ALBANIA

	FY 1998 Actual	FY 1999 Estimate	FY 2000 Request
Support for East European Democracy	$27,400,000	$30,000,000	$25,000,000
P.L. 480 Title II	607,000	---	---

Introduction.

The U.S. assistance program in Albania promotes economic and political stability in a fragile country and volatile region. Supporting a sustained transition in Albania contributes to the U.S. foreign policy objective of promoting stability in the Balkans. The collapse of the government in the Fall of 1998 underlines the need for continued attention to the country's democratic development and economic reform. A democratic and prosperous Albania, oriented to western markets, enhances U.S. efforts to combat terrorism, arms proliferation, narcotics trafficking, and international organized crime.

The Development Challenge.

Following the civil unrest that occurred in 1997, the Albanian economy began to recover as the political situation and public order gradually stabilized. The Government of Albania's (GOA) reforms were slowly showing progress. They had nearly doubled the value-added tax and increased excise taxes, which brought the budget deficit under control. The GOA doubled salaries for law enforcement officials and restored some public order. Despite these accomplishments, political and regional instability were too great to overcome. The struggle in Kosovo, the widening internal political chasm, pervasive corruption coupled with a still inexperienced administration, all contributed to the collapse of the government in the Fall of 1998. Nonetheless, the fragile democracy did survive and formed a new administration. The challenge of Albania's transition from an authoritarian, command-driven system to one which is democratic and market-oriented is intensified by the frailty of its critical economic and political institutions.

In August 1998, security threats to the United States Government (USG), stemming from influences outside of Albania, necessitated the withdrawal of most American staff from Albania. Consequently, the USAID program reduced its pace due to the absence of American advisors and their inability to travel to the country. By the end of September, implementation of activities proceeded by temporarily stationing American contractors and grantees in neighboring countries, using third-country nationals to manage activities in the country, and conducting critical training in third countries in the region. This change in implementation arrangements has complicated, but not hampered significantly, USAID's ability to deliver results. The situation is being constantly monitored and implementation will return to normal as soon as feasible. Given Albania's critical importance to stability in the region and the USG's commitment to assisting the new GOA and its reforms, USAID believes continued assistance at the requested levels for FY 2000 is necessary to help ensure the sustainability of reforms in economic restructuring, democracy and the social sectors.

The basic concepts of democracy, such as participatory and representative government, respect for diversity of beliefs, rule of law and human rights have been introduced in Albania, but they have yet to gain widespread legitimacy. The new Albanian government appears to have the political will to work toward deepening these concepts, as exemplified by the approval of the new constitution by national referendum in November, 1998. Institutionalization of key democratic concepts -- rule of law, independence of the judiciary, executive oversight by the parliament, independence of the media, and decentralized governance -- is critical at this stage of Albania's development.

The U.S. assistance program to Albania will continue to support the goals of economic restructuring and growth, democratic development, and social stability. Although most SEED assistance programs to Central and Eastern Europe have been envisioned as relatively short-term programs to jump start the transition to market democracies, Albania does not fit this paradigm. Completing the transition in Albania will most likely take much longer. USAID expects to assist Albania's transition through 2002 and beyond.

Other Donors.

The United States is Albania's third largest bilateral partner, behind Italy and Greece. Other major contributors include Germany, the World Bank, the International Monetary Fund, the European Investment Bank, the European Bank for Reconstruction and Development, and the International Fund for Agricultural Development. The donor community continues to be very committed to Albania and recently formed a Friends of Albania group which organized a conference in Tirana in the Fall of 1998. This conference demonstrated international political support for the new Albanian government and reiterated what the GOA needs to do to get the country back on track. Key elements of donor support focus on democratization and institutional development with an emphasis on the judiciary, political cooperation, media, local government and civil service reform; fighting crime and corruption; and furthering economic stabilization and development. The donor community is clearly willing to continue their assistance programs, but it is up to the GOA to take the critical next steps.

FY 2000 Program.

A major focus of U.S. assistance efforts in FY 2000 will help the GOA to solidify the rule of law, including its fight against corruption and its need to reestablish control over its borders. Under the democracy goal, USAID will continue to support the development of democratic practices and institutions in Albania. Target beneficiaries include the Albanian Parliament, judiciary, and law enforcement bodies. The media, local government and the NGO sector will be highlighted in order to promote citizen awareness of and participation in the democratic process. In the fight against corruption, USAID will work with selected NGOs to help citizens realize they have a right to information on government operations, to mobilize public concern about corruption, and to press government to take corrective action. This civil society effort will complement activities in other areas to strengthen the rule of law, upgrade law enforcement bodies and regulate financial institutions. Support to local government will also encourage the decentralization of governance and the development of new civic intermediaries for the people of Albania. Finally, various assistance efforts will help Albania implement the elements of its new Constitution. FY 2000 funding is requested for the following strategic objectives: increased, better-informed citizen participation in political and economic decision-making; legal systems that better support democratic processes and market reforms; and more effective, responsive and accountable local government.

Given the positive turn around of Albania's economy after the unrest of 1997 and temporary setbacks in late 1998, the USAID program will continue to devote significant attention to Albania's transition to a market economy. Toward the goal of promoting economic restructuring and growth, a major portion of USAID's assistance will continue to focus on growth of the private sector, including agriculture. USAID has had success in fostering the formation and independent operation of agricultural producer associations. More farmers are now starting to believe in the idea of working together in order to maximize their economic interests. USAID will continue to help more farmers to belong to these associations and stress the importance of making one's production base attractive to the market. This link to the buyer is what is making such agricultural producer associations a success. Support to land privatization will continue and USAID will focus on fostering a viable land market. The land registration process is envisioned to cover all districts in Albania and to date, over 315,000 parcels have been registered.

The Albanian American Enterprise Fund plans to continue providing equity investments to Albanian firms and will be fully vested in FY 2000. In addition, the AAEF has envisioned that its new American Bank, which has recently opened, will become a model bank in the private banking system. Completing the restructuring of the state banking system will be a high priority for the GOA, and USAID expects that the remaining state banks will be either liquidated or fully privatized in 2000. USAID's support for capital market development continues to improve the trading, clearance, and settlement mechanisms needed to ensure proper regulation of the market. USAID's efforts will continue to focus on the institutional framework that needs to be in place in order to accomplish that and to ensure that markets for securities and other instruments can eventually emerge. FY 2000 funding is requested for the following strategic objectives: private enterprise growth; financial sector development; and environmental management.

Albania continues to have the least developed system of social infrastructure among the Central and Eastern European nations. Most of its health care facilities are seriously dilapidated and outdated and suffered additional damage during the unrest of 1997. To lower maternal and child mortality rates, as well as reduce the prevalence of abortion, USAID's women's reproductive health care activity will be expanded to more urban areas, starting in FY 2000. In addition, two hospital partnerships link US hospitals with Albanian hospitals in an effort to improve financial management, create policy analysis and educate health managers. Assistance will provide financial management advisory services to support a hospital payment system and to help achieve sustainable health insurance mechanisms. USAID also plans to establish a Women's Wellness Center and a national nurses association. FY 2000 funding is requested for the strategic objective: improved sustainability of social benefits and services.

ALBANIA

FY 2000 PROGRAM SUMMARY*
(in Thousands of Dollars)

USAID Director: Howard Sumka

Strategic Objectives	Economic Restructuring	Democratic Transition	Social Stabilization	Cross-cutting / Special Initiatives	Total
Privatization	--	--	--	--	--
Fiscal Reform	--	--	--	--	--
Private Enterprise	14,640	--	--	--	14,640
Financial Reform	1,100	--	--	--	1,100
Energy	--	--	--	--	--
Environmental Management	--	--	--	--	--
Citizens' Participation	--	3,260	--	--	3,260
Legal Systems	--	2,050	--	--	2,050
Local Government	--	1,400	--	--	1,400
Crises	--		--	--
Social Benefits	--	--	1,000	--	1,000
Environmental Health	--	--	--	--	--
Cross-cutting/Special Initiatives	--	--	--	1,550	1,550
- ESF	--	--	--	--	--
TOTAL	15,740	6,710	1,000	1,550	25,000
*Support for East European Democracy (SEED) Act funds

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ACTIVITY DATA SHEET

PROGRAM: ALBANIA
TITLE: Accelerated Development and Growth of Private Enterprise, 180-S001.3
STATUS: Continuing
PROPOSED OBLIGATION AND FUNDING SOURCE: FY 2000: $14,640,000 SEED Act
INITIAL OBLIGATION: FY 1991; ESTIMATED COMPLETION DATE: FY 2003

Summary: This strategic objective will accelerate the development and growth of private enterprises in Albania. Starting from an economy with no private businesses in 1991, Albania has advanced to an economy dominated by the private sector. Nonetheless, the absence of any experience with private business and the poor performance of state enterprises have left a legacy of inefficient and/or ineffective institutions and a severe shortage of skills in both the public and private sector. Considerable portions of the public enterprises and assets have been privatized or terminated, but the private sector has not yet been effective in establishing active markets in most areas of production, distribution, or finance. The GOA auctioning of Department of Agriculture PL 480 Title I edible oil and wheat will be completed this year, with proceeds assisting with GOA budget support.

USAID's strategy is to raise returns in the private agricultural sector through more efficient production technology, improved collection of raw production, and higher quality final agricultural products. Agriculture, one of the first sectors to privatize, dominates the economy by providing over 50% of GDP and employment. USAID support has been vital in setting up a network of input supply dealers to provide fertilizer, seeds and other critical inputs. Results have been impressive. Nearly 90% of fertilizer is distributed by nearly 300 private dealers, who are also leading the distribution of farm chemicals and hybrid seeds. The government role in research and genetic banks is being promoted and supported by these private business associations. USAID is capitalizing on the successes of this strategy by moving ahead with additional support to the agriculture trade associations.

While association members have maintained a total of over $2 million in revolving credit for operations, adequate credit for agriculture and all small and micro-business enterprises is still a limiting factor in making opportunities available. USAID is increasing support for micro-enterprise lending facilities.

USAID is a major donor in implementing a land titling and property registration system to provide secure tenure to farm families and in establishing a fledgling land market, which will allow for consolidation of small parcels into economically viable holdings. Land titling and the recording of ownership by individuals and local community groups is moving ahead. To date, 66 % of agricultural land has been titled and recorded, and 21% of village land has been titled and recorded. In addition to work on private farm lands, assistance to private forestry is producing incentives for private leasing of public lands for sustainable forestry and grazing uses.

The small and medium enterprise sector is also rapidly expanding with the assistance of support for a high quality technical high school (the Fultz School), the University of Nebraska MBA training program, and a network of Business Assistance Centers and Business Development Centers in Tirana and other urban centers. Over 30,000 potential entrepreneurs have been trained in English, computers, secretarial skills, cosmetology, auto mechanics, business and other areas. Many graduates have started their own businesses, while others have found higher paying jobs.

The Albanian American Enterprise fund (AAEF) is increasing foreign (especially U.S.) and domestic investments in promising Albanian enterprises. The Fund has so far approved 30 projects totaling $22 million. To complement activities for improving the policy, legal and regulatory framework in support of the private sector, judges will be trained in legal business-related issues and in judicial administrative- support procedures.

Key Results: Three key intermediate results are necessary to achieve this objective: 1) Commercial Business Regime Improved: Domestic investment from domestic sources should rise from the baseline of $509 million in 1993 to $1,290 million by the end of year 2000, and the domestic investment from foreign sources should rise from the baseline of $10 million in 1991 to $120 million by the end of year 2000; 2) Business Support Services Improved: Clients of USAID supported activities should increase from the baseline of zero to 2200 in the year 2000, and revenue from service fees paid by customers of USAID-assisted activities should increase from zero baseline to $300,000 in the year 2000; and 3) Trade Associations Active in Supporting Private Agriculture: The number of new private sector enterprises should increase from the baseline of 26 to 90 in the year 2000.

Performance and Prospects: Political instability and insecurity have adversely affected success in increasing domestic investment. The annual investment from domestic sources in 1997 was only $14 million, compared to the target of $990 million. Annual investment from foreign sources was $42 million against a target of $90 million. Revenue from service fees paid by customers of USAID-assisted activities was $48,000, against the target of $95,000, which is rather satisfactory considering the security restrictions in place over the past year. The number of active business clients was 1,255 men and 1,401 women, well above the target of 700. With a change of government, adoption of a new constitution, and a focus on improving internal security and stability, the prospect for increased domestic and foreign investment should improve. USAID expects the number of clients paying for business services and the amount of generated funds to reach over 4.400 and $280,000 annually, respectively, in 1999. U.S. assistance will build on early successes with non-bank credit through financial institutions, credit unions at the trade association level and through micro-credit programs to reach $21.7 million in loans to around 80 clients by the year 2000. USAID has assisted the GOA in preparing for critical working group sessions with the World Trade Organization. The prospects for WTO accession are good, and are expected to occur in the year 2000. Although progress is currently slow in privatization, USAID plans to continue working in this area in conjunction with the World Bank.

Possible Adjustments to Plans: While the evacuation has cut American presence in the USAID program, our partner grantees and contractors have exercised considerable ingenuity in continuing their programs. Short-term strategies include the use of third-country nationals and the use of third-country locations for the venue of training and consultations. USAID is in the process of analyzing its portfolio to determine whether any further adjustments need to be made.

Other Donor Programs: The European Union (EU) and World Bank work closely with the U.S. assistance program to forge significant program linkages and synergies in support of the private sector. These include support to small and medium enterprises and implementation of a property registration system. USAID actively collaborates with donors in other areas as well. In agriculture, USAID, Germany (GTZ) and the EU are the major donors. USAID and GTZ are collaborating in strengthening the faculties of the Agricultural University of Tirana, while the EU is working on the development of an extension service. EU has set up farm mechanization centers, while USAID has helped set up private wholesale dealerships and assists with agricultural imports such as fertilizer, animal feeds, seeds and pesticides. USAID supports private farm forestry and the World Bank supports the Forestry Directorate with programs in high elevation areas.

Principal Contractors, Grantees or Agencies: USAID implementers include: the U.S. Department of Commerce, the International Fertilizer Development Center (IFDC), the University of Wisconsin Land Tenure Center, Volunteers in Overseas Cooperative Assistance (VOCA), Land O' Lakes, World Learning (TRANSIT), the Harry Fultz Educational Foundation, the Albanian-American Enterprise Fund (AAEF), the ORT Federation (Organization for Educational Resources and Technological Training), and the University of Nebraska.

Selected Performance Measures:

	Baseline	Target
Real GDP Growth	-27.1% (1991)	+5% (2001)
Percentage of labor force unemployed	27 % (1992)	8% (2001)
New private sector enterprises (Number)	2,600 (1991)	90,000 (2001)
Domestic investment (US$)	$509 million (1993)	$1,290 million (2000)
Foreign Investment	$10 million (1991)	$120 million (2000)
Membership of selected business advocacy groups (individuals)	0 (1991)	25,000 (2001)
Accession to the World Trade Organization	No (1997)	Yes (2000)

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ACTIVITY DATA SHEET

PROGRAM: ALBANIA
TITLE: A More Competitive and Market-Responsive Private Financial Sector, 180-S001.4
STATUS: Continuing
PROPOSED OBLIGATION AND FUNDING SOURCE: FY 2000: $1,100,000 SEED Act
INITIAL OBLIGATION: FY 1991; ESTIMATED COMPLETION DATE: FY 2002

Summary: This strategic objective assists Albania in developing the fundamental institutions and elements of a well-functioning private financial sector. The number of private banks has expanded, although their operations have been mostly limited to financing trade for foreign clients doing business in Albania. The initial capital market development program starting in 1995 was recognized as too ambitious and subsequently was scaled back to reflect the realities of the country. On the public sector side, the task has been one of restructuring and privatizing the remaining state banks, while encouraging expansion of private banks and ensuring proper regulation of the banking system. In the informal sector, USAID has joined other donors in supporting the winding down of the pyramid schemes, with the intent of liquidating assets and distributing proceeds to depositors. Beneficiaries include foreign investors wishing to do business in Albania and who depend on a sound financial system to carry out transactions, all depositors and borrowers who rely on the banking system, and entrepreneurs seeking capital for development and expansion of their businesses.

Key Results: Six intermediate results are helping to achieve this strategic objective: 1) A sound regulated and efficient banking system established; 2) Ministry of Finance functioning effectively; 3) Publicly owned banks restructured; 4) Component capital market institutions in place; 5) Collateral law implemented and; 6) Insolvent non-bank financial schemes liquidated. These results address many of the critical elements required for a reasonably well functioning financial sector, in ways that will augment institutional capacity.

Performance and Prospects: There has been some progress on the legal and institutional front in creating an enabling environment for well-functioning financial markets. While the unrest of 1997 along with the political crisis in the fall of 1998 represented setbacks, and revealed the frailty in public institutions, they did provide needed impetus for reform. USAID assistance collaborating with the World Bank's lead effort in state bank restructuring and privatization helped the GOA to successfully liquidate the Rural Commercial Bank in 1998. A Bank Asset Resolution Trust was created in 1998 which is managing and liquidating the non-performing loan portfolios of the remaining state banks. In addition, the GOA plans to privatize the National Commerce Bank and the Savings Bank in 1999 but, more than likely this will take a year longer. USAID has also helped to increase the capacity of the Bank of Albania's (BOA) bank supervision department to regulate and monitor the banking system, enforce banking laws and regulations, and strengthen the BOA's bank licensing and bank liquidation policies. Since the ordered evacuation, technical assistance has focussed on bank supervision training activities in countries in the vicinity of Albania.

In addition, assistance to the Ministry of Finance through the U.S. Treasury had targeted three areas including tax administration, government debt issuance and management, and budget planning and formulation. This assistance directly complemented World Bank and IMF structural adjustment programs. Based on the GOA's satisfactory performance in meeting fiscal and macroeconomic targets, the IMF approved an Economic Structural Adjustment Agreement in May 1998. Even after the political turmoil in the fall of 1998, Albania continued to make economic progress. Overall, macroeconomic policies and reforms remained on track. For example, the fiscal deficit financed by domestic resources came down to 6.5% of GDP against a peak of 11.4% at the end of 1997. With USAID assistance, the Albanian government enacted the Small Business Tax and a new Budget law, and it drafted a Public Debt Law all of which were in compliance with World Bank and IMF targets.

Albania's capital market is still in a very early stage of development and USAID has concentrated assistance in developing the institutional and regulatory capacity of the Albanian Securities Commission (ASC) and the Tirana Stock Exchange. USAID, through assistance from the U.S. Securities and Exchange Commission, delivered training on broker-dealer examination licensing and regulatory procedures to the ASC. As a result, changes were made in the type and quality of information provided by potential broker-dealers and new minimum standards were set. In addition, USAID has planned a conference during the spring of 1999 on the subject of the future of capital markets in Albania. It would bring all key individuals and institutions together to discuss the current state of affairs, as well as develop a road map for the future. Technical assistance to promote adoption and implementation of a secured transactions law has continued as planned. A draft of this collateral law, creating an effective way by which a creditor can obtain a secured interest in movable property, was completed in May 1998. The law is expected to be enacted in 1999. The pyramid schemes have been dismantled and the GOA administration of these schemes is to be completed by early 1999, at which point the proceeds from all liquidated assets are to be distributed to the poorest depositors who lost their savings.

Possible Adjustments to Plans: As a result of the withdrawal of all American implementors from Albania in August of 1998, the USAID program to Albania has reduced its pace due to the continued absence of U.S. advisors and the inability to travel to and within Albania. By the end of September, implementation of activities shifted to conducting critical training and workshops in neighboring countries, working with Albanian counterparts via contact with local contractor staff in Albania, and through telecommunications from the U.S. The U.S. Treasury assistance program terminated in November 1998 with other donors such as the World Bank and the IMF continue supporting the GOA through their fiscal and financial sector programs. USAID's program review in Spring 1999 will examine the need to adjust assistance targets in light of the evacuation situation.

Other Donor Programs: An International Monetary Fund advisor assists the central bank governor on monetary policy and has been the lead donor on fiscal and macroeconomic policy advice. The World Bank is responsible for the wind-up of the defunct pyramid schemes and the privatization or liquidation of the state-owned banks, continuing assistance in the implementation of the value-added tax, and the coordination of all donor financial sector assistance. The German aid organization, GTZ, has provided technical assistance to the National Commercial Bank and will provide training in bankruptcy procedures as well as expertise in drafting commercial laws. The EU is providing technical assistance in the establishment of a New Chart of Accounts for the banking sector.

Principle Contractors, Grantees, or Agencies: USAID implements these activities through the U.S. Securities and Exchange Commission, the Financial Services Volunteer Corps (FSVC), the University of Maryland/IRIS Center, Barents Group, World Learning and Chesapeake Associates.

Selected Performance Measures:

	Baseline	Target
Percent of firms using financial sector funds	5% (1995)	70%(2000)
Non-performing loans/public sector(90 days past due)	25 (1997)
State-owned banks restructured (i.e., privatized or liquidated - cumulative number)	0 (1995)	3 (2000)
Trading Mechanism in place that is financially viable	No (1996)	Yes (2000)
Percent of insolvent non-bank schemes liquidated	0% (1997)	100% (1999)

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ACTIVITY DATA SHEET

PROGRAM: ALBANIA
TITLE: Increased Environmental Management Capacity to Support Sustainable Economic Growth, 180-S001.6
STATUS: Continuing
PROPOSED OBLIGATION AND FUNDING SOURCE: FY 2000: $ 0 SEED Act
INITIAL OBLIGATION: FY 1998; ESTIMATED COMPLETION DATE: FY 2002

Summary: The object of this activity is to increase public and private capacity to address critical environmental constraints to sustainable economic development and growth. The immediate and long-term health and productivity of streams and hillsides in Albania is threatened by low-yield activities that destroy the vegetative cover, exposing soils to erosion and initiating long-term degradation of the entire ecosystem. Over-grazing and illegal logging are the immediate problems; absence of land management systems is the greater issue. Productivity of rich farmland in the coastal plain and river valleys is diminished by poor water management practices. Degraded and poorly managed watersheds fail to retain groundwater for use in dry summers, and impede or destroy irrigation reservoirs and canal systems through excess siltation. USAID is assisting in the reclaiming of collectivized forest lands by private landowners and by local community associations. Local community associations (komunas) have been taking possession of former communal lands that had been inadvisedly converted to low land forests, and introducing practices of sustainable use. Grazing practices are being rationalized. Komuna organizations have been formed. Growers and producers have been supported. Entrepreneurs have been trained in current growing and production practices.

Rural people relying on natural resources of forests, soils, and freshwater will benefit from stabilizing watersheds and shifting production from destructive practices to those that yield sustainable higher values. Indirect beneficiaries will include farmers and municipalities provided with more abundant and higher-quality water supplies.

Key Results: Three key intermediate results are necessary to achieve this objective: 1) Increased local and private participation in natural resources management: the percentage of villages within USAID target areas that have at least one case of both local and private participation should rise from the baseline of zero to 1.5% or 40 villages by the year 2001; 2) Increased use of environmentally friendly, sustainable natural resource technology: The number of villages in USAID target areas with at least one replication of USAID-introduced packages without USAID funding should rise from a zero baseline to 10 in the year 2001; and 3) Increased public advocacy of sound environmental practices: The local level requests for USAID-promoted environmental services should rise from the 1996 baseline of 10 to 30 by the year 2001.

Performance and Prospects: Support to community forestry resulted in the production and marketing of seedlings as a new source of rural income and developed information essential to restoring productivity to rural lands. Support to new NGOs has begun to inform the public of issues in environmental quality, conservation, and sustainable development. Nascent producer associations are becoming aware of the importance of sound environmental management practices. Growers are adopting sound practices with respect to the use of crop control chemicals. Several research institutes and the universities are working with the worldwide USAID crop research support program to develop and implement integrated pest management procedures which are both environmentally friendly and support internationally marketable olive oil and other food products.

Possible Adjustments to Plans: Implementation of the watershed assessment activities are being reexamined in light of the current evacuation conditions. The US Forest Service, engaged to conduct the initial watershed assessment and to develop a long-range action plan, is not able to field direct-hire experts in country as originally planned. They are exploring cooperative arrangements with Colorado State University and local Albanian organizations by which an adequate technical and management in- country presence can be maintained. During the 1999 program review, USAID will examine the need to adjust assistance targets in light of the evacuation situation.

Other Donor Programs: The World Bank is near the mid-point of a $45,000,000 project to restore irrigation facilities and hydrological monitoring systems. Germany is providing technical training for new extension officers. The EU has funded some watershed and land-use assessments and may expand its programs in the near future.

Principal Contractors, Grantees or Agencies: Chemonics, US Forest Service, US Resources Conservation Service, Colorado State University, Regional Environment Center (REC) Albania

Selected Performance Measures:

	Baseline	Target
% of villages within USAID target areas have at least one case of both local and private participation	0 (1995)	1.5 (2001)
Number of villages in USAID target areas with at least one replication of USAID-introduced packages without USAID funding	0 (1995)	10 (2001)
Local level requests for USAID-promoted environmental service	10 (1996)	30 (2001)
Environmental activities actually undertaken	0 (1996)	8 (2001)
Protocols established to communicate hydrometeorological and socioeconomic data from scientific to management staff	0 (1998)	TBD

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ACTIVITY DATA SHEET

PROGRAM: ALBANIA
TITLE: Increased, Better-informed Citizens' Participation in Political and Economic Decision-Making, 180- SO02.1
STATUS: Continuing
PROPOSED OBLIGATION AND FUNDING SOURCE: FY 2000: $3,260,000 SEED Act
INITIAL OBLIGATION: FY 1991 ESTIMATED COMPLETION DATE: FY 2002

Summary: Citizen participation is a critical element in any democracy. The civil society sector in Albania reflects the polarized and divided environment of the country, but Albanians, as individuals, have shown great interest in participating in the political process. Non-governmental organizations (NGOs), independent media, and democratic political parties were unknown before the fall of communism. Moreover, most civil society organizations are located in Tirana and only a few have a nationwide network. USAID's efforts have focused on strengthening Albanian NGOs which are independent of the conflicting political parties, and which have the potential of working throughout the countryside as well as in the large cities.

These efforts benefit a wide range of politically active citizens by strengthening the organization of NGOs, as well as the linkages between them, the political parties, and the print and broadcast media. Under a new program, succeeding generations of Albanians will be taught critical thinking, the importance of diversity of opinions, conflict resolution without resorting to violence, and the value of public participation.

Key Results: Seven intermediate results are pursued in support this objective: 1) more effective political parties; 2) free and fair elections; 3) NGO participation in social, economic and political decision-making; 4) independent media strengthened; 5) improved effectiveness of Parliament; 6) increased demand for transparent, accountable decision-making; and 7) more participatory instructional practices adopted in the educational system.

Performance and Prospects: In spite of the evacuation of U.S. citizens from Albania in August of 1998, USAID advisors are working very closely with their Albanian counterpart organizations. The Central Elections Committee was essential in promoting public support for the passage of the new constitution and will now work on drafting compatible legislation for future elections. The National Democratic Institute's (NDI) partner, the Society for Democratic Culture (SDC), and the International Republican Institute's (IRI) counterpart, the Institute for Contemporary Studies (ICS), have been able to hold roundtables and work on voter education in the areas beyond the larger cities. Media programs have also been instrumental in promoting citizen participation in the referendum, not only through the work of the International Research and Exchanges Board (IREX), but also through other programs sponsored by the International Foundation for Electoral Systems (IFES) and by SDC. NGOs, such as SDC, ICS, and other advocacy groups, are supported by training, small grants to 67 NGOs, and the strengthening of a locally based resource center for Albanian NGOs. An updated NGO law is expected to pass by Parliament this year as a result of the combined efforts of the American ORT Foundation (ORT), the International Center for Not-for-Profit Law (ICNL) and an NGO working committee, all of which are promoting an active civil society in Albania.

USAID advisors have sponsored a major public opinion poll throughout Albania, which includes a section on the nature, problems and needs of the Albanian NGO community. The process of collecting data included public meetings and encouraged debate between legislators and NGO leaders. Political party spokespersons have been trained in campaign management, and groups of journalists have been trained in election coverage and in economic reporting. While it is difficult to give direct assistance to parliament and political parties without U.S. citizens in country, the activity leaders are working closely in nearby countries and in Washington, DC with their local in-country counterparts.

In spite of current difficulties, a new effort is planned to focus on training for primary and secondary school teachers intended to "bring democracy into the classroom". Civil society organizations will also contribute to planned anti-corruption programs in the future. NGOs are expected to assist in the effort to help citizens be more aware of and participate in pressing government to insist on transparency and bring about measures to combat corruption in all areas of Albanian society.

Possible Adjustments to Plans: Though civil society activities are more difficult to manage from a distance, even with talented and well-trained local assistance, these activities will continue whether or not U.S. citizens are allowed in country. The U.S. project personnel will return to Albania as soon as it is possible to do so.

Other Donors Programs: Some of the political parties are receiving support and assistance from their equivalent party organizations in Western Europe. Denmark's Dialogue for Development is supporting the Albanian Civil Society Foundation which, in turn, is supporting Albania's NGO community. The Organization for Security and Cooperation in Europe has been very active in the past year in a range of programs supporting electoral processes and the constitutional referendum and in the promotion of political stability.

Principal Contractors, Grantees, or Agencies: USAID implements these activities through the National Democratic Institute, the International Republican Institute, the International Center for Not-for-Profit Law, the International Research and Exchanges Board (IREX), and the American ORT Federation.

Selected Performance Measures:

	Baseline	Target
More women run for office	20 in 1992	40 in 2000
Free and Fair Elections	No in 1996-97	Yes 2000
NGOs participating in making public policy decisions	None in 1995	185 in 2000
Independent media strengthened by independent private radio and TV stations	0 in 1995	57 in 2000
Improved effectiveness of Parliament with professional staff hired	0 in 1994	58 in 2000
Participatory practices in the education system - number of participating classrooms	None in 1997	20 in 2000

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ACTIVITY DATA SHEET

PROGRAM: ALBANIA
TITLE: Legal Institutions that Better Support Democratic Process and Market Reforms, 180-S002.2
STATUS: Continuing
PROPOSED OBLIGATION AND FUNDING SOURCE: FY 2000: $ 2,050,000 SEED Act
INITIAL OBLIGATION: FY 1991; ESTIMATED COMPLETION DATE: FY 2002

Summary: USAID efforts have focused on strengthening democratic processes and institutions which have suffered setbacks during the governmental crises of late 1996 and early 1997, and the evacuation of all U.S. citizens in August of 1998. Despite these difficulties, the Albanians adopted a constitution by popular referendum in November of 1998 which promises to support the transition to a democratic society and a market-based economy.

The direct beneficiaries of these activities are a significant percentage of the Albanian judicial system, and indirectly, every member of the Albanian public.

Key Results: The three key intermediate results will improve democratic judicial processes by: 1) training more competent legal professionals; 2) restructuring the legal system in line with international norms; and 3) promoting an environment in which citizens have legal recourse to the justice system.

Performance and Prospects: USAID's rule of law program in Albania is aimed at promoting reform in the judiciary, supporting the legal profession, offering continuing legal education and improving the commercial law regime. A law library at the Court of Cassation has been established, and the collection of donated books continues to grow. USAID advisors are also assisting in drafting the governing statute and code of ethics for the National Chamber of Advocates. USAID continues to work with the Council of Europe (EU) to publish and distribute over 10,000 copies of various new codes and regulations throughout Albania. The advisors have also presented workshops for legal professionals and private citizens on the private practice of law, contracting, etc.; supported and participated in study tours for judges and legal professionals; and offered legal assessments on draft local government, agricultural land tax, media, collateral and family laws.

USAID advisors continue to focus on strengthening governmental legitimacy and authority, seriously undermined by the crisis of 1996-97. The Albanian people perceive that their government often flouts the rule of law and that the judiciary is corrupt, incompetent, and politically motivated. A key element of the process of overcoming these doubts and fears has been the year-long effort to bring about a popularly approved constitution. In addition, four areas of continuing emphasis help assure that laws and legal institutions support democratic processes: 1) an ongoing program to support the Albanian judiciary and to help them become both respected and effective; 2) continuing efforts to help the national and regional bar associations, as well as a continuing focus on criminal justice reform and court administration; 3) on-going support to the Magistrates School for training law school graduates to become competent judges, and 4) the presentation of courses in commercial law for judges, lawyers and law students; the completion of a handbook on women's legal and commercial rights; and the development and implementation of modern commercial laws. In parallel with USAID's emphasis on judicial training and related rule of law issues, assistance will be provided to police, prosecutors and defense attorneys in criminal procedures. In collaboration with other donors and USAID advisors in the civil society sector, corruption issues will be addressed.

Possible Adjustments to Plans: With approval of the Constitution by national referendum in November 1998, the Government of Albania (GOA) now has an acceptable framework for building democracy and civil society. The challenge is to bring the document to life. U.S. citizens have not been allowed to work on USAID funded activities since the evacuation of August 1998. USAID activities have nonetheless proceeded and continue to influence the sector significantly. Third country nationals actively supported the public awareness component of the national referendum process. USAID advisors under the Department of Justice criminal law program will continue training lawyers, judges and others in the justice system at facilities in Warsaw and Budapest, until such time as they can return to Albania.

Other Donor Programs: The Organization for Security and Cooperation in Europe (OSCE) was instrumental in the preparation and passage of the new Albanian Constitution. The Council of Europe (EU) continues to provide legal expertise and training for the Magistrates School in Tirana and for the Albanian judiciary. Additional donors to Albania's legal reform process are the Soros Foundation, Danida (Denmark) and GTZ (Germany).

Principal Contractors, Grantees, or Agencies: USAID/Albania implements this activity through the American Bar Association's Central and East European Law Initiative (ABA/CEELI) project and the U.S. Department of Justice.

Selected Performance Measures:

	Baseline	Target
Magistrates School functioning	No in 1995	Yes in 2000
Number of professionals trained	0 in 1995	100 in 2000
Constitution adopted by referendum	No in 1995	Yes in 2000
Citizens have legal recourse and are trained in legal issues	None in 1995	200 in 2000

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ACTIVITY DATA SHEET

PROGRAM: ALBANIA
TITLE: More Effective, Responsive, and Accountable Local Government, 180-S002.3
STATUS: Continuing
PROPOSED OBLIGATION AND FUNDING SOURCE: FY 2000: $ 1,400,000 SEED Act
INITIAL OBLIGATION: FY 1995; ESTIMATED COMPLETION DATE: FY 2002

Summary: Albania is still in the early stages of local government reform. The breakdown in governmental control during the civil insurrection of 1996-97 affected both national and municipal authorities. There is no tradition of decentralized authority in Albania and the public has had no experience with a local government able to act on its own authority. Local governments, whether elected or appointed, are therefore viewed as simply representatives of the central government in Tirana. In the Autumn of 1998, however, the potential for enhancing the devolution of power was increased by a new law giving municipalities control over local property revenue. The passage of the new Constitution in November 1998 will bolster opportunities to further local autonomy.

The local government program to date has been implemented on a pilot basis. Local authorities in all municipalities will benefit eventually as the results of the activities in the pilot cities are disseminated. All the citizens of the cities they serve should find their quality of life improved through strengthened local administration and municipal services. The central government should find itself relieved of many responsibilities as the municipalities become able to govern more independently and this will eventually have a positive fiscal impact on the government.

Key Results: Five key results are pursued in support of strengthening local government in Albania: 1) the central government transfers responsibility and authority to local government; 2) local governments are capable of budgeting, planning and managing; 3) local governments provide improved services; 4) local government is increasingly open with citizen participation in the budget and planning process; and 5) municipalities support and implement local economic development plans.

Performance and Prospects: USAID advisors have worked with the Government of Albania (GOA) at a ministerial level to foster an informed and non-partisan dialogue on decentralization at the same time they have been helping to strengthen the capacity of eight pilot cities plus Durres and Tirana. Special focus has been put on developing the Association of Albanian Mayors.

The Association of Mayors, a core group of city mayors, has been trained by USAID advisors in the modern budgeting process, data collection and analysis, principles of taxation, revenue forecasting, cash management, contract execution and supervision, the use of citizen commissions and advisory boards, public infrastructure management, and economic development. This capacity building has been concentrated in eight pilot cities and is being expanded to include others, using the pilot sites as models and with the Association of Mayors providing leadership.

USAID advisors have worked with a wide spectrum of other donors to improve service delivery as an essential component of building public confidence. Improvement has been noted in land management and water delivery, though gains are often mitigated and strained by recent migration to the improved areas. Increased attention is being given to contract management of privately provided services and grant assistance is being sought to support the improvement of municipal services.

Planning for economic development is seen by USAID advisors as the primary instrument for initiating community involvement in local government decision-making. Joint planning is geared to ensure involvement of and opportunities for local businesses and NGOs to communicate their interests to municipal managers.

Possible Adjustments to Plans: Given the historically limited role of local government in Albania, the setbacks from unrest in 1996-97, and the evacuation of U.S. citizens in August of 1998, the progress made in this sector is considerable. The GOA continues to support USAID activities, and a strong Albanian staff works with USAID advisors based in other countries. Training in Macedonia, Hungary or other Central and Eastern European countries, and the assistance of third country nationals in Albania have permitted these programs to remain on target. Activities will be accelerated as soon as U.S. citizens are allowed to return to Albania.

Host Country and Other Donors: The World Bank and a bilateral Italian program provide support in major infrastructure (water, sewerage, etc.). The German Government has provided some technical assistance and training. The Netherlands is active in local government development. The EU, along with USAID, is providing material support, principally computers, to selected municipalities. USAID support is focused on major secondary cities which do not receive similar assistance from other donors. GOA contributions to the activities are principally in the form of personnel and facilities.

Principal Contractors, Grantees, or Agencies: USAID implements this activity through DAI/Mendez-England and the Urban Institute.

Selected Performance Measures:

	Baseline	Target
Central government transfers responsibility and authority to local government - law allowing devolution of power in place	No in 1995	Yes in 2000
Local government capable of budgeting, planning and managing - cities implementing	0 in 1995	8 in 2000
Local government provides improved service	0 in 1995	8 in 2000
Local government supports economic development-cities with implemented economic development plans	0 in 1995	5 in 2000

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ACTIVITY DATA SHEET

PROGRAM: ALBANIA
TITLE: Improved Sustainability of Health and Social Benefits and Services, 180-S003.2
STATUS: Continuing
PROPOSED OBLIGATION AND FUNDING SOURCE: FY 2000: $ 1,000,000 SEED Act
INITIAL OBLIGATION: FY 1991; ESTIMATED COMPLETION DATE: FY 2002

Summary: Albania has the least developed public system of social infrastructure among the Eastern European nations. Many of its health care facilities are seriously dilapidated and outdated. The health delivery system emphasizes curative services over primary care and preventive services, and suffers from weak planning and management capacity. An influx of refugees from neighboring Kosovo is causing an additional strain. The country's prior isolationism, official pronatalist policy, poor information and lack of alternatives has resulted in high mortality and morbidity rates for women. Abortion became the predominant form of family planning.

The purpose of this strategic objective is to improve the sustainability of social benefits and services in Albania with an emphasis on women's reproductive health. Improved health services will fortify the productive capacity of Albania's human resources. Increasing the efficiency and lowering the cost of health services will reduce the social investment required to maintain a healthy population. Medical professionals (doctors, nurses, technicians and managers) are the channels through which projects are functioning, with the primary beneficiaries being Albanian citizens in need of medical care. Women in Albania are beginning to benefit from access to family planning information and services with improved counseling and care.

Key Results: Three key intermediate results are necessary to achieve this objective. 1) Improved Reproductive Health Practices: High maternal mortality rates are the result of overreliance on abortion and lack of familiarity with modern reproductive health methods. USAID's program will emphasize information dissemination, family planning counselling, improved access to services, and higher-quality services. 2) Improved Hospital Services in Tirana: Albanian hospitals need to modernize administrative procedures, clinical methods, and financial management. Through partnership arrangements USAID's program will introduce improvements in administration, nursing, maternal/child care, emergency medicine, and infection control. It is expected that the participating Tirana-based hospitals will serve as models for extension to other hospitals and the Tirana University Hospital will incorporate improved practices in medical/nursing school curricula. 3) Improved Health Administration and Management: Given Albania's comparatively low level of health expenditures, it is especially important to improve health management, performance budgeting, and cost control. USAID's program will help institutionalize improved management procedures in the Ministry of Health, establish university-based health management education courses, and develop in-service training in the Ministry.

Performance and Prospects: The GOA is quite aware of the urgent need to revitalize and modernize its health care system. Working with USAID advisors, key health care administrators have acquired the knowledge and skills needed to manage more efficiently and effectively at the central level (the Ministry of Health) and at the district, hospital and polyclinic levels. Two hospitals, the Durres Hospital and the University Hospital Center of Tirana, have implemented hospital operations improvement techniques and now serve as models for the rest of the hospital system. The number of hospital beds, reflecting vacancies, has consequently been reduced. At the Durres Hospital, where the main hospital building collapsed in 1995, a strategic planning process has matched available resources with a long-range plan for a replacement hospital. At the University Hospital Center, administrative and medical records were computerized. In both hospitals, pharmaceutical and medical supply purchasing and distribution were computerized. Several national conferences have been held to share the information and management techniques developed at the pilot hospitals with over eighty hospital managers and administrators from all over Albania.

The planning capacity of the MOH has been improved through management training, computerization and a hospital facilities survey. A Learning Resource Center has been opened at the National Institute of Public Health which provides access for students and faculty to modern management literature and research through the internet. Health management courses were designed and are now being taught at the University of Tirana. Four Tirana hospitals have received extensive training in emergency medical services through a partnership program with Spectrum Health which is based in Michigan. Albanian nurses from across the country are receiving in-service training opportunities to improve their skills and status in the health care system.

A total of 95 service providers who have been trained in the two largest urban areas of Albania, are now providing upgraded women's reproductive health services including family planning. Training of additional providers is well underway in two other selected geographic areas of Albania and if security allows, the program will be implemented nationwide. The results of a major focus group research on Albanian attitudes toward family planning has been released in a report entitled, "We Want to Know Everything About It: Albanian Women Speak about Family Planning" which has aided service providers in providing the necessary information sought by Albanian clients. Contraceptives are being provided throughout the country by the United Nations Population Fund (UNFPA) with assistance from USAID/Albania in logistics management.

Possible Adjustments to Plans: The implementation of this strategic objective was set back by the withdrawal of American staff and the resultant prohibition of travel to Albania by American consultants. Program implementors have responded by transferring training programs to locations outside of Albania, increasing the use of third country (non-American) technical consultants, and delegating greater assumption of responsibility to local Albanian staff. The programs have now adapted to this new interim working arrangement and have developed new implementation plans for the coming year.

Other Donor Programs: The World Bank is supporting the reconstruction of rural hospitals throughout Albania. The University of Montreal and the Paris Hospital System are providing planning assistance and management training to the Ministry of Health. The United Nations Development Program (UNDP) is providing health care manuals to medical facilities. Switzerland is providing assistance to the nursing school. The EU has a Public Health Facilities Maintenance project and has supported capacity-building at the Ministry of Health. The United Nations Population Fund (UNFPA) is providing significant contraceptive commodities.

Principal Contractors, Grantees, or Agencies: USAID implements these activities through the American International Health Alliance, John Snow, Inc., and the U.S. Department of Health and Human Services.

Selected Performance Measures:

	Baseline	Target
Health Services Improved:
Infant mortality (deaths per 1,000 live births)	35.7 (1994)	25 (2000)
Maternal mortality (deaths per 100,000 births)	40.6 (1994)	20 (2000)
Access to Quality Health Services Improved:
cumulative number of primary health care clinics complying with quality standards	199 (1995)	516 (1999)
clinics providing family planning services	2 (1995)	350 (1999)

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