waste to a substantial section of the country, especially in the Luwero area north of Kampala.

Obote ruled until July 27, 1985, when an army brigade, composed mostly of ethnic Acholi troops and commanded by Lt. Gen. Basilio Olara-Okello, took Kampala and proclaimed a military government. Obote fled to exile in Zambia. The new regime, headed by former defense force commander Gen. Tito Okello (no relation to Lt. Gen. Olara-Okello), opened negotiations with Museveni's insurgent forces and pledged to improve respect for human rights, end tribal rivalry, and conduct free and fair elections. In the meantime, massive human rights violations continued as the Okello government murdered civilians and ravaged the countryside in order to destroy the NRA's support.

Negotiations between the Okello government and the NRA were conducted in Nairobi in the fall of 1985, with Kenyan President Daniel Moi seeking a cease-fire and a coalition government in Uganda. Although agreeing in late 1985 to a cease-fire, the NRA continued fighting, seized Kampala in late January 1986, and assumed control of the country, forcing Okello to flee north into Sudan. Museveni's forces organized a government with Museveni as president and dominated by the political grouping called the National Resistance Movement (NRM or the "Movement").

A referendum was held in March 2000 on whether Uganda should retain the Movement system, with limited operation of political parties, or adopt multi-party politics. Although 70% of voters endorsed retention of the Movement system, the referendum was widely criticized for low voter turnout and unfair restrictions on Movement opponents. Museveni was reelected to a second five-year term in March 2001. Parliamentary elections were held in June 2001, and more than 50% of contested seats were won by newcomers. Movement supporters nevertheless remained in firm control of the legislative branch. Observers believed that the 2001 presidential and parliamentary elections generally reflected the will of the electorate; however, both were marred by serious irregularities, particularly in the period leading up to the elections, such as restrictions on political party activities, incidents of violence, voter intimidation, and fraud.

A Constitutional Review Commission (CRC) issued a report proposing comprehensive constitutional change in December 2003. The government, however, took issue with many CRC recommendations and made counter-proposals in September 2004. A July 2005 national referendum resulted in the adoption of a multiparty system of government and the subsequent inclusion of opposition parties in elections and government.

In February 2006, the country held its first multiparty general elections since President Museveni came to power in 1986. The election generally reflected the will of the people, although serious irregularities occurred. Ruling NRM candidate President Museveni was declared the winner with 59.3% of the vote, giving him a third term in office following the passage of a controversial amendment in June 2005 to eliminate presidential term limits. Opposition FDC leader Kizza Besigye captured 37.4% of the vote, while the remaining contestants received less than 2% of the vote each, according to official figures from the Electoral Commission.

GOVERNMENT
The 1995 constitution established Uganda as a republic with an executive, legislative, and judicial branch. The constitution provides for an executive president, to be elected every 5 years. President Yoweri Museveni, in power since 1986, was elected in 1996 and reelected in 2001 and 2006. Legislative responsibility is vested in the parliament; legislative elections were last held February 2006. There are currently 102 women representatives in the 332-member parliament. The Ugandan judiciary operates as an independent branch of government and consists of magistrate's courts, high courts, courts of appeals, and the Supreme Court. Parliament and the judiciary have significant amounts of independence and wield significant power.

Principal Government Officials
President and Commander in Chief--Yoweri Kaguta Museveni
Vice President--Gilbert Bukenya
Prime Minister--Apollo Nsibambi
Foreign Minister--Sam Kutesa
Minister of Defense--Crispus Kiyonga
Ambassador to the United States--Perezi K. Kamunanwire

Uganda maintains an embassy in the United States at 5909 16th Street NW, Washington, DC 20011 (tel. 202-726-7100).

POLITICAL CONDITIONS
Since assuming power, Museveni and his government have largely put an end to the human rights abuses of earlier governments, initiated substantial economic liberalization and general press freedom, and instituted economic reforms in accord with the International Monetary Fund (IMF), World Bank, and donor governments.

The vicious and cult-like Lord's Resistance Army (LRA), which seeks to overthrow the Ugandan Government, had murdered and kidnapped civilians in the north and east since 1986. Although the LRA does not threaten the stability of the government, LRA violence at one time displaced up to 1.8 million people, creating a humanitarian catastrophe, particularly when they were forced into internally displaced persons (IDP) camps for their own protection. The Uganda Peoples Defense Force (UPDF) launched "Operation Iron Fist" against LRA rebels in northern Uganda in 2002 and conducted operations against LRA sanctuaries in southern Sudan with the permission of the Sudanese Government. The Sudanese Government had previously supported the LRA.

In 2005, the Ugandan military pushed the LRA out of northern Uganda. The LRA escaped to the Democratic Republic of the Congo (D.R.C.) and continued to operate there, southern Sudan, and occasionally in Central African Republic. Under military pressure, the LRA requested peace talks. Government of Southern Sudan Vice President Riek Machar mediated a 2-1/2 year peace process which resulted in a Final Peace Agreement (FPA) in April 2008. LRA leader Joseph Kony refused to sign the FPA and continued to commit atrocities against local populations in D.R.C., southern Sudan, and C.A.R. In December 2008, the Governments of Uganda, D.R.C., and southern Sudan launched a joint military operation against the LRA in northeastern D.R.C. A follow-on operation is ongoing.

There have been no LRA attacks in northern Uganda since August 2006. As a result, the majority of the 1.8 million IDPs have returned to or near their homes.

ECONOMY
Uganda's economy has great potential. Endowed with significant natural resources, including ample fertile land, regular rainfall, and mineral deposits, it appeared poised for rapid economic growth and development at independence. However, chronic political instability and erratic economic management produced a record of persistent economic decline that left Uganda among the world's poorest and least-developed countries.

Since assuming power in early 1986, Museveni's government has taken important steps toward economic rehabilitation. The country's infrastructure--notably its transportation and communications systems that were destroyed by war and neglect--is being rebuilt. Recognizing the need for increased external support, Uganda negotiated a policy framework paper with the IMF and the World Bank in 1987. It subsequently began implementing economic policies designed to restore price stability and sustainable balance of payments, improve capacity utilization, rehabilitate infrastructure, restore producer incentives through proper price policies, and improve resource mobilization and allocation in the public sector. Uganda's macroeconomic policies are sound and contributed to an 8.6% growth rate in fiscal year 2007-2008, compared to 7% in FY 2006-2007. Inflation ran at 240% in 1987 and 42% in June 1992, and was 5.1% in 2003. It bounced up to 7.7% in 2007 and 12% in 2008 and portions of 2009, well above the government's annual target average of 5%, as food prices rose.

Investment as a percentage of GDP was 17% in 2006/2007 compared to 15.7% in 2002/2003. Private sector investment, largely financed by private transfers from abroad, was 20% of GDP in 2006/2007. In the same year, gross national savings as a percentage of GDP fell to an estimated 12%, from 13% the previous fiscal year. The Ugandan Government has worked with donor countries to reschedule or cancel substantial portions of the country's external debts.

Agricultural products supply nearly all of Uganda's foreign exchange earnings, with coffee (of which Uganda is Africa's second leading producer) accounting for about 23% and fish 7% of the country's exports in 2007/2008. Exports of non-traditional products, including apparel, hides, skins, vanilla, vegetables, fruits, cut flowers, and fish are growing, while traditional exports such as cotton, tea, and tobacco continue to be mainstays. Significant discoveries of oil in the Albertine Rift in western Uganda in 2008 pose both a major challenge and a major opportunity for Uganda's economy and development. As of late 2009, the private sector had invested considerably in the oil sector, but production had not yet begun pending further feasibility studies on the funding and construction of the necessary infrastructure to support the industry.

Most industry is related to agriculture. The industrial sector has been rehabilitated and resumed production of building and construction materials, such as cement, reinforcing rods, corrugated roofing sheets, and paint. Domestically produced consumer goods include plastics, soap, cork, beer, and soft drinks.

Uganda has about 45,000 kilometers (28,000 mi.), of roads, of which 10,000 (6,213 miles) kilometers are main roads and 35,000 kilometers (21,747 miles) are feeder roads. Only 3,000 kilometers (1,864 mi.) are paved, and most roads radiate from Kampala. The country has about 1,350 kilometers (800 mi.) of rail lines, but most of it is not currently in use. A railroad originating at Mombasa on the Indian Ocean connects with Tororo, where it branches westward to Jinja, Kampala, and Kasese and northward to Mbale, Soroti, Lira, Gulu, and Pakwach. Uganda's important road and rail links to Mombasa serve its transport needs and also those of its neighbors--Rwanda, Burundi, and parts of Congo and Sudan. An international airport is at Entebbe on the shore of Lake Victoria, some 32 kilometers (20 mi.) south of Kampala.

FOREIGN RELATIONS
The Ugandan Government generally seeks good relations with other nations without reference to ideological orientation. Uganda's relations with Rwanda, D.R.C., and Sudan have sometimes been strained because of security concerns. Uganda, D.R.C., Rwanda, and Burundi participate in the U.S.-facilitated Tripartite Plus process, which has helped ease tensions and contributed to increased bilateral contacts with the aim of resolving conflicts between the neighbors. President Museveni remains active in attempts to implement a peace agreement in Burundi and continues to support peace initiatives in Sudan and Somalia. Uganda has 1,700 peacekeepers in Somalia as part of the African Union Mission in Somalia.

In the past, neighbors were concerned about Uganda's relationship with Libya, which had supplied military equipment and bartered fuel to Uganda. In addition to its friendly ties to Western nations, Uganda has maintained ties with North Korea and Iran.

A rebel group operating in western Uganda and eastern Democratic Republic of the Congo, near the Rwenzori Mountains, the Allied Democratic Forces (ADF), emerged as a localized threat in 1996 and inflicted substantial suffering on the population in the area. It has largely been defeated by the UPDF and the affected areas of western Uganda have been secured. Remnants of the ADF remain in eastern Congo.

DEFENSE
The Uganda Peoples Defense Force (UPDF)--previously the National Resistance Army--constitutes the armed forces of Uganda. Prior to 2000, U.S. military forces participated with the UPDF in training activities under the African Crisis Response Initiative. U.S. military assistance was terminated in 2000 as a result of the Ugandan incursion into the D.R.C. Following the June 2003 UPDF withdrawal of troops from the D.R.C., the U.S. restarted limited nonlethal military assistance.

U.S.-UGANDAN RELATIONS
Although U.S.-Ugandan relations were strained during the rule of Idi Amin in the 1970s, relations improved after Amin's fall. In mid-1979, the United States reopened its embassy in Kampala. Relations with successor governments were cordial, although Obote and his administration rejected strong U.S. criticism of Uganda's human rights situation.

Bilateral relations between the United States and Uganda have been good since Museveni assumed power, and the United States has welcomed his efforts to end human rights abuses and to pursue economic reform. Uganda is a strong supporter of counterterrorism efforts. The United States is helping Uganda achieve export-led economic growth through the African Growth and Opportunity Act and provides a significant amount of development assistance. At the same time, the United States is concerned about continuing human rights problems and the pace of progress toward the establishment of genuine political pluralism.

U.S. development assistance in Uganda has the overall goal of reducing poverty. Most U.S. program assistance is focused in the areas of health, education, and agriculture. Both the U.S. Agency for International Development (USAID) and the Centers for Disease Control and Prevention (CDC) have major programs to fight the HIV/AIDS pandemic. Other programs promote trade and investment, curb environmental degradation, encourage the peaceful resolution of local and international conflicts, and promote honest and open government. The United States also provides large amounts of humanitarian assistance to populations without access to adequate food supplies because of conflict, drought, and other factors.

U.S. Peace Corps Volunteers are active in primary teacher training and HIV/AIDS programs. The Department of State carries out cultural exchange programs, brings Fulbright lecturers and researchers to Uganda, and sponsors U.S. study and tour programs for a wide variety of officials from government, non-governmental organizations, and the private sector. Through the Ambassador's Self-Help Fund, local groups in poor areas receive assistance for small projects with a high level of community involvement.

U.S.-Ugandan relations also benefit from significant contributions to health care, nutrition, education, and park systems from U.S. missionaries, non-governmental organizations, private universities, HIV/AIDS researchers, and wildlife organizations. Expatriate Ugandans living in the U.S. also promote stronger links between the two countries.

Principal U.S. Officials
Ambassador--Jerry P. Lanier
Deputy Chief of Mission--John Hoover
Public Affairs Officer--Joann Lockard
Director, USAID--David Eckerson

The U.S. Embassy in Uganda is at 1577 Ggaba Road, Kampala; tel. 259791/2/3/5; fax: 259-794; http://kampala.usembassy.gov/.
Northern Uganda Virtual Presence Post - http://northernuganda.usvpp.gov/.

TRAVEL AND BUSINESS INFORMATION
The U.S. Department of State's Consular Information Program advises Americans traveling and residing abroad through Country Specific Information, Travel Alerts, and Travel Warnings. Country Specific Information exists for all countries and includes information on entry and exit requirements, currency regulations, health conditions, safety and security, crime, political disturbances, and the addresses of the U.S. embassies and consulates abroad. Travel Alerts are issued to disseminate information quickly about terrorist threats and other relatively short-term conditions overseas that pose significant risks to the security of American travelers. Travel Warnings are issued when the State Department recommends that Americans avoid travel to a certain country because the situation is dangerous or unstable.

For the latest security information, Americans living and traveling abroad should regularly monitor the Department's Bureau of Consular Affairs Internet web site at http://www.travel.state.gov, where the current Worldwide Caution, Travel Alerts, and Travel Warnings can be found. Consular Affairs Publications, which contain information on obtaining passports and planning a safe trip abroad, are also available at http://www.travel.state.gov. For additional information on international travel, see http://www.usa.gov/Citizen/Topics/Travel/International.shtml.

The Department of State encourages all U.S. citizens traveling or residing abroad to register via the State Department's travel registration website or at the nearest U.S. embassy or consulate abroad. Registration will make your presence and whereabouts known in case it is necessary to contact you in an emergency and will enable you to receive up-to-date information on security conditions.

Emergency information concerning Americans traveling abroad may be obtained by calling 1-888-407-4747 toll free in the U.S. and Canada or the regular toll line 1-202-501-4444 for callers outside the U.S. and Canada.

The National Passport Information Center (NPIC) is the U.S. Department of State's single, centralized public contact center for U.S. passport information. Telephone: 1-877-4-USA-PPT (1-877-487-2778); TDD/TTY: 1-888-874-7793. Passport information is available 24 hours, 7 days a week. You may speak with a representative Monday-Friday, 8 a.m. to 10 p.m., Eastern Time, excluding federal holidays.

Travelers can check the latest health information with the U.S. Centers for Disease Control and Prevention in Atlanta, Georgia. A hotline at 800-CDC-INFO (800-232-4636) and a web site at http://wwwn.cdc.gov/travel/default.aspx give the most recent health advisories, immunization recommendations or requirements, and advice on food and drinking water safety for regions and countries. The CDC publication "Health Information for International Travel" can be found at http://wwwn.cdc.gov/travel/contentYellowBook.aspx.

Further Electronic Information
Department of State Web Site. Available on the Internet at http://www.state.gov, the Department of State web site provides timely, global access to official U.S. foreign policy information, including Background Notes and daily press briefings along with the directory of key officers of Foreign Service posts and more. The Overseas Security Advisory Council (OSAC) provides security information and regional news that impact U.S. companies working abroad through its website http://www.osac.gov

Export.gov provides a portal to all export-related assistance and market information offered by the federal government and provides trade leads, free export counseling, help with the export process, and more.

STAT-USA/Internet, a service of the U.S. Department of Commerce, provides authoritative economic, business, and international trade information from the Federal government. The site includes current and historical trade-related releases, international market research, trade opportunities, and country analysis and provides access to the National Trade Data Bank.

Background Note: Taiwan

Bureau of East Asian and Pacific Affairs

PROFILE

OFFICIAL NAME:
Taiwan

Geography
Area: 36,189 sq. km. (13,973 sq. mi.).
Cities (2009): Capital--Taipei (pop. 2.6 million). Other cities--(Kaohsiung 1.5 million), Taichung (1.07 million).
Terrain: Two thirds of the island is largely mountainous with 100 peaks over 3,000 meters (9,843 ft.).
Climate: Maritime subtropical.

People
Population (Feb. 2009): 23.0 million.
Annual growth rate (2008): 0.34%.
Languages: Mandarin Chinese (official), Taiwanese, Hakka.
Education: Years compulsory--9. Attendance (2007)--99.30%. Literacy (2008)--97.78%.
Health: Infant mortality rate (2007)--0.47%. Life expectancy (2008)--78.57 yrs; male 75.59 yrs.; female 81.94 yrs.
Work force (August 2009): 10.96 million.

Political Establishment
Type: Multi-party democracy.
Constitution: December 25, 1946; last amended 2005.
Branches (Yuan): Executive, Legislative, Judicial, Control, Examination.
Major political parties: Kuomintang (KMT or Nationalist Party); Democratic Progressive Party (DPP); several small parties.
Suffrage: Universal over 20 years of age.
Central budget proposed (FY 2009): $56.8 billion.
Defense proposed (2009): 17.2% of entire budget.

Economy
GDP (2008): $391 billion.
Real annual growth rate (2008): 0.06%.
Per capita GDP (2008): $17,083.
Unemployment (Aug. 2009) 6.13%.
Natural resources: Small deposits of coal, natural gas, limestone, marble, and asbestos.
Agriculture (1.69% of GDP): Major products--pork, rice, fruit and vegetables, sugarcane, poultry, shrimp, eel.
Services: (73.27% of GDP).
Industry (25.04% of GDP): Types--electronics and flat panel products, chemicals and petrochemicals, basic metals, machinery, textiles, transport equipment, plastics, machinery.
Trade (2008): Exports--$255.6 billion: electronics, optical and precision instruments, information and communications products, textile products, basic metals, plastic and rubber products. Major markets--P.R.C. and Hong Kong $99.6 billion, U.S. $30.8 billion, Japan $17.6 billion. Imports--$240.5 billion: electronics, optical and precision instruments, information and communications products, machinery and electrical products, chemicals, basic metals, transport equipment, crude oil. Major suppliers--Japan $46.5 billion, P.R.C. and Hong Kong $32.9 billion, U.S. $26.3 billion.

PEOPLE
Taiwan has a population of 23 million. More than 18 million, the "native" Taiwanese, are descendants of Chinese who migrated from Fujian and Guangdong Provinces on the mainland, primarily in the 18th and 19th centuries. The "mainlanders," who arrived in Taiwan after 1945, came from all parts of mainland China. About half a million indigenous peoples inhabit the mountainous central and eastern parts of the island and are believed to be of Malayo-Polynesian origin. Of Taiwan's total population, approximately one million, or 4.4%, currently reside in mainland China.

Education
Since 1979, six years of elementary school and three years of junior high have been compulsory for all children. About 95% of junior high graduates continue their studies in either a senior high or vocational school. Taiwan has an extensive higher education system with 162 institutions of higher learning. In 2008, about 156,213 students took the entrance examinations to enter universities and colleges; about 73% of the candidates were accepted by a college or university. Opportunities for graduate education are expanding in Taiwan, but many students travel abroad for advanced education. In FY 2008, over 19,400 U.S. student visas were issued to Taiwan passport holders.

Languages
A large majority of people in Taiwan speak Mandarin Chinese, which has been the medium of instruction in the schools for more than five decades. Native Taiwanese and many others also speak one of the Southern Fujianese dialects, Min-nan, also known as Taiwanese. Recently there has been a growing use of Taiwanese in the broadcast media. The Hakka, who are concentrated in several counties throughout Taiwan, have their own distinct dialect. As a result of the half-century of Japanese rule, many older people also can speak Japanese. The method of Chinese romanization most commonly used in Taiwan is the Wade-Giles system. In 2002, Taiwan authorities announced adoption of the pinyin system used on the mainland to replace the Wade-Giles system, but its use is not consistent throughout society, often resulting in two or more romanizations for the same place or person.

Religions
According to Taiwan's Interior Ministry figures, there are about 11.2 million religious believers in Taiwan, with more than 75% identifying themselves as Buddhists or Taoists. At the same time, there is also a strong belief in traditional folk religion throughout the island. These are not mutually exclusive, and many people practice a combination of the three. Confucianism also is an honored school of thought and ethical code. Christian churches have been active on Taiwan for many years, and today, the population includes a small but significant percentage of Christians.

Culture
Taiwan's culture is a blend of its distinctive Chinese, Japanese, and Western influences. Fine arts, folk traditions, and popular culture embody traditional and modern, Asian, and Western motifs. One of Taiwan's greatest attractions is the Palace Museum, which houses over 650,000 pieces of Chinese bronze, jade, calligraphy, painting, and porcelain. This collection was moved from the mainland in 1949 when Chiang Kai-shek's Nationalist Party (KMT) fled to Taiwan. The collection is so extensive that only 1% is on display at any one time.

HISTORY
Taiwan's indigenous peoples, who originated in Austronesia and southern Asia, have lived on Taiwan for 12,000 to 15,000 years. Significant migration to Taiwan from the Chinese mainland began as early as A.D. 500. Dutch traders first claimed the island in 1624 as a base for Dutch commerce with Japan and the China coast. Two years later, the Spanish established a settlement on the northwest coast of Taiwan, which they occupied until 1642 when they were driven out by the Dutch. Dutch colonists administered the island and its predominantly aboriginal population until 1661. The first major influx of migrants from the Chinese mainland came during the Dutch period, sparked by the political and economic chaos on the China coast during the Manchu invasion and the end of the Ming Dynasty.

In 1664, a fleet led by the Ming loyalist Cheng Ch'eng-kung (Zheng Chenggong, known in the West as Koxinga) retreated from the mainland and occupied Taiwan. Cheng expelled the Dutch and established Taiwan as a base in his attempt to restore the Ming Dynasty. He died shortly thereafter, and in 1683, his successors submitted to Manchu (Qing Dynasty) control. From 1680, the Qing Dynasty ruled Taiwan as a prefecture and, in 1875, divided the island into two prefectures, north and south. In 1887 the island was made into a separate Chinese province.

During the 18th and 19th centuries, migration from Fujian and Guangdong provinces steadily increased, and Chinese supplanted indigenous peoples as the dominant population group. In 1895, a weakened Imperial China ceded Taiwan to Japan in the Treaty of Shimonoseki following the first Sino-Japanese war.

During its 50 years (1895-1945) of rule, Japan expended considerable effort in developing Taiwan's economy. At the same time, Japanese rule led to the "Japanization" of the island, including compulsory Japanese education and pressuring residents of Taiwan to adopt Japanese names.

At the end of World War II in 1945, Taiwan reverted to Chinese rule. During the immediate postwar period, the Nationalist Chinese (KMT) administration on Taiwan was repressive and corrupt, leading to local discontent. Anti-mainlander violence flared on February 28, 1947, prompted by an incident in which a cigarette seller was injured and a passerby was shot to death by Nationalist authorities. The island-wide rioting was brutally put down by Nationalist Chinese troops, who killed thousands of people. As a result of the February 28 Incident, the native Taiwanese felt a deep-seated bitterness toward the mainlanders. For 50 years the KMT authorities suppressed accounts of this episode in Taiwan history. In 1995 a monument was dedicated to the victims of the "2-28 Incident," and for the first time, Taiwan's leader, President Lee Teng-hui, publicly apologized for the Nationalists' brutality.

Starting before World War II and continuing afterwards, a civil war was fought on the mainland between Chiang Kai-shek's KMT government and the Chinese Communist Party led by Mao Zedong. When the civil war ended in 1949, 2 million refugees, predominately from the Nationalist government, military, and business community, fled to Taiwan. In October 1949 the People's Republic of China (P.R.C.) was founded on the mainland by the victorious communists. Chiang Kai-shek established a "provisional" Republic of China (R.O.C.) capital in Taipei in December 1949. During the 1950s, the KMT authorities implemented a far-reaching and highly successful land reform program on Taiwan. They redistributed land among small farmers and compensated large landowners with commodities certificates and stock in state-owned industries. Although this left some large landowners impoverished, others turned their compensation into capital and started commercial and industrial enterprises. These entrepreneurs were to become Taiwan's first industrial capitalists. Together with refugee businessmen from the mainland, they managed Taiwan's transition from an agricultural to a commercial, industrial economy.

Taiwan has developed steadily into a major international trading power with $496 billion in two-way trade (2008). Taiwan's accession to the World Trade Organization in 2002 has expanded its trade opportunities and further strengthened its standing in the global economy. Tremendous prosperity on the island has been accompanied by economic and social stability. Chiang Kai-shek's successor, his son Chiang Ching-kuo, began to liberalize Taiwan's political system, a process that accelerated when President Lee Teng-hui took office in 1988. The direct election of Lee Teng-hui as president in 1996 was followed by opposition Democratic Progressive Party (DPP) candidate Chen Shui-bian's election victory in March 2000. Chen was re-elected in March 2004 in a tightly contested election. The KMT's Ma Ying-jeou won the March 2008 presidential election by a substantial majority and took office on May 20, 2008.

ADMINISTRATION
The authorities in Taipei exercise control over Taiwan, Kinmen, Matsu, Penghu (Pescadores) and several other smaller islands. Taiwan is divided into counties, provincial municipalities, and two special municipalities, Taipei and Kaohsiung. At the end of 1998, the Constitution was amended to make all counties and cities directly administered by the Executive Yuan. From 1949 until 1991, the authorities on Taiwan claimed to be the sole legitimate government of all of China, including the mainland. In keeping with that claim, when the Kuomintang retreated to Taiwan in 1949, they re-established the full array of central political bodies, which had existed on the mainland. While much of this structure remains in place, the authorities on Taiwan in 1991 abandoned their claim of governing mainland China, stating that they do not "dispute the fact that the P.R.C. controls mainland China."

The first National Assembly, elected on the mainland in 1947 to carry out the duties of choosing the President and amending the constitution, was re-established on Taiwan when the KMT moved. Because it was impossible to hold subsequent elections to represent constituencies on the mainland, representatives elected in 1947-48 held these seats "indefinitely." In June 1990, however, the Council of Grand Justices mandated the retirement, effective December 1991, of all remaining "indefinitely" elected members of the National Assembly and other bodies.

The second National Assembly, elected in 1991, was composed of 325 members. The majority were elected directly, while 100 were chosen from party slates in proportion to the popular vote. This National Assembly amended the Constitution in 1994, paving the way for the direct election of the President and Vice President the first of which was held in March 1996. In April 2000, the members of the National Assembly voted to permit their terms of office to expire without holding new elections. The National Assembly elected in May 2005 voted to abolish itself the following month, leaving Taiwan with a unicameral legislature. The President is both leader of Taiwan and Commander-in-Chief of its armed forces. The President has authority over four of the five administrative branches (Yuan): Executive, Control, Judicial, and Examination. The President appoints the President of the Executive Yuan, who also serves as the Premier. The Premier and the cabinet members are responsible for government policy and administration.

The main lawmaking body, the Legislative Yuan (LY), was originally elected in the late 1940s in parallel with the National Assembly. The first LY had 773 seats and was viewed as a "rubber stamp" institution. The second LY was not elected until 1992. The third LY, elected in 1995, had 157 members serving 3-year terms, while the fourth LY, elected in 1998, was enlarged to 225 members. The LY has greatly enhanced its standing in relation to the Executive Yuan and has established itself as a major player on the central level. With increasing strength, size, and complexity, the LY now mirrors Taiwan's recently liberalized political system. In the 1992 and 1995 elections, the main opposition party--the Democratic Progressive Party (DPP)--challenged the half-century of Kuomintang (KMT) dominance of the Legislature. In both elections, the DPP won a significant share of the LY seats, leaving only half of the LY seats in the hands of the KMT. In 2001, the DPP won a plurality of LY seats--88 to the KMT's 66, the People First Party's 45, the Taiwan Solidarity Union's 13, and 13 won by other parties and independents. In the December 2004 LY election, the Pan-Blue coalition won a slender majority of 114 of the 225 seats compared to the Pan-Green coalition's 101. The LY was halved in size from 225 to 113 seats by constitutional amendments in 2005. In the January 2008 LY election, the first to be held under this new structure, the KMT won an absolute majority of 81 seats to the DPP's 27 seats, with the remaining five seats going to independent and small party candidates.

In 1994, when the National Assembly voted to allow direct popular election of the President, the LY passed legislation allowing for the direct election of the Governor of Taiwan Province and the mayors of Taipei and Kaohsiung Special Municipalities. These elections were first held in December 1994. In a move to streamline administration, the position of elected Governor was abolished at the end of 1998, and most other elements of the Taiwan Provincial Government have been eliminated.

The Control Yuan (CY) monitors the efficiency of public service and investigates instances of corruption. The 29 Control Yuan members are appointed by the President and approved by the Legislative Yuan; they serve 6-year terms. In recent years, the Control Yuan has become more activist, and it has conducted several major investigations and impeachments. From January 2005 to August 2008 the Control Yuan was inactive because the Pan-Blue dominated LY has refused to approve the new slate of CY members proposed by President Chen. The new Control Yuan members appointed by President Ma took office on August 1, 2008.

The Judicial Yuan (JY) administers Taiwan's court system. It includes a 16-member Council of Grand Justices (COGJ) that interprets the constitution. Grand Justices are appointed by the President, with the consent of the National Assembly, to 9-year terms.

The Examination Yuan (EY) functions as a civil service commission and includes two ministries: the Ministry of Examination, which recruits officials through competitive examination, and the Ministry of Personnel, which manages the civil service. The President appoints the President and members of the Examination Yuan.

Principal Leaders
President--Ma Ying-jeou
Vice President--Vincent Siew (Siew Wan-chang)
Premier--Wu Den-yih
Vice Premier--Eric Chu (Chu Li-luan)
Legislative Yuan President--Wang Jin-pyng
Judicial Yuan President--Lai In-jaw
Defense Minister--Kao Hua-chu
Foreign Minister--Timothy Yang (Yang Chin-tien)
Minister of Justice--Wang Ching-feng
Mainland Affairs Council Chairman--Lai Shin-yuan
Government Information Office Minister--Su Jun-pin
Cabinet Spokesperson--Su Jun-pin

POLITICAL CONDITIONS
Until 1986, Taiwan's political system was controlled by one party, the Kuomintang (KMT), the chairman of which was also Taiwan's top leader. As the ruling party, the KMT was able to fill appointed positions with its members and maintain political control of the island.

Before the 1986 island-wide elections, many "nonpartisans" grouped together to create Taiwan's first new opposition political party, the Democratic Progressive Party (DPP). Despite an official ban on forming new political parties, Taiwan authorities did not prohibit the DPP from operating, and DPP and independent candidates captured more than 20% of the vote in the 1986 elections. In 1987, President Chiang Ching-kuo ended the nearly four decades of martial law under which dissent had been suppressed. Since then, Taiwan has taken dramatic steps to improve respect for human rights and create a democratic political system, including ending almost all restrictions on the press. Vice President Lee Teng-hui succeeded Chiang Ching-kuo as president upon Chiang's death in 1988, and in 1990 the National Assembly (NA) elected Lee to a six-year term as President, the final indirect presidential election conducted by the NA. Under President Lee, the Legislative Yuan (LY) passed the Civic Organizations Law in 1989, which allowed for the formation of new political parties, thereby legalizing the DPP. In 1992, the DPP won 51 seats in the 161-seat LY, increasing the DPP's influence on legislative decisions. Chen Shui-bian's victory in the Taipei mayoral election in December 1994 further enhanced the profile of the DPP, which won 45 of the 157 seats in the 1995 LY elections.

In 1996, the KMT's Lee Teng-hui was elected President and Lien Chan Vice President in the first direct presidential election by Taiwan's voters. In the November 1997 local elections, the DPP won 12 of the 23 county magistrate and city mayor contests to the KMT's 8, outpolling the KMT for the first time in a major election. In a three-way contest in March 2000, DPP candidate Chen Shui-bian became the first opposition party candidate to win the presidency. His victory resulted in the first-ever transition of the presidency from one political party to another, validating Taiwan's democratic political system. President Chen was re-elected by 50.1% of the popular vote to a second term in a very tight contest on March 20, 2004. The election was marred by a shooting incident the day before the election during which President Chen and his running mate Vice President Annette Lu were slightly wounded. While the opposition contested the results, it was the first time that the DPP had won an outright majority in an island-wide election. Taiwan's second democratic transition of ruling party followed the March 22, 2008, presidential election, which went decisively (58%) to KMT candidate Ma Ying-jeou. Together with the KMT legislative victory two months earlier, Taiwan now had a unified government under KMT control.

The March 2004 election also included two "defensive referenda." Historically, referenda have been closely tied to the question of Taiwan independence, and thus a highly sensitive issue in cross-Strait relations. Both referenda in 2004 failed to meet the required participation threshold of 50% of eligible voters, as did four more referenda held in conjunction with the 2008 legislative and presidential elections. The 2008 DPP referendum on joining the UN under the name Taiwan was especially controversial.

The final National Assembly passed a set of constitutional amendments in June 2005 that halved the number of LY seats from 225 to 113 and created single-member legislative election districts beginning with the January 2008 legislative election. The constitutional revisions also abolished the National Assembly and provided for the public to confirm or reject future constitutional amendments passed by the Legislative Yuan. President Chen's controversial efforts to promote a second round of constitutional revisions focused on changing the government structure were unsuccessful. The P.R.C. accused him of using the constitution issue to move Taiwan toward independence. While not entirely ruling out future constitutional changes, President Ma has stressed the need to implement rather than revise the constitution.

In the December 2004 legislative elections, the ruling DPP won a plurality with 89 of the 225 seats, gaining 2 seats more than it did in 2001, but the opposition KMT and its Pan-Blue allies continued to hold a narrow majority in the Legislative Yuan. The ruling DPP's inability to form a majority coalition led to gridlock in the LY until 2008. Following a landslide victory in December 2005 local elections, the KMT won the 2006 mayoral election in Taipei City, while the DPP won in Kaohsiung City. In the January 2008 elections for the downsized 113-seat LY, the KMT won 81 seats and KMT allies won a further five seats, giving them a three-quarters majority over the DPP, which won just 27 seats. As of October 2009, seven KMT legislators had vacated their seats because of election violations, new positions, and other reasons.

Political Parties
In addition to the Kuomintang (KMT) (described above in 'History' and 'Political Conditions'), the other major political party is the DPP, whose membership is made up largely of native Taiwanese, and whose platform includes outspoken positions on some of the most sensitive issues in Taiwan politics. For example, the DPP maintains that Taiwan is an entity separate from mainland China, in contrast to the KMT position that Taiwan and the mainland, though currently divided, are both part of "one China." In sharp contrast to the tenets of both KMT and P.R.C. policy, a number of prominent DPP politicians openly advocate independence for Taiwan.

There are a number of small political parties, including the Taiwan Solidarity Union (TSU), the People First Party (PFP), and the New Party (NP). After the 2000 presidential election, former KMT President Lee Teng-hui broke with the KMT and in 2001 formed the pro-independence Taiwan Solidarity Union (TSU), which allied itself with the DPP, an alliance that largely fell apart over time. The TSU failed to elect any members to the LY in January 2008. The People First Party (PFP) was formed in the wake of the March 2000 presidential election by disgruntled KMT members who supported the presidential bid of former KMT Taiwan Provincial Governor James Soong, who did not receive the KMT nomination. The PFP and KMT subsequently formed the "Pan-Blue" Alliance to oppose the DPP government. The PFP, however, gradually shrank and it largely merged with the KMT in the runup to the January 2008 LY elections, although one PFP candidate did win election to the LY under the name PFP. The New Party, which also split from the KMT, holds several seats on the Taipei City Council, but has no legislators at this point. In addition, there are more than 100 other registered small political parties, such as the Hakka Party, the Green Party, and the Constitution Party. None of these small parties received more than 1% or 2% of votes in the January 2008 LY election.

Taiwan and the Mainland
Over the past several years, Taiwan has relaxed restrictions on unofficial contacts with the P.R.C., and cross-Strait interaction has mushroomed. In January 2001, Taiwan formally allowed the "three mini-links" (direct trade, travel, and postal links) from Kinmen (Quemoy) and Matsu Islands to Fujian Province and permitted direct cross-Strait trade in February 2002. Cross-Strait trade has grown rapidly over the past 10 years. China is Taiwan's largest trading partner, and Taiwan is China's fifth-largest. Estimates of Taiwan investment on the mainland, both officially approved by Taiwan authorities and investment made by Taiwan firms through third parties, range from $150 billion to over $300 billion, making Taiwan and Hong Kong by some measures the two largest investors in the P.R.C. This trade generally runs in Taiwan's favor and continues to grow, providing another engine for the island's economy.

In February 2003, Taiwan and the P.R.C. agreed to allow Taiwan carriers to fly non-stop (although routed via Hong Kong or Macau airspace) to bring Taiwan residents on the mainland home for the Lunar New Year holiday. The two sides agreed to conduct Lunar New Year charter flights again in 2005, with flights operated by both Taiwan and P.R.C. carriers flying over, but not having to land in, Hong Kong or Macau. Over time these flights were expanded to cover three other major holidays. In July 2008, Taiwan and P.R.C. carriers began operating cross-Strait charter flights every weekend. These flights are open to mainland tourists, as well as Taiwan and foreign travelers. Daily direct cross-Strait charter flight service began in December 2008, and the two sides have also begun cargo charter flights, direct shipping, direct postal service, and cooperation on food safety issues. To meet rapidly increasing air transport demand, in April 2009 both parties agreed to increase the number of passenger and cargo flights to 270 per week; carriers from each side operate 135 flights per week. Under the terms of the April agreement, certain charter flights were changed to regularly scheduled flights. In addition, Taiwan and the P.R.C. agreed to establish two new civil aviation routes across the Taiwan Strait. These changes took effect on August 31, 2009.

The development of semiofficial cross-Strait relations has had ups and downs. In April 1993, the first round of high-level cross-Strait talks was held in Singapore between the heads of two private intermediary organizations--Taiwan's Straits Exchange Foundation (SEF) and the P.R.C.'s Association for Relations Across the Taiwan Strait (ARATS). These talks primarily addressed technical issues relating to cross-Strait interactions. Beijing suspended lower-level talks from 1995-97 following President Lee's U.S. visit. SEF Chairman Koo Chen-fu visited the mainland in October 1998 for the second round of high-level talks. In 1999 Beijing once again suspended the cross-Strait dialogue, canceling plans for a visit by ARATS Chairman Wang Daohan to Taiwan, because of statements by President Lee that relations between the P.R.C. and Taiwan should be conducted as "state-to-state" or at least as "special state-to-state relations." Since his May 20, 2000 inauguration, President Chen called for resuming the cross-Strait dialogue without any preconditions, but the P.R.C. insisted President Chen must first acknowledge what it claimed was the "1992 consensus" on one China reached by the two sides. The cross-Strait dialogue remained suspended for the entire eight years of President Chen's two terms. Nonetheless, economic and social ties continued to develop rapidly despite the "one China" obstacle and Taiwan's resentment over the P.R.C.'s March 2005 "Anti-Secession Law," and the two sides were able through intermediary organizations to reach agreements on holiday cross-Strait charter flights. The KMT began its own dialogue with Beijing in 2005. President Ma has moved quickly to resume the SEF-ARATS dialogue, expand charter flights, and take other steps to enhance cross-Strait relations. The United States has welcomed and encouraged the regular cross-Strait dialogue as a process which contributes to a reduction of tension and to an environment conducive to the eventual peaceful resolution of the outstanding differences between the two sides. The United States believes that differences between Taipei and Beijing should be resolved peacefully in a manner acceptable to people on both sides of the Taiwan Strait.

ECONOMY
Through decades of hard work and sound economic management, Taiwan has transformed itself from an underdeveloped, agricultural island to an economic power that is a leading producer of high-technology goods. In the 1960s, foreign investment in Taiwan helped introduce modern, labor-intensive technology to the island, and Taiwan became a major exporter of labor-intensive products. In the 1980s, focus shifted toward increasingly sophisticated, capital-intensive and technology-intensive products for export and toward developing the service sector. At the same time, the appreciation of the New Taiwan dollar (NTD), rising labor costs, and increasing environmental consciousness in Taiwan caused many labor-intensive industries, such as shoe manufacturing, to move to China and Southeast Asia. Taiwan has transformed itself from a recipient of U.S. aid in the 1950s and early 1960s to an aid donor and major foreign investor, especially in Asia. Taiwan is now a creditor economy, holding the world's fourth-largest stock of foreign exchange reserves ($332 billion as of Sept. 2009). Although Taiwan enjoyed sustained economic growth, full employment, and low inflation for many years, in 2001, Taiwan joined other regional economies in its first recession since 1949. From 2002-2007, Taiwan's economic growth ranged from 3.5% to 6.2% per year. With the current global economic downturn, Taiwan's economy slumped into recession in the second half of 2008. Its real GDP, following growth of 5.7% in 2007, rose 0.06% in 2008 and is expected to contract in 2009. The official forecast anticipates a decline of 4.04% in 2009, although the economy is beginning to recover and most forecasts project 3%-4% growth for 2010.

Foreign Trade
Foreign trade has been the engine of Taiwan's rapid growth during the past 50 years. Taiwan's economy remains export-oriented, so it depends on an open world trade regime and remains vulnerable to fluctuations in the world economy. The total value of trade increased more than five-fold in the 1960s, nearly ten-fold in the 1970s, doubled in the 1980s, and nearly doubled again in the 1990s. In the first half of this decade, exports grew 60%. Export composition changed from predominantly agricultural commodities to industrial goods (now 98%). The electronics sector is Taiwan's most important industrial export sector and is the largest recipient of U.S. investment. Taiwan became a member of the World Trade Organization (WTO) as a special customs territory in January 2002.

Taiwan firms are the world's largest suppliers of computer monitors and leaders in PC manufacturing, although now much of the final assembly of these products occurs overseas, typically in China. Textile and apparel production continues to move to lower-cost locations overseas, but is still a major industrial export sector and employs about 200,000 people. Imports are dominated by raw materials and capital goods, which account for more than 90% of the total. Taiwan imports coal, oil and gas to meet most of its energy needs. Reflecting the large Taiwan investment in China, it supplanted the United States as Taiwan's largest trade partner in 2003. In 2008, China (including Hong Kong) accounted for over 26% of Taiwan's total trade and almost 40% of Taiwan's exports. Japan was Taiwan's second-largest trading partner with 13% of total trade, including 19% of Taiwan's imports. The U.S. is now Taiwan's third-largest trade partner, taking 12% of Taiwan's exports and supplying 11% of its imports. Taiwan is the United States' 11th-largest trading partner; Taiwan's two-way trade with the United States amounted to $61.6 billion in 2008. Imports from the United States consist mostly of agricultural and industrial raw materials as well as machinery and equipment. Exports to the United States are mainly electronics and consumer goods. The United States, Hong Kong, China, and Japan account for 58% of Taiwan's exports, and the United States, Japan, and China provide almost 44% of Taiwan's imports. As Taiwan's per capita income level has risen, demand for imported, high-quality consumer goods has increased. The U.S. trade deficit with Taiwan in 2008 was $11 billion, down 8.3% from $12 billion in 2007. Even though Taiwan maintains formal diplomatic relations with about a score of its trading partners, Taiwan maintains trade offices in nearly 100 countries. Taiwan is a member of the Asian Development Bank, the WTO, and the Asia-Pacific Economic Cooperation (APEC) forum. Taiwan is also an observer at the Organization for Economic Cooperation and Development (OECD). In 2009, Taiwan acceded to the WTO Government Procurement Agreement. These developments reflect Taiwan's economic importance and its desire to become further integrated into the global economy.

Agriculture
Although only about one-quarter of Taiwan's land area is arable, virtually all farmland is intensely cultivated, with some areas suitable for two and even three crops a year. Agriculture comprises only about 1.7% of Taiwan's GDP. Taiwan's main crops are rice, sugarcane, fruit, and vegetables. While largely self-sufficient in rice production, Taiwan imports large amounts of wheat, corn, and soybeans, mostly from the United States. Poultry and pork production are mainstays of the livestock sector and the major demand drivers for imported corn and soybeans. Rising standards of living have led to increased demand for a wide variety of high-quality food products, much of it imported. Overall, U.S. agricultural and food products account for more than 30% of Taiwan's agricultural import demand. U.S. food and agricultural exports total about $2.5 billion annually, making Taiwan the United States' sixth-largest agricultural export destination. Taiwan's agricultural exports include frozen fish, aquaculture and sea products, canned and frozen vegetables, and grain products. Taiwan's imports of agricultural products have increased since its WTO accession in 2002, and it is slowly liberalizing previously protected agricultural markets.

Economic Outlook
Taiwan faces many of the same economic issues as other developed economies. As labor-intensive industries have relocated to countries with low-cost labor, Taiwan's future development will rely on further transformation to a high technology and service-oriented economy and carving out its niche in the global supply chain. Taiwan's economy has become increasingly linked with China, and the Ma administration is expected to further develop these links and liberalize cross-Strait economic relations, particularly through the negotiation of an Economic Cooperation Framework Agreement (ECFA). Taiwan official statistics indicate that Taiwan firms had invested about U.S. $75.6 billion in China through 2008, which is more than half of Taiwan's stock of direct foreign investment. Many unofficial estimates put the actual number at between U.S. $150 and over $300 billion. Exact figures are difficult to obtain, as much Taiwan investment in the P.R.C. is via Hong Kong and other third-party jurisdictions. More than one million Taiwan people are estimated to be residing in China, and more than 70,000 Taiwan companies have operations there. Taiwan firms are increasingly acting as management centers that take in orders, produce them in Taiwan, the mainland, or Southeast Asia and then ship the final products to the U.S. and other markets.

DEFENSE
In proportion to its population, Taiwan still maintains a large military establishment. Defense expenditures for 2008 were NTD 334 billion (approximately U.S. $10.5 billion), which accounted for 2.94% of GDP. For 2009, the Legislative Yuan allocated NTD 395.3 billion (approximately U.S. $12.35 billion) for defense, which accounts for 3.05% of GDP. The military's primary mission is the defense of Taiwan against the P.R.C., which is seen as the predominant threat and which has not renounced the use of force against Taiwan. Taiwan's armed forces were reduced as part of a reform initiative from 1997 to 2001, going from about 450,000 to 385,000, with further reductions planned by the current administration to reduce the total force to just under 215,000. Registered reservists reportedly totaled 2,900,000 in 2008. Conscription remains universal for qualified males between the ages of 18 and 30. In 2007 the length of conscription service was dropped from 16 to 12 months, with a view to moving toward an all-volunteer force over the next several years. For qualified applicants, alternative service is available in police and fire departments and public clinics, as well as through teaching in some rural schools. Applicants with advanced degrees may qualify for National Defense Service, consisting of reserve officer training followed by four years of work in a government or academic research institution.

Taiwan's armed forces are equipped with weapons obtained primarily from the United States. In recent years, however, Taiwan also has procured some weapons from other Western nations and has stressed military "self-reliance," which has resulted in the growth of indigenous military production in certain fields. In October 2008, President George W. Bush notified Congress for the sale of PAC-3 systems, Apache helicopters, Harpoon missiles, and Javelin missiles, along with the upgrade of the E-2T aircraft. The procurement of these systems is ongoing. Taiwan adheres to the principles of the nuclear Non-Proliferation Treaty and has stated that it does not intend to produce nuclear weapons.

FOREIGN RELATIONS
The People's Republic of China replaced Taiwan at the United Nations in 1971, and Taiwan's diplomatic position has continued to erode, as many countries changed their official recognition from Taipei to Beijing. As of September 2008, Taiwan had formal diplomatic ties with 23 countries. At the same time, Taiwan has cultivated informal ties with most countries to offset its diplomatic isolation and to expand its economic relations. Many nations have set up unofficial organizations to carry out commercial and other relations with Taiwan. Including its official overseas missions and its unofficial representative and/or trade offices, Taiwan is represented in 122 countries. During the administration of President Chen, Taiwan lobbied strongly for admission into the United Nations and other international organizations, such as the World Health Organization (WHO). The P.R.C. opposes Taiwan's membership in such organizations, most of which require statehood for membership, because it considers Taiwan to be a part of its territory, not a separate sovereign state. The administration of President Ma has called for a "diplomatic truce" with Beijing, under which Taiwan would retain its existing diplomatic allies but not seek to win over countries that recognize the P.R.C. The Ma administration also hopes to expand Taiwan's "international space," increasing its participation in international organizations, such as the WHO.

U.S.-TAIWAN RELATIONS
On January 1, 1979, the United States changed its diplomatic recognition from Taipei to Beijing. In the U.S.-P.R.C. Joint Communiqué that announced the change, the United States recognized the Government of the People's Republic of China as the sole legal government of China and acknowledged the Chinese position that there is but one China and Taiwan is part of China. The Joint Communiqué also stated that within this context the people of the United States will maintain cultural, commercial, and other unofficial relations with the people on Taiwan.

On April 10, 1979, President Carter signed into law the Taiwan Relations Act (TRA), which created domestic legal authority for the conduct of unofficial relations with Taiwan. U.S. commercial, cultural, and other interaction with the people on Taiwan is facilitated through the American Institute in Taiwan (AIT), a private nonprofit corporation. The Institute has its headquarters in the Washington, DC area and has offices in Taipei and Kaohsiung. It is authorized to issue visas, accept passport applications, and provide assistance to U.S. citizens in Taiwan. A counterpart organization, the Taipei Economic and Cultural Representative Office in the United States (TECRO), has been established by the Taiwan authorities. It has its headquarters in Taipei, the representative branch office in Washington, DC, and 12 other Taipei Economic and Cultural Offices (TECO) in the continental U.S. and Guam. The Taiwan Relations Act (TRA) continues to provide the legal basis for the unofficial relationship between the U.S. and Taiwan, and enshrines the U.S. commitment to assisting Taiwan maintain its defensive capability.

Following de-recognition, the United States terminated its Mutual Defense Treaty with Taiwan. However, the United States has continued the sale of appropriate defensive military equipment to Taiwan in accordance with the Taiwan Relations Act, which provides for such sales and which declares that peace and stability in the area are in U.S. interests. Sales of defensive military equipment are also consistent with the 1982 U.S.-P.R.C. Joint Communiqué.

The United States position on Taiwan is reflected in the Three Communiqués and the Taiwan Relations Act (TRA). The U.S. insists on the peaceful resolution of cross-Strait differences and encourages dialogue to help advance such an outcome. The U.S. does not support Taiwan independence. President Bush stated on December 9, 2003 that the United States is opposed to any attempt by either side to unilaterally alter the status quo in the Taiwan Strait. While the United States welcomes recent exchanges that enhance channels of communication between leaders in Beijing and Taipei, the United States urges Beijing and Taipei to further advance cross-Strait cooperation and dialogue, including direct discussions between the authorities in Beijing and elected leaders in Taipei.

U.S. commercial ties with Taiwan have been maintained and have expanded since 1979. Taiwan continues to enjoy Export-Import Bank financing, Overseas Private Investment Corporation guarantees, normal trade relations (NTR) status, and ready access to U.S. markets. In recent years, AIT commercial dealings with Taiwan have focused on expanding market access for American goods and services. AIT has been engaged in a series of trade discussions, which have focused on protection of intellectual property rights and market access for U.S. goods and services.

Maintaining diplomatic relations with the P.R.C. has been recognized to be in the long-term interest of the United States by seven consecutive administrations; however, maintaining strong, unofficial relations with Taiwan also a major U.S. goal, in line with our desire to further peace and stability in Asia. In keeping with our one China policy, the U.S. does not support Taiwan independence, but it does support Taiwan's membership in appropriate international organizations, such as the World Trade Organization, Asia-Pacific Economic Cooperation (APEC) forum, and the Asian Development Bank, where statehood is not a requirement for membership. In addition, the U.S. supports Taiwan's meaningful participation in appropriate international organizations where its membership is not possible.

U.S. Representative Offices
American Institute in Taiwan
Washington Headquarters
Suite 1700, 1700 North Moore Street
Arlington, VA 22209
Tel: 703-525-8474
Fax: 703-841-1385

American Institute in Taiwan
Taipei Office
No. 7, Lane 134, Hsin Yi Road
Section 3, Taipei, Taiwan
Tel: 011-886-2-2162-2000
Fax: 011-886-2-2162-2239

American Institute in Taiwan
Kaohsiung Office
5F, No. 2, Chung Cheng 3rd Road
Kaohsiung, Taiwan 800
Tel: 011-886-7-238-7744
Fax: 011-886-7-238-5237

Taiwan Representative Office
Taipei Economic and Cultural Representative Office (TECRO)
4201 Wisconsin Avenue, NW
Washington, DC 20016-2137
Tel: 202-895-1800
Fax: 202-895-0825

TRAVEL AND BUSINESS INFORMATION
The U.S. Department of State's Consular Information Program advises Americans traveling and residing abroad through Country Specific Information, Travel Alerts, and Travel Warnings. Country Specific Information exists for all countries and includes information on entry and exit requirements, currency regulations, health conditions, safety and security, crime, political disturbances, and the addresses of the U.S. embassies and consulates abroad. Travel Alerts are issued to disseminate information quickly about terrorist threats and other relatively short-term conditions overseas that pose significant risks to the security of American travelers. Travel Warnings are issued when the State Department recommends that Americans avoid travel to a certain country because the situation is dangerous or unstable.

For the latest security information, Americans living and traveling abroad should regularly monitor the Department's Bureau of Consular Affairs Internet web site at http://www.travel.state.gov, where the current Worldwide Caution, Travel Alerts, and Travel Warnings can be found. Consular Affairs Publications, which contain information on obtaining passports and planning a safe trip abroad, are also available at http://www.travel.state.gov. For additional information on international travel, see http://www.usa.gov/Citizen/Topics/Travel/International.shtml.

The Department of State encourages all U.S. citizens traveling or residing abroad to register via the State Department's travel registration website or at the nearest U.S. embassy or consulate abroad. Registration will make your presence and whereabouts known in case it is necessary to contact you in an emergency and will enable you to receive up-to-date information on security conditions.

Emergency information concerning Americans traveling abroad may be obtained by calling 1-888-407-4747 toll free in the U.S. and Canada or the regular toll line 1-202-501-4444 for callers outside the U.S. and Canada.

The National Passport Information Center (NPIC) is the U.S. Department of State's single, centralized public contact center for U.S. passport information. Telephone: 1-877-4-USA-PPT (1-877-487-2778); TDD/TTY: 1-888-874-7793. Passport information is available 24 hours, 7 days a week. You may speak with a representative Monday-Friday, 8 a.m. to 10 p.m., Eastern Time, excluding federal holidays.

Travelers can check the latest health information with the U.S. Centers for Disease Control and Prevention in Atlanta, Georgia. A hotline at 800-CDC-INFO (800-232-4636) and a web site at http://wwwn.cdc.gov/travel/default.aspx give the most recent health advisories, immunization recommendations or requirements, and advice on food and drinking water safety for regions and countries. The CDC publication "Health Information for International Travel" can be found at http://wwwn.cdc.gov/travel/contentYellowBook.aspx.

Further Electronic Information
Department of State Web Site. Available on the Internet at http://www.state.gov, the Department of State web site provides timely, global access to official U.S. foreign policy information, including Background Notes and daily press briefings along with the directory of key officers of Foreign Service posts and more. The Overseas Security Advisory Council (OSAC) provides security information and regional news that impact U.S. companies working abroad through its website http://www.osac.gov

Export.gov provides a portal to all export-related assistance and market information offered by the federal government and provides trade leads, free export counseling, help with the export process, and more.

STAT-USA/Internet, a service of the U.S. Department of Commerce, provides authoritative economic, business, and international trade information from the Federal government. The site includes current and historical trade-related releases, international market research, trade opportunities, and country analysis and provides access to the National Trade Data Bank.

Background Note: Togo

Bureau of African Affairs

PROFILE

OFFICIAL NAME:
Togolese Republic

Geography
Area: 56,785 sq. km.; slightly smaller than West Virginia.
Cities: Capital--Lome 1,008,000 (pop. 2007 est.). Other major cities--Sokodé 111,200; Kara 104,900; Atakpamé 77,300; Dapaong 53,600.
Terrain: Savannah and hills and coastal plain.
Climate: Tropical.

People
Nationality: Noun and adjective (sing. and pl.)--Togolese.
Population (2008): 6,019,877.
Annual growth rate (2006): 2.4%.
Ethnic groups: Ewe, Mina, Kabye, Cotocoli, Moba, and others.
Religions (est.): Animist 33%, Christian 47.1%, Muslim 13.7%, other 6.1%.
Languages: French (official), local (Ewe, Mina, Kabye).
Education: Attendance (2006)--74.6% of age group 6-11 enrolled. Literacy (2006)--male 70%, female 44%.
Health: Life expectancy (2003)--male 51 yrs, female 55 yrs.
Work force: (1999 est.) Total--2 million (43% of the total population); rural work force (est.)--1,350,000; urban work force (est.)--650,000.

Government
Type: Republic.
Independence: April 27, 1960 (from French-administered UN trusteeship).
Constitution: Adopted 1992.
Branches: Executive--president (chief of state); prime minister (head of government). Legislative--National Assembly. Judicial--Supreme Court.
Subdivisions: 30 prefectures.
Political parties: Rassemblement du Peuple Togolais (RPT); Union des Forces de Changement (UFC); Comite d'action pour le Renouveau (CAR), Pan-African Patriotic Convergence Party (CPP), Democratic Convention of the African People (CDPA).
Suffrage: Universal adult.
National holiday: Independence Day, April 27.

Economy
GDP (2008): $2.89 billion.
Per capita income (2008): $900.
Natural resources: Phosphates, limestone, marble.
Agriculture (40% of 2008 GDP): Products--yams, cassava, corn, millet, sorghum, cocoa, coffee, rice, cotton.
Industry (25% of 2008 GDP): Types--mining, manufacturing, construction, energy.
Services: 35% of 2008 GDP.
Trade: (2008): Exports--$782 million: phosphates, cocoa, coffee, cotton. Imports--$1.54 billion: consumer goods, including foodstuffs, fabrics, clothes, vehicles, equipment. Major partners--Ghana, France, Cote d'Ivoire, Germany, Nigeria, Canada, People's Republic of China, Benin.

GEOGRAPHY
Togo is bounded by Ghana, Burkina Faso, Benin, and the Gulf of Guinea. It stretches 579 kilometers (360 mi.) north from the gulf and is only 160 kilometers (100 mi.) wide at the broadest point. The country consists primarily of two savanna plains regions separated by a southwest-northeast range of hills (the Chaine du Togo).

Togo's climate varies from tropical to savanna. The south is humid, with temperatures ranging from 23^oC to 32^oC (75^oF to 90^oF). In the north, temperature fluctuations are greater--from 18^oC to more than 38^oC (65^oF to 100^oF).

PEOPLE
Togo's population of 6 million people (2008 est.) is composed of more than 20 ethnic groups. The two major groups are the Ewe in the South and the Kabye in the North. Population distribution is very uneven due to soil and terrain variations. The population is generally concentrated in the south and along the major north-south highway connecting the coast to the Sahel. The ethnic groups of the coastal region, particularly the Ewes (about 21% of the population), constitute the bulk of the civil servants, professionals, and merchants, due in part to the former colonial administrations which provided greater infrastructure development in the south. The Kabye (12% of the population) live on marginal land and traditionally have emigrated south from their home area in the Kara region to seek employment. Their historical means of social advancement has been through the military and law enforcement forces, and they continue to dominate these services.

Most of the southern peoples use the Ewe or Mina languages, which are closely related and spoken in commercial sectors throughout Togo. French, the official language, is used in administration and documentation. The public primary schools combine French with Ewe or Kabye as languages of instruction, depending on the region. English is spoken in neighboring Ghana and is taught in Togolese secondary schools. As a result, many Togolese, especially in the south and along the Ghana border, speak some English.

HISTORY
The Ewes moved into the area which is now Togo from the Niger River valley between the 12th and 14th centuries. During the 15th and 16th centuries, Portuguese explorers and traders visited the coast. For the next 200 years, the coastal region was a major raiding center for Europeans in search of slaves, earning Togo and the surrounding region the name "The Slave Coast." In an 1884 treaty signed at Togoville, Germany declared a protectorate over a stretch of territory along the coast and gradually extended its control inland. Because it became Germany's only self-supporting colony, Togoland was known as its model possession. In 1914, Togoland was invaded by French and British forces and fell after brief resistance. Following the war, Togoland became a League of Nations mandate divided for administrative purposes between France and the United Kingdom.

After World War II, the mandate became a UN trust territory administered by the United Kingdom and France. During the mandate and trusteeship periods, western Togo was administered as part of the British Gold Coast. In 1957, the residents of British Togoland voted to join the Gold Coast as part of the new independent nation of Ghana.

By statute in 1955, French Togo became an autonomous republic within the French union, although it retained its UN trusteeship status. A legislative assembly elected by universal adult suffrage had considerable power over internal affairs, with an elected executive body headed by a prime minister responsible to the legislature. These changes were embodied in a constitution approved in a 1956 referendum. On September 10, 1956, Nicholas Grunitzky became prime minister of the Republic of Togo. However, due to irregularities in the plebiscite, an unsupervised general election was held in 1958 and won by Sylvanus Olympio. On April 27, 1960, in a smooth transition, Togo severed its constitutional ties with France, shed its UN trusteeship status, and became fully independent under a provisional constitution with Olympio as president.

A new constitution in 1961 established an executive president, elected for 7 ye