U.S. Department of State

A summary of the 55 regional training and technical assistance projects conducted in 2002 through PFS, listed by subject matter, appears in the following chart:

¹On a select basis, PFS sponsors participation by senior financial sector officials in training courses conducted by non-PFS organizations; and such courses are included herein.

Europe Regional HIV/AIDS Initiative: Baltic Sea Initiative/Network of Excellence

Through the Network of Excellence (NOE), USAID aims to strengthen NGO efforts to prevent the spread of HIV/AIDS and to facilitate greater collaboration at the national and regional levels in Estonia, Latvia, Lithuania, and St. Petersburg and Kaliningrad, Russia. In FY 02, small grants were competed and awarded to a number of governmental and non-governmental organizations in the Baltic States. In Estonia, peer education and prevention efforts targeted youth involved in sex work and other risky behaviors, reaching 510 youth in 34 workshops. In Latvia, youth peer education materials were developed and over 3,000 "intravenous drug user contacts" were made in greater Riga through outreach work. Another grant is helping the Lithuanian AIDS Center become a regional information hub, with a region-wide knowledge management system (KMS). The KMS will serve as a focal point to link HIV/AIDS epidemiological and health promotional information in each country and allow for the documentation and sharing of regional best practices. This activity also provided a year's support for an HIV/AIDS advisor to the Baltic Sea Council, which proved so valuable that the Council is now funding the position on its own.

Europe Regional HIV/AIDS Initiative: Southeastern Europe - RiskNet

RiskNet, initiated with joint support from USAID and UNFPA, seeks to prevent HIV/Sexually Transmitted Infections (STI) in Bosnia, Bulgaria, Croatia, Macedonia, Romania, and Serbia. RiskNet strengthens the capacity of local NGOs in the region to design and implement effective HIV/STI prevention interventions and promote sexual health. In FY 02, USAID funded a baseline assessment, which found that although the prevalence of HIV in SEE is relatively low, numerous factors exist to fuel a rapid increase in the HIV infection rate, particularly among youth and marginalized groups. These include injecting drug use, prostitution, human trafficking, tourism, high unemployment, weakened health care systems, and low funding for prevention, diagnosis, and treatment of HIV and STIs. Despite the availability of condoms on the market, those factors need to be addressed before transmission of HIV and STIs can be controlled. USAID's contribution targets providing small grants (primarily to NGOs) which fund cross-border HIV/AIDS prevention activities and the sharing of lessons learned within a regional network. UNFPA focuses upon mass-media condom social marketing, particularly to increase condom demand and use among high-risk youth. A joint work-plan was also approved in FY 02, and the first NGO workshop was scheduled in December 2002 to work on proposals for future activities.

Europe Regional TB Initiative: TB Regional Evaluation

In March 2002, a region-wide evaluation of USAID tuberculosis programs was initiated to determine accomplishments and to improve program implementation, the Agency's first such TB evaluation. European participants in the evaluation include Estonia, Kosovo, and Latvia. The evaluation teams included experts from the Royal Netherlands Tuberculosis Association (KNCV), Rational Pharmaceutical Management+ (RPM+), and USAID. A final report is due in early 2003.

Europe Regional TB Initiative: Prevention

To combat the multi-drug resistant TB (MDR TB) epidemic in the Baltics, the Latvian MDR TB Center of Excellence was established with SEED-funded technical assistance from the Centers for Disease Control. In 2002, about 30 physicians and TB program managers were trained on MDR TB at the Center. A computerized information system was completed to improve patient case management, treatment delivery, and cost analyses. The Center has undertaken feasibility and cost-effectiveness studies of some rapid TB diagnostic technologies, and the Latvian National TB Program has fully upgraded the National Center for TB and Lung Disease to combat the problem of institutional TB transmission.

In Estonia, the TB Nurse Training Program developed training modules. All TB nurses in Estonia have been trained, and recurrent training cycles have been initiated. A national TB infection control strategy is under development, to include a plan of intervention in high-risk facilities. In addition, 50 health care workers were provided a one-week training course on controlling infection in places where people congregate indoors (schools, churches, etc.). In Lithuania, the first national TB drug resistance survey that conformed to international standards was initiated with USAID assistance. The survey will be completed in January 2003. An interim analysis of on-going survey data indicates that levels of MDR TB in Lithuania are comparable to the high levels documented in Latvia and Estonia.

During 2002, the TB drug management and laboratory assessments for Romania were completed. Training workshops have been held on TB drug management and procurement. Technical assistance continues on the following topics: 1) developing uniform bidding documents and procedures; 2) rationalizing competitive procurement procedures; 3) rationalizing TB drug distribution systems; 4) developing mechanisms for selection of drugs to improve the TB drug management system; and 5) developing drug management information systems. Lessons learned in drug management and laboratory strengthening will be shared between Romania and Moldova.

Strategic Technical Assistance for Results with Training (START)

In FY 02, START trained 2,829 participants from Albania, Bosnia, Bulgaria, Croatia, Kosovo, Macedonia, and Romania. Of these, 1,124 were women (40 percent). Over two-thirds of the training took place in-country (2,036), with the remainder in the U.S. or in third countries. Except for 16 students who graduated from the American College of Management and Technology in Croatia, all training was short-term, and participants came from the government, non-government, and private sectors.

As under the previous Global Training for Development (GTD) Europe project, training covered a wide range of topics from olive oil export strategies to combating credit card fraud. Several countries -- Bosnia, Bulgaria, and Croatia -- emphasized training in the legal sector, including court management and administration, legislative drafting, comparative law, and securities legal practices. Local government and citizen participation was also a major focus in these countries. Albania, Bulgaria, Croatia, and Romania paid particular attention to the social welfare sector, as they conducted training in pension reform, child welfare, breast cancer prevention, HIV/AIDS prevention, and neo-natal care. Water and environmental issues were a primary focus in Bosnia. For Albania and Macedonia, training in the private sector included meat and dairy management, craft show management, organic honey production, and agriculture and vineyard improvement. As in previous years, START/PTP arranged for a group of 30 members of the Kosovo Assembly to attend a conference in the U.S.

The Small Grants program was offered in five countries, with 34 grants awarded and a total of $145,447 disbursed. The process of training and supporting local organizations so they may become training providers continued. Through third-country training, 31 institutions in Central Europe and 16 in Western Europe (reflecting the increased emphasis on programs relating to EU accession) were contracted. A major FY 02 initiative was to develop local organizations' capacity to provide logistical support for in-country training. The process of supporting business and professional associations continued as well. The National Apparel and Textile Producers Association in Bulgaria, Macedonia Association of Marketing Agencies, Bulgarian Hotel and Restaurant Association, and Romanian Water Users Association and Association of Organic Producers were among the associations strengthened during FY 02.

All six countries sent participants to the Third Southeastern Europe Corporate Governance Roundtable, hosted by the Organization for Economic Cooperation and Development (OECD), in Zagreb. USAID/Sarajevo has tentatively agreed to sponsor/host the fourth and final OECD roundtable on corporate governance. Participants from five countries attended the Budapest Conference on Competitiveness and Anti-Corruption, and Croatia and Macedonia were represented at another USAID-sponsored Budapest conference, on Distressed Debt Relief.

Third-Country Training of over 432 participants continued as a major catalyst for regional cooperation. For example, in furtherance of the reform and modernization of the Zagreb Municipal Court, judges and other court employees visited the Slovene Supreme Court Information Center to examine the automated case management system and technical and business operations of the Slovene model. Another example was the training program for Croatian municipal water and wastewater managers that took place in both Poland and Denmark.

Some major FY 02 training accomplishments are highlighted below:

The Balkans Regional Infrastructure Program (RIP) facilitates infrastructure projects throughout SEE, while improving regional capability for sustainable public utilities and transport agencies. Projects help six SEE countries by assisting with: 1) project preparation; 2) project implementation; 3) project investment and financing; and 4) policy reform. Direct partners providing loan and grant resources for projects facilitated by technical assistance under the RIP include the World Bank, EBRD, and the European Investment Bank, as well as several EU grant programs.

Project Facilitation Activities have accelerated an estimated 2.5 billion euros in water and transportation infrastructure project investments. The projects include water facilities in Albania, Croatia, Romania, and Serbia; highway projects in Bulgaria and Romania; and seaport projects in Albania and Bulgaria. There was also progress in improving the efficiency of project management and implementation of various loans and grants in Albania and Romania. Another result of RIP technical assistance was the creation of a self-financed network of groups of project management professionals from six SEE countries, institutionalizing the use of Western methods of construction management and planning in a region where these techniques were little understood. RIP also provided support that secured development and signature of a treaty among the four nations of the Sava River basin (Bosnia, Croatia, Serbia, and Slovenia) on inter-basin cooperation in the fields of navigation, flood control, water quality, and other joint concerns.

Recognizing the limitations of grants as well as the sovereign borrowing capacity of SEE nations to meet the region's need for improved infrastructure, RIP has developed an innovative concept termed the Balkans Infrastructure Development Facility (BIDFacility). This new institution will use a revolving fund of $10 million to develop public infrastructure projects in water, energy, and transport for private sector investment, recouping the costs of preparation from successfully financed projects. The International Finance Corporation (IFC) has joined with USAID to raise the needed capital from various European donors. USAID resources of $1.5 million have been joined by IFC's pledge of between $1 million and $2 million. Fund-raising among European donor nations for the balance of the $10 million in needed capital is under way in 2003, with strong initial interest expressed by the Greek and Swiss governments.

The final component of the RIP is a proposed Balkans Infrastructure Investment Guarantee Fund, utilizing USAID's Development Credit Authority to attract private sector investment in the water, energy, and transportation infrastructure sectors in SEE.

U.S. ENVIRONMENTAL PROTECTION AGENCY (EPA)

EPA's approach to environmental cooperation in Central and Eastern Europe (CEE) since 1990 has been to seek to balance the region's near-term and long-term needs. Therefore, EPA programs recognize the requirement to show a U.S. presence and help alleviate certain acute problems in the near term. At the same time, EPA addresses the longer-term need to develop management capacity and more effective environmental institutions by providing training and technical assistance, in the following ways:

• Institution Building activities strengthen public and non-governmental institutions by providing information on legislative/regulatory frameworks, various environmental assessment tools, and pollution mitigation and prevention, to encourage the development of sound environmental policies.

• Demonstration Projects address high-priority environmental issues in key geographic areas or, "hot spots," where large populations are at risk from exposure to numerous pollutants, or where unique natural resources are threatened. Such projects demonstrate innovative, cost-effective, and appropriate technologies and/or focus on pollution or environmental problems common to the region.

With SEED financial support from the U.S. Agency for International Development (USAID), EPA has conducted a wide range of activities in most of the CEE countries since 1990. A detailed description of the scope of activities can be found on the EPA web site at: http://www.epa.gov/oia/dark.htm.

Strengthening SEE Environmental NGOs: This project provides training in basic skills, as well as technical assistance, to develop the capacity of environmental NGOs in SEE. The project utilizes the expertise and experience of environmental NGO members who previously had received training through the REC's Junior Fellowship Program.

In FY 02, the project's main focus was on preparing a five-part set of training manuals, targeting proposal writing, developing environmental action plans, project monitoring and evaluation, presentation and communication skills, and environmental education. Trainers also were trained in using the manuals, and direct assistance was provided to NGOs in Bosnia-Herzegovina, Bulgaria, and planned for Macedonia.

Balkan Environmental Information Service: The REC's Balkan Information Service (BIS) promotes information sharing and cooperation among major environmental stakeholders in these countries, and enhances and simplifies access to environmental information and the REReP results.

The BIS on-line project page is fully functional and can be accessed at:
http://www.rec.org/REC/Programs/InformationProgram/BalkanInformationService/Default.html Meanwhile, the related REC library catalogue home page (http://www.rec.org/library-catalogue) has been improved further. The REC's library catalogue received more than 4,000 on-line hits during FY 02.

The Bulletin: EPA continues to provide support to continue the hard-copy and web-based publication of the REC Bulletin, a quarterly publication that will be distributed to environmental stakeholders in the Balkan region, and elsewhere in CEE. The Bulletin provides free access to relevant environmental information to support public participation in environmental decision-making and increase public awareness of environmental issues.

Three issues of The Bulletin were published in 2002. The autumn 2002 issue was devoted to water, which is a pressing matter in the CEE region. Other issues appeared in April and July 2002, and all have been uploaded on-line to the web version of The Bulletin at: bulletin.rec.org. The Bulletin mailing list has been expanded and updated constantly since the project began and includes about 3,100 subscribers from CEE and the rest of the world. Readers and other media have recognized The Bulletin as a unique magazine covering the environment in CEE.

Local Environmental Action Program (LEAP): Through the LEAP process, communities are organized and trained to assess their local environmental conditions and to develop and implement action plans that address their most pressing environmental priorities. The REC is promoting LEAPs throughout CEE and provides a link between interested CEE municipalities and LEAP experts and resources.

In FY 02, the REC's LEAP Practitioners Network continued to send Polish experts to provide LEAP training and implementation assistance in Romania (and Ukraine). Regional environmental action plans (REAPs) were launched in two counties. Each county will prepare up to five project proposals on priority projects to support important infrastructure needs identified by their respective plans. Promotional materials were developed to promote LEAPs in Albania. In Bulgaria, pilot LEAP documents were disseminated in an electronic version, and more than 200 municipalities requested information on the pilot programs. Interest in LEAP activities has increased significantly since Bulgaria's new Environmental Law was adopted, and all municipalities have to develop their LEAPs within a year. A LEAP side event is being planned for the May 2003 Environment for Europe Ministerial in Kiev, Ukraine.

Urban Air Quality/Lead Phase-Out: A regional working group, chaired by Bulgaria, was established in 1995, and is managed by the REC, to foster sharing of experience and information exchange on critical issues of urban air quality and phase-out of leaded gasoline. As a direct result of this work, seven of the eight participating countries (Bulgaria, Croatia, Czech Republic, Hungary, Poland, Romania, Slovakia, and Slovenia) now have national plans to reduce the use of lead in gasoline and have a final date to get the lead out.

As a result of the project, all member countries transposed international requirements and standards for air quality (PM limit values) and gasoline, and are proceeding with lead phase-out commitments. Hungary and Slovakia banned the use of leaded gasoline in 1997 and 1999, respectively. Slovenia did so as of January 2001, and the Czech Republic as of July 2001. Bulgaria will ban the sale of leaded gasoline as of January 2004. Romania will make progress toward a total ban by January 2007. Other SEE countries are interested in pursuing similar strategies and will be working toward this goal, based on the experience and advice of their neighbors.

Baltic Region Activities

The following is information on EPA's Region 5 Office of International Activities program in the Baltic Region, conducted with SEED funding under the umbrella of the State Department's Northern Europe Initiative (NEI) Great Lakes/Baltic Sea Partnership Program.

Environmental Security: The Baltic military and civilian environmental authorities have been introduced to approaches for environmental military training and principles of sound environmental management of military facilities. This was accomplished by U.S. and Swedish specialists, in cooperation with Estonian, Latvian, Lithuanian, and NATO SHAPE School specialists, through a suite of three courses for Baltic military and identifying country-specific risk assessment and base management pilots. As a result, the Baltic governments have developed environmental policies for the military sector and placed military and civilian staff in positions to manage environmental training compliance with environmental policies and regulations. At Latvian MOD initiative, EPA co-funded the First Baltic Military Environmental Cooperation Conference in Riga, which was attended by 10 Baltic Sea area countries, as well as Norway and the U.S. The conference recognized the impact of the NEI and bilateral programs, established a working group under Swedish and Latvian leadership, and recommended specific tasks to strengthen Baltic military environmental capacity and regional cooperation.

In October 2002, a train-the-trainer course was conducted at the Nemencine Regional Training Center by the Swedish Armed Forces (SAF) and the U.S. Navy for 10 Estonian, Latvian, and Lithuanian military "distance learning" trainers and one Polish military observer. SEED funds covered the U.S. cost share for local Baltic expenses. EPA provided in-kind support to the U.S. Navy and SAF, which met trainer travel and module development expenses.

Over a three-month period (November 2001-January 2002), the U.S. Navy-SAF Annex 7 Distance Learning pilot was demonstrated at Nemencine Military Training Center, Lithuania, and at satellite sites in Estonia and Latvia. Military instructors were trained by the U.S.-Swedish team for all three Baltic States that are responsible for implementation. The course used both Internet and CD-ROMs. The training exercise revealed structural Information Technology barriers in the Estonian and Latvian Armed Forces. Lithuania encountered similar issues but overcame them through advance preparation, better equipment, and their instructors were able to conduct a second session without coaching. Eight Estonian, 13 Latvian, and 28 Lithuanian students attended the course. EPA provided in-kind support.

The program was successful in terms of U.S.-Sweden's Annex 7 goals of demonstrating the feasibility of international training using computer technology and introducing distance learning concepts to the Baltic military. In addition, the CD-based training project received the second highest award in competition with 3,660 other entries at the "The Communicator Awards 2002 Printed Media Competition," recognizing outstanding work in the communications field. However, project funding was not sufficient to correct deficiencies noted during the beta test. A key factor for future success will be to complete local language- specific modules that the Baltic militaries could use easily for future training.

In May 2002, Lithuania introduced the completed Camp Pabrade Base Management Plan (BMP) as a model to its Armed Forces, environmental officials, Estonian, Latvian, and Swedish military specialists. The BMP was released in Lithuanian and English, both in paper and electronic format.

In August 2002, the Second Baltic Military Environmental Cooperation Conference in Riga included military representatives from 10 countries in the Baltic Sea Watershed, as well as Georgia, Italy, Romania, Ukraine, the UK, and the U.S. Participants discussed a draft strategy on cooperation, potential mechanisms, and named a steering committee. The Lithuanian Government offered to host the Third Conference, in 2003. U.S. participants caucused on their role in the conference (observers) and agreed on a transition approach for future environmental assistance to the Baltics. The U.S. National Guard Bureau (NGB) introduced its Bilateral Affairs liaisons for Estonia, Latvia and Lithuania as contacts for potential military environmental assistance projects in the region and provided co-funding for local costs at the Second Conference. Similar support by NGB is anticipated for the 2003 conference in Vilnius.

In September 2002, in follow-up to the recommendations of the First Baltic Military Environmental Cooperation Conference in Riga in 2001, U.S., Swedish, and Baltic environmental military training specialists met to define the knowledge base needed by Baltic military environmental specialists, the core elements of a training program for such a specialists, and the training approach.

Also in September 2002, at Lithuanian Government request, the U.S. and Sweden co-funded with Lithuania a Base Commanders Course that included not only the Baltic military but also officers from Armenia, Azerbaijan, Georgia, and Poland. The training provided an introduction into environmental management concepts and resulted in expressions of interest in cooperation with Lithuanian, Swedish and U.S. specialists to build a military environmental management capacity by the non-Baltic trainees in their respective countries. Training was conducted by Lithuanian, Swedish, and U.S. specialists.

In September 2002, EPA and U.S. Fish and Wildlife Service specialists met with the Lithuanian MOD, MOE, and environmental NGOs to discuss local cooperation in developing a national computerized MOD endangered species data base, using Camp Pabrade data as the pilot. Lithuanian MOE work on a computerized data base had been shelved in the mid-1990's. It was agreed that such a data base was needed to house information resulting from several NGO projects, and that the U.S. co-funded MOD project could be used to stimulate this work. Estonia and Latvia reportedly have computerized similar information. The Lithuanian MOD plans to start work on a second BMP in 2003, with its own funds.

In September 2002, the workshop to introduce Environmental Base Management concepts to key elements of Estonian Armed Forces and local government officials for the Tappa Training Area was attended by more than 35 Estonian, Latvian, Lithuanian, Swedish, and U.S. specialists. Latvian, Lithuanian, U.S. Air Force Academy, U.S. Fish and Wildlife Service, and SAF specialists made key presentations. U.S. and Estonian MOD participants met and agreed on the content and level of EPA assistance to draft the Estonian Pilot BMP for the Central Training Area. Participants identified potential Central Training Area management issues and possible solutions during breakout sessions. SAF offered continued assistance to the development of the BMP, stating that the project was key to developing the Estonian MOD's environmental management system. The UK sent a military observer involved in Eastern European military base development.

In September 2002, regulations were issued for implementation of the Camp Adazi BMP to protect rare and endangered species. The Latvian Fund for Nature Draft developed management plans for two high-quality lake preserves on Adazi Base, which are under review. The extension of the BMP process to a second Latvian military facility was delayed into 2003 due to MOD funding constraints.

In June and September 2002, in response to a request by the Latvian Government for assistance, the former military harbor in Liepaja, Latvia, was used as a case study to introduce sediment assessment and management technology to Latvia, as well as Estonia and Lithuania.

Liepaja Harbor

Liepaja Harbor contains a former Soviet submarine base, whose sediments are severely contaminated. Moreover, over 30 submarines were scrapped there during the past decade, using minimal environmental protection, and a former military oil terminal, leased to a private firm, continues to leak petroleum products into the soil. As part of the harbor reconstruction for both commercial and military uses, the national and regional governments have required the removal of the contaminated sediments. The Naval Research Laboratory (NRL) has been assisting the Latvian Government by including the harbor in its research work. The NRL's research has been providing the U.S. Navy with an approach to assessing sediment contamination, based in part on research done in Liepaja, that could also be used throughout the Baltic Region and in the U.S. The work to date has resulted in improvements to the Latvian confined disposal design but has not resolved the controversies regarding the extent of contamination, recontamination, site closure, and continued impacts of soil and groundwater contamination on the harbor. Moreover, Latvia is the only Baltic State with clearly identified hotspots containing PCB contamination approaching or exceeding current levels in Great Lakes. A Swedish study has identified the Riga environs as an atmospheric source of "fresh" PCB isomers.

From July to August 2002, four Latvian interns were identified for training in the U.S. (three interns arrived in August under arrangements with the Great Lakes Commissions Fellowship program), key equipment and software were ordered, and essential elements of equipment sharing and cooperation among Latvian environmental institutions were brokered.

In September 2002, EPA held two seminars and a workshop on sediment management in Latvia:

Liepaja (Contaminated Sediment Characterization Techniques: Field Training): Thirteen Baltic specialists were trained in the use of hardware and software for bathymetric surveys, use of mapping-grade differential global positioning system (GPS) units, and collection of sediment cores for analyses. Topics included quality assurance procedures, field safety, data dictionary generation, and transferring data into a geographic information system (GIS). The Liepaja Port Authority and Special Economic Zone, University of Latvia, and Latvian Ministry of Environmental Protection and Regional Development co-sponsored the training. Training included both fieldwork in the harbor and classroom exercises.

Jurmala (The FIELDS Environmental Software Tools Seminar): Seven pre-qualified Baltic specialists were trained by three members of the EPA "Field Environmental Decision Support" Team (FIELDS) in the use of EPA-developed tools to integrate the power of GIS, imaging software, GPS, and in-field sampling and analysis technology. The training was co-sponsored by the Latvian EPA at its facilities.

Jurmala (Assessment and Remediation of Contaminated Sediments and Dredged Materials Workshop): The Workshop was attended by 25 Estonian, Latvian, Lithuanian, and Italian specialists. Harbor studies in Liepaja, Tallinn, Italy, and the U.S. were presented. Sediment management issues were identified and discussed in light of the Liepaja experience. The LMPRD representative noted that the technology and approaches apply also to contaminated site management, a number of which pose significant treats in Latvia. Baltic and U.S. specialists and institutions were urged to join the EU-funded Sediment Research Network (SedNet), a consortium of scientists and engineers interested in improving the management of contaminated sediments. Currently, there is no Baltic participation in SedNet. This far-reaching network has several participating sediment workgroups (site investigation and characterization, contaminant behavior and fate, sediment treatment, planning and decision-making, risk management and communication, and financial and economic aspects).

Spill Liability Dispute Resolution

A series of recent spills along the border between Latvia and Lithuania have increased tensions, as the two countries have sought to assess the environmental damage. A U.S. company managhed several of the facilities involved. Currently, there is no agreement that provides guidance on how damages to the environment are to be calculated in the event an onshore spill originates in one country and the damages extend to a second. Both governments have requested the U.S. to develop and present a seminar focusing on the tools for dispute resolution that could lead to a trans-boundary agreement.

In January 2002, a scoping mission by three EPA and private-sector specialists took place to introduce the concept of mediation and design the planned seminar.

In February 2002, a two-day workshop introduced mediation as an additional dispute-resolution tool for trans-boundary environmental issues. The three trainers used facilitated exercises as a training tool. The workshop was attended by 13 Latvian and 10 Lithuanian Government officials. A second seminar was recommended, using Butinge Oil Terminal as a case study.

In August 2002, a Center for Environmental Policy grant was amended to pay back funds for the workshop and provided funds to the Great Lakes Commission for training in the U.S. for Baltic specialists (one each from Estonia, Latvia, and Lithuania) in mediation techniques under the Great Lakes-Baltic Sea Fellowship program.

Fellowship Program

The objectives of the Great Lakes-Baltic Sea Fellows Program are to facilitate information exchange in both the policy and scientific arenas. Establishing networks of knowledge between the Great Lakes basin and the Baltic Sea ultimately will contribute to the eradication of persistent pollutants and invasive species, and improve watershed management in both regions. The Great Lakes-Baltic Fellows Program has supported 11 fellows: two at SOLEC 98, four in 1999, and five in 2000. About half of the fellowships have been in a scientific field, while the others have focused on policy initiatives. The primary study areas have been invasive species, pollution prevention, and watershed management. The current focus is on short-term fellowships in policy areas to reinforce the main NEI program sectors.

In February 2002, six short-term fellows were hosted in support of the State Department's Global Invasive Species Program by the Great Lakes Commission and EPA. They took part in an Ecological Risk Assessment workshop in Washington, D.C., and an International Invasive Species Conference in Virginia.

In May 2002, EPA Region 5 facilitated the transfer of GC-MS analytical laboratory equipment from the University of Connecticut Environmental Research Institute (ERI) to Kaunas Technical University. ERI has agreed with Kaunas to establish a regional "center of analytical excellence" and assist with training and equipment. Pro bono shipping to Lithuania was provided by Lithuanian Mercy Lift. Agreement was reached to facilitate ERI's (self-funded) expansion of its visiting scholar program to Latvia and Estonia as their financing allows.

In August 2002, three Latvian fellows were hosted in the U.S. -- one at the University of Connecticut Environmental Research Institute for PCB analysis of sediments, and two at USEPA Region 5 for a FIELDS training program in sediment collection, data management, and software use.

In August 2002, EPA received a used gas chromatograph-mass spectrophotometer from the City of Cincinnati Industrial Wastewater laboratory. This equipment was transferred to Latvian People's Support Group of Chicago for transport to Latvian Agriculture University.

Invasive Species

The EU's recognition of the invasive species problem is reflected in "EU Concerted Action: Testing Monitoring Systems for Risk Assessment of Harmful Introductions by Ships to European Waters," while the Nordic Ministers have provided some support to the "Baltic Research Network on Invasions and Introductions." In the U.S., invasive species cause an estimated $170 billion dollars of damage to both environmental and agricultural systems, with new species being spotted monthly in the Great Lakes Watershed. The U.S./Baltic Partnership has illustrated the common ground between the Great Lakes-Baltic Sea Basins with respect to the presence of invasive species, the vulnerability to invasive species, and their ecological effects on the aquatic ecosystem.

Funding was received to assist the Baltic States to build an inventory of ongoing studies and monitoring activities along the Eastern Baltic shoreline that track the presence and emergence of such species, both along the shoreline and in the associated wetland areas vulnerable to colonization. The inventory would report current local government tracking and reporting networks for this issue. This Baltic Sea-Great Lakes pilot would support the State Department's Global Invasive Species Program (GISP) and build on the Great Lakes-Baltic Sea Fellowships February 2002 Study Tour, held in response Copenhagen GISP regional meeting. The inventory and subsequent analysis would provide the basis for tailoring not only future work on invasive species but planned wetland and coastal protection activities for the Eastern Baltic area by the World Bank, PHARE, and UNDP.

Watershed Management

The Latvian and Lithuanian Ministries of Environment have formed bi-national oversight (policy) and technical committees for the Lielupe Watershed. The PHARE-funded Lielupe reports have been formally reviewed by the Latvian and Lithuanian Watershed Committee, gaps identified, and a bilateral draft watershed management plan for the Lielupe watershed has been prepared and is being presented to the stakeholders.

Similar organizational structures have been established between the Russian Federation and Lithuania for Nemunas River and Sesupe Subbasin. A common GIS map (and database) has been developed, overcoming a number of technical and political issues. The drafting of a joint watershed management plan has been delayed due to lack of funding on the Russian side. EPA-funded cooperative water quality monitoring initiated by Lithuanians and Russians has resulted in a working-level agreement (September 27, 2002) on monthly information exchanges and joint projects between MOE and Hydromet. The Lithuanians are continuing with technical work on their side. EPA has also coordinated among the Lithuanian MOE, Kaliningrad Oblast Administration, and TACIS to ensure coordination of the TACIS assistance program with that of the U.S. NEI project, resulting in synergistic and water program planning by both countries. However, U.S. funding delays led to schedule delays that precluded greater cooperation with TACIS contractors, whose project ended in the summer of 2002.

The Estonians have been working at the local level to develop a water quality model to protect the beaches at the mouth of the Parnu River. The results are being used to redraft the watershed management plan for the newly defined Parnu River watershed. EPA supported work in the Estonian, Russian, and Latvian triangle (3 Rivers/3 Countries), enabling training of local government officials and other stakeholders in setting priorities for watersheds to promote effective participation in national watershed plan development. It is providing tools to local governments to involve citizens in watershed management through volunteer lake and stream monitoring programs. EPA will work to address landfill issues as well, as they have been identified as a complicating factor in watershed planning.

The watershed program was designed as a three-phase, four-country project to help participating countries meet the new EU Water Directive and UN Compact. These agreements require integrated, watershed-based management of all water resources. The program aims to deliver the concepts of U.S.-style grassroots participatory watershed management to the Baltic states and their Russian neighbors.

The first phase, focusing on development of national capacity to manage watershed programs, ended with an International Watershed Workshop in May 2002, in Svetlogorsk. Both U.S. and non-U.S. Baltic watershed pilot activities shared their experiences and lessons learned. This early work related to the establishment of monitoring and data design to support watershed planning efforts. The project's second phase focused on introducing tools and building capacity with local educators, NGOs, and municipalities to enable them to participate in watershed planning at the local level. Funding was reprogrammed from Environmental Security and the Watershed pilots to allow for an early kickoff of this phase. Funding will allow the completion of the initial training in most geographic areas and the building of local capacity to maintain training and volunteer monitoring networks.

The Watershed Management Program's third and final phase will complete training for focus areas and begin to build the relationships that will set the framework for cooperative watershed management across the mechanisms used by EU aspirant countries. EPA will ensure that the Baltic Russian neighbors (Kaliningrad, Pskov.) have a common understanding of watershed management principles, methodology, and of volunteer monitoring, and will facilitate the development of information exchange mechanisms.

All U.S. training is based on the training reinforcement model. The optimum schedule to ensure that trainees are well equipped to continue the work after the completion of the EPA program is a three-step training module. It is structured as an introductory session of three-four days, a two-day follow-up session with the same group six months later, and a one-day check-back session to provide final evaluation and identify any additional needs.

In March 2002, the joint Latvian-Lithuanian Lielupe River Watershed Plan was completed in draft, pending public input. This is the first such trans-boundary plan in the Eastern Baltic Sea Catchment. The Latvian language version was presented to stakeholders during a March 12, 2002, seminar on the Lielupe Watershed Management Plan, held in Jelgava.

In March 2002, a workshop on the Lielupe Watershed Management Plan was held for 24 Latvian and Lithuanian NGO and academic institution representatives, EPA, the LMEPRD, and CEP, at the Latvian Agriculture University at Jelgava to identify NGOs willing to participate in watershed management planning and education activities.

Also in March 2002, Kaliningrad's office of the Ministry of Natural Resources installed a workstation and software (with U.S. FSA funding) and prepared a GIS-based watershed map of the Russian part of the Sesupe basin. The first cut of their portion of the GIS Sesupe map was prepared in March 2002. The Lithuanian MOE's new Water Department agreed to resolve thematic conflicts and produce a merged database and maps for the watershed. The work will be completed using NEI SEED funds.

In April 2002, the Ministry of Environment presented the Lithuanian version of the joint Latvian-Lithuanian Lielupe River Watershed Plan at a two-day public meeting with stakeholders in Siauliai, Lithuania.

In May 2002, the International Transboundary Watershed Workshop was held in Svetlogorsk, Russia. Both U.S. and non-U.S. Baltic watershed pilot activities shared their experiences and lessons learned. This early work related to the establishment of monitoring and data design to support watershed planning efforts. The workshop also identified mechanisms to strengthen implementation of watershed plans. This workshop was held at the request of the environmental ministries, which were responding to EU concerns about watershed directive implementation. Over 60 people from seven countries (including Poland and Belarus) attended. EU TACIS program representatives also participated.

In June 2002, the redrafting of the "Lake Monitoring Pocket Book" to fit Estonian ecology was completed, and the Council for Cooperation of Border Regions made a preliminary release of the manual. Due to the highly positive response, concerns were raised that the demand could outstrip the supply.

In September 2002, the Parnu River Steering Committee completed a report on water modeling. The first Pärnu River Watershed Management Plan (WMP) was compiled for the Pärnu River Watershed, as originally delineated. Subsequently, the Estonian Government decided that all Estonia is one River Basin District, within the meaning of the EU Water Framework Directive. The territory was divided into sub-basins and, after that, the Pärnu sub-basin became larger than the Pärnu River Watershed. Estonians are expanding the Parnu WMP accordingly. It is expected to be the first completed Estonian WMP. The Danish consultant met with EPA specialists during training in Tartu.

In September 2002, the Lielupe Decision Maker/Local Prioritization training in Jelgava was attended by 15 Latvian and seven Lithuanian representatives from local government, stakeholders, and NGOs. Among the results of the training was a list of ideas on ways to support local public involvement in Lielupe River watershed management.

In September 2002, an assessment of water quality and resources and modeling feasibility in the Sesupe basin according Water Framework Directive requirements was completed. Information from it will be included in a Lithuanian framework watershed plan. The report will be provided to the Russian side during planned working-level meetings in the fall in Kaliningrad. Terms of Reference for a Surface Water Information System were drafted under the contract with KTU. This is expected to serve as a pilot for the national Lithuanian database.

In September 2002, two Lielupe River Workshops were held at Siauliai University. The first was a one-day train-the-trainer workshop for 16 local officials and Ministry personnel from Latvia and Lithuania. Discussions identified the need to resolve differences between national monitoring systems. The second focused on volunteer monitoring techniques and NGOs. The workshop was attended by 11 Latvians and 18 Lithuanians. The presentation included the new "trainers" from the previous day's workshop.

In September 2002, a general volunteer monitoring training session was cosponsored by a local Sesupe River NGO, "Herba," at the Marijampole municipal facilities. Fifteen people attended the one-day train-the-trainer session. Forty-six volunteers, primarily educators, took part in the second workshop. Program implementation will be funded by three local municipalities (Vilkaviskis, Kalvarija, and Marijampole). A Russian version of the volunteer stream-monitoring manual, based on the Indiana volunteer program, has been prepared for printing by "Herba." Planned Russian participation did not materialize due to the session's postponement from May to September.

From September 30 to October 2, 2002, a combined U.S.-Estonian team conducted Local Decision-Makers training, drawing on both previous Estonian and U.S. case studies. Fifty-seven people attended. The Center for Transboundary Cooperation will be looking for additional sources of funds to respond to the high interest level and to leverage EPA funding in 2003.

On September 27, 2002, Kalingrad Hydromet and Lithuania signed a working-level agreement to exchange environmental data on a monthly basis and cooperate on joint studies in the Nemunas River and Curonian Lagoon watersheds. This is a direct outcome of U.S.-funded joint monitoring work in the Sesupe River.

From September 28 to October 9, 2002, an EPA Region 5 grants assistance team visited sites in all three Baltic States to document fiscal and management controls, assist in grants closeout for expiring cooperative agreements, and review ongoing cooperative agreements for actions to be taken by grantee and/or EPA project officers. The visits proved useful to both the grantees and EPA and should help expedite program closeout.

U.S. DEPARTMENT OF LABOR

Labor Market Transition Project

In FY 02, the U.S. Department of Labor (USDOL), International Labor Affairs Bureau, received SEED funds through an Inter-Agency Agreement with USAID to continue labor market transition projects in Central and Eastern Europe (CEE). USDOL completed its Worker Adjustment project in Romania, and continued its work in Bulgaria and Macedonia, including regional activities involving staff from all three projects. USDOL strives to increase employment of the workforce in all communities targeted for assistance. To that end, country project objectives include the following: improving business sector activity; increasing worker participation in job transition services, including skills training and job placement; and institutionalizing the demonstrated methods and services within each country for long-term sustainability. All country projects successfully met or progressed toward each of these objectives. Activities also had strong, positive impacts on building local and national partnerships, improving labor-management relations, mitigating social unrest due to privatization-related downsizing, and stimulating short and long-term local economic development projects that create jobs.

Regional Account Highlights

Regional activities in FY 02 included professional and organizational development training and meetings for USDOL project staff from Bulgaria, Macedonia, and Romania, as well as a mid-term, external evaluation of the Macedonia project. Training for 20 local staff was aimed at monitoring and oversight to enhance staff capacity to sustain project activities after USDOL support ends. Each country project has, as a result, produced and implemented a performance monitoring plan for its projects to standardize and simplify data collection methods, and enhance participants' quantitative and qualitative analysis skills.

Bulgaria

By the end of FY 02, USDOL had provided training and seed funding to 35 small communities in Bulgaria that had been severely affected by economic dislocation. The resulting local economic development projects have helped businesses, stimulated employment growth, and fostered community participation in democratic decision-making, often for the first time.

Local economic development activities are long-term projects where the full economic impact may not be realized for several years. Nevertheless, since 1997 these projects have created 2,776 jobs, 88 business starts, and 14 new NGOs. More results will be achieved over the next two years as the community projects mature. USDOL funding, however, will decrease significantly hereafter, as the project transitions to management by the Bulgarian Government, and will be supported by funds from the World Bank.

Macedonia

The USDOL project in Macedonia -- known as the Partnership for Economic Development in Macedonia (PRiSMa) -- completed its third full year of operation. In FY 02, PRiSMa completed or continued labor market activities in 21 communities, and initiated new activities in the final nine primary communities or market towns with a Local Employment Office. Each community already has or will receive training and technical assistance in implementing and monitoring three sub-projects that demonstrate methods for local economic development and strategic planning; pre-layoff labor-management relations and dispute resolution services; and maximization of human resources in small, competitive enterprises.

In the spring of FY 02, an external mid-term evaluation of PRiSMa took place. The findings were positive and highlighted particularly strong impacts on job creation, job retention, and tripartite coalition building in multi-ethnic market towns and at the national level. The report recognized the notable initiative taken by the project's director and the directors of the USAID-funded Community Self-Help Initiative and Local Government Reform Project to collaborate strategically and maximize the impacts of their complementary activities in over 12 communities.

Main FY 02 indicators:

• 600 Macedonians received training.
• 130 new jobs were created.
• 690 workers retained jobs or were re-assigned to jobs at their existing place of employment.

Because of the consistent, well-recognized impacts of USDOL activities in Macedonia, local and national-level support from the Ministries of Labor, Education, and Economy continued. Promising agreements were reached toward institutionalizing USDOL-demonstrated methods, and the Ministry of Economy took steps to establish a loan guarantee fund to support future local economic development projects in disenfranchised communities. In addition, the project's Enterprise Competitiveness or "Quick Start" method is being recognized in curriculum development reform efforts for the country. Quick Start is a demand-oriented, management-driven approach that seeks to maximize the potential of workers in small and medium-sized enterprises, while modernizing vocational training curricula. Ministry staff also were designated to help local project teams implement and monitor on-going and future projects.

Romania

The SEED-funded Labor Redeployment Program (LRP) completed its fifth and final year of program activities in FY 02. Working in 35 communities, the Romania project successfully created thousands of jobs and engaged thousands of workers in pre-layoff employment assistance services. Both activities helped mitigate the social unrest that often results from privatization-related layoffs. The project was so effective that the Romanian Government drafted, passed, and funded policy and legislation to institutionalize the USDOL-demonstrated pre-layoff services and programs.

• Over 80,000 unemployed workers were provided with early forms of assistance to help them find new jobs.
• Of these, 18,635 were re-employed; and
• Dislocated workers who had received entrepreneurial training created 4,105 new business start-ups.

In addition, institutionalization of the services developed through LRP assistance was achieved. To provide a legal framework for those services, the Romanian Government drafted and enacted policies, in 1998, to support services for displaced workers who lost their jobs in mass layoffs due to privatization, restructuring, and liquidations. Since then, two laws were passed that mandate the continuation of Active Measures. One provision requires laid-off workers to participate in pre-layoff services to become eligible for severance payments. Another allocates resources to support Active Measures -- 27 percent of the NAE's 2003 budget is dedicated to this purpose.

Though still relatively early in their development, economic development projects in Romania have created 610 jobs thus far. In addition to employment, 36 small businesses and two NGOs were created through these local economic development activities.

DEPARTMENT OF STATE

Bureau of International Narcotics and Law Enforcement Affairs (INL)

INL is responsible for developing policies and managing programs to combat international narcotics consumption, production, trafficking, and other criminal activity. INL conducts programs by funding and coordinating the training and assistance activities of Federal law enforcement agencies, as well as specific Justice and Treasury Departmental offices, in the Central and Eastern European (CEE) countries that are eligible for SEED assistance.

INL assistance programs strengthen host nation capacity to combat transnational organized crime and related activities, corruption, cyber crime, money laundering and other financial crimes, and trafficking in persons, contraband, and narcotics; strengthen border controls; develop democratic police forces; and develop legislative and institutional criminal investigative and prosecutorial capabilities. INL's project-based approach to programs creates comprehensive, sustainable assistance efforts.

The focal point of INL's regional law enforcement assistance efforts is the International Law Enforcement Academy (ILEA), headquartered in Budapest, Hungary. Established in 1995, ILEA has as its mission to support the region's emerging democracies, help protect U.S. interests through international cooperation, and promote social, political, and economic stability by combating crime and criminal activities. To achieve these goals, ILEA provides high-quality training and technical assistance, supports institution building and enforcement capabilities, and fosters relationships between U.S. law enforcement agencies and their counterparts in the region. During FY 02, 94 participants from SEED Act countries attended ILEA's Core Program, an eight-week training program aimed at mid-level law enforcement officials, along with colleagues from Russia and the Former Soviet Union. In FY 02, INL provided $1,350,000 in SEED funds to support the ILEA program -- $725,000 for operational support, $500,000 for USG law enforcement agency support, and $125,000 for participant travel and stipends.

ILEA also provided a venue for short-term, specialized training programs offered by USG agencies, including the ATF, DOJ/OPDAT, DOS, EPA, and FBI. In FY 02, subjects included money laundering, organized crime, prosecuting public corruption, environmental crimes investigations, and crimes and explosives investigations. Representatives from the following SEED countries attended the ILEA Core Program in FY 02: Albania, Bulgaria, Croatia, Macedonia, Romania, and Serbia and Montenegro.

Albania

In FY 02, INL administered $2,875,000 in SEED funding for Albania. Funds were used to support a DOJ/OPDAT Resident Legal Advisor (RLA) program, professionalize the police, and improve border controls. Several years of investment and effort have begun to pay off with major structural and procedural changes in the Albanian Ministry of Public Order (MoPO) and the Albanian National Police (ANP). Overcoming entrenched interests and bureaucratic obstacles, the ANP has adopted recommendations to create an Organized Crime Directorate that has unified the offices responsible for financial crimes, counternarcotics, anti-trafficking, and anti-terrorism. The ANP has also reorganized its Office of Professional Responsibility and removed 102 police officers for illegal activities. A program to establish international standards of border security at three major Albanian ports of entry was also initiated. A second DOJ/OPDAT Resident Legal Advisor was assigned to assist in developing a joint police-prosecutor organized crime task force. In addition, in-country DOJ/ICITAP and DOJ/OPDAT advisors funded through INL have supported the formation of an international consortium of law enforcement assistance donors. This 25-member consortium (embassies and international organizations) works cooperatively to avoid duplication of assistance programs and to rationalize resources of all donors. In FY 02, Albanians took part in an ILEA eight-week Core Program.

Baltic States

In FY 02, INL administered $327,000 in SEED funds for the Baltic States. Funds were used to provide comprehensive technical assistance to the Baltic States to build law enforcement and criminal justice system capacity and strengthen the rule of law. Projects included training and technical assistance to address public corruption, support reform of criminal procedure codes, improve witness security, and combat trafficking in women and children. INL's regional efforts focused on training and technical assistance in the framework of the Northern Europe Initiative (NEI) to promote regional cooperation and highlight shared experiences.

Estonia/Lithuania: In FY 02, through DOJ/OPDAT, INL provided funding for a prosecutors training program in Estonia, in which Lithuanian prosecutors also participated.

Latvia: In FY 02, INL continued support for the Anti-Corruption Bureau in Riga, prosecutors training in plea-bargaining and evidence collection, and police training.

Bosnia-Herzegovina

In FY 02, INL's SEED funding amounted to $5.5 million. Of this, $1.5 million funded several ICITAP police development programs, including providing senior advisors to entity Ministers of Interior, two Organized Crime advisors, a Police advisor to the Brcko District, and specialized anti-organized crime training for the Bosnian police. Funding was also made available to continue development and implementation of a computerized, Bosnia-wide law enforcement information-sharing network that will be compatible with a citizen information network being developed by the Office of the High Representative (OHR). An additional $2 million funded the continuing development of greater information-sharing capabilities, a radio communications system, and enhanced means of airport passenger screening for the new State Border Service.

Finally, $2 million assisted BiH in its judicial reform, training, and anti-corruption efforts. These funds supported a Resident Legal Advisor (RLA) at the U.S. Embassy in Sarajevo; an Assistant U.S. Attorney to serve as Vice President of the High Judicial and Prosecutorial Councils; a legal training expert to coordinate curriculum development and OHR efforts to train Bosnian judges, prosecutors, and police in the new legal codes and procedures; classroom and field training experts to assist in the adoption of new legal codes and procedures; and equipment and training to help local prosecutors. INL funding also enabled the continuation of a criminal justice law liaison through ABA/CEELI to assist efforts to train judges and prosecutors and provide computer systems for prosecutors in Sarajevo Canton.

Bulgaria

In FY 02, INL administered $850,000 in SEED funds for Bulgaria. Those funds supported a DOJ/OPDAT Resident Legal Advisor program and a USSS Counterfeiting and Financial Crimes project. The RLA program provided training and advisory technical assistance in the areas of Ministerial-level internal controls efforts, witness protection, combating public corruption, human trafficking and money laundering, and asset forfeiture. Accomplishments include the formation of a legislative working group aimed at instituting probation and assisting the Bulgarian Government in drafting comprehensive anti-trafficking legislation that recently passed its first reading in the Parliament. The USSS Counterfeiting and Financial Crimes project provided training and technical expertise to Bulgarian law enforcement aimed at dismantling U.S. currency counterfeiting operations. During FY 02, Bulgarians participated in an ILEA eight-week Core Program.

Croatia

In FY 02, INL administered $1,082,629 in SEED funds for Croatia. Funds were used to support a DOJ/OPDAT Resident Legal Advisor program and a DOJ/ICITAP police professionalization program. The police professionalization program, now in its second year, is a three-year, $3 million dollar program that combines guidance, training, and equipment to increase the professionalism of the Croatian police. The program's primary objectives are to foster long-term, sustainable change by overhauling police training; improve police personnel management and standard operating procedures; and strengthen the police internal affairs section's capacity to enforce professional standards. The Interior Ministry has taken ownership of core program recommendations and is creating a basic police academy program, which will consist of six months of classroom training followed by six months of field training. The Ministry is also developing a "train-the-trainer" program whereby new training can be provided as needed by through Field Training Officers. About 10,000 officers throughout Croatia will eventually receive updated training through this program. The program's accomplishments include: 1) development of a practical, task-based curriculum for the police school; 2) establishment of management and administrative procedures, so that Interior Ministry officials can monitor personnel performance and evaluate training; 3) creation of a comprehensive field training and mentoring system that is cross-linked to the police academy; and 4) overhaul of the internal affairs unit. With the final $1 million tranche for this program, all objectives will be achieved and the program closed out in 2004-2005. In FY 02, the RLA program focused on: 1) assisting the State Attorney's Office to adhere to the new law regulating its organization and jurisdiction; 2) supporting the Office to Combat Organized Crime and Corruption; and 3) assisting the State Attorney's Office to improve prosecutions and establish a training program for prosecutors. With this assistance, the Croatian Government has begun to enact legislation and implement changes to the criminal procedure code to address corruption and organized crime. Access to the Ministry of Justice and State Attorney's Office also has improved. During FY 02, Croatians participated in an ILEA eight-week Core Program.

Macedonia

In FY 02, INL used $2,025 million in SEED funding for police assistance to Macedonia. Funding of $500,000 was for training a multi-ethnic police force and trainers to graduate ethnic minority officers to serve in the country's police force, in support of the Framework Agreement. A total of $125,000 in FY 02 SEED funds will help provide community police trainers to support OSCE's and the Macedonian Government's efforts to integrate police in the sensitive ethnic Albanian villages.

Romania

In FY 02, INL administered $1,010,000 in SEED funds for Romania, which were used to support a DOJ/OPDAT Resident Legal Advisor program and for two law enforcement capacity-building projects. These projects, Cyber-Crimes Investigative Unit and Counter-Narcotics Assistance, included courses, advisory technical assistance, and equipment procurement. The RLA extended advisory technical assistance and training in combating human trafficking; improving courtroom administrative procedures; and detecting, investigating, and prosecuting corruption. The RLA provided specialized assistance to the establishment of the National Anti-Corruption Prosecutor's Office and a commitment (fulfilled by the Romanian Government) to set up the specialized Cyber-Crime Investigative Unit in the General Inspectorate of Police. During FY 02, Romanians took part in an ILEA eight-week Core Program.

Serbia

INL received no new funding in FY 02, and FY 01 funds carried the existing program through the fiscal year. The law enforcement assistance to Serbia was to support the OSCE-led basic police-training program, a program designed to develop a multi-ethnic police force in Southern Serbia. The U.S. provided a police manager, a curriculum development specialist, and four police instructors to the school.

Montenegro

Though not officially engaged in Montenegro, INL funded Montenegrin participation in the ILEA 8-week course.

Kosovo

FY 02 SEED funding for police programs in Kosovo, administered by INL, totaled $61.45 million. Of this, $53.4 million paid for the U.S. contribution of 605, later reduced to 555, civilian police officers to the 4,500-officer UNMIK Police Force that is policing Kosovo and simultaneously helping to develop the new Kosovo Police Service (KPS), including through field training. The UNMIK Police have assumed full law-and-order responsibilities from KFOR, including protecting patrimonial sites and the airport, as security permits. UNMIK Police played a major role in the dramatic decrease in crime, particularly the most violent crime, in Kosovo in FY 02, which is down for the second year in a row. INL helped the UNMIK Police further to develop their capabilities to combat organized crime, extremism, and terrorism, with $500,000 in assistance, including expert personnel and technical equipment. Six million dollars has been used to support the training and equipping of the new KPS, including the provision of instructors and personal equipment for the new police and their police stations. Over 1,400 cadets of all ethnicities graduated from the OSCE's Kosovo Police Service School in FY 02, for a total of over 5,400 graduates to date. The KPS now handles most of the patrolling functions in Kosovo and independently operates two police stations, under international supervision.

FY 02 SEED funding for INL-managed judicial sector reform in Kosovo was $1.55 million and supports an RLA in the U.S. Office in Pristina, an Organized Crime advisor to the UNMIK Department of Justice, and a training officer for OSCE's Kosovo Judicial Institute. It also supports the training of Kosovar prosecutors, defense attorneys, and judges in basic skills and such substantive areas as human rights, trafficking in persons, and victim and witness advocacy.

U.S.DEPARTMENT OF JUSTICE

Office of Overseas Prosecutorial Development, Assistance and Training (OPDAT)

OPDAT's programs in Central and Eastern Europe (CEE) are designed to assist host countries in building institutions which provide fairer, more efficient, and transparent administration of criminal justice, as the CEE countries seek to emerge from decades of communist and authoritarian rule and establish the rule of law. Legal systems in CEE are derived from the continental civil law model, with "inquisitorial" criminal justice systems in which proceedings are based largely on written submissions, the prosecutor's role in the trial process is limited, judges may exercise investigative functions, and there is little coordination between investigator and prosecutor. Nonetheless, CEE countries have shown interest in moving toward greater use of oral proceedings in trials and adopting certain common law "adversarial" procedures, such as guilty pleas and plea bargaining, accelerated and abbreviated trials, and the use of informants, undercover operations, and wiretapping.

Many CEE countries have enacted or are enacting new criminal procedure codes which incorporate these and related procedures. OPDAT has also taken significant steps throughout the region to foster better cooperation between investigators and prosecutors, through team building and task force approaches. In FY 02, OPDAT's substantive focus within the region was on strengthening host countries' ability to combat some of the most acute manifestations of criminality, particularly public corruption, organized criminal activity, trafficking in humans and contraband, and money laundering.

Albania

OPDAT worked closely with the Government of Albania (GOA) to improve its ability to combat organized crime, corruption, and trafficking in persons. In the first quarter of FY 02, the Resident Legal Advisor (RLA) in Albania worked closely with the Prosecutor General's Office to develop strategies for investigating government officials suspected of corrupt practices. After the RLA's mission in Albania ended and his replacement arrived, the new RLA worked with GOA officials to improve Albania's ability to investigate and prosecute money laundering, financial crimes, and terrorist financing. In September 2002, the OPDAT team sponsored a highly successful seminar on the dimensions of Albanian organized crime in the Balkans and in the U.S., which established links between law enforcement agents combating ethnic Albanian crime in the U.S. and those doing so in the region. OPDAT also helped the U.S. Embassy in Tirana and the GOA to develop a "three-port strategy" for disrupting trafficking operations at Albania's three main ports of entry -- Rinas Airport, Durres Seaport, and Vlora Seaport.

Bosnia-Herzegovina

Throughout FY 02, the OPDAT program provided substantial assistance to the Bosnians in organizing and putting into action a nation-wide anti-trafficking task force, the first ever of its type. In the last quarter of FY 02, the task force returned its first indictment (which led to a conviction in the first quarter of FY 03). OPDAT also continued to work with the Office of the High Representative (OHR) on reform of the criminal and criminal procedure codes. OPDAT held a four-day Management and Trial Advocacy Workshop for public prosecutors in the Brcko District, in February 2002. Subsequently, an experienced Assistant U.S. Attorney spent four weeks there advising prosecutors on how proposed amendments to the Criminal Code could facilitate their ability to investigate cases involving public corruption and organized crime. The RLA for organized crime, who was assigned to the Anti-Fraud Department of the OHR, ended his mission in the last quarter of FY 02. During his tenure, he assisted the Anti-Fraud Department in its attack on endemic corruption by providing advice on investigations and working with local prosecutors, police, and investigative judges to guide and mentor them in their investigation and prosecution of corruption cases. The RLA was instrumental in assisting in the investigation and prosecution of officials of BH Banka, one of the largest banks, operated by and for the benefit of one of Bosnia's biggest organized crime families.

Bulgaria

In country since February 2001, the RLA continued to focus on improving institutional structures and relationships; extending technical assistance on countering corruption, organized crime, and human trafficking; providing review and commentary on Government of Bulgaria (GOB) corruption and judicial reform strategies; and assisting in legislative drafting and review. In the first quarter of FY 02, the RLA sponsored an anti-corruption assessment visit by U.S. experts, with the goal of empowering the Ministry of Justice's Inspectorate General, based on U.S. models. She conducted a seminar designed to alert high-level officials to the need for amendments to Bulgaria's money laundering law and related provisions in the Criminal Procedure Code. She subsequently provided hands-on assistance in developing asset forfeiture legislation that meets U.S. and international standards. She was also instrumental in creating an anti-trafficking task force for Bulgaria. In November 2001, she hosted a retreat for a Bulgarian working group, in which high-level GOB officials came together to develop a strategy for modernizing the anti-trafficking legislation. Late in FY 02, Bulgarian law was amended to bring it into conformity with international standards. Working with experts from the National Institute of Corrections, the RLA also provided assistance to the Bulgarians in developing a probation system.

Croatia

The RLA, who arrived in Zagreb in February 2001, continued to provide technical assistance and skills-development training for judges, prosecutors, and police investigators in implementing criminal codes and procedures, and to introduce adversarial techniques and police/prosecution team-building, particularly in anti-corruption matters. The RLA held a seminar for about 50 representatives from the Croatian judiciary, prosecutors' offices, and police agencies on techniques used in the U.S. to combat organized crime. This was followed by a seminar designed to illustrate the methods and techniques to investigate and prosecute money laundering, which emphasized U.S. investigative and prosecutorial techniques for tracing illegal funds.

Czech Republic

In March 2002, a Department of Justice (DOJ) prosecutor went to the Czech Republic for a one-year term as a RLA. During his tenure, the RLA provided counter-corruption and money laundering technical assistance and skills development programs. In April 2002, the RLA conducted two workshops on computer crime, at which three U.S. computer crimes experts and their Czech counterparts discussed best practices for investigating and prosecuting criminal activity, utilizing computer technology. In June 2002, he conducted a workshop for 26 state prosecutors on certain amendments to the Czech Criminal Procedure Code, which require the prosecutor to participate more actively in trials. The weeklong program was modeled on the National Advocacy Center's Basic Trial Advocacy program for new Assistant U.S. Attorneys. In August 2002, the RLA conducted roundtables in four Czech cities to discuss candidly with prosecutors, criminal investigators, and judges the ability of the Czech criminal justice sector effectively to investigate and prosecute corruption at the highest levels. DOJ's Deputy Assistant Attorney General John Malcolm was one of the U.S. experts who took part in the roundtable discussions.

Macedonia

Because of the Ordered Departure in 2001, OPDAT had no presence in Macedonia until April 2002, when an experienced Federal Prosecutor arrived in country. During her time there, the RLA has worked with prosecutors throughout Macedonia to improve trial skills and encourage greater cooperation between police and prosecutors in investigations. She conducted a case management seminar in July 2002, which demonstrated to prosecutors how their U.S. counterparts build toward a successful prosecution through their methods of organizing the case. As the Government of Macedonia (GOM) considers revisions in its criminal code, the RLA has worked with local officials in informing Macedonian prosecutors about the investigative tools available to them.

Romania

During FY 02, DOJ/OPDAT continued its criminal law technical assistance program through its RLA by concentrating on assistance in three major areas: anti-corruption, human trafficking, and court reform. During the fourth quarter of FY 02, Romania's Anti-Corruption Office (PNA) became operational. OPDAT provided investigative equipment, and the RLA conducted a training workshop for the PNA, in December 2002, attended by 45 Romanian prosecutors. The RLA held a roundtable in June 2002, to acquaint prosecutors with the use of the task force concept to fight public corruption. Participants discussed ongoing and recent corruption investigations and prosecutions in their respective jurisdictions. They then considered how those same investigations and prosecutions would have taken place under Romania's new anti-corruption law. Working toward a more regional approach to combat human trafficking, the RLA traveled to Moldova to present a strategy for joint efforts and preventing and investigating human trafficking activities. He also helped in the drafting of a new Law on Judicial Organization and, with the Federal Judicial Center and the U.S. Marshals' Service, organized programs on court administration.

Regional Activities

OPDAT hosted a regional anti-corruption seminar in May 2002, at the International Law Enforcement Academy (ILEA) facility in Budapest, Hungary, for about 40 high-level officials from Lithuania, Romania, and Slovakia in CEE, along with representatives from Armenia, Azerbaijan, and Georgia in the Eurasian region. This conference sought to provide guidance to participants in refining and implementing anti-corruption initiatives and strategies. It encouraged them to share their successes and discuss candidly their country's failures, with the expectation that the sharing of these experiences would be useful to attendees from other countries in the region. The conference emphasized three basic pillars for an anti-corruption regime: 1) prevention, precluding public corruption form arising in the first place; 2) enforcement, through effective investigation, prosecution, and adjudication of corruption; and 3) public awareness, educating the public to the high costs of public corruption for average citizens. In collaboration with faculty experts, each country worked on developing an action plan, designed to identify specific actions that it could take to bolster its anti-corruption capacity and the types of international assistance that would be most useful in helping to bring about these actions.

FEDERAL TRADE COMMISSION/DEPARTMENT OF JUSTICE

Region-Wide Overview

The Federal Trade Commission (FTC) and Antitrust Division of the Department of Justice (DOJ) technical assistance program in Southeast Europe (SEE) seeks to assist the competition agencies and other stakeholders to develop framework laws and enforcement agencies, promote the education of supporting institutions (other government agencies, academia, business groups, consumer associations, and the media), and train personnel in the substantive legal principles, analytical framework, and investigative techniques needed for a competition law enforcement regime to succeed. FTC/DOJ programs in FY 02 consisted exclusively of regional workshops and short-term visits to target countries. The FTC/DOJ's longstanding resident advisor program in the region ended in FY 02.

In FY 02, USAID provided $200,000 in SEED funds for assistance to Albania, Bosnia-Herzegovina, Bulgaria, Croatia, and Romania, and $50,000 for Macedonia. In general conformity with its written work plan, which extended its activities until the end of calendar year 2002, the FTC/DOJ conducted six regional seminars or workshops and eight short-term missions. Both the FTC and the DOJ utilize their scarce resources primarily for domestic law enforcement and do not generally make use of appropriated funds for technical assistance programs. They rely principally on USAID funds to organize programs and pay travel expenses and salary compensation for the time spent on foreign missions.

Regional/Multi-Country Program Highlights

FTC/DOJ conducted six regional seminars attended by two to six representatives from each of the following countries: Albania, Bosnia, Bulgaria, Croatia, Macedonia, and Romania. These seminars took the form of interactive investigational skills-training workshops based on hypothetical cases covering a broad range of issues one might expect to encounter. Participants from numerous agencies have said that these seminars are of great value because they convey real-world investigational experience in the context of actual cases. These interactive exercises were designed by experienced former long-term resident advisors with extensive domestic experience in the U.S. and expertise in the types of investigation at issue. They are designed to approximate, as closely as possible, actual investigations that antitrust enforcement staff anywhere might encounter.

Given the high turnover in foreign agency personnel, it is difficult to ensure that what is learned through technical assistance is retained over time. Regional approaches to assistance provide a measure of assurance that countries continue to learn from each other's experiences. Regional conferences have permitted the sharing of experiences and a broader approach to conveying the most important message, i.e., how to conduct an actual competition investigation. In particular, regional programs create other synergies that ultimately lead to more effective law enforcement. They promote regional networking. Agency staffs often receive little opportunity to meet with their counterparts in other countries, and contacts formed at regional conferences have led to cooperation on investigations, in some cases. At the end of the conference, participants leave with a full set of materials so that they can present the hypothetical case in their own offices.

Regional workshops are structured so that the more advanced agencies of Hungary and Slovenia can develop mentoring relationships with less experienced agencies by co-hosting events with the U.S., and offering approaches that are relevant to conditions within a region. All four FY 02 seminars were held in Budapest, Hungary. Two additional programs, in Ljubljana, Slovenia, and Budapest Hungary, were scheduled in calendar year 2002.

Country-Specific Program Highlights

In addition to the regional seminars, the FTC/DOJ made eight short-term visits to work with agencies in Albania, Bulgaria, Macedonia, and Romania. The objective of these visits has been to assist the agency in setting priorities and avoiding non-antitrust influences; promote the application of rigorous legal and economic analysis to actual investigations; develop long-term professional relationships that encourage informal e-mail and telephone consulting; and stress the value of written explanations and conclusions for actions undertaken, so that they will serve as guideposts and make the agency's actions transparent and predictable.

Albania

In October 2002, an FTC attorney participated in a seminar on administrative law and confidentiality and met with competition agency officials to discuss the specific confidentiality issues involved in investigating competition matters.

Bulgaria

In December 2001, an FTC attorney spent a week in Sofia, Bulgaria, assisting in a diagnostic assessment on the development of competition law and working with the Commission for the Protection of Competition, reviewing decisions taken and how they could fit into the broader scheme of economic liberalization in Bulgaria.

FY 02 missions continued to refine and improve framework laws, especially by helping in drafting, to include new, improved remedies for law violations. Missions also continued to address the principal shortcoming at the Commission -- the lack of a cadre of experienced staff. With experience comes a better ability to focus investigations on the issues that are "outcome determinative" and to help both the agency and businesses dealing with it to avoid unnecessary document requests and delays. Competitors frequently seek the Commission's intervention to protect them from market forces and other legitimate competitors. Commission staff are gradually becoming more sophisticated in their analysis, grasping that their role is to protect the competitive process, and focusing their resources on these kinds of cases.

Macedonia

USAID provided SEED funds specifically earmarked for Macedonia. As a result, the FTC/DOJ was able to concentrate four short-term missions there. In brief, these missions were:

In January 2002, an FTC attorney worked with the Anti-Monopoly Authority in Skopje, discussing merger, cartel, and abuse of dominance cases, and pre-merger notification issues. Macedonia's experiences in participating in Budapest seminars on abuses of dominance and cartels assisted in these discussions.

In April 2002, an FTC attorney conducted two seminars, in cooperation with the German technical assistance entity, GTZ. One conference included about 30 lawyers, judges, and Anti-Monopoly Authority officials. The second day was aimed at about 20 Macedonian business leaders.

In May 2002, an FTC attorney returned to Macedonia to meet with officials of the Anti-Monopoly Authority and to participate in a three-day conference (May 10-12) in Ohrid, attended by 75 people and cosponsored by the German GTZ.

In October 2002, two FTC attorneys and an FTC economist, all with specialized experience in the electricity industry, conducted a program on privatization and competition in that industry and the relationship between sector regulators and competition agencies.

The FTC/DOJ is seeing results from its outreach efforts to the Anti-Monopoly Authority, which was somewhat isolated from contact with U.S. competition authorities during 2001 because of the violence there. For historical reasons, the agency has had some relationship with the German antitrust agency and has adopted a law modeled on the very cumbersome German competition law. The agency head recognizes that law's shortcomings and is receptive to input from FTC/DOJ staff. As a result, FTC/DOJ has begun to provide seminars to agency staff. Substantial revisions in the framework law are needed.

Romania

During the week of May 27, 2002, an FTC attorney and a DOJ economist visited the Romanian Competition Council and the Competition Office. The FTC attorney, who previously had been a resident advisor in Bucharest, consulted with the newly appointed Council President on matters involving remedies and "gun-jumping" in pre-merger notification, while the DOJ economist discussed topical issues of monopoly regulation and deregulation of electricity, credit cards, television, and insurance.

The work begun during previous FTC/DOJ missions has brought change to the way that the Council operates. The Council increasingly understands that its mandate is to remove unreasonable obstacles to competition and allow market forces to determine the price and quantity of goods and services that will be available. At the same time, some Council members are concerned that market forces, if fully unleashed, would cause too great an increase in prices and too many business failures for the economy to absorb. The Council recognizes that it should play a limited role in this broader economic debate, but appears ambivalent about whether or not to use "social" issues in making decisions. FTC/DOJ has spent considerable time helping both staff and councilors to understand the appropriate, limited role for an antitrust agency in such matters.

During this period, FTC/DOJ has seen improvement in the operation of the Council as an institution, although serious problems remain. As a result of FTC/DOJ input, the Council understands that the quality of work coming to it from its staff and that of the Competition Office is in many cases deficient, and has sent a clear message to staff that it wants to see improvements. Some staff now understand how a well-reasoned analysis of competition issues should look, and have demonstrated the capability to make such analyses. The Council has encouraged FTC/DOJ efforts to improve the analytic product.

Changes Anticipated in 2003

FTC/DOJ's original view was that a regional program encompassing such a broad range of development problems (ranging from countries without any laws to countries merely struggling with implementation) might require a resident advisor to coordinate the service of regional needs. This had been a highly successful formula in 2000-2001, when the FTC resident advisor in Bucharest, Romania, was about to spend substantial time as a kind of "circuit rider" in neighboring countries with problems different from those of Romania. The FY 03 ($200,000) funding, from which for the first time the FRY will also receive assistance, is inadequate to justify a resident advisor and a vigorous short-term regional program. Regional seminars and short-term missions were of sufficient frequency in FY 02 to allow FTC/DOJ to build on the progress made by the resident advisors and stay in touch with the specific needs of individual countries. The unique credibility and long-term professional relationships that the FTC/DOJ enjoys with the competition agencies in the region have helped to compensate for the lack of a resident advisor. FTC/DOJ has found that regional programs and short-term visits can be successful when built upon these already-established relationships.

DEPARTMENT OF STATE

Bureau of Educational and Cultural Affairs

Overview

In FY 02, the Bureau of Educational and Cultural Affairs (ECA) brought about 1,462 citizens of Central and Eastern European (CEE) countries to the United States and sent 570 U.S. citizens to CEE on short and long-term professional and academic exchange programs addressing a wide range of topics related to democratic and free-market reform. ECA's FY 02 assistance programs for the region were funded through the SEED Act, as well as through a significant percentage of ECA's own base appropriation under the Educational and Cultural Exchanges (ECE) Account. Only those programs that are SEED or jointly funded are described below.

Academic Programs

Northern Europe Initiative -- NEI (SEED-funded): This program provides funding for American faculty to teach at Baltic academic institutions as Fulbright lecturers, in cooperation with the Eurofaculty Program sponsored by the Council of Baltic Sea States. One lecturer is teaching U.S. economic history at the University of Vilnius, while another is lecturing in macroeconomics at the University of Latvia in Riga. Both Fulbright lecturers will teach in the Eurofaculty Program during the spring 2003 semester. Remaining FY 02 SEED funds will be used to support two to three additional lecturers in Estonia, as well as in Latvia and Lithuania.

Ron Brown Fellowship Program (SEED-funded): This program provides scholarships to qualified
students and mid-career professionals from CEE for one or two years of graduate study at U.S. universities, leading to a master's degree. Fellows conclude their academic program with professional internships in the U.S. of up to six months. In FY 02, 51 Ron Brown Fellows were selected to study business administration, economics, law, environmental management, educational administration, public policy, public administration, and communications/journalism. U.S. Embassies and Fulbright Commissions in the region recruit and select the grantees through open, merit-based competitions. The Institute of International Education (IIE), under a grant, is responsible for placing the grantees at U.S. universities and assisting them with internship placements. IIE also administers a small grant program to encourage professional development and community activism among Ron Brown alumni; 12 grants were awarded from this fund in FY 02. Highlight:

• Prominent Ron Brown alumni include the Minister of Justice in Albania, an Assistant Minister for Privatization in Serbia, an adviser to the President of Romania, and a Legal Counselor for the Ministry of Justice in Romania. Other alumni are in positions such as Senior Associate, McKinsey Company; Associate Banker, European Bank of Reconstruction and Development; Head of Legal Department, Producta Ltd.; Deputy Country Director, Mercy Corps; and Project Coordinator, Croatian Ministry of Environmental Protection and Physical Planning.

Bosnia-Herzegovina Undergraduate Development Program (SEED-funded): This program seeks to assist Bosnia's democratic and economic restructuring by bringing Bosnian undergraduates to the U.S. for a year of non-degree study at U.S. institutions, after which they return home to complete their degrees. The program exposes the students to the cultural and ethnic diversity of the U.S. The experience provides a strong example of tolerance in a democratic society and encourages ethnic reconciliation. In addition to the academic component, students participate in community service and gain hands-on professional experience during a summer internship related to their field of study. Students may choose one of the following concentrations: agriculture, American studies, business, criminal justice, economics, environmental management, journalism/mass communication, and political science. Fact:

• Since the program's inception in 1997, 52 students have participated and returned home. In FY 02, nine participants were placed at two universities that have received grants to host students: the University of Montana and the University of Pittsburgh. Former participants now work for such organizations as the United Nations Human Rights Commission and the International Crisis Group, and contribute articles to the Network Bosnia Daily.

Global Education Initiatives

Civic Education Curriculum Development Programs (SEED-funded): The Office of Global Educational Programs administers specialized curriculum development and training projects that emphasize civic education in collaboration with local partners throughout CEE. These projects are designed to equip the region's successor generations with the skills necessary to contribute as citizens to the development of civil society and the democratic governance of their countries. In FY 02, 223 U.S. and CEE citizens will participate in exchange activities under these civic education grants, with an additional 2,000 educators and 36,000 students in CEE countries taking part in the training components.

English Language Programs (SEED and ECA base-funded): The English Language Fellow Program is designed to provide universities, binational centers, teacher training colleges, ministries of education, and other educational language institutions with American professional expertise in English as a foreign language. This program's objectives are to promote the teaching of English to provide broad access to information and diverse perspectives, facilitate democratic institution building, and encourage participation in the global economy. Ten-month fellowships are given to senior-level English Language Fellows to conduct teacher training and development activities in areas such as teaching methodology, curriculum and text analysis, and/or English for Specific Purposes, as well as to junior-level EL Fellows who are recent TEFL/TESL MA graduates to do classroom teaching.

In FY 02, 12 English Language Fellows were placed in Albania, Bosnia, Estonia, Kosovo, Montenegro, Romania, and Serbia. Their focus was on the teaching of English to help in the transition to an open, democratic society, in educational and economic restructuring, and in dealing with cross-cultural issues. Program expansion is planned for FY 03, with additional SEED funding being secured for the placement of two fellows in Macedonia.

The English Language Specialist/Speaker Program is designed to provide posts with professionally trained Americans in the fields of TEFL/TESL or Applied Linguistics. These specialists work on short-term projects in curriculum design, material development, English for specific purposes, program evaluation, and teacher training. Project objectives support post Mission Performance Plan goals.

Citizen Exchanges (SEED and ECA base-funded): ECA's Office of Citizen Exchanges encourages the growth of democracy in CEE by supporting exchanges and training programs conducted by U.S. NGOs and universities and host-country partner institutions. These programs not only expand and enhance partnerships between U.S. and counterpart institutions, they also enable CEE country citizens to develop the knowledge and skills essential to their professional responsibilities. Program activities supported by the Office of Citizen Exchanges in FY 02 included internships, study tours, training, consultations, and extended, intensive workshops promoting two-way exchanges. Many of the programs were designed to accommodate non-English speakers and take into account the need for ongoing information sharing, training, and plans for self-sustainability. Programs typically offer support for the establishment of training centers, professional networks, Internet communication, and train-the-trainer programs. These grants also touch the lives of several hundred participants in regionally based training programs led by former grantees. Thematic priorities include leadership training for women, support for public awareness campaigns to prevent trafficking of women and girls, media internships, business management training through distance learning, diplomatic training, and public advocacy training for NGOs.

Media Internships: In FY 02, 23 media managers and journalists from Bosnia, Croatia, Macedonia, Montenegro, and Serbia took part in media internship programs conducted by the International Center for Journalists and WBUR/Boston University. Each organization brought a group of 11 or 12 participants over, with a mix of nationalities in each delegation. The program included a weeklong orientation, five-week internship assignments at small-to-medium-sized newspapers and radio and TV stations throughout the U.S., and a final debriefing. In FY 03, the Network on Tolerance in Journalism Program, implemented by New York University's Center for War, Peace and the News Media in cooperation with its 18 media partners in Southeastern Europe, will continue to train media professionals to increase the levels of tolerance and inter-ethnic dialogue in journalism across the region. This program trained 212 journalists in FY 02, and FY 01 and FY 02 program activities in the region reached an estimated 352 media representatives from 93 newsrooms in eight countries and regions (including Kosovo and Montenegro).

Trade and Transport Facilitation Project: This three-year grant from Stability Pact SEED funds supports the development of trade and market-based economies in Albania, Bosnia, Bulgaria, Croatia, Macedonia, and Romania. The project includes train-the-trainer workshops on such topics as business ethics, anti-corruption mechanisms, domestic statutes and international conventions, and professionalism; web site development; a distance learning initiative; meetings to identify procedural problems causing delays at the borders; and exchanges between U.S. trade and transport professionals and emerging leaders in the SEE transport field. To date, 67 seminars have been conducted in 26 cities in SEE, and over 1,200 people have been trained.

Anti-Trafficking: The Office of Citizen Exchanges awarded two grants in FY 02 to address the issue of trafficking in persons in Southeastern Europe (SEE). Both the International Center for Journalists and WBUR/Boston University will conduct media training programs designed to help combat trafficking in women and girls SEE. The programs include four, four-day workshops in SEE for media representatives and NGOs on trafficking issues; on-site media consultations after each workshop in each of the nine countries and regions represented; a trainer-training program to encourage widespread information sharing; and the development of a source list of organizations and experts on trafficking throughout SEE for journalists to use for their reporting. Other project activities include a month-long program for 18 participants from SEE in Boston and Washington, D.C., and an in-country workshop in Belgrade for the original 18 participants, as well representatives from NGOs working on anti-trafficking issues.

Diplomatic Training: In FY 02, the Office of Citizen Exchanges continued to support the development of a unified, multi-ethnic foreign ministry in Bosnia-Herzegovina, with grants to Meridian International Center (MIC) and Diplomatic Tradecraft Associates. For FY 03, Global Education Services has received a grant to conduct a diplomatic training program for Macedonian Ministry of Foreign Affairs (MFA) officials. The program consists of four training/consultation sessions in Skopje; a two-week, Washington, D.C.-based program for 15 Macedonian MFA officials, that includes site visits, simulation exercises, and customized de-briefing sessions; and a train-the-trainers program to ensure the training initiative's sustainability.

Secondary School Exchange and Partnership Programs: Secondary School Exchanges and Partnerships support exchanges of high school students and educators between the U.S. and CEE countries, through youth leadership programs, School Partnership Programs, and the like. The long-term objectives of these programs are to: 1) foster interaction between U.S. and CEE secondary school students to promote mutual understanding; 2) integrate CEE citizens into the world community by helping them build open societies and promote democratic values and institutions in their countries; 3) build sustainable partnerships between CEE and U.S. school systems and private organizations; and 4) promote educational reform and citizen empowerment in the region.

Youth Leadership Program for Bosnia-Herzegovina (SEED-funded): The Youth Leadership Program for Bosnia-Herzegovina, now in its fourth year, serves State Department priorities of promoting civic education and leadership development for youth from both the Federation and Republika Srpska. Twenty-two students and teachers took part in the program in FY 02. The students are between 15 and 18 years of age, English-speaking, and show aptitude for leadership; the teachers chosen have demonstrated support for youth activities. Participants engaged in discussions and debates on such issues as democracy in general, democracy as practiced in the U.S., leadership, education, cultural values, and reform in Bosnia. They learned to express opinions, consider the opinions of others carefully, compromise, and work in teams. In June 2003, 18 secondary school students and four educators from Bosnia will take part in a four-week, program of workshops, community service activities, school-based student groups, meetings with community leaders, and discussion groups in the U.S.

Brèko Academic Semester Program (SEED-funded): This program, initiated in 2001, supports the participation of secondary school students from the Brèko District of Bosnia-Herzegovina in an academic semester program in the U.S. The Office of Public Affairs (OPA) of Embassy Sarajevo, in conjunction with the Office of the Deputy High Representative and Supervisor of the Brèko District, has made the education sector a primary focus of public diplomacy programming. USG-funded programs for youth target the training and preparation of student leaders. The program aims to promote democratic values and inter-ethnic harmony in the Brèko District; develop leadership skills among the participants; and promote mutual understanding between the peoples of the U.S. and Brèko. The objective is for the students to interact and form friendships with each other, across ethnic lines, as well as to interact and benefit from their experience with American students and teachers. In FY 02, 22 students from the district participated in this AYUSA-administered program.
.
Serbian Youth Leadership Program (SEED-funded): The Serbia Youth Leadership Program seeks to identify future leaders in schools in key cities of Serbia and bring them to the U.S. for an intensive educational and training experience. The objectives are to provide the participants with leadership skills and expose them to key elements of the American democratic process; promote ties between schools and communities in Serbia and the U.S.; and to foster mutual understanding between the people of the U.S. and of Serbia. This is the third year of the program, and the U.S.-based project will take place in April 2003 with 32 participants (24 students/8 teachers) from eight cities in Serbia.

Southeast Europe Youth Leadership Program (SEED-funded): The third regional youth leadership program will bring about 116 students and teachers from Bulgaria, Kosovo, Macedonia, Montenegro, Romania, and Serbia, to the U.S. for a four-week program on civic education, leadership, conflict resolution, and community activism. The goals are to help the participants understand civic participation and the rights and responsibilities of citizens in a democracy through civic education; develop leadership skills among secondary school students appropriate to their needs; and foster relationships among youth from different religious and ethnic groups based on their commonalities. The students (ages 15-18) and adults (teachers or community leaders) take part in several small group intensive projects, each focusing on advocacy, negotiation, investigation, and leadership skills. Highlight:

• As an example of the active and charitable roles that alumni have taken in their own communities, on November 13, 2002, alumni in six cities in Serbia (Belgrade, Subotica, Niš, Èaèak, Valjevo, and Pirot) arranged open debates on issues related to children's rights, in connection with Children's Rights Day (November 20). Admission to the debates for the public was a toy or book that could be given to children at local orphanages. In Èaèak, for instance, student alumnae Milena Otaseviæ and Dragana Simoviæ worked with teacher alumna Biljana Misoviæ and four other debaters to present affirmative and negative arguments on the topic of parental curfews. Ms. Simovic concluded her report by noting that this event "might have been a good way to popularize a debate as a means of problem-solving and negotiation in our town."

School Connectivity Project for Southeast Europe (SEED-funded): The School Connectivity Project for Southeast Europe promotes electronic education under the framework of the Stability Pact e-Southeast Europe initiative (e-SEE), which develops the digital economy in the region. This project will enhance the use of information technologies in schools, while promoting inter-ethnic dialogue among students from different SEE countries and generating personal and institutional ties among students, educators, and their schools. It will also engage U.S. schools in a multilateral linkage to promote mutual understanding and shared expertise. Through an open, merit-based competition, as many as 80 high schools in participating SEE countries are being selected to receive computers and Internet connections. The program will provide training and support for developing and disseminating joint thematic projects on topics related to the region's shared history and culture.

Montenegro Young Business Leaders Program (SEED-funded): This program offers extracurricular programs in applied economics and an exchange program for about 36 secondary school students and educators in Montenegro. The exchange participants will travel to the U.S. in spring 2003 for a four-week program designed to provide an intensive study of applied economics, practical business skills, entrepreneurship, and related ethics and character education. The following summer, six teachers and community leaders from the U.S. will conduct teacher-training sessions in Montenegro to introduce these economics education programs to a wider audience. The program is administered in eight pilot schools by Junior Achievement International (JAI). Response from the Ministry of Education, teachers, school administrators, students, and local business people has been positive, and demand for the classes is such that they may become part of the regular school curriculum in 2003-04. Forty-two students and educators from Montenegro participated in the program in FY 02.

International Visitor/Freedom Grant Programs (SEED and ECA base-funded): ECA's base-funded International Visitor (IV) program gives participants from CEE an opportunity to familiarize themselves with American society, government, and culture; study U.S. approaches to their professional fields; and establish professional contacts with U.S. counterparts. The Freedom Grant Program, the SEED-funded counterpart of the IV Program, brings mid to senior-level regional and local government officials and key professionals in selected fields to the U.S. to meet with their professional counterparts and examine issues related to democratic and economic reform. U.S. Embassies nominate the program participants. They first spend several days meeting and developing working relationships with experts in their professional fields in Washington, D.C., and then throughout the U.S.

The Freedom Grant Program is designed to be flexible and responsive to specific Embassy requests for short-term exchange programs for influential public and private-sector decision-makers. Participants develop working relationships with their U.S. counterparts, from whom they can gather information on an ongoing basis. The programs, which are typically two to three weeks long, have included government officials, members of federal and local legislatures, leading economists, journalists and government spokespersons, regional leaders, judges and prosecutors, and NGO representatives. Topics addressed in FY 02 included elections, the U.S. system of government and politics, foreign policy decision making, intergovernmental relations, economic development and regional investment, entrepreneurship, small-business development, HIV/AIDS, rights of disabled, religious freedom, immigration and consular issues, judicial reform, and journalism. In FY 02, 148 grantees from SEE participated in Freedom Grant projects.

Like the Freedom Grant Program, ECA's IV Program gives CEE participants an opportunity to familiarize themselves with American society, government, and culture; study U.S. approaches to their professional fields; and establish professional contacts with their U.S. counterparts. IV program participants, who are nominated by U.S. Embassies, come to the U.S. for about three weeks to meet with experts in their fields in Washington, D.C., and various cities around the country. Program topics in FY 02 included civic education, media relations, rule of law, trade, state and local government, American studies, taxation and budgeting, social welfare, health, media relations, and NGO management.

Country Program Highlights

Albania

Civic Education: Under an ECA grant to the University of Washington, U.S. experts are collaborating with a team of six Albanian curriculum specialists to publish a civic education handbook for middle school teachers. Since 1995, SEED funds have supported a U.S.-based training component and in-country training of 1,700 Albanian teachers and professors. The grant has also established civic education resource centers in the cities of Skhodra, Korca, Elbasan, and Gjiokastra. At the completion of project activities, over 10,000 copies of the curriculum material will be disseminated to schools throughout Albania. The Civic Education Project is expected to train close to 4,000 teachers in 25 cities in the use and implementation of civic education curriculum for elementary and secondary level schools.

• On July 19, the newly appointed Minister of Education, Professor Luan Memushi, held a conference on "Human Rights in Education in Albania," where he congratulated members of the ECA-funded Civic Education Curriculum Development Project for their contribution to civic education training.

Institutional Linkages/College and University Partnerships:

• Drexel University's Institute for the Humanities is assisting the University of Tirana to develop a new center for public policy and political science. The center will be run independently from the Law and Social Sciences faculties. The current Rector concurs with this approach to avoid internal divisions among competing faculties (law and social sciences).

• Southern Illinois University conducted two workshops in 2002 for the Shkodra University business faculty. The workshops focused on empirical research methods. U.S. professors are working with 10 Albanian professors and 10 students from the University to apply theoretical concepts in practice, including the development of local industry business plans. Four Albanian graduates with degrees earned at Southern Illinois University are now teaching at Shkodra University.

International Visitor/Freedom Grant Program: A group of seven participants, comprised of high-level law enforcement officers, a prosecutor, and a naval officer, examined ways to strengthen domestic and international collaboration on prevention, intervention, investigation, and prosecution of trafficking abuses and organized crime schemes. They also explored coordination among federal agencies, as well as between the judicial branch and law enforcement, in responding to these crimes. Their program featured frank exchanges with USG agencies and NGOs about the situation in both the U.S. and Albania, including the need to establish a strong legal system in Albania to fight illegal trafficking effectively. Discussions and site visits provided concrete information and methods for pre-empting and for responding to these crimes, as well as for further U.S.-Albanian collaboration.

Institutional Linkages/College and University Partnerships: California State Polytechnic University and the New Bulgarian University completed a needs assessment of the graduate program to evaluate the current state of public administration at the Bulgarian institution. Five professors from the New Bulgarian University developed graduate courses and instructional materials. Emphasis on student-centered pedagogy is a priority in the partnership with the California institution. Four workshops targeting local government officials have been organized. Municipal officials have been interviewed to gather insights into municipal issues, policies, and the decision-making processes. Collaboration is ongoing with the National Association of Municipalities of the Republic of Bulgaria and the National Association of Legal Initiatives in Local Government.

Civic Education:

• The University of Iowa is administering a civic education project in Bulgaria. A team of six teachers from Bulgaria worked with three curriculum specialists from the University of Iowa to draft a civic education course for the elementary and secondary grade levels, emphasizing human rights, citizenship, and conflict resolution. One hundred and sixty teachers and faculty participated in pilot testing and training activities. Additional project activities are designed to support publication of 500 copies of the curriculum, expand the training and dissemination effort to additional schools in Haskovo, Ichtiman, Dobrich, and Samokov, and support a wrap-up conference in Sofia. SEED funds for this multi-phased project have become available incrementally.

• The University of Tennessee and Burgas Free University are working together to develop a teacher-training pedagogical model addressing local culture and citizenship participation. The project focuses on pedagogical approaches in teacher training, curriculum development, and models of community action. Project participants also include high school teachers.

International Visitor/Freedom Grant Program:

• Seven representatives of the Bulgarian National Assembly, including the Chairman and Members of the parliamentary Committee on International Security and Public Order, learned about U.S. national security legislation, including the U.S. Homeland Security initiative.

• Minister of Justice Anton Stankov and four officials of his Ministry examined the institutions and operations of the U.S. legal system at the federal, state, and local levels. Upon their return, Minister Stankov held a news conference on May 27, 2002, to propose the creation of anti-corruption departments in all government institutions. According to press reports, "during his visit in the U.S., Stankov saw models of how such internal departments prevented corruption and provided oversight for maintaining ethical norms in each state body."

Croatia

• Four officials from the Croatian Government's Office of Human Rights examined U.S. human rights law, enforcement of trafficking-in-persons laws, and local community responses to domestic abuse and issues of civil rights. Participants were particularly impressed with local-level initiatives, including the Jacksonville Police Department's Victim Advocate Office.

• Six Academicians and Information Resource Managers from the Universities of Zagreb, Split, and Osijek, and from the Rudor Boskovic Institute, explored ways in which libraries, librarians, and educational institutions adapt to the newest developments in technology. They were particularly interested in studying how technology is used to provide wider, more open access to information and knowledge both in libraries and classrooms, and how such open access affects information security.

Estonia

• The University of Pittsburgh's Katz School of Business is supporting the modernization of the University of Montenegro Economics Faculty's business curriculum. A careful needs assessment of management education will be conducted to support an executive education program to train business managers. As the grant was awarded in the fall of 2002, activities are just beginning.

• A solicitation document is in progress to invite U.S. institutions to submit proposals to support a public administration project for Montenegro. A grant is expected to be awarded in mid-2003.

• The University of Pittsburgh is supporting junior faculty development at the University of Belgrade Law School. The project is in its second year, and two Serbian students have completed their law degrees. One is now teaching International Business Law and is also involved in harmonizing Serbian laws in preparation to Serbia's accession to WTO. Another student holds a leadership position at the Yugoslav Committee for Human Rights (YUKOM), coordinating the work of Serbia's resource centers supporting democracy building. The partnership has also trained selected law students who will be presenting legal cases at the international Moot Court Competition in Vienna.

• The University of Pittsburgh is assisting the Belgrade University Faculty of Political Science to develop a new undergraduate curriculum in public administration. This partnership will address issues of local government management and decentralization.

• The University of Texas at Arlington is assisting the University of Kragujevac to strengthen its capacity as a regional center for public management education. A certificate program to train Serbian government officials and students is under way. Local government entities are eager to participate in the workshops to train local government officials.

• The State University of New York at Cortland and the University of Nis are addressing issues of democracy by supporting the development of a political science curriculum. Six participants from the University of Nis Faculty of Law and Philosophy met with three SUNY counterparts at the annual conference of the American University for Democracy in Timisoara, Romania. This meeting enabled Serbian participants to discuss curriculum with other U.S. scholars. SUNY participants traveled to Nis and discussed project plans for 2003. Four professors from Nis are expected to arrive at SUNY-Cortland in January of 2003 to conduct research for curriculum material. A private collection of 400 books in political science has been donated to the University of Nis.

• Portland State University is helping the Faculty of Economics of Novi Sad to strengthen faculty expertise in modern business practices. The project is structured around several core areas that include training doctoral students and developing certificate programs in international business for several audiences, including students, government officials, and private sector representatives from the Novi Sad region to support foreign investment. Two doctoral students from Novi Sad are working on curriculum material and marketing and accounting research at Portland State University.

Educational Advising: SEED funding has been used to re-establish an educational advising center in Belgrade to provide current, accurate, and impartial information about U.S. education to Serbian students and scholars. Funding was used to renovate and equip space at the Open School of Belgrade, and to cover operating costs of the new center. The center hired an experienced education adviser and used funding to send her to the Zagreb advising center to observe operations, receive updated information on relevant topics, and to learn about cost-defrayment and revenue-generation schemes. Statistics for the former Yugoslavia show that 2,027 students are studying in the U.S., a 13 percent increase from the previous academic year.

Serbia Youth Leadership Program: Program alumni have been active in their communities and are implementing what they learned in the U.S. Pancevo students have collected donations at their high school for patients needing kidney transplants. Subotica students took part in a community service project with a local church and distributed food to the homeless for Christmas. The Nis and Kragujevac students attended workshops of the School of Democracy and Human Rights. Alumni from the spring 2002 project met with the mayor of Belgrade on their return from the U.S. They were very enthusiastic and full of optimism about their plans to open Key Clubs (service clubs) in their own communities, organize lectures on drug abuse at their schools, and visit local orphanages to read books to the children.

English Language Fellow Program: The senior English Language Fellow at the Belgrade Law School and his counterpart, in addition to teacher training, curriculum development, and methodology, are teaching ESP to law students using the simulation of the court process -- students play the roles of prosecutors, judges, and lawyers, with the discussion in English. The law students' qualifications improve because they can better understand and read in English, which gives them an improved understanding of American attitudes and culture.

Citizen Exchanges:

• Women's Leadership. Through a grant to Drexel University, ECA supports training activities designed to strengthen the role of women in leadership positions and in decision-making bodies in Serbia and Montenegro. Project activities include two two-week programs in Washington, D.C. and Philadelphia, where participants will attend seminars on coalition building, fundraising, diversity, and leadership skills; visit government offices, community groups, courtrooms, and media outlets; and take part in short internships. Workshops led by U.S. experts and participants will also be held throughout Serbia and Montenegro. In FY 02, a 14-woman delegation from Serbia and Montenegro came to Washington, D.C. and Philadelphia. An American delegation held seminars and visited cities and towns in Serbia and Montenegro in September.

• Law Linkage Project. Through a grant to ABA/CEELI, ECA supports the rule of law and transition to a market economy by improving legal education in Serbia. The project will link three law faculties in Serbia -- Novi Sad, Nis, and Kragujevac -- to three law schools in the U.S. The program will include exchanges of administrators, faculty, and students, and is designed to develop practical-clinical-legal training skills for Serbian professionals. This project builds upon a previous ECA grant that linked law faculties in Skopje, Podgorica, Sarajevo, Banja Luka, and Pristina with U.S. law schools.

International Visitor/Freedom Grant Program:

• The Mayors of Kraguijevac and Cuprija visited the U.S. to gain an overview of how local government functions in the U.S. federal system, and of economic development initiatives at the local level. Through the program, the mayors became aware of new ways to transform and adapt older economies and attract new investment, and how vital smaller businesses are for the local economy. Also, the mayors were very intrigued by the relationship of local government to the academic world through the various studies done in local universities.

• Four representatives of the Montenegro Assembly took part in a project focusing on decentralization in the U.S. and the powerful role of state governments. Political leaders in Serbia and Montenegro, the last remaining republics of the former Yugoslavia, will decide whether to preserve or abolish their federation. Participants were eager to discuss how political decisions are reached on difficult issues, such as transitioning regional economies. Finally, the Montenegrin Parliament formed two special investigative committees in FY 02 to probe alleged abuses in the privatization process and in the relationship between government and organized crime. This program acquainted participants with the Congressional institutions involved in auditing USG programs and investigating abuses.

Kosovo

• Arizona State University trained 13 Kosovars to develop courses in public administration and business administration. Seven additional professors will be at Arizona State University for the 2003 spring semester to develop new courses in public administration and strengthen the business management curriculum. One spin-off of this project is on-site management training workshops for senior managers at the Kosovo electrical utility plant, which is experiencing serious disruptions of electrical power in Pristina. Kosovar participants are expected to play an important role in transforming the management culture at that plant. Finally, six U.S. English teachers have been teaching at the University of Pristina since the fall of 2001 to support English language training for faculty and students of the University.

• The University of Pittsburgh is supporting faculty development in the University of Pristina Law Faculty. The project has several components: one to equip Kosovars to build and defend legal cases, develop new courses, and participate in the University of Pittsburgh's three-week English for Lawyers program. Another important component is teaching law at the University of Pristina by U.S. law professors. Library acquisitions and technology to support a functional law library comprise another component.

Civic Education: The University of Pittsburgh's Institute for International Studies in Education (IISE) is developing a series of action research projects to support the Faculty of Education at the University of Pristina. Selected high schools are targeted to promote civic learning.

Educational Advising: SEED funding was also used to establish an educational advising center in Kosovo to provide accurate, impartial information about U.S. education and opportunities for study in the U.S. A former Ron Brown participant, hired as educational adviser, has established a comprehensive advising operation, which includes administration of ETS standardized tests, test preparation courses, and translations of official school and university transcripts, certificates, and diplomas. The advising center boasts an impressive web site (http://www.ussac.org/), which provides much information about studying in the U.S.

International Visitor/Freedom Grant Program: Seven newly elected Kosovo National Assembly members examined the role of the U.S. Congress and state legislatures through a project whose overall focus was on getting business done in a legislative body. Participants were also provided an opportunity to discuss sensitive policy issues, particularly the future status of Kosovo, with U.S. foreign policy officials.

Latvia

Muskie Graduate Fellowship Program: In celebration of the tenth anniversary of the Muskie/FSA Graduate Fellowship Program, the U.S. State Department's Bureau of Educational and Cultural Affairs (ECA) named 18 outstanding persons from Eurasia to receive the first Edmund S. Muskie/FREEDOM Support Act Graduate Fellowship Program Alumni Awards. Ziedonis Udris, Attorney at Law, CB&M Law Offices, was honored for contributions in the area of international commercial law, international arbitration, and human rights in Latvia.

Institutional Linkages/College and University Partnerships:

• Monmouth University is improving social work education and delivery in Latvia, where only 9 percent of social workers are properly trained. Building on an existing relationship with the Attisaba Higher School of Social Work and Social Pedagogy in Riga, Monmouth is helping to develop a graduate curriculum in social work. Project activities include faculty exchanges, collaborative research, internship placements for graduate students, and collaboration with a service NGO in Latvia. Monmouth is using this experience to develop further its own Master's in Social Work program, which offers concentrations in International and Community Development and Families and Children.

• Lewis and Clark College is building on a previously funded grant that produced significant results in developing a legal clinical education program at the University of Latvia. The current partnership is strengthening the law curriculum and facilitating out-of-court resolution of cases through legal negotiations. The project plans to conduct seminars for judges and Members of Parliament further to explore alternative dispute-resolution opportunities that can reduce court delays and improve access to justice. Activities include legal clinics, workshops, and a "citizen justice" conference focusing on access to justice, in collaboration with the judiciary, lawyers, and NGOs in both U.S. and Latvia.

Lithuania

Secondary School Partnerships: Forty-two schools -- almost half of the country's high schools -- applied to be among the nine schools that would be chosen to participate in the School Connectivity for Southeastern Europe project. MtNet, a Macedonian Internet service provider, has agreed to make ISDN lines available for the nine schools for a year without charge, in exchange for some publicity.

International Visitor/Freedom Grant Program: Six newly elected officials in their first year of public service participated in a project designed to demonstrate how democracy functions on the local level in the multi-ethnic context of the U.S., and to see the divisions of authority among the local, state, and federal governments. The mayors were especially eager to see practical examples of how their counterparts provide information and services to their constituents, since their communities had each received a USAID grant financing the establishment of Community Information Centers in their townships.

Romania

Civic Education: With SEED funds provided in FY 01 and FY 02, the Institute for Training and Development is administering a civic education project in Romania. A team of six Romanian teachers worked with three U.S. curriculum development and political science specialists to create a civics and comparative government course for the 11th grade level. The project also trained 100 teachers and established a civic education web site. Additional project activities are designed to develop civic education resource centers in eight Romanian cities, and to expand training and publishing activities.

The Ministry of Education has officially approved the use of the ECA-funded Civic Education Curriculum for the 11th grade in schools throughout Romania. The efforts of the Romanian curriculum team and the U.S. grantee organization, the Institute for Training and Development, have benefited nearly 100 schools throughout the country. Plans are under way to develop eight Civic Education Centers and a Romanian Association of Civic Education.

DEPARTMENT OF STATE

Office of International Information Programs

The Office of International Information Programs (IIP) in the Department of State is the principal international strategic communications service for the U.S. foreign affairs community. IIP designs, develops, and implements a wide variety of strategic public diplomacy initiatives and communications programs, using the Internet and print publications, traveling and electronically transmitted speaker programs, and information resource services.

Using cutting-edge technology, IIP's programs and services are designed to articulate U.S. government policies and actions and to present their context in U.S. society and values. Authorized under the Smith-Mundt Act, these programs and services are created solely for international audiences, such as the media, government officials, opinion leaders, and the general public in more than 140 countries.

IIP's products and services -- including web sites and other Internet services, electronic journals, U.S. Speaker programs, print publications, and CD-ROMs -- are uniquely designed to support vital U.S. foreign policy interests by increasing international support for U.S. policies, and to promote understanding of the political, intellectual, and social context for these policies. IIP also manages Information Resource Centers overseas and offers Washington-based reference specialists to answer requests from abroad for specialized information.

Program Description

Under its U.S. Speaker/Specialist Program, IIP recruits speakers and specialists from both the public and private sectors to speak and consult on such matters as international security, trade policy, democracy, civil society issues, education, free and fair elections, ethics in government, the environment, narcotics, the rule of law, and a free and responsible press. Those who travel abroad under this program serve from two days to two weeks. The program also includes Professionals-in-Residence (PIRs), who serve for periods of three weeks to 10 months, to act as consultants to media outlets, government ministries, parliaments, and other organizations promoting the development of democratic institutions. These programs and services are intended as a vital component of U.S. Missions' public diplomacy activities. They help those Missions to gain better access to host government institutions and local media organizations, and provide practical assistance to the people responsible for fostering and building democratic institutions throughout Central and Eastern Europe (CEE).

Region-Wide Overview

Since 1989, American experts under the U.S. Speakers/Specialist Program have gone to CEE in small and large groups; stayed for periods of two weeks to 18; and participated in seminars, conducted hands-on workshops, and served as resident advisors for public and private institutions. Journalists and media experts, for example, help build newspapers and TV media outlets that will form independent sources of news and reflect the freedom of the press ideal. Speakers/Specialists usually are NGO professionals; university professors; national, state, and local government representatives; attorneys; media and communication experts; and researchers. U.S. Missions have appreciated speaker/specialist programs for the lasting contributions they have made to the democratic reform process in these countries. Speakers/Specialists often have an almost immediate impact, nurturing valuable public diplomacy contacts. Speakers/Specialist alumni have been eager to share their experiences with the American people through articles and lectures. Their experiences and insights have also created whole new bodies of valuable knowledge about CEE that have been made available to media organizations, public policy institutions, and universities.

In FY 02, IIP sent 20 Speakers/Specialists and Professionals-in-Residence to SEED-eligible countries. A single speaker may be programmed in multiple countries and on several different topics.

Country-Specific Highlights/Assessments

Albania

During his visit to three Albanian TV stations, video journalism expert Hugo Perez achieved significant accomplishments within only a few days. His visit resulted in such tangible benefits as improved images, better stories (through an enhanced balance of images and scripts), as well as innovative, productive collaboration between reporters and cameramen. Everyone involved benefited from the presence of Mr. Perez, and the Mission would welcome a return visit in the future.

Paris-based media specialist Paul Miller (a member of the Feature Network Service) conducted a training course on International News reporting at the Albanian Media Institute, in which 15 journalists from both print and electronic media participated. Mr. Miller's visit to Tirana provided an excellent opportunity for Albanian journalists not only to consolidate resources they already possessed in their media arsenals, but also helped them to create new ones.

Jay Nordlinger, Managing Editor for "The National Review," left a highly favorable impression of how the U.S. media are neither a tool nor a mouthpiece of the government, a concept that the Albanian press is still learning. Overall, Mr. Nordlinger helped set the record straight about America's role in the world since the terrorist attacks on New York and Washington in September 2001.

Bosnia- Herzegovina

Speaker/Specialist William Blacklow conducted a three-week program aimed at improving the skills of the public affairs office of the Council of Ministers of Bosnia-Herzegovina and of the State-level Ministries. The program's objective was to assess the needs of the press offices and to work with these officers, individually, on improving their skills and understanding of the important tasks they perform. Mr. Blacklow's program had the immediate result of drawing the State-level press officers together.

Brian Fontes, former FCC Chief of Staff and currently Vice President for Government Relations for Cingular Wireless, has visited Bosnia on numerous occasions in recent years under SEED-funded programs. During FY 02, Mr. Fontes traveled there as U.S. Speaker/Specialist for consultations on media-related issues, particularly on those involving broadcast and media regulation. He also took part in the Bosnia Communications Regulatory Council meeting, September 23-24, 2002. Mr. Fontes is Chairman of the Council, which is the single most influential body in broadcast media development and sustainability in Bosnia.

Romania

Judge Rich Leonard, Chief, Federal Bankruptcy Court, North Carolina, visited Romania for two weeks in January and February 2002, to consult on caseflow management and technology in the Romania courts. Judge Leonard met with court personnel from the Minister of Justice Rodica Stanoiu on down to court clerks in both Bucharest and the city of Brasov. His findings and report have been circulated to other elements of the Mission involved in court reform and provided to the Minister of Justice. According to U.S. Embassy Bucharest, Judge Leonard is a keen observer and a skillful diplomat -- qualities that make him very effective in countries such as Romania.

Slovakia

Election Consultant Bill Tucker conducted groundbreaking get-out the-vote (GOTV) workshops for small groups of NGO representatives in Kosice, Presov, Trencin, and Banska Bystrica. He brought certain American insights into election campaigns to Slovakia at a time when various NGOs and other organizations were developing their strategies to elevate the level of public debate and raise issues that could help inform and motivate the average citizen.

While much of IIP Speaker/Consultant Ann Stone's work centered on advising NGOs on activities and strategies in the pre-election period, she was equally interested in helping NGOs and other organizations to develop long-term infrastructure and planning. It is a tribute to her effectiveness that after her second visit to Bratislava, she left the NGO community asking for more. Ms. Stone made her biggest impact in her work with women's organizations. She showed a clear sense of the role that women could and should play, as candidates as well as voters, and Slovak women responded enthusiastically to her.

Independent media consultant Ronald Klayman served as a Professional in Residence, working with several local TV stations. He addressed issues of TV broadcasting and the management of TV networks. Mr. Klayman also served on the jury of the 7^th International Festival of Local TV Broadcasters in Kosice. There he also participated in roundtable discussions that are an integral part of the Festival activities.

Political Consultant Tim Burke provided GOTV training to a number of civic groups in Banska Bystrica, Nitra, and Bratislava during his one-week program, in June 2002. Mr. Burke was one of five political professionals who traveled to Slovakia last summer to assist NGOs in preparing and designing citizen-involvement initiatives for the September parliamentary elections. Their visits helped energize the NGOs that subsequently became involved in the December local elections as well.

BROADCASTING BOARD OF GOVERNORS (BBG)

During FY 02, the BBG's International Broadcasting Bureau, International Media Training Center, conducted 28 SEED-funded workshops for more than 660 journalists and media managers from Central and Eastern Europe. Seventeen workshops were held overseas, in Albania, Bosnia, Croatia, Kosovo, and Macedonia, with the remaining 11 workshops taking place throughout the United States.

Workshop topics addressed were:

• University Journalism Training (Albania)
• Internet Training (Albania)
• Ethnic Diversity (Bulgaria)
• Serbian Press Spokesperson
• Investigative Reporting (Radio/TV) (Bosnia, Macedonia, Montenegro, and Serbia)
• Radio/TV Skills (Albania and Bosnia)
• Trafficking in Women/Human Rights (Regional), held in Croatia
• Advertising Practices (Kosovo)
• On-Camera Presentations (Kosovo and Macedonia)
• Feature Writing (Kosovo)
• Studio Training (Kosovo)
• Editors Workshop (Croatia)
• Analytical Reporting (Macedonia)
• Public Radio Station Management (Bosnia)
• TV Reporting Skills (Croatia)
• Photojournalism Workshop (Macedonia)
• Media Managers (Slovakia)

Oral and written program evaluations have been unanimously positive. Posts have been extremely eager to have additional programs placed in their countries, as well as abroad.

U.S. DEPARTMENT OF THE TREASURY

Office of Technical Assistance

The Treasury Department's Office of Technical Assistance (OTA) conducts advisory assignments in the following five functional areas of Treasury's expertise: budget formulation and management, tax administration and policy, financial institutions regulation and policy, government debt issuance and management, and financial crimes enforcement policy. OTA programs are carried out within a government-to-government/ministry-to-ministry context and benefit from substantial Treasury economic policy input.

OTA's Financial Crimes Enforcement Policy Team provides technical assistance in three main areas: 1) money laundering and terrorist financing; 2) anti-corruption policies and procedures; and 3) organizing and training law enforcement entities to help them detect, investigate, and prosecute financial crimes. This team was active in SEED Act countries prior to the September 11 terrorist attacks, but expanded its programs substantially after that tragedy. Using SEED funds provided both directly and through the State Department's Bureau of International Narcotics and Law Enforcement Affairs (INL), OTA managed projects to combat corruption, money laundering, and the financing of terrorist activities in Albania, Bosnia-Herzegovina, Bulgaria, Macedonia, Poland, Romania, and Serbia.

The range of OTA's Enforcement activities in SEED countries in FY 02 was particularly notable. In Albania, OTA advisors helped the country to improve its ability to freeze the financial assets of terrorists, when its prosecutors took action against a terrorist (as designated on both the U.S. and UN lists) with financial holdings there. Enforcement advisors helped financial intelligence units (FIUs) in Bulgaria and Poland to improve their organization and procedures better to track evidence of financial crimes. In Serbia, OTA Enforcement advisors assisted the government to draft anti-money laundering legislation that was enacted in FY 02, as well as helping to establish and organize Serbia's FIU.

Albania

Financial Institutions Policy and Regulation Program (FIPRP): A Treasury Department resident Banking advisor provided technical assistance to the Ministry of Finance (MOF) on the privatization of the state-owned Savings Bank of Albania. The MOF announced its intention to sell the Savings Bank in late 1999, and since March 2000 a FIPRP advisor has worked with it in all aspects of the privatization effort. This includes preparing the bank for sale, structuring the sales methodology, writing the marketing document, and responding to information requests from potential bidders, among other tasks.  Despite an extensive marketing effort and due diligence performed by two Italian banks, no firm offers were received by the final bid date of June 30, 2002.  It was decided then to suspend the attempt to privatize the bank, as several structural factors were discouraging potential bidders. Among the reasons cited by interested banks that, ultimately, did not bid for the Savings Bank were the following: uncertainty created by market share limitations contained in the Law on Competition; the unprofitability of a number of small branches in the bank's large branch network; and the bank's significant credit exposure to the Government of Albania (GOA) through its large portfolio holdings of government treasury bills.

The GOA is currently debating the merits of a radical restructuring of the Savings Bank to attract potential investors. Any such restructuring must include credible progress in reducing its credit exposure to GOA treasury bills. As a result, the Minister of Finance has requested that Treasury convert its program to debt management technical assistance, with the goal of reinvigorating the bond market and creating demand for GOA securities outside of the Savings Bank. Success in this effort would remove a critical obstacle to privatizating the Savings Bank.

Bosnia-Herzegovina

Budget Policy and Management: The Treasury Department resident advisor provides budget technical assistance at both the Federation and State level in Bosnia-Herzegovina (BiH). OTA Federation-level assistance in FY 02 supports MOF efforts to produce an efficient budget planning and execution function, and the advisor was instrumental in helping the MOF develop draft procedures for the preparation, submission, and approval of operating budgets. The advisor also provided training to cement advances and complete implementation of new budget formulation and execution procedures. With USAID and Treasury asssitance, the Federation government established modern treasury and accounting systems. The advisor's work program supported these modernization programs by training MOF counterparts in how they could improve the Federation Treasury's cash and debt management functions.

OTA State-level assistance is designed to improve budget practices in the nascent State government apparatus, particularly in the context the newly introduced financial recording systems and projected revenue growth from the implementation of the VAT. USAID invested substantial sums to install modern technology and financial systems at the State level, and OTA's work in implementing modern budget practices and procedures at State-level institutions supports this USAID initiative.

Financial Institutions Policy and Regulation Program (FIPRP): Treasury's Financial Institutions advisor helped develop the Federation Law on Deposit Insurance. This law became the pattern for the Deposit Insurance Law for the Republic Srpska (RS). Based on these successes, the advisor was asked to develop State-level legislation creating a unified deposit insurance regime. His work in this area resulted in the State Parliament's enactment of the BiH State-level Law on Deposit Insurance, on July 18, 2002. The advisor played a central role in developing this law, which was the first to establish a State-level agency through consolidation of two Entity-level Agencies. During FY 02, integration of the Entity Deposit Insurance Agencies proceeded smoothly, benefiting from the advisor's guidance and knowledge of the basic law for the new State-level Agency, which he helped draft. In addition, the advisor is drafting internal policies and procedures for the new State-level Agency. At the request of its Chairman, he also is functioning as an advisor to its newly constituted Management Board. The advisor will continue his work on the consolidation of the Entity-level deposit insurance agencies through FY 03.

Government Debt Issuance and Management (GDIM): Since February 1998, Treasury has posted a resident advisor to Sarajevo to work on a series of government debt projects with the State Ministry of Foreign Trade & Economic Relations and the Ministries of Finance of the Federation and the RS. This mission's accomplishments include facilitating passage of Entity-level debt laws that parallel the State-level external debt law; playing a major role in the project to dismantle and replace the ZOP, Bosnia's state-controlled payments system, with a state-of-the-art, transparent private sector payments system; rewriting the Federation Treasury regulation into law and codifying the relationship between the Federation Treasury and the Cantonal treasuries; and amending certain provisions regarding the new payment system forms and providing for electronic banking for payment of taxes. In addition, a debt tracking system was installed in the Federation debt management unit (there are plans to introduce the system in the RS as well).

The Government Debt advisor is working on an initiative to develop a policy and regulatory framework governing sub-sovereign borrowing with both Entities. The advisor will assist Bosnian officials in drafting a comprehensive set of debt laws, including one each for the State, Federation, the RS, Brcko District, and one that will govern issuance by sub-sovereign governments, cantons, and municipalities.

Tax Policy and Tax Administration: The Treasury Department resident Tax advisor plays an active role on the modernization board for the Federation of Bosnia and Herzegovina. As such, he participates in the consultative group of international assistance providers that are developing an overall strategy for tax administration in BiH. The Tax advisor assisted in the design of the Tax Administration Modernization Plan (TAMP), the first phase (TAMP1) of which is nearing completion. The advisor assisted in preparing the Statement of Work for the second phase (TAMP2). He also helped to development the BiH tax administration law and the Rulebook for its tax organization.

Bulgaria

Enforcement Policy and Administration: Treasury has provided technical assistance to the Government of Bulgaria (GOB) in the enforcement area since 1998. In FY 02, the bulk of work concentrated on anti-money laundering assistance provided to the Bureau of Financial Intelligence (BFI). This work program included helping the BFI Director to structure a new organization to receive and analyze the Suspicious Transaction Reports (STR) submitted by Bulgarian financial institutions. The advisor worked to strengthen the BFI's use of information technology, with the goal of improving its data processing and analysis capacities. The advisor helped strengthen Bulgaria's anti-money-laundering legislation by drafting amendments and/or new regulations designed to rectify problems and weaknesses in the existing law and related regulations. The advisor also assisted Bulgaria to establish workable procedures for tracing, freezing, seizing, and confiscating proceeds of crime.

The advisor promoted interaction between the BFI and relevant law enforcement authorities, as well as between the BFI and reporting entities defined by law, including Bulgarian banks. To facilitate inter-institutional cooperation in the fight against money laundering, a Memorandum of Understanding was developed to formalize operations of the Bulgarian American Financial Crimes Task Force. The Task Force includes the Treasury advisor and representatives from the U.S. Secret Service, DOJ/OPDAT, the Bulgarian Prosecutor's General's Office, the Ministry of Interior, and the National Investigation Service.

Government Debt Issuance and Management (GDIM): A GDIM advisor has been present in Bulgaria since 1998, to support GOB efforts to pursue sound public policy financing initiatives and manage its assets and liabilities in a cost-effective manner. The current resident advisor, who has been in Sofia since 2000, has been instrumental improving Ministry of Finance (MOF) debt management practices and central bank investment policies. She has spent much of her time advising the GOB on implementing sound public policies that serve as the underpinning for the successful operation of Bulgaria's currency board. The advisor is providing substantial input in developing Bulgaria's state treasury operations designed to manage revenues, expenditures, and debt in a more integrated, efficient manner. The advisor assisted in the drafting of the new Law on Public Debt and helped establish new criteria for primary dealers in government securities. In addition, the advisor continues to assist the Bulgarian National Bank (BNB) in establishing an early warning system that will help analyze capital flows in order to improve BNB management of Bulgaria's international reserves.

Tax Policy and Tax Administration: Treasury has had a resident Tax advisor in Sofia since February 2002. For the two years prior to conversion to a resident advisor program, tax assistance was provided on an intermittent basis. This change in the technical assistance delivery mechanism reflects a major change in attitude on the part of the General Tax Directorate (GTD), based on the effectiveness and utility of Treasury tax assistance. In FY 02, the Tax advisor coordinated an ambitious work program designed to support Bulgarian tax modernization efforts. Assistance was provided in the areas of tax law and regulation, collections, tax returns processing, and taxation of the gaming industry. To support this broadly based assistance effort, the advisor sponsored a substantial training component as part of the overall work program. Treasury also hosted the Director and Deputy Director General of GTD for a program focused on tax court operations, tax case appeals, and administrative law issues.

Croatia

Budget Policy and Management: In FY 02, the resident Budget advisor continued work to improve Government of Croatia (GOC) budget practices. The objective is to bring those practices into compliance with IMF and EU standards. Much of the work program has been focused upon improving or reformulating existing budgetary procedures, as well as implementing new ones. In light of the GOC's desire to move toward performance-based budgeting, the advisor is assisting the MOF to develop essential tools of sound fiscal management, including increasing budget transparency.

Financial Institutions Policy and Regulation Program (FIPRP): The FIPRP resident advisor is a macroeconomic/fiscal policy expert, who reports to the Deputy Minister of Finance. His direct counterpart is the Assistant Minister, who heads the Bureau for Macroeconomic Analysis and Planning. The advisor's primary mission is to provide advice regarding the consistency and impact of fiscal, monetary, and exchange rate policies on Croatia's economic growth and stability. Secondary objectives are to advise the MOF on how laws relating to fiscal, monetary, and exchange rate policies can be strengthened, and how the MOF could be reformed or reorganized to make it more efficient and effective. The advisor is helping to develop the MOF's institutional capacity in the areas of macroeconomic and fiscal policy formulation, with emphasis on implementing early warning systems to detect macroeconomic instability or the emergence of a debt repayment crisis. The advisor also is working to strengthen the dialogue between the international financial institutions (IFI's) and the GOC, through improved mechanisms for the implementation of their mutual agreements.

Macedonia

Tax Policy and Tax Administration: Treasury technical assistance to Macedonia was disrupted in June 2001, with the ordered evacuation of its resident Tax Administration advisor. Prior to that, the advisor had assisted the Public Revenue Office (PRO) in implementing the country's first VAT. He also helped the PRO to execute its strategic plan, focusing his advisory work on data processing, information systems, tax audit, and collections. He directed the work of several intermittent advisors, who helped the PRO write its collection procedures manual and provided management training to senior PRO officials. When the evacuation order was lifted in November 2001, the advisor coordinated a resumption of technical assistance in the tax administration reform area.

Prior to the advisor's evacuation, it was determined that tax policy assistance would better address Government of Macedonia (GOM) needs than continued tax administration assistance, as the country's tax laws were determined to be the most significant impediment to improving the overall tax regime. In response, Treasury recruited a Tax Policy advisor in December 2001 to replace the Tax Administration advisor, but who was unable to arrive in Skopje in a timely manner. To fill this gap, the original Tax Administration advisor returned to Skopje for the May-September 2002 period, during which work was completed in several areas of his original work plan. He also designed a supplemental work plan under which short-term advisors provided assistance in the areas of taxpayer service and education, tax collection, and general management training. Meanwhile, the Tax Policy advisor was due to arrive in Skopje on a full-time basis in January 2003.

Romania

Budget Policy and Management: Since 1992, Treasury has stationed a resident advisor in Romania to assist the Ministry of Public Finance (MOPF) in implementing modern budget and financial management practices. In recent years, the work program has focused on implementing program budgeting, with the objective of better measuring budgetary inputs related to government programs and collecting and analyzing information about the results attained through these expenditures. In FY 02, the resident advisor placed increasing emphasis on developing an objective, transparent, analytical process for budget preparation and decision-making that can become institutionalized within the Government of Romanian (GOR). For example, while the GOR has adopted program budgeting in principle, many spending agencies continue to prepare their component budgets only after macro-level budget decisions have been made. To support the program budgeting initiative, the advisor continued budget examination training with the MOPF Chiefs of Service and officials of other agencies included in the budget development process. In FY 02, the advisor helped MOPF staff revise the 2003 budget instructions and forms to reflect Romania's recently enacted Public Finance Law. The advisor is overseeing drafting of the 2003 Budget Summary, which should be finalized by January 2003.

Tax Policy and Tax Administration: In FY 02, Treasury switched from having a resident generalist Tax Administration advisor to a specialist Tax Policy advisor in Bucharest. While more remains to be done to upgrade its tax administration system, Romania's Fiscal Code has not been re-written since the 1930's, and is in serious need of updating and revision. Posted to Bucharest in January 2002, the Tax Policy advisor focused almost exclusively on revising the Romanian Tax Code. In the first year of this project, the advisor completed a preliminary draft of the Tax Code that included all major taxes in Romania (profit tax, income tax, VAT, local taxes, and withholding taxes for non-residents), excepting excise duties. In FY 03, the advisor will work with his Romanian counterparts to finalize the preliminary draft Fiscal Code, so that it is ready for publication and implementation. In addition, the advisor will give ongoing advice on tax policy matters, as well as providing targeted assistance in different areas of Romania's system of tax administration through short-term advisors.

Federal Republic of Yugoslavia (Serbia)

Budget Policy and Management: Treasury budget assistance began in May 2001, with the assignment of a resident advisor to the Ministry of Finance and Economy (MOFE). Serbia adopted a new Budget System Law in February 2002. This legislation, created with the advisor's assistance, is the cornerstone for budgetary reform. During FY 02, the advisor helped the MOFE to develop a new chart of accounts, which conforms to international standards, and worked with MOFE staff on its implementation. As part of the implementation process, the advisor helped the MOFE to modify existing budgetary processes and assisted in drafting new budget development instructions. In addition, she helped the MOFE to create a new organizational structure designed to improve the efficiency of Serbia's annual budget process.

Enforcement Policy and Administration: Initially, Treasury's Enforcement Team provided assistance to Serbia's Public Revenue Agency (PRA), helping it to establish a criminal investigative function within the agency. Work is currently on hold in this area, however, until the Serbian Parliament passes a new tax administration law, expected sometime in 2003. Enforcement advisors then will begin this project's second phase by initiating an intensive training program for newly recruited PRA criminal investigation unit members. Treasury Enforcement advisors helped the PRA to write the regulations and establish the investigatory procedures this criminal investigative unit will use in its day-to-day operations.

In FY 02, Enforcement Team advisors conducted an intensive program of assistance to Serbia's Anti-Money Laundering Commission (AML). As part of this program, the advisors provided substantial input into Serbia's new anti-money laundering law, including advice on modifications designed to ensure compliance with the 40 Financial Action Task Force recommendations on money laundering and eight recommendations regarding terrorist financing. Enforcement Team advisors also helped the Serbian government to establish a Financial Intelligence Unit (FIU), pursuant to its anti-money laundering law, that will be responsible for the collection, analysis, and distribution of information obtained from financial institutions and other sources both inside and outside Serbia.

Financial Institutions Policy and Regulation Program (FIPRP): In March 2001, Treasury initiated a financial institutions advisory program in Serbia, designed to assist the National Bank of Yugoslavia (NBY) with the resolution of problem banks in a largely bankrupt financial system. The Federal Agency for Deposit Insurance and Bank Rehabilitation (the Agency), a 10-year-old institution that had little previous experience in conducting actual bank resolutions, is this program's counterpart. FIPRP's assistance aims to improve the Agency's operational capacity and develop the processes and procedures it uses for the rehabilitation, bankruptcy, or liquidation of problem financial institutions. In FY 02, FIPRP helped the Agency develop a management structure for its expanded organization, including a new organization chart and the related job descriptions. It also helped draft a bank rehabilitation manual that was approved and accepted by the Executive Director and the Agency Council. Additional work included assisting the Agency to interpret the various laws that affect its efforts, advising Agency staff in asset management and other techniques to maximize the proceeds from asset dispositions, and developing monitoring and control systems related to the assets under Agency management. FIPRP advisors created a scheme to pay off all depositors in four banks representing 65 percent of Serbia's banking assets -- Yugobanka, Beogrdska Banka, Beobanka, and Investbanka -- when they were placed in bankruptcy during January 2002.

Government Debt Issuance and Management (GDIM): The resident Government Debt advisor was posted to Belgrade in October 2002. His work program is designed to support both the Serbian and Montenegrin Ministries of Finance in debt issuance and management. Terms of Reference for Serbia are focused on the development of a domestic government securities market that will provide a source of deficit finance for the Serbian government, create securities and a liquid market that the NBY can use for the conduct open market operations to control the money supply, and serve as a reference point for pricing other credit instruments. Prior to his posting as a resident, the advisor did extensive work on a TDY basis related to the launch of Serbia's first Treasury bills in October 2002.

Tax Policy and Tax Administration: During 2002, OTA advisors provided an extensive program of tax administration assistance that focused on audit, collection, taxpayer service and education, administrative law, and human resources. After extensive discussions with the USAID Mission over the summer, OTA agreed to re-focus its assistance effort, and a resident Tax advisor was posted to Belgrade in September 2002. The focus of her work will be to provide tax policy advice to the Serbian Ministry of Finance. However, she also will assist USAID in the design of an extensive tax administration modernization project in Serbia that will be undertaken by a USAID institutional contractor. In this role, she has already participated in the drafting of the request for proposals and the contractor review process.

Federal Republic of Yugoslavia (Montenegro)

Budget Policy and Management: Treasury's budget assistance is directed at helping Montenegro implement a comprehensive budgetary system, with an emphasis on budget preparation, adoption procedures, and execution. Given capacity restraints in the Government of Montenegro (GOM), much of the work program in FY 02 was directed at budget staff development and training them in compliance with the procedures contained in the Organic Budget Law. The advisor helped MOF budget staff create new forms, design new procedures, and draft new budget instructions -- both in paper and automated versions. For example, she helped MOF budget staff develop a new format for spending plans and drafted the budget instructions for budget staff and spending units to use in their preparation. She provided training and assisted staff in preparing these Annual Spending Plans. She also helped MOF budget staff to develop a strategy to clear arrears and in designing the related implementation plan.

Government Debt Issuance and Management (GDIM): The resident Government Debt advisor in Belgrade also extends technical assistance to the GOM. The focus of this effort is providing advice on potential problems created by GOM debt issuance following its adoption of the euro as the local currency. Given Montenegro's use of other countries' currency as its own, issuance of sovereign debt has the potential to destabilize the banking system and threaten its currency regime. The GOM may be exposed to "liquidity squeezes" if its government debt is not issued in a framework where repayment is assured within the budget year of its issuance. GDIM assistance has provided exposure analysis, investigated alternative financing structures, and advanced decision matrices designed to assure that the GOM makes sound debt issuance decisions, in these unique circumstances.

Lithuania

Budget Policy and Management: In response to a request by Lithuania's Finance Minister, an OTA budget team conducted an assessment mission in November 2001, to evaluate the MOF's need to upgrade its financial policies and operations in order to comply with EU standards. The mission report included the OTA budget team's observations and recommendations in the areas of accounting, budgeting, financial systems, treasury operations, and internal/external auditing. Responding to this report, Lithuania's Director of the Treasury indicated that accrual accounting was his principal area of concern regarding EU ascension. He asked OTA to provide a program of training in accrual accounting that would help Lithuania in preparing accrual accounting-based financial reports. In response, OTA designed a training program to give education and training in accrual accounting concepts and theory, as well as, examples of accrual accounting applications within the MOF and other ministries. Two different seminars were designed, one for entry and mid-level staffers and another for management-level participants, which provided information covering the accounting cycle, financial statements, and internal controls, as they relate to accrual accounting. Both seminars were well received by the participants, and additional seminars have been scheduled to expand this type of assistance.

Government Debt Issuance and Management (GDIM): In response to an MOF request, Treasury agreed to help it develop a funding model that can be used for financial analysis and risk assessment in connection with strategic debt management. The model will be able to accept different macroeconomic projections; refunding requirements for outstanding and newly issued debt; and Lithuania's fiscal requirements, including on-lending operations and honoring loan guarantees. Outputs from the model will include debt stock projections; debt service (including amortization and maturity schedules); and the statistical measure needed to analyze these data. The project is expected to move forward in FY 03.

Slovakia

Budget Policy and Management: Treasury technical assistance to the Slovak Ministry of Finance (MOF) focuses on budget process reform, with the goal of increasing both transparency and spending-unit accountability through the use of program budgeting. OTA budget work in Slovakia began prior to its "graduation" from bilateral SEED assistance and has continued through an advisor working on a half-time basis. The work program has provided for continual expansion of the use of program budgeting principles throughout the Slovak government. For example, in 2002, four major spending agencies developed program budgets. Six other major Ministries (Defense, Health, Labor, etc.) converted to program budgeting systems for the 2003 budget. The MOF wants the entire State Budget in program budgeting format for the 2004 budget, and all other Ministries are in the process of conversion.

U.S. DEPARTMENT OF THE TREASURY

Contributions to the EBRD Trust Fund

The U.S. provided $5 million in regional FY 02 SEED Act money to a special fund at the European Bank for Reconstruction and Development (EBRD) to support loans to micro, small, and medium-sized entrepreneurs in Southeast Europe. This complements the $21 million that the U.S. had made available previously from FY 00 and FY 01 SEED funds. The program extends technical assistance and training to financial intermediaries to strengthen their lending capacity, with the goal of creating commercially sustainable MSE lending programs, as well as loan funds that are supplemented by EBRD funds. To date, banks in Albania, Bosnia-Herzegovina, Bulgaria, Kosovo, Romania, and Serbia have received funds under the program. In 2002, these banks supported 28,000 loans and disbursed $183 million to micro and small entrepreneurs. The $5 million in FY 02 regional SEED money will be used for a new program in Macedonia and possibly Montenegro, and will support the branch expansion of banks currently supported under the program.