CRS Report to Congress

Steven Woehrel, Julie Kim, and Carl Ek
Specialists in International Relations
Foreign Affairs, Defense, and Trade Division

Updated February 7, 2000

Albania1

Most Recent Developments

In 1999, Albania bore the brunt of the refugee flood from Kosovo, receiving over 400, 000 Kosovar refugees at the height of the crisis. In response, NATO deployed an Albania Force (AFOR) under a mission to provide humanitarian relief and shelter to the refugees. NATO maintains about 2,000 troops (AFOR 2) in Albania for logistical support for the peacekeeping operation in Kosovo, KFOR. The political environment in Albania has remained highly polarized between the two largest parties since the 1997 economic crisis and civil unrest.

Political and Economic Factors

Albania was the last east central European country to embark on democratic and market economic reforms in the 1980s. Its record of democratic and economic development since then has been decidedly mixed, and not comparable to the northern tier transition countries. Albania has held four national elections, some of which failed to meet democratic standards. Under former President Sali Berisha, who ruled with his Democratic Party led government from 1992 to 1997, the rule of law often became subject to political pressures, according to State Department and other human rights reports. The political environment became increasingly polarized between the then ruling Democratic Party and the Socialist (former Communist) Party opposition. Judicial independence was compromised by political pressures.

In early 1997, a financial crisis erupted into anti government demonstrations, riots and clashes with police, and fighting in pockets of armed insurgencies that resulted in over 2,000 deaths. Under international mediation, President Berisha and opposition parties worked out an agreement on forming a broad based interim government in April. A multinational peace force led by Italy was briefly deployed to the country to assist in the delivery of humanitarian aid. Early elections in June 1997, viewed by the international community to be generally free and fair, resulted in a clear victory for the Socialist Party. Fatos Nano of the Socialist Party became Prime Minister. Nano resigned in September 1998 and was replaced by Pandeli Majko of the Socialist Party. A year later, Majko resigned after Nano replaced him as Socialist Party chairman. Deputy Prime Minister Ilir Meta replaced Majko in October 1999, a change not expected to produce any radical change in policy. On the opposition side, Berisha's Democratic Party has periodically called for new elections.

The security and human rights situation has gradually improved since the 1997 crisis, but significant problems remain. Organized crime and corruption, allegations of politically motivated killings, and illegal police practices continue to undermine further progress in democratic development. The judicial process remains inefficient and subject to corruption and executive pressure, while law enforcement remains lax. 2 Parts of the country are considered havens for illegal trafficking. The political atmosphere between the ruling Socialist Party and the opposition Democratic Party remains highly polarized. Relations between the two largest parties hit the lowest point in September 1998, when a leading Democratic Party member was assassinated. The death was followed by violent anti government demonstrations led by Democratic Party leader Sali Berisha. During his brief time in office, former Prime Minister Majko made some effort to foster political reconciliation. In 1999, however, arch rivals Fatos Nano and Sali Berisha resumed or held onto their respective party leaderships.

Albania's economic situation has fluctuated dramatically since 1989. It remains the poorest country in Europe. In the initial post communist years, grim economic prospects, extremely high unemployment, and food shortages prompted mass exodus attempts, especially by Albania's younger population. From 1993 to 1996, Albania experienced galloping economic growth fueled by remittances from abroad and large-scale international aid. However, Albania's economic recovery proved to be highly unstable and susceptible to corruption and organized crime. The collapse of numerous high-risk investment schemes beginning in late 1996 plunged the country into an economic, political, and social crisis that brought the economy to a virtual standstill. Gross domestic Product (GDP) declined by an estimated 7% in 1997. The Nano government that took office in mid 1997 worked quickly, with assistance from international financial institutions, to stabilize the economy and resume structural reforms, especially privatization, and banking and administrative reform. The economy rebounded with 8% GDP growth in 1998. In 1999, the Kosovo crisis imposed a severe financial burden on Albania, but the unexpectedly quick return of hundreds of thousands of refugees to Kosovo by mid year and the steady inflow of foreign assistance and hard currency mitigated the situation. GDP growth for 1999 is estimated to reach 5% 6%. Future economic priorities for Albania include large-scale privatization and attracting foreign investment, Its economy is expected to benefit somewhat from regional reconstruction projects centered around Kosovo.

Foreign Policy and Defense Factors

Albania emerged from nearly total international isolation in the early 1990s and has made significant strides in establishing and improving relations with other countries and international institutions. Albania is a member of the Organization for Security and Cooperation in Europe (OSCE), the Council of Europe, which it joined in 1995, NATO's Partnership for Peace (PFP) program and NATO's Euro Atlantic Partnership Council (EAPC, succeeding the North Atlantic Cooperation Council in 1997). Albania is not an associate partner in the Western European Union (WEU). Albania is currently seeking membership in the World Trade Organization (WTO). Albania has a Trade and Economic Cooperation Agreement, but not yet an Association Agreement, with the European Union (EU), and has received substantial economic assistance from the EU. During the Kosovo war, the EU agreed to establish new Stabilization and Association Agreements with several Balkan countries, including Albania. Negotiations with Albania on the SAA are expected to begin in 2000.

Albania has also relied on direct and indirect assistance from neighboring states. Hundreds of thousands of Albanians have sought economic opportunity and employment abroad, especially in neighboring Greece and Italy. Italy led the international effort to stabilize the situation in Albania during and after the 1997 unrest, contributing to and commanding the multinational force that assisted humanitarian aid convoys. In the early 1990s, relations with Greece deteriorated over ethnic Greek issues and border skirmishes. Bilateral relations have since improved, especially once the Albanian Socialist Party came to power. Bilateral relations with the Former Yugoslav Republic of Macedonia (FYROM), which has a sizeable ethnic Albanian minority, have also improved in recent years; both countries have participated in numerous regional initiatives to prevent the spread of conflict in the Balkans and increase regional cooperation.

The violent conflict in Kosovo from early 1998 to mid 1999 between ethnic Albanians and Serb forces was of enormous concern to Albania. Beginning in early 1999, Serb forces began to systematically drive out nearly 1 million Kosovar Albanians from the province. Albania received the largest number, over 400,000, of Kosovar refugees. Albania's government and citizens were given widespread international praise for their efforts to try to accommodate the refugees. Many Albanians are supportive of Kosovar Albanians' goal of independence. In response to the refugee crisis, NATO deployed the Albania Force (AFOR) to assist international agencies provide humanitarian relief to the refugees. The United States also deployed to Albania a task force of U.S. attack helicopters for possible use against Serb forces in Kosovo.

The Armed Forces. During the 1997 insurgency, the Albanian army largely disintegrated as many conscripts abandoned their military units and as munitions depots and military installations were raided. Over 650,000 weapons, mainly small arms, were stolen during the crisis. In 1996, Albania's armed forces totaled 54,000 personnel. Since the civil unrest in 1997, official military manpower figures have been unavailable, but some estimates put the strength of the armed forces at 10,000 20,000 troops. 3 In the last few years, Socialist government has endeavored to reconstruct and reorganize the armed forces and police. In 1998, Albania's defense expenditures amounted to about $100 million. The defense budget for 1999 was about $43 million, reflecting planned reductions and cuts in personnel. 4 Albania has received bilateral military assistance from the United States and from neighboring states such as Italy, Greece, and Turkey. In November 1998, the General Staff of the Albanian army presented to the President "The Policy of Security and Defense," a document outlining the goals and transforming structure of the armed forces. At the presentation, a defense official stated that the reforms would bring about reduced military spending, move the services toward a professional army, and bring the armed forces to closer integration with NATO.

After the 1997 crisis in Albania, NATO became more actively involved in the effort to rebuild Albania's armed forces. NATO and the Albanian government formulated a tailored program of assistance in the context of Albania's PFP Individual Partnership Program (IPP). NATO and Albania worked to establish a very basic level of interoperability through participation in joint military exercises in the context of PFP, and through special bilateral programs.5 In June 1998, NATO opened a Partnership for Peace Cell to coordinate and implement NATO activities in Albania. Albania hosted a PFP peace support exercise, "Cooperative Assembly 98," in August 1998. Another PFP exercise, "Cooperative Dragon," is planned to be held in Albania in June 2000. A very small contingent of Albanian troops has served with NATO operations in Bosnia since late 1996. Albania is also a participant in the southeastern Europe multinational peacekeeping force that was inaugurated in 1999 in Bulgaria.

Albania's cooperation with NATO increased in the past year in response to the Kosovo crisis. After the start of the air campaign against Yugoslavia, NATO decided to launch a 7,000 strong Albania Force (AFOR) under a mission, Operation Allied Harbor, to provide the Kosovar refugees with humanitarian aid and shelter. The Albanian army assisted AFOR in setting up refugee camps throughout the country. The United States also deployed to Albania Task Force Hawk, a contingent of two dozen attack helicopters and several thousand supporting troops (which never went into combat in Kosovo). In the process of establishing and maintaining these operations, NATO greatly upgraded Albania's transportation and communications infrastructure and facilities. A smaller contingent of NATO forces remains in Kosovo (AFOR 2) under Italian command as logistical and communications support to the NATO peacekeeping operation (KFOR) in Kosovo. AFOR 2 is likely to remain in Albania for as long as KFOR is deployed in Kosovo. The Albanian government welcomed NATO's Southern Eastern Europe Initiative as an opportunity to develop closer cooperation with NATO and improve interoperability with NATO countries. Officials have pledged to implement Albania's annual national program under the Membership Action Plan. 6

Civilian Oversight. Albania has made some progress in adopting fundamental documents on national security strategy and defense doctrines. A National Security strategy document is currently under review in the parliament. Its aim is to clarify the roles of different state institutions in the area of national security. A draft law on the state police would separate the police from its current joint status with the armed forces. Albania's new constitution, signed into law in November 1998, refers in general terms to the mission of the armed forces. It states that the armed forces are to secure the independence and territorial integrity of the country. The armed forces are to maintain neutrality in political matters and be subject to civilian control. Albania has looked to international programs, such as through Partnership for Peace, to gain experience and expertise in civil-military relations and characteristics of the armed forces in a democratic society. exercise, "Cooperative Assembly 98," in August 1998. A very small contingent of Albanian troops has served with NATO operations in Bosnia since late 1996.

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Bulgaria 7

Most Recent Developments

In 1999, the Bulgarian government and President strongly supported NATO's Allied Force operation against Serbia, despite domestic opposition to the air strikes. Later in the year, the government adopted Plan 2004, a program to reform and restructure Bulgaria's armed forces and defense institutions. Bulgaria currently hosts the headquarters of the Multinational Peace Force Southeastern Europe formed by seven countries of the region.

Political and Economic Factors

Bulgaria is a parliamentary republic ruled by a democratically elected government. Bulgaria's process of reform since 1989 from communism to an open, market oriented democracy has progressed unevenly and more slowly than in Poland, Hungary, or the Czech Republic, but has made accelerated strides in recent years. Under Socialist Party led or Socialist Party supported governments for most of the last decade, Bulgaria's economic reforms lagged, resulting in a sharp deterioration of economic conditions. Beginning in late 1996, political fortunes turned against the ruling Socialist government. In Bulgaria's second direct presidential elections in October November 1996, Petar Stoyanov of the Union of Democratic Forces (UDF) defeated the Socialist Party candidate and began serving a five year term in January 1997. Mass anti government demonstrations led by the UDF and nationwide strikes during the winter forced the Socialist government to resign and offer early parliamentary elections. A UDF caretaker government under interim Prime Minister Stefan Sofianski took swift steps to stabilize the economy. Elections in April 1997 resulted in a victory for the UDF and its coalition partners, who hold an absolute majority of parliamentary seats (137 out of 240 seats). UDF leader Ivan Kostov became Prime Minister. Bulgaria's next general elections are scheduled to be held in 2001.

Priority concerns of the Kostov government have been accelerating economic reforms, combating crime and corruption, and achieving greater integration with European institutions. The State Department's Report on Human Rights Practices for 1998 noted that the Bulgarian judiciary is independent but continues to suffer from corruption and structural and staffing problems. It said that the Bulgarian government generally respected the human rights of its citizens, but cited remaining problems in police abuses, constitutional restrictions on political parties, discrimination against women, and mistreatment of the Roma (Gypsy) minority. In 1998, the European Commission, in a report on Bulgaria's preparedness for EU membership, assessed that Bulgaria met the political qualifications.8 In its 1999 regular report on Bulgaria, the European Commission noted that the political situation remained stable in Bulgaria and lauded the leadership of the United Democratic Forces led government in its commitment to EU as well as NATO membership. It called for further progress in judicial reform and in combating corruption. In July 1998, the Kostov government adopted a national strategy for combating organized crime.

After years of stagnation, the Bulgarian economy has undergone an impressive turnaround since the departure of the Socialist government. With the backing of the International Monetary Fund (IMF) and other international financial institutions, the Bulgarian government introduced numerous structural reforms that have resulted in a reduced budget deficit, lower inflation, and a rise in foreign investment. The introduction in July 1997 of a currency board swiftly pushed down Bulgaria's soaring inflation rates and continues to contribute to financial stability. Bulgaria's GDP declined by over 10% in 1996 and by 7% in 1997. In 1998, GDP rebounded with 3.5% growth. The 1999 Kosovo war negatively affected the Bulgarian economy by curtailing exports and expanding the current account deficit. In the second half of the year, however, the economy recovered somewhat and GDP growth is still expected to reach about 1.5% 2.5% in 1999. In its 1999 regular report, the European Commission noted continued improvements in macroeconomic developments in Bulgaria since its last report in mid-1998. It noted that sound fiscal policies under the currency board arrangement has maintained macroeconomic stability. It stated that Bulgaria's next priority should be focused on further privatization and enterprise restructuring, and on reforming the system of state subsidies. Notwithstanding Bulgaria's progress, the report stated that Bulgaria is not yet able to cope with competitive pressure and market forces within the EU in the medium term.

Foreign Policy and Defense Factors

Like Poland, Hungary, and the Czech Republic, Bulgaria has endeavored to join or participate in a range of international institutions. Bulgaria is a member of NATO's PFP and the EAPC. It is an Associate Partner of the WEU. It is a member of the OSCE and the Council of Europe. It has been a member of the WTO since 1996. Unlike Poland, Hungary, and the Czech Republic, Bulgaria is not yet a member of the OECD. Bulgaria is an associated country with the EU, but was not among the first transition countries to begin accession negotiations. At the EU Helsinki summit in December 1999, EU leaders decided to open the enlargement process to six additional countries, including Bulgaria. Bilateral negotiations on accession are to begin in February 2000.

Although Bulgaria joined NATO's Partnership for Peace program in early 1994 and has participated in numerous PFP exercises from the beginning, a national consensus on the question of eventual Bulgarian membership in NATO appeared to be lacking while the Bulgarian Socialist Party was in power. In an effort to draw a sharp distinction with the former government, the interim government under Prime Minister Sofianski issued, in one of its first decisions, a declaration in February 1997 stating Bulgaria's unequivocal goal of becoming a full member of NATO. Bulgaria began an "intensified dialogue" with NATO on prospective membership in early 1997. The Kostov government and President Stoyanov have strongly pressed NATO and NATO member states to uphold and develop the alliance's "open door" policy to additional candidate states. During the Kosovo war, the Bulgarian government granted NATO unrestricted use of its airspace, in spite of domestic opposition to the NATO campaign. The government later granted NATO troops passage across Bulgaria for deployment to the peacekeeping operation in Kosovo. At the April 1999 NATO summit, the alliance endorsed a detailed Membership Action Plan for future NATO aspirants. The Bulgarian government presented to NATO its 1999 2000 Membership Action Plan in October 1999. NATO officials and member countries have given strong praise to Bulgaria for its support of Operation Allied Force. During his first visit to Bulgaria in November 1999, President Clinton expressed support for Bulgaria's eventual entry into NATO.

Bulgaria maintains good relations with its neighboring states. It has actively supported and, in some cases, led numerous regional initiatives such as the Black Sea Economic Conference, regional summit meetings, and the creation of a joint Balkan peacekeeping force, the Multinational Peace Force South Eastern Europe (initially based in Plovdiv, in Bulgaria). It participates in the Stability Pact for Southeastern Europe. After the end of the Cold War, Bulgaria normalized relations with Turkey, which had been strained over Bulgaria's expulsion of large numbers of its ethnic Turk minority during the 1980s. Bulgaria maintains good relations with Romania, which also seeks NATO and EU entry. Bulgaria was the first country to recognize the independence of its western neighbor, the former Yugoslav Republic of Macedonia. In early 1999, Bulgaria resolved a dispute with Macedonia over language, clearing the way for fully normalized bilateral relations and several agreements. When violent conflict broke out in the Serbian province of Kosovo in early 1998, the Bulgarian government initiated a joint declaration on conflict prevention by countries in the Balkan region.

The Armed Forces. The Bulgarian armed forces, comprising the army, navy, and air force, are engaged in a major reform and restructuring process. Similar to other former Warsaw Pact countries, this process has involved moving away from large, offensively oriented and top-heavy forces. Under the Videnov government, corruption in the armed forces, as in other parts of the government, was reportedly a major problem. 9 In 1999, Bulgaria's armed forces comprised about 81,000 active forces, including some 50,000 conscripts, and over 300,000 reserves, in the army, navy, and air force. Over 30,000 served as paramilitary forces as border guards, security police, or railway/construction troops. 10 Bulgaria's defense budget for 1998 was about $277 million (488 billion leva), which represented the third year of decline in defense spending. For 1999, the government announced, and parliament later approved, a major increase in the defense budget to about $307 million (588 billion leva), an amount representing over 2% of GDP. According to the Defense Ministry, most of the increase is to go to personnel and restructuring costs. Almost all of the defense budget goes toward basic force maintenance; resources for the acquisition of new weapons or for other modernization measures may not be available for some years. Equipment maintenance, logistical support, and training have also suffered under budget cuts, to the detriment of the Bulgarian army's state of readiness. 11 The projected defense budget for 2000 is about $350 million (700 billion leva), which would represent another major increase.

In February 1998, the Kostov government approved a three-staged plan to reform the armed forces over the next twelve years ("Plan 2010"). The overall aim of the reform was to create a smaller, more mobile armed force compatible with NATO forces and capable of providing initial security against a small or medium-sized conflict in Bulgaria. The reform plan called for the armed forces to be reduced ultimately to 65,000 to 75,000 men from its 1998 size of about 101,500. The length of conscription was to be reduced from 18 to 12 months. Up to 30% of the armed forces was to be comprised of professional soldiers by the year 2010. Funds made available by the cuts in personnel were to be allocated primarily for modernization of equipment and training. The Bulgarian armed forces were to be reorganized into a brigade/corps structure centered around the creation of a Rapid Reaction Force and two regular army corps.12

In early 1999, Bulgaria and the United States cooperated on a joint project to assess and make recommendations on the reform of the Bulgarian armed forces. In October 1999, the Bulgarian government adopted Plan 2004, an accelerated outline of structural and organizational reforms for the defense ministry and armed forces. According to the Defense Minister, the goal of these reforms is to achieve a small but combat ready army. The Plan called for the armed forces to be further reduced to about 45,000 by the year 2004, or about half of its current strength. The structure of the armed forces would consist of rapid reaction forces, main defense forces, territorial defense forces, and reserves. The Defense Ministry staff would be reduced by about half. The reforms would also reduce levels of military equipment and close some military bases and academies. These reductions and privatization of some defense industry sectors are expected to provide budgetary savings and sources of revenue. 13 Sufficient resources are to be devoted to implementation of the Membership Action Plan.

Bulgaria has participated in and hosted numerous NATO Partnership for Peace training exercises designed to improve interoperability with NATO forces. Bulgaria has also participated in the Planning and Review Process (PARP) under PFP, working to implement over 40 inter operability objectives. Bulgaria has contributed a small platoon and medical facilities to NATO's Stabilization Force (SFOR) operation in Bosnia since mid 1997; this limited participation contrasts with the much larger battalion level contributions to SFOR and its predecessor, the Implementation Force (IFOR), made by Poland, Hungary, and the Czech Republic. In January 2000, the government approved a proposal to contribute a 44-person engineering platoon to KFOR, NATO's peacekeeping operation in Kosovo. The Bulgarian forces are to be attached to the Dutch contingent serving in the southern multinational brigade in Kosovo.

Civilian Oversight. Under the Bulgarian constitution, the role of the armed forces is to guarantee the sovereignty, security, and independence of the country and to defend its territorial integrity. The President is commander in chief of the armed forces and appoints or dismisses the higher command of the armed forces. Civilian government and parliamentary authorities exercise control over the armed forces. The government has established an inter-departmental committee on NATO integration. Civilian expertise in defense, defense budget, and other security issues in parliament is considered to be weaker than in Poland, Hungary, or the Czech Republic. Part of the Plan 2004 military reform program calls for deep cuts in civilian personnel in both the General Staff and the Defense Ministry.

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Estonia

Most Recent Developments

Estonia is viewed by both the United States and the European Union as a parliamentary democracy and free market economy. However, the OSCE and the EU have objected to amendments to Estonia's language law adopted in February 1999, saying that some of them would hinder the integration of the country's large Russian speaking minority into Estonian society.

Estonia offered strong verbal support to the NA TO air campaign in Kosovo. It has provided 5 military policemen to KFOR, and plans to send civilian police, as well as a "military support unit. " Estonia's defense spending in 1999 was about $67.9 million, amounting to 1.39% of GDP. (This figure includes the expenses of the Border Guards and the Rescue Service). The draft Estonian defense budget for 2000 calls for defense spending of about 1.6% of GDP.

Political and Economic Factors

According to the 1998 State Department Country Report on Human Rights Practices, Estonia is a parliamentary democracy that has held several free and fair elections since the restoration of its independence in 1991. It said that Estonia generally respected the human rights of its citizens and its large non citizen community," but noted problems in several areas, notably in the treatment of prisoners and the use of excessive force by police. The report said that Estonia has an independent judiciary. This positive assessment of Estonia's political system is similar to the report's discussion of the democratic political systems of Poland, Hungary and the Czech Republic. 15

One significant difference between the domestic political situations of Estonia and Poland, Hungary and the Czech Republic is Estonia's large Russian speaking minority (about 470,000 persons out of a total population of 1.45 million). In 1992, an Estonian citizenship law took effect giving citizenship to all who were citizens in 1940 and their descendants. Most Russian speaking inhabitants in Estonia settled in Estonia after the Soviet takeover of the country in 1940, and all but about 80,000 of them were excluded from Estonian citizenship. They can become citizens after 3 years provided they can demonstrate knowledge of the Estonian language. Over 107,000 people, mostly Russian speakers, have applied for and received Estonian citizenship. Approximately another 125,000 have chosen Russian citizenship. The remainder are still non citizens. Non-citizens cannot run for office or vote in national elections, but can vote in local elections. The 1998 State Department human rights report says that Estonia generally respects the rights of non-citizens. On December 8, 1998, the Estonian parliament adopted a law that grants citizenship to non-citizen children born since 1991, if their parents have lived in Estonia for five years and do not have citizenship in another country. The move fulfilled the last of 30 Organization for Security and Cooperation in Europe (OSCE) recommendations for harmonizing Estonia's citizenship laws with OSCE standards.

OSCE High Commissioner for National Minorities Max van der Stoel, echoed by the European Union, strongly criticized amendments to Estonia's language law adopted in February 1999. The OSCE and EU particularly object to provisions that require private sector employees who deal with the public to speak Estonian. The European Commission's October 1999 report on Estonia's progress toward EU membership says the language law amendments "go beyond the non compliance by Estonia of the political criteria for membership on minorities issues and could conflict between the law and the obligations of Estonia" under its association agreement with the EU as the European Convention on Human Rights. Estonia has developed an integration strategy, which among other things, aims at increasing resources for Estonian language training.

Estonia has a free market economy. Since regaining independence in 1991, Estonia has made dramatic economic progress by implementing a program of balanced budgets, tight monetary policy, establishment of a strong currency and liberal trade and investment rules. After several years of strong economic growth, Estonia was hit hard in late 1998 and early 1999 by the Russian economic crisis. It has rebounded rapidly however, and Gross Domestic Product grew at an estimated rate of 3.5 4.0% in the fourth quarter of 1999, and is expected to continued to grow strongly in 2000. Inflation for 1999 was estimated at 3.2%. Estonia's currency, the kroon, is pegged to the German mark, and has remained stable. Estonia has been one of the most successful countries in the region in attracting foreign investment. Privatization is virtually complete; only a handful of large enterprises remain in state hands. Estonia joined the World Trade Organization in 1999. Estonia's progress in establishing a free market economy is broadly similar to that of Poland, Hungary and the Czech Republic.

Perhaps a key indication of Estonia's progress in establishing a democratic political system and a free market economy is the decision of the European Union to open membership talks with Estonia, along with Poland, Hungary, the Czech Republic, Slovenia, and Cyprus. The EU opened substantive negotiations with Estonia in November 1998. Estonia is currently engaged in an effort to harmonize its laws and policies with EU standards. In an October 1999 report on Estonia's fitness to join the EU, the EU Commission said that Estonia is a democracy that meets political criteria for EU membership, but warns the country's language law "constitutes a step backward and should be amended." The report also praises Estonia as a "functioning market economy," but notes that progress needs to be made in certain areas of structural reform, such as energy privatization, land privatization and strengthening the financial sector. After it completes the remaining structural reforms, Estonia should be economically ready for EU membership "in the medium term." The Commission also added that Estonia needs to make progress in strengthening its public administration. Estonia hopes to join the EU in 2003, but the EU has set no date for the entry of new members. 16

Foreign Policy and Defense Factors

Estonia enjoys excellent relations with most of its neighbors, and has no ethnic or territorial disputes with them. It has very good ties with the Nordic countries Denmark, Finland, Iceland, Norway and Sweden, which are enshrined in a number of institutional frameworks. Links between Finland and Estonia (whose majority peoples are ethnically related) are especially close. Estonia has also increased cooperation with Lithuania and Latvia in security, economic and political matters through the Baltic Council, the Baltic Assembly and other inter governmental organizations. However, Estonia's relations with one neighbor, Russia, have been rocky at times. Russia has sharply criticized Estonia for allegedly violating the human rights of its Russian speaking population. It has also expressed strong opposition to Estonia's efforts to join NATO, threatening that such a move could lead Russia to reconsider its cooperation with NATO. Estonia and Russia have initialed a border agreement, but have not signed it. One reason for the delay is that Russia is attempting to tie the signing of the agreement to its grievances on the status of Russian speakers in Estonia. Another possible reason is that Russia does not want to sign a treaty that it thinks might enhance Estonia's chances for NATO membership, by removing what might be seen as a "territorial dispute."

The Armed Services. Estonia has just over 5,000 men in its regular armed forces. Estonia plans to increase the peacetime strength of its regular forces to about 7,000 7,200 men in the future. In addition, it has about 14,000 reservists it can mobilize, and about 7,500 in the Defense League (Kaitseliit), a volunteer paramilitary force. Estonia's armed forces do not possess tanks or combat aircraft, and have only 32 armored personnel vehicles and 19 105mm artillery pieces. Estonia's main weapons procurement efforts focus on supplying its forces with fight infantry weapons and NATO standard communications equipment. Other priorities include air surveillance equipment, air defense weapons, anti tank weapons and naval mine warfare equipment. Estonia relies on foreign donations for part of its procurement needs.

Estonia's defense spending in 1999 was about $67.9 million, amounting to 1.39% of GDP. (This figure includes the expenses of the Border Guards and the Rescue Service). This percentage is less than that of Hungary and the Czech Republic (an estimated 1.6% of GDP for Hungary and an estimated 2.2% for the Czech Republic and Poland for 1999.) The draft Estonian defense budget for 2000 calls for defense spending of about 1.6% of GDP. The current NATO Europe average is 2.2% of GDP. Estonia's current long term defense plans call for spending to be increased to 1.8% of GDP in 2001 and 2% of GDP in 2002.

The armed forces of Poland, Hungary and the Czech Republic are much larger than those of Estonia. Poland has 220,000 men in its armed forces, about as many as Great Britain. The Czech Republic's military has about 56,000 men, roughly as many as Portugal. Hungary's armed forces have about 60,000 men, making its forces about the size of Canada's. All three countries have much larger weapons stocks than Estonia. A possible weakness in Estonia's qualifications for NATO membership is that, given the small size of its population, Estonia may never be able to contribute as much to the collective defense capability of NATO as larger countries such as Poland, Hungary and the Czech Republic. On the other hand, Estonia's armed forces may be able to make a modest contribution to future NATO peacekeeping efforts, similar to that of smaller current NATO members such as Luxembourg.

A key focus of Estonia's defense policy is to increase its interoperability with NATO. In 1994, Estonia, along with Lithuania and Latvia, agreed to form a Baltic Peacekeeping Battalion with the help of NATO countries, which have supplied equipment and training for the force. BALTBAT has not been deployed as whole unit, although parts of the force have participated in the NATO led force in Bosnia. Current plans are to develop BALTBAT into a fully capable infantry battalion that would be able to engage in a full range of peace support operations as well as to contribute to the self-defense capabilities of the Baltic states. Over 500 Estonian troops have participated in international peacekeeping operations since 1995. An Estonian platoon (about 38 troops) is serving in SFOR in Bosnia, as part of the Danish battalion. An additional 10 military police are also serving in Bosnia. Five civilian policemen have been deployed to Kosovo.

Another Baltic NATO military cooperation project is BALTRON, the Baltic naval squadron. This five vessel joint minesweeping unit held its first exercise with NATO forces in September 1998, but did not participate in the sweeping of live mines due to a lack of modem minesweeping equipment. BALTRON continues to lack the capacity to conduct minesweeping operations independently. It is planned that BALTRON will acquire the training and equipment to accomplish such missions in the medium term. In April 1998, the three Baltic states signed an agreement on setting up BALTNET, a joint air surveillance network, with the long term goal of integrating it with NATO's system. In 1999, organizational structures were established and equipment for BALTNET was deployed. In 2000. BALTNET will provide its first integrated radar picture of the region, although it will need additional, more modem equipment over the next few years before it will be fully effective. Finally, the Baltic states opened a joint Baltic Defense College (BALTDEFCOL) in Tartu, Estonia in August 1999. BALTDEFCOL is charged with educating staff officers from the three states in NATO based staff procedures, defense planning and management. The college's first class will graduate in June 2000. Security assistance to the Baltic states is coordinated through the Baltic Security Assistance (BALTSEA) framework. BALTSEA includes the three Baltic states as well as the United States and other NATO and non NATO security assistance donors.

Estonia is actively engaged in the Partnership for Peace program, which it views as a good way to achieve interoperability with NATO. It participated in 22 training exercises in 1998, including within PFP and exercises "in the spirit of' PFP. This figure does not include planning conferences, training courses and other activities. Estonia also participates in the NATO/PFP Planning and Review Process (PARP). Within this process, Estonia and NATO develop an implementation plan to achieve specific interoperability objectives (10s). Latvia has also adopted Partnership Goals (PGs), aimed at increasing Latvia's ability to participate in future operations with NATO. Estonia is focusing on several areas, including command, control and communications; logistics; and English language training.

While Estonia has made progress in achieving interoperability with NATO, observers believe that it may lag behind Poland, Hungary and the Czech Republic in some areas, which, as part of NATO's "first wave" of enlargement, necessarily had to move further sooner than Estonia. In addition, Poland, Hungary and the Czech Republic have each contributed battalion sized contingents to SFOR. Poland has also contributed a battalion to KFOR. Hungary has contributed a 324-man security unit to KFOR, and the Czech Republic has contributed a reconnaissance company. 17

Oversight of the Military and of Intelligence Agencies. As in Poland, Hungary and the Czech Republic, legal mechanisms exist to guarantee civilian control of Estonia's military and intelligence services. The President of Estonia is the Supreme Commander of National Defense. He can declare war and issue mobilization orders in case of an attack against Estonia. He also appoints and dismisses the leadership of the armed forces, and approves officer promotions, on the proposal of the government and the commander of the regular armed forces. The parliament approves the defense budget as well as defense policy guidelines and priorities. The parliament also approves the nomination by the President of the commander of Estonia's armed forces. The Estonian defense minister, a civilian, exercises control over the development and organization of the armed forces through the commander of the Regular Armed Forces. The President of the Republic is commander in chief of the armed forces, and appoints top military officers. These mechanisms are similar to those in Poland, Hungary and the Czech Republic.

Strategic Considerations

Some officials at the Department of Defense and at NATO believe that Estonia's geographic position precludes its defense by conventional forces. Because it is unlikely that NATO members would wish to ensure a country's protection through a nuclear guarantee alone, these officials believe that Estonia's membership is unlikely until alliance relations with Russia improve dramatically. Officials in some member states, such as France, Italy, and Germany, place relations with Russia as the highest priority, and wish to go slowly on NATO membership for any of the Baltic states.

At the same time, many allies strongly support Estonia's EU membership. Russia does not oppose EU membership for the Baltic states. Some of the allies believe that Estonia's membership in the EU could provide an important test for Russia's relations with the West. They believe that Russia would be less likely to seek to intimidate an EU member out of concern for economic or financial retaliation by the EU, a measure that could lead to overall improvement of Russian Baltic state relations and, eventually, to Baltic state membership in NATO.18

View of the Clinton Administration

On January 16, 1998, President Clinton and the presidents of the three Baltic states signed a U.S. Baltic Charter of Partnership. It says that the United States has a "real, profound and enduring interest in the independence, sovereignty, territorial integrity and security" of the Baltic states. It says that the United States "welcomes and supports" the efforts of the Baltic states to join NATO. It adds that "NATO's partners can become members as each aspirant proves itself able and willing to assume the responsibilities and obligations of membership, and as NATO determines that the inclusion of these nations would serve European stability and the strategic interests of the Alliance."

During the second meeting of the Baltic Partnership Commission in July 1999, Deputy Secretary of State Strobe Talbott said that the Baltic states "are making very real and concrete progress" in their eligibility for NATO membership. He said that he would "stop just short of saying Baltic membership in NATO is "inevitable," but added that it would be "desirable." Talbott echoed similar themes during a speech in Tallinn in January 2000. He described the fate of the Baltic states as a "litmus test for the fate of the entire continent." He said the United States was "committed to creating the conditions" under which the Baltic states can become NATO members. He restated long-standing U.S. policy that no country should be excluded from NATO membership for reasons of history or geography. He invited Russia to view the region "not as a fortified frontier but as a gateway."

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Latvia

Most Recent Developments

In its October 1999 report on Latvia's qualifications to become a member of the European Union, the European Commission said Latvia had a 'functioning market economy. " The report said that Latvia "should be able to cope with competitive pressures within the Union in the medium term, provided that it maintains macroeconomic stability and commits itself to completing structural reform. " At the December 1999 Helsinki summit, the European Union agreed to open membership negotiations with Latvia and the other candidate states not included in the first round in 1998. After OSCE and EU criticism of a controversial language law, Latvian President Vaira Vike Freiberga refused to promulgate the new law and returned it to the parliament to be revised.

Latvia's defense spending in 1999 was 34.4 million lats ($58.3 million), or about 0.89% of GDP. Latvian officials strongly supported NATO's air campaign in Kosovo. Ten to twelve Latvian soldiers (military medics and military police) will join KFOR in 2000. Eight Latvian military medics served as part of NATO led forces in Albania in 1999.

Political and Economic Factors

According to the 1998 State Department Country Reports on Human Rights Practices, Latvia is a parliamentary democracy that has held several free and fair elections. The government generally respected the human rights of its citizens, the report says, but notes problems with police brutality, an inefficient judiciary and poor prison conditions. This mostly positive assessment of Latvia's political system is broadly similar to the report's discussion of the democratic political systems of Poland, Hungary and the Czech Republic.

The presence of a large Russian-speaking minority has been an important political issue in Latvia. After it achieved independence in 1991, Latvia gave citizenship only to persons who were Latvian citizens on June 17, 1940 and their descendants. About 670,000 of the 2.4 million residents of Latvia did not receive Latvian citizenship, almost all of them ethnic Russians or Russian speakers. Until late 1998, the number of candidates for naturalization was limited by "naturalization windows." Non-citizens born in Latvia (about 230,000 people) who passed a Latvian language and history test and signed a loyalty oath to Latvia were eligible for citizenship from 1996 to 1998, depending on their age group. After the year 2000, non-citizens who were not born in Latvia were eligible for citizenship (after taking the language test and loyalty oath). In June 1998, the Latvian parliament approved amendments aimed at liberalizing the naturalization law. The Latvian government's proposal, based on OSCE recommendations, eliminated the "naturalization windows" system, allowing all non-citizens to apply for citizenship immediately. Another provision granted citizenship to all children of non-citizens born in Latvia since 1991. Opponents of the measure collected enough signatures for a referendum aimed at overturning the parliament's decision. However, Latvian voters approved the law in the October 1998 referendum. Latvia's citizenship laws now comply with all of the OSCE's recommendations.

The number of naturalized citizens remains low. From February 1995 to August 1999, a total of 25,717 persons applied for naturalization, and 18,089 of these were granted citizenship. The State Department report says "the reasons for this relatively small number may include potential applicants' lack of confidence that they could meet language requirements, the restricted category of applicants eligible to seek naturalization in the first 2 years, certain benefits that flow from non citizen status (such as travel without visas to Russia and exemption from compulsory military service), and a sense that the legal status of permanent resident non citizens is relatively secure." However, the number of applicants has accelerated since the passage of the amendments to the citizenship law went into effect.

The 1998 State Department report said that Latvia generally respected the fights of non-citizens. The report notes that non-citizens cannot vote, establish political parties, occupy government posts, and hold certain jobs (such as armed guards, private detectives and attorneys). Land ownership by non-citizens can be hampered by complicated administrative procedures. The Latvian government has adopted a minorities integration plan. Its main focus is on Latvian language training, which is in short supply.

OSCE High Commissioner for National Minorities Max van der Stoel expressed objections to a new language law adopted by the Latvian parliament in July 1999. One problem, he said, was a requirement that private sector employees speak Latvian. After OSCE and EU criticism of the law, Latvian President Vaira Vike Freiberga refused to promulgate the new law and returned it to the parliament to be revised.

Latvia's Gross Domestic Product grew by 3.6% in 1998. Due to the impact of the Russian financial crisis, Latvia's Gross Domestic Product dropped by 1.3 % for the first three quarters of 1999. However, the economy appeared to rebound at the end of 1999, and may result in as much as 0.5% growth for the whole of the year. Inflation in Latvia in 1999 was 3.2% due to responsible monetary and fiscal policy. Latvia's currency, the lats, is pegged to Special Drawing Rights, an international financial accounting unit, and has remained stable since its introduction in 1993. Latvia has been very successful in attracting foreign investment.

In its October 1999 report on Latvia's qualifications to become a member of the European Union, the European Commission said Latvia had a "functioning market economy." The report said that Latvia "should be able to cope with competitive pressures within the Union in the medium term, provided that it maintains macroeconomic stability and commits itself to completing structural reform." These structural reforms include removing "the remaining bottlenecks to enterprise activity and investment and privatization of the few remaining large enterprises. At the December 1999 Helsinki summit, the European Union agreed to open membership negotiations with Latvia and the other candidate states not included in the first round in 1998. 19

Foreign Policy and Defense Factors

Latvia enjoys good relations with most of its neighbors. Latvia has increased cooperation with Estonia and Lithuania in security, economic and political matters through the Baltic Council, the Baltic Assembly and other inter governmental organizations. However, Latvia's relations with one neighbor, Russia, have been difficult at times. Russia has sharply criticized Latvia for allegedly violating the human rights of its Russian speaking population. It has also expressed strong opposition to Latvia's efforts to join NATO, threatening that such a move could lead Russia to reconsider its cooperation with NATO. Latvia and Russia have completed negotiations on a border agreement, but have not signed it. One reason for the delay is that Russia is attempting to tie the signing of the agreement to its grievances on the status of Russian speakers in Latvia. Another possible reason is that Russia does not want to sign a treaty that it thinks might enhance Latvia's chances for NATO membership, by removing what might be seen as a "territorial dispute."

The Armed Services. Latvia has about 5,500 men in its active duty armed forces, and 14,500 men in the National Guard reserves. It has 13 armored personnel carriers, 26 100 mm artillery pieces, as well as five 82 mm mortars and 26 120 mm mortars, but no tanks or combat aircraft. Latvia's defense spending in 1999 was 34.4 million lats ($58.3 million), or about 0.89% of GDP. This percentage is substantially smaller than that of Hungary and the Czech Republic (an estimated 1.6% of GDP for Hungary and an estimated 2.2% for the Czech Republic and Poland for 1999.) The current NATO Europe average is 2.2% of GDP. Latvia plans to increase defense spending to 1.06% of GDP in 2000, and to 2% of GDP in 2003. Latvia eventually plans to have peacetime armed forces of 10,000 men. The force would increase to 50,000, if the reserves are mobilized, Procurement priorities will include anti tank weapons, air defense, naval surveillance and mine laying capabilities.

The armed forces of Poland, Hungary and the Czech Republic are much larger than those of Latvia. All three countries have much larger weapons stocks than Latvia. A possible weakness in Latvia's qualifications for NATO membership is that, given the small size of its population, Latvia may never be able to contribute as much to the collective defense capability of NATO as larger countries such as Poland, Hungary and the Czech Republic. On the other hand, Latvia's armed forces may be able to make a modest contribution to future NATO peacekeeping efforts, similar to that of smaller current NATO members.

A key focus of Latvia's defense policy is to increase its interoperability with NATO. In 1994, Latvia, along with Estonia and Lithuania, agreed to form a Baltic Peacekeeping Battalion with the help of NATO countries, which have supplied equipment and training for the force. BALTBAT has not been deployed as whole unit, although parts of the force have participated in the NATO led force in Bosnia. Current plans are to develop BALTBAT into a fully capable infantry battalion that would be able to engage in a full range of peace support operations as well as to contribute to the self-defense capabilities of the Baltic states.

Another Baltic NATO military cooperation project is BALTRON, the Baltic naval squadron. This five vessel joint minesweeping unit held its first exercise with NATO forces in September 1998, but did not participate in the sweeping of live mines due to a lack of modem minesweeping equipment. BALTRON continues to lack the capacity to conduct minesweeping operations independently. It is planned that BALTRON will acquire the training and equipment to accomplish such missions in the medium term. In April 1998, the three Baltic states signed an agreement on setting up BALTNET, a joint air surveillance network, with the long term goal of integrating it with NATO's system. In 1999, organizational structures were established and equipment for BALTNET was deployed. In 2000. BALTNET will provide its first integrated radar picture of the region, although it will need additional, more modem equipment over the next few years before it will be fully effective. Finally, the Baltic states opened a joint Baltic Defense College (BALTDEFCOL) in Tartu, Estonia in August 1999. BALTDEFCOL is charged with educating staff officers fi7om the three states in NATO based staff procedures, defense planning and management. The college's first class will graduate in June 2000. Security assistance to the Baltic states is coordinated through the Baltic Security Assistance (BALTSEA) framework. BALTSEA includes the three Baltic states as well as the United States and other NATO and non NATO security assistance donors.

Latvia is actively engaged in the Partnership for Peace program, which it views as a good way to achieve interoperability with NATO. Latvia also participates in the NATO/PFP Planning and Review Process (PARP). Within this process, Latvia and NATO develop an implementation plan to achieve specific Interoperability Objectives (10s). Latvia has also adopted Partnership Goals (PGs), aimed at increasing Latvia's ability to participate in future operations with NATO.

While Latvia has made progress in achieving interoperability with NATO, observers believe that it may lag behind Poland, Hungary and the Czech Republic, which, as part of NATO's "first wave" of enlargement, have necessarily had to move further sooner than Latvia. In addition, Poland, Hungary and the Czech Republic have each contributed battalion sized contingents to SFOR. Poland has also contributed a battalion to KFOR. Hungary has contributed a 324-man security unit to KFOR, and the Czech Republic has contributed a reconnaissance company. Latvia has had a platoon of soldiers serving as part of the Danish battalion of SFOR on several occasions, rotating with a platoon from Estonia and Lithuania. Ten to twelve Latvian soldiers (military medics and military police) will join KFOR in 2000. Eight Latvian military medics served as part of NATO led forces in Albania in 1999.

Oversight of the Military and of Intelligence Agencies. As in Poland, Hungary and the Czech Republic, legal mechanisms exist to guarantee civilian control of Latvia's military and intelligence services. The Latvian parliament adopts the defense budget and approves laws on national defense. The commander of Latvia's armed forces is subordinated to a civilian Minister of Defense. 20

Strategic Considerations and Clinton Administration View

Some defense analysts believe that the proximity to Russia of all three Baltic states complicates their potential NATO membership. For a discussion of this issue, along with the Administration's U.S. Baltic Charter of Partnership, see above.

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Lithuania

Most Recent Developments

Political and Economic Factors

Lithuania is a parliamentary democracy, which has held free and fair elections since achieving independence in 1991, according to the 1998 State Department Country Report on Human Rights. The report says Lithuania generally respects the human rights of its citizens, including the rights of national minorities. It says Lithuania has an independent judiciary. It notes some problems in the areas of police brutality and corruption and poor prison conditions. This positive assessment of Lithuania's political system is similar to the report's discussion of the democratic political systems of Poland, Hungary and the Czech Republic. 21

Lithuania has also made progress toward establishing a free market economy. Lithuania's economy was hit hard by the Russian financial crisis. Lithuania's GDP fell by 5.0% in the first three quarters of 1999. Lithuania's budget and current account deficit's ballooned in the latter half of 1999. Average annual inflation in Lithuania in 1999 was 0. 8%. Lithuania's currency, the litas, is stable. It is pegged to the U.S. dollar through a currency board system. Lithuania has privatized most of its firms; about 70% of GDP is in private hands, but several critical sectors, including the energy sector, await privatization.

Foreign investment in Lithuania has increased sharply in recent years, after a slow start. In 1999, Lithuania agreed to sell a 33% stake in the Mazeikiai oil refinery (which produces about 10% of Lithuania's GDP) to the U.S. firm Williams International. Williams has the option to purchase a majority stake over the next five years. The deal was controversial; it triggered the resignation of Lithuanian Prime Minister Rolandas Paskas and the country's finance and economy ministers. They claimed the terms of the deal, which would require Lithuania to settle the refinery's debts, would damage the country's fiscal stability, already hurt by the Russian economic crisis. Nevertheless, President Valdas Adamkus and Paskas's Homeland Party pushed the deal through, saying that Lithuania's strategic interests required the sale to be made to Williams, rather than the Russian firm Lukoil, which has been the refinery's main crude oil supplier.

In its October 1999 report on Lithuania's qualifications to become a member of the European Union, the European Commission said that Lithuania "continues to make progress toward the establishment of a market economy, "but stops short of calling it a "functioning market economy," as are its Baltic neighbors, Estonia and Latvia. It says Lithuania is "on the way to being able to cope with competitive pressure and market forces within the Union in the medium term, provided it completes the remaining reform agenda." The EU report says Lithuania must cut its fiscal deficit, and bring its high current account deficit under control, It says that it needs to implement additional structural reforms, including financial sector privatization and energy sector restructuring. At the December 1999 Helsinki summit, the European Union agreed to open membership negotiations with Lithuania and the other candidate states not included in the first round in 1998. 22

Foreign Policy and Defense Factors

Lithuania enjoys good relations with neighboring countries, and has no major territorial or ethnic disputes with them. Lithuania has increased cooperation with Estonia and Latvia in security, economic and political matters through the Baltic Council, the Baltic Assembly and other inter governmental organizations. Lithuania has forged highly successful ties with Poland, a country with which Lithuania has historically had a complex and sometimes difficult relationship. The two countries have created joint cooperation institutions, including a Lithuanian-Polish peacekeeping battalion. Poland has expressed some concerns about the status of ethnic Poles in Lithuania, but the issue does not appear to have had a strongly negative impact on bilateral relations. Poland supports Lithuania's aspirations to join NATO.

Lithuania has a generally good relationship with Russia. Russia and Lithuania signed a border treaty in October 1997. Russia does not condemn Lithuania for alleged mistreatment of its small Russian speaking population Oust under 9% of the country's population). One area of friction, however, is Russia's strong opposition to Lithuania's membership in NATO. Russia notes that its Kaliningrad exclave would be surrounded by NATO member states if Lithuania gained membership in the alliance. Lithuania currently permits Russian military traffic to transit Lithuania on its way to Kaliningrad. It is possible that the transit issue could become important should Lithuania become a strong candidate for NATO membership, particularly if Russia's relations with NATO should deteriorate

The Armed Services. Lithuania has about 6,250 men in its active duty armed forces, and about 12,000 in the National Defense Volunteer Forces, a volunteer paramilitary force. Lithuania possesses no tanks, combat aircraft or heavy artillery, and has 27 armored personnel carriers and 36 120mm mortars. Its 1999 defense budget was 668 million litas ($167 million), about 1.5% of GDP. This percentage is smaller than that of Hungary and the Czech Republic (an estimated 1.6% of GDP for Hungary and an estimated 2.2% for the Czech Republic and Poland for 1999.) The current NATO Europe average is 2.2% of GDP. Lithuania plans to increase its defense spending to 2% of GDP by 2001. Lithuania will focus spending on improving communications, acquiring air surveillance systems, anti tank weapons, and short-range air defense weapons. In future years, Lithuania hopes to acquire armor, naval systems, and an integrated air defense system. Lithuania depends on foreign assistance for part of its procurement needs.

The armed forces of Poland, Hungary and the Czech Republic are much larger than those of Lithuania. All three countries have much larger weapons stocks than Lithuania. A possible weakness in Lithuania's qualifications for NATO membership is that, given the small size of its population, Lithuania may never be able to contribute as much to the collective defense capability of NATO as larger countries such as Poland, Hungary and the Czech Republic. On the other hand, Lithuania's armed forces may be able to make a modest contribution to future NATO peacekeeping efforts, similar to that of smaller current NATO members such as Luxembourg.

A key focus of Lithuania's defense policy is to increase its interoperability with NATO. In 1994, Lithuania, along with Estonia and Lithuania, agreed to form a Baltic Peacekeeping Battalion with the help of NATO countries, which have supplied equipment and training for the force. BALTBAT has not been deployed as whole unit, although parts of the force have participated in the NATO led force in Bosnia. Current plans are to develop BALTBAT into a fully capable infantry battalion that would be able to engage in a full range of peace support operations as well as to contribute to the self-defense capabilities of the Baltic states.

Another Baltic NATO military cooperation project is BALTRON, the Baltic naval squadron. This five vessel joint minesweeping unit held its first exercise with NATO forces in September 1998, but did not participate in the sweeping of live mines due to a lack of modem minesweeping equipment. BALTRON continues to lack the capacity to conduct minesweeping operations independently. It is planned that BALTRON will acquire the training and equipment to accomplish such missions in the medium term. In April 1998, the three Baltic states signed an agreement on setting up BALTNET, a joint air surveillance network, with the long term goal of integrating it with NATO's system. In 1999, organizational structures were established and equipment for BALTNET was deployed. In 2000. BALTNET will provide its first integrated radar picture of the region, although it will need additional, more modem equipment over the next few years before it will be fully effective. Finally, the Baltic states opened a joint Baltic Defense College (BALTDEFCOL) in Tartu, Estonia in August 1999. BALTDEFCOL is charged with educating staff officers fi7om the three states in NATO based staff procedures, defense planning and management. The college's first class will graduate in June 2000. Security assistance to the Baltic states is coordinated through the Baltic Security Assistance (BALTSEA) framework. BALTSEA includes the three Baltic states as well as the United States and other NATO and non NATO security assistance donors.

Lithuania is actively engaged in the Partnership for Peace program, which it views as a good way to achieve interoperability with NATO. It participated in 28 training exercises in 1998, including within PFP and exercises "in the spirit of' PFP. Lithuania also participates in the NATO/PFP Planning and Review Process (PARP). Within this process, Lithuania and NATO develop an implementation plan to achieve specific Interoperability Objectives (10s). Lithuania has also adopted Partnership Goals (PGs), aimed at increasing Lithuania's ability to participate in future operations with NATO.

While Latvia has made progress in achieving interoperability with NATO, observers believe that it may lag behind Poland, Hungary and the Czech Republic, which, as part of NATO's "first wave" of enlargement, have necessarily had to move further sooner than Latvia. In addition, Poland, Hungary and the Czech Republic have each contributed battalion sized contingents to SFOR. Poland has also contributed a battalion to KFOR. Hungary has contributed a 324-man security unit to KFOR, and the Czech Republic has contributed a reconnaissance company. Lithuania has had a platoon of soldiers serving as part of the Danish battalion of SFOR on several occasions, rotating with a platoon from Estonia and Latvia. There are 29 Lithuanian soldiers in KFOR as part of a Polish battalion.

Oversight of 'the Military and of Intelligence Agencies. As in Poland, Hungary and the Czech Republic, legal mechanisms exist to guarantee civilian control of Lithuania's military and intelligence services. The President of Lithuania is the Supreme Commander of the Lithuanian Armed Forces. Lithuania's parliament approves the defense budget. The Defense Ministry prepares defense plans and budget requests and supervises their execution. These mechanisms are similar to those in Poland, Hungary and the Czech Republic. A Lithuanian government publication states that "as a general principle, the role of civilians within the Ministry of National Defense is to provide continuity in policy formulation and execution, and to provide depth of expertise in political and administrative matters. It is not to assume responsibility for providing military advice or for conducting military operations which properly remain with professional military officers. 23

Strategic Considerations and Clinton Administration View

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Macedonia (The Former Yugoslav Republic of Macedonia) 24

In 1999, in support of NATO operations in neighboring Kosovo, Macedonia hosted several thousand NATO troops on its territory. During Operation Allied Force, Macedonia received hundreds of thousands of Kosovar refugees. Macedonia continues to host NATO support forces for KFOR, the peacekeeping operation in Kosovo. In late 1999, the Macedonian government presented to NA TO its national program under the Membership Action Plan (MAP).

Political and Economic Factors

Macedonia is a young state that has remained under the shadow of violence and instability in the region since independence. Macedonia seeks eventual membership in NATO, but is not expected to gain full membership for some time. Macedonia declared independence from the former Yugoslavia in late 1991. 25 Macedonia has a unicameral parliament, the 120 seat National Assembly (Sobranje), and a popularly elected President. Macedonia is a multi ethnic state with ethnic Albanians comprising the largest minority (about 23% by the last census held in 1994, although Albanians have claimed to represent a larger share).

In the most recent general elections held in October and November 1998, the longstanding former communist leadership was defeated by a rightist coalition led by the Internal Macedonian Revolutionary Organization Democratic Party for Macedonian National Unity, VMRO DPNWE. The elections were called a landmark vote by many observers. 26 Allied with the newly formed Democratic Alternative Party, VMRO DPMNE largely abandoned its former nationalist platform in favor of a new focus on economic reform, job creation, and fighting corruption. After the vote, the two parties extended their coalition to include one of the two ethnic Albanian parties represented in parliament, the Democratic Party of Albanians (DPA). The three party coalition commands a solid majority in the 120-seat parliament. Cooperation within the coalition on finding solutions to inter-ethnic tensions is seen to be key to the stability of the government and of the country as a whole. 27 Parliament approved the new government under Prime Minister Ljubco Georgievski of VMRO DPMNE on November 30, 1998. Socialist President Kiro Gligorov, in office since 1991, declined to seek re election in the 1999 direct presidential elections. In late 1999, Boris Trajkovski of the VMRO DPMNE won a tight run off vote for the presidency, helped by the ethnic Albanian vote. 28

The State Department's Report on Human Rights Practices for 1998 assessed that the Macedonian government generally respected the human rights of its citizens, but noted some problems such as incidents of police abuse and societal discrimination against minorities. The report stated that the judiciary is generally independent. Other human rights reports have pointed to cases of misconduct by the police and to deficiencies regarding independence of the judiciary and the treatment of ethnic minorities. 29 The Macedonian government came under some international criticism for its handling of the flood of Kosovar Albanian refugees in 1999. A number of times the government closed the border with Kosovo, preventing entry to refugees massed on the border. It orchestrated mass transfers of refugees to Albania and other countries, and the police reportedly harassed and mistreated refugees inside refugee camps.

Formerly the poorest republic in the Yugoslav federation, Macedonia continues to face economic difficulties. With the lifting of the Greek embargo and suspension of U.N. sanctions against Yugoslavia in 1995, Macedonia's GDP grew slightly (less than 1%) in 1996 for the first time since independence. In 1998, GDP registered about 3% growth. The Kosovo crisis in 1999 severely affected Macedonia's economy, severing trade routes and placing heavy burdens on the budget. Most of the country's enterprises have been privatized, but still await major restructuring. In line with guidance from the International Monetary Fund, the Macedonian government has maintained a tight monetary policy, resulting in a sharp drop in inflation and in the budget deficit, but only paltry economic recovery. Over one third of the work force is unemployed. Macedonia continues to receive substantial amounts of international economic assistance, but little foreign direct investment.

Foreign Policy and Defense Factors

Since gaining independence, Macedonia has sought to integrate into a wide range of European and other international organizations. Macedonia became a member of the OSCE and the Council of Europe. Macedonia joined NATO's Partnership for Peace program in early 1994. Macedonia is also a member of the EAPC in NATO. Unlike most other central European countries, Macedonia does not yet have Associate Partner status with the WEU. It has requested membership in the WTO, where it is currently an observer. In 1999, the European Union agreed to negotiate a Stabilization and Association Agreement with Macedonia in order to enhance economic relations and expand Macedonia's trade with EU countries.

In Macedonia's early years of independence, relations with all of its neighboring states (Albania, Serbia, Bulgaria, and Greece) were problematic, in varying degrees. Macedonia's economy was hit hard by economic sanctions against Serbia during the Bosnian war. A small U.N. force was deployed in Macedonia from 1993 to early 1999 to help prevent a spread of the Bosnian conflict and to bolster Macedonia's security along its border with Serbia. Serbia and Macedonia have yet to conclude an agreement on the delineation of their common border. Relations with Albania have periodically become strained over the treatment of the ethnic Albanian minority in Macedonia; both Macedonia and Albania, however, have cooperated on numerous regional diplomatic and security initiatives intended to enhance stability in the region. In 1994, Greece imposed a unilateral embargo on Macedonia in connection with many bilateral disputes; Greece lifted its embargo a year later when bilateral relations were normalized. Greece has since actively supported trade and investment in Macedonia. 30 Relations with Bulgaria have been mainly cooperative, although many bilateral agreements were long held up over Bulgaria's non-recognition of a Macedonian language distinct from Bulgarian. Macedonia participates in several regional cooperation initiatives, including the multinational peace force for South Eastern Europe. During the Kosovo crisis in 1999, Macedonia received nearly 250,000 refugees from Kosovo, straining the country's resources and challenging internal stability. Most, but not all, of the refugees returned home soon after the withdrawal of Yugoslav forces from Kosovo in June 1999.

The Armed Forces. The Army of the Republic of Macedonia (ARM) was created only in 1992, after Macedonia declared independence and after the Yugoslav People's Army withdrew its units (and much of its equipment) from the republic. The ARM's active forces currently comprise about 16,000 personnel, including 8,000 conscripts. The army has three corps and one border guard brigade. Special paramilitary police constitute a key part of the armed forces, numbering about 7,500. Mandatory military service in Macedonia is for a nine month term. Macedonia's defense budget in 1999 was about $68 million, the same as in 1998. 31

From 1993 until February 1999, a small U.N. force of about 1,000 troops (including a U.S. contingent) was deployed in Macedonia in a conflict prevention mission. In late 1998, NATO deployed a European led extraction force of about 2,000 troops to offer protection for unarmed international observers in Kosovo. NATO deployed several thousand more troops in Macedonia in 1999 in preparation for the deployment of the 50,000 strong Kosovo Force (KFOR) into Kosovo. Macedonia became the primary launching point for the deployment of troops to KFOR and continues to host NATO support forces.

The Army of the Republic of Macedonia continues to undergo major structural changes. In 1998, the Macedonian Defense Ministry prepared a Defense Strategy and a White Paper on the strategic aims and tasks of the armed forces. The Defense Strategy identified NATO to be the only guarantor for the stability and security of Europe, and expressed Macedonia's wish for full NATO membership. 32 It planned to restructure the armed forces and move toward a professional army over a ten year period. In late 1999, Macedonia presented to NATO its first Membership Action Plan. Macedonia's defense reforms aim to restructure the armed forces into a small, mobile, well trained, and well equipped force. According to Defense Minister Nikola Kljusev, the plan calls for reducing the active duty armed forces from the current projected strength of 22,000 to 16,000 and for cutting the size of the reserves in half to reach 60,000. Rapid reaction forces, support forces, and strategic forces are to be formed. 33 The plan calls for reducing three army corps to two, based in Kumanovo and Bitola. It also calls for new training for border guards.

The Macedonian army is at the beginning stages of working toward interoperability with NATO, and may be considered far behind Poland, Hungary and the Czech Republic in this respect. The Macedonian army is poorly trained and equipped. The government has given priority to acquiring modem armaments and equipment, especially in communications and air defense, and to training, depending on the availability of resources. In 1999, the United States and several European countries (including France, Germany, Turkey, and Bulgaria) stepped up donations to Macedonia of military equipment and weapons such as tanks, armored personnel carriers, artillery, and radar equipment. The Macedonian army has no forces abroad in international peacekeeping operations. Macedonia has actively participated in several hundred bilateral and multilateral PFP exercises and activities designed to promote greater interoperability with NATO. It has also benefited in the area of interoperability from access to and cooperation with several thousand NATO forces on Macedonian territory.

Civilian Oversight. Under the Macedonian constitution of 1991, the President is the commander in chief of the armed forces. The President is also the Chairman of the Security Council of Republic of Macedonia. A state of war or a state of emergency can be declared by a two-thirds majority vote in parliament. Some overlap in border security functions exists between the army and the border police, which is under the Interior Ministry. The level of civilian expertise in military affairs and the extent of parliamentary oversight over the army are probably not comparable to Poland, Hungary, or the Czech Republic. A Defense Strategy, signed into law in September 1998, states that the civilian and democratic control of the armed forces is to be promoted and developed across many levels in Macedonia. Specifically, it calls on the parliament to participate more actively in designing and overseeing defense policies. It says that the government should implement defense policies by preparing the defense budget, administration of the armed forces, and restructuring, training, and equipping the armed forces. In order to increase public awareness of defense issues, the Defense Ministry issues an annual White Paper on Defense.

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Romania

Recent Developments

During the spring 1999 NATO military campaign against Yugoslavia, Romania granted alliance aircraft permission to fl y over its territory, accepted numerous Kosovar refugees, and supported the economic embargo of Serbia In August, the IMF concluded a new loan agreement with the government; only part of the funds have been released, however, as the IMF continued to voice concerns over Romania's fiscal policies and the slow pace of economic reform. In November, Romania was named to chair the OSCE in 2001. In early December, Romania was invited to begin accession negotiations with the European Union. In a controversial move a few days later, President Constantinescu fired Prime Minister Radu Vasile; central bank chief Mugur Isarescu was named as Vasile's replacement.

Political and Economic Factors

Romania is a constitutional democracy with a bicameral legislature. It has had three elections, deemed free and fair by outside observers, since the fall of communism. In their fall 1996 elections, Romanians turned out the former communist dominated party that had ruled continuously usually with the support of extremist parties since the country's bloody revolution in late 1989, and replaced it with the reform minded Romanian Democratic Convention (CDR), it formed a coalition government with the Social Democratic Union and the ethnic Hungarian party. 34 In 1998, however, Romania experienced considerable political upheaval; the Prime Minster stepped down in March and several members of the cabinet were replaced during the ensuing months. The political infighting continued in 1999, leading to a repetition of the previous year's scenario: the second CDR Prime Minister was pressured to resign, a new one Mugur Isarescu, head of the central bank was appointed, and more cabinet changes took place.

According to the U.S. Department of State's 1998 Report on Human Rights Practices, Romania's judiciary "remains subject to executive branch influence, but is becoming increasingly independent." The report found that the Romanian government "generally respected the fights of its citizens," but added that "several serious problems remained" in law enforcement, including police mistreatment of detainees. The report also cited problem areas such as violence against women, juvenile homelessness, and discrimination against religious and ethnic minorities particularly the Roma (gypsies). However, the situation of the large (1.6 million) ethnic Hungarian minority has improved considerably over the past three years.

Romania's economy, which had been devastated by decades of mismanagement under Communist dictator Nicolae Ceausescu, was showing signs of improvement by the mid 1990s, but began to experience serious difficulties in 1996. Early that year, the International Monetary Fund (IMF) and the European Union (EU) froze credits to Romania when the government failed to follow agreed upon economic policies. Although Romania is rich in natural resources, most observers agree that the country cannot prosper until it relinquishes control over key sectors of the economy, permits the growth of strong private financial institutions, and eases barriers to foreign investors.

Shortly after taking office in the March 1998, Prime Minister Radu Vasile announced a wide ranging economic reform plan that included privatization of large, state owned monopolies such as telecommunications, electricity, mining, oil, and gas significant bottlenecks in the reform process. Critics charged, however, that Vasile's program was little more than an unprioritized inventory of accumulated problems, and that it did not depart significantly from the plan of his CDR predecessor, Victor Ciorbea. IMF teams visited Bucharest several times, but left without renewing an earlier loan accord. A new loan agreement, this time for $547 million, was finally struck in August 1999. An initial tranche of $73 million was delivered, but the second disbursement, scheduled for October, was withheld, due to IMF concerns over Romania's fiscal policies and the slow pace of reform. An IMF official has indicated that the next tranche may be released in March 2000, after the new government's budget is passed. The new Prime Minister, Mugur Isarescu, has urged the public to endure further austerity, and has drawn up a budget that broadens the tax base and restrains spending.

The CDR coalition government's economic reforms, to the extent they were implemented, have had a harsh impact on the economy. GDP, which had risen by a healthy 7.1 % and 3.9% in 1995 and 1996, respectively, fell 6.9% in 1997, 5.4% in 1998, and an estimated 4% in 1999. Unemployment, though still relatively low (around 11%), has been climbing and is expected to rise further, particularly in sectors slated for privatization. Inflation, which had fallen from 300% in 1993 to 30% in 1995, rose to 1501/6 in 1997, fell to 40% in 1998, but exceeded 50% in 1999. Finally, higher prices particularly for fuel and other basics have resulted in a sharp reduction in real incomes; the national average is less than $100 per month. 35 The reforms and budget cutbacks have prompted protests by railway and factory workers, miners, teachers, and university students. Some observers have noted bright signs in Romania's economic picture, pointing to the privatization of several large enterprises. But during the series of political crises that has gripped the country, many believe that the government has made insufficient headway on market reforms and privatization. Concessions to the militant miners unions early in 1999, and steep pay increases scheduled for the military and security forces have also raised doubts among observers. In the fall of 1998, Romania was downgraded by two investment rating services, and the government's performance was criticized by the IMF, the EU, the European Bank for Reconstruction and Development, and the OECD.

Foreign Policy and Defense Factors

Romania has actively sought to integrate with western international institutions, and to cultivate good relations with its neighbors. It is a member of the OSCE and the Council of Europe, as well as of NATO's PFP and EAPC. In October 1999, Romania was invited to begin accession negotiations with the EU; the country is an associate partner of the WEU. It has not yet become a member of the OECD. Through a series of bilateral treaties and multilateral agreements, Romania has been seeking to normalize its relations with neighboring states and to increase regional cooperation. After lengthy negotiations, Romania finally concluded bilateral agreements with Hungary and Ukraine; earlier, it had signed treaties with Bulgaria, former Yugoslavia, and Slovakia. Romania also has been working in cooperation with Moldova, Turkey, Greece, and other countries in the region on matters affecting trade, security, the environment, and law enforcement.

The Armed Services. Traditionally, Romania's military has been a highly regarded institution in society; its restrained role during the 1989 revolution reinforced that perception. In March 1995, Romania signaled more active participation in the United Nations by announcing it would send a battalion of troops and medical staff to help preserve a truce in the civil war in Angola. Also, Romania dispatched a 200 member sapper (engineering) battalion to NATO led SFOR, provided troops for the humanitarian assistance effort in Albania, has pledged troops to KFOR, and has participated in numerous NATO Partnership for Peace exercises.

In FY1998, Romania's defense budget was about $800 million, or 2.4% of GDP (the NATO average is 2.6%). That year, Romania received $8.9 million in U.S. Foreign Military Financing, and $1.03 million in International Military Education and Training funds. Romania has 178,000 military personnel; the Ministry of National Defense intends to reduce that number to 112,000 by 2005. 36

In terms of NATO interoperability, Romania lags behind Poland, the Czech Republic, and Hungary. During the first half of the 1990s, Romania reorganized its military structure to be in accordance with western standards, and created a rapid reaction force. Romania has also been modernizing equipment. The country is upgrading its fighter aircraft, armor, naval vessels, communications facilities, and missile launching system. In addition, Romania has acquired four U.S. C 130 Hercules transport aircraft, and has contracted to purchase, with Ex-Im Bank assistance, five Lockheed Martin long range surveillance radar systems. 37 Despite these significant steps, Jane's Intelligence Review concluded in January 1999 that "much remains to be done. 38

Some defense analysts believe that Romania's lack of up to date and interoperable equipment helped frustrate immediate entry into NATO in July 1997. In addition, some critics also contend that Romania's poor economic situation is the major impediment to alliance membership, as the costs of military modernization are still prohibitive. 39 It has also been argued that the Ceausescu regime left a legacy of widespread corruption and resistance to systemic change, which still afflicts many Romanian institutions, including the military.

Oversight of the Military and of Intelligence Agencies. Like Poland, Hungary, and the Czech Republic, Romania has enacted legislation to ensure civilian control over the military and intelligence agencies; the 1991 constitution declares the president to be commander in chief of the armed forces. Romania has had a civilian defense minister since mid 1994, and has reportedly consolidated civilian control since then. Romanians maintain that civilians have full control over the armed forces, and point out that civilians constitute an increasing share of the Defense Ministry, and of the student body of the National Defense Academy. Some observers note that Romania has a large number of security and intelligence organizations; in addition, in November 1999, AP reported that 20% of the personnel of Romanian Intelligence Service are former members of Ceausescu's infamous Securitate. The 1998 State Department Human Rights Report states that "[a]ll security and intelligence organizations operate under the authority of civilian leadership." The 1997 Report noted that many senior officials in the security forces had been replaced that year.

Clinton Administration Views

Defense analysts believe that Romania's troubled economy, its limited experience with real reform, and its ill equipped armed forces scuttled its chances for immediate entry into the alliance, and that membership in the near future is unlikely. Over the past 18 months, this notion has been broached publicly. In late April 1998, a senior U.S. Defense Department official stated that, although Romania was on the right path, "[i]t still has [a] considerable way to go" before it will be ready for NATO membership.40 In May, James Rosapepe, U.S. Ambassador to Romania, echoed those comments in a speech in Bucharest: "The most effective approach to NATO membership is a calm one. Let me suggest that by worrying less and reforming more you will hasten the day that Romania joins." Also, during a July 1998 press conference, then White House spokesperson Mike McCurry stated that, although the door to NATO remains open and the United States intends to actively help Romania prepare to join the alliance, "we haven't reached the stage where we can move towards granting membership at this point." In January 1999 a U.S. government official concluded that "Romania is not on track. It is not that Romania couldn't pay its NATO modernization bill, but that the economy is in such dire straits that there is concern for its political stability."

After Romania's cooperation with NATO during the Kosovo crisis, however, the Administration appeared to speak in a more positive tone. During a June 22, 1999 press conference in Bucharest, Secretary of State Albright lauded the country's cc exemplary behavior," which "in many ways has already made Romania part of the NATO family." She reaffirmed American support for Romania's aspirations to join NATO, and stated that the United States would back Romania's bid for the 2001 chairmanship of the OSCE. 41 During a visit to Bucharest on November 30, Defense Secretary Cohen commended the efforts of U.S. Marines who were helping to build up a professional NCO corps for Romania, and declared that the United States would work very closely with Romania to help it achieve its goal of becoming a member of NATO. 42

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Slovakia 43

Most Recent Developments

Prospects for Slovakia's entry into NATO appear to have improved dramatically since controversial leader Vladimir Meciar was defeated in elections in late 1998. NATO's newest members, Poland, Hungary, and the Czech Republic, all strongly support Slovakia's candidacy for NATO membership. Slovakia presented its Membership Action Plan (MAP) national program to NA TO in October 1999.

Political and Economic Factors

Slovakia and the Czech Republic peacefully split from union in the Czech and Slovak Federal Republic in 1993. From a starting point generally equal to that of the Czech Republic, Slovakia's international standing quickly diminished because of internal political instability. Except for a brief period in 1994, Slovakia was led by controversial leader Vladimir Meciar from independence in 1993 to his defeat in the 1998 elections. After the 1994 general elections, Meciar's party, the Movement for a Democratic Slovakia (HzDS) formed a coalition with two small extremist parties. On several occasions, the European Union and the United States issued sharply critical statements regarding various policies and practices of the Meciar government that they claimed deviated fi7orn democratic norms. In July 1997, the European Union issued opinions on the qualifications Of countries applying for EU membership; Slovakia was the only candidate that explicitly failed to meet the political criteria of EU membership because of democratic shortcomings and the instability of Slovakia's political institutions.44

In the September 25, 1998, general elections, Meciar's HzDS and its coalition partners were collectively defeated by a coalition of four opposition parties. Turnout surpassed 80% of the electorate. The victorious coalition, comprising the Slovak Democratic Coalition, the Party of the Democratic Left, the Party of Civic Understanding, and the Hungarian Coalition, won 58% of the vote and commands 93 of the parliament's 150 seats. A new government under Prime Minister Mikulas Dzurinda of the Slovak Democratic Coalition, took office on October 30. The government's program, approved by parliament on December 2, referred to the Slovak electorate's call for fundamental change in the country and calls for a national revival. In addition to economic reforms, Prime Minister Dzurinda placed emphasis on restoring ethical governance, fighting crime and corruption, and improving interethnic relations. For the first time since Slovak independence, an ethnic Hungarian party was included in the governing coalition.

In 1999, the government implemented several measures to consolidate democratic development, according to EU and other international reports. In May 1999, Slovakia held direct presidential elections for the first time. In the second round, Rudolf Schuster defeated Vladimir Meciar, 57% to 43%. 45 In September, a new law on the use of minority languages came into force. 46 Parliament took several measures to open committees and institutional structures to the opposition. The government adopted measures to strengthen judicial independence and to expand ethnic minority representation. In its 1999 regular progress report on accession, the European Commission noted that continued efforts were needed in the fight against corruption, the protection of minority rights, and in further judicial reforms.

In spite of the country's political troubles in the mid 1990s, Slovakia's economy continued to register robust GDP growth (6.5% 7% annually from 1995 to 1997, and 4.4% in 1998), although other economic indicators were not so favorable. Slovak enterprises underwent little restructuring and received little foreign investment. Trade and current account deficits grew. Privatization of enterprises during the Meciar regime was carried out in a largely non-transparent and politicized manner. According to the European Commission's 1999 report, the current Slovak government's economic policies represent a clear break from the past and a considerable reform effort. GDP growth slowed to about 3.5% in 1999 as a result of implementing several austerity measures. The Commission's report judged that, thanks to the reforms efforts, Slovakia is close to being considered a functioning market economy that could cope with competitive pressure and market forces of EU membership in the medium term.

Foreign Policy and Defense Factors

Like Poland, Hungary, and the Czech Republic, Slovakia has joined numerous European and international organizations. Slovakia was among the first countries to sign up for NATO's PFP program in 1994, and has since participated in numerous PFP exercises, other PFP related programs, and is a member of NATO's EAPC. Slovakia is also an Associate Partner with the VVEU. Slovakia is a member of the OSCE, the Council of Europe, and the WTO. Slovakia is currently in negotiations to join the OECD, where Poland, Hungary, and the Czech Republic are already members. At the EU summit in Helsinki on December 10-11, 1999, Slovakia was named (along with Bulgaria, Romania, Latvia, Lithuania, and Malta) eligible to open accession negotiations with the EU beginning in February 2000.

In spite of its association with NATO activities, the Meciar government (particularly the two extremist coalition partners to the HzDS) was seen to be ambivalent about Slovakia's future membership in NATO. In contrast, the Dzurinda government's program explicitly states that attaining membership in NATO in the shortest possible time is a priority. During the Kosovo war in 1999, Slovakia granted NATO use of its air space and territory, although the air operation was not popular among the Slovak population. At the April 1999 NATO summit, the alliance endorsed a detailed Membership Action Plan for future NATO aspirants. In June, the Slovak government adopted a Program of Preparation for NATO Membership. Drawing from this and other documents, Slovakia submitted to NATO its national program for NATO accession in October. Meeting with U. S. officials in September 1999, Dzurinda reported that Slovakia was viewed to be among the top candidates for NATO's next wave of enlargement. Slovak officials have stated that 2001 2002 is their target date for entry into NATO.

Neighboring states also warmly greeted the electoral victory of the Democratic Coalition and others in 1998. Under Meciar's leadership, Slovakia had become isolated and removed from its former "Visegrad" partners Poland, Hungary, and the Czech Republic. Though it signed a bilateral treaty with Hungary in 1995, relations between Slovakia and Hungary remained strained over the treatment of Slovakia's ethnic Hungarian community and a lingering dispute over an abrogated joint Danube dam project. Inter governmental relations between Slovakia and the Czech Republic also became strained at times during Meciar's rule, though the two countries remained strong economic and trading partners. Since the 1998 election, leaders from Poland, Hungary, and the Czech Republic have frequently expressed a strong interest in Slovakia's early inclusion in the NATO and EU accession processes. The Visegrad Four process of regular, high level meetings and consultations has been revived.

The Armed Forces. Unlike Poland, Hungary, and the Czech Republic, Slovakia has had to develop its defense institutions from scratch. Under the Meciar government, defense and military reforms often became subordinate to other priorities.47 Since Slovak independence, the Armed Forces of the Slovak Republic have been downsizing steadily, moving toward a smaller, more flexible, and less top-heavy force. The armed forces comprise the Slovak army (two corps) and the air force. The government also has about 2,600 internal security and civil defense forces. In 1999, the Slovak armed forces numbered about 45,000 troops, including 13,600 army conscripts. The armed forces are currently being drawn down, ultimately to reach 30,000. Its size is slightly smaller than the armies of the Czech Republic and Hungary, and substantially smaller than the Polish armed forces. After an initial period after independence of annual increases, Slovakia's defense spending decreased after 1995. Slovakia's defense budget in 1999 was $311 million (13.8 billion koruna), about 1.7% of GDP. The defense budget for 2000 was originally set to decrease further, but it was later revised upward to about $400 million (17.7 billion koruna), over 2% of GDP. The Ministry of Defense foresees the defense budget reaching 2.3% by 2002 and steadily increasing through 20 10; the government has committed to a defense budget minimum of 2% of GDP per year.

In late 1998, the Dzurinda government formulated a new Integrated Development Program to the year 2010. The program involves a major reorganization of the armed forces in three phases, In 1999, the government followed with a Concept of Defense Reform by 2002, elaborating on reforms for the initial phase. The aim of the reforms is to create a small, well trained, and semi professional army, building on earlier reforms, that can be fully integrated into NATO. Under the reforms, the army is to be divided into immediate reaction, rapid reaction, and main defense forces. As of January 2000, the Defense Ministry and General Staff are to be integrated Separate ground force and air force headquarters are to be established by April 2000. The reforms also call for personnel cutbacks in the Ministry of Defense. The overall size of the armed forces was originally set to decrease to 35,000 troops. In 1999, the target size was revised to 30,000 by 2002. Length of conscription is to be reduced from 12 to 9 months by 2002; by this time the share of professional soldiers in the service is to increase. The U.S. Department of Defense is currently conducting a "force assessment" of the Slovak armed forces to assist in identifying additional measures needed to meet interoperability standards with NATO. The Slovak government is also preparing a new defense bill and armed forces bill for consideration by parliament in 2000. The Slovak army has consistently remained one of the highest regarded public institutions in Slovakia, according to public opinion polls. 48

Slovakia's defense reform programs call for implementation of new command and control systems that are interoperable with NATO, and for the gradual modernization of armed forces equipment to enhance interoperability and standardization. Slovakia has participated in and hosted numerous NATO Partnership for Peace training exercises designed to improve interoperability with NATO forces. Slovakia has also actively participated in the Planning and Review Process (PARP) under PFP, and has been working on 30 interoperability objectives in the second PARP cycle. Slovakia has participated in several international operations in the Balkans, including the U.N. operations in Bosnia and Croatia (UNPROFOR and UNTAES), the humanitarian mission in Albania (AFOR), and the Kosovo peacekeeping operation (KFOR). Currently, a 40 member Slovak engineering unit serves with KFOR. Defense Minister Kanis criticized the previous government under Meciar for not contributing Slovak military units to SFOR, with the Slovak armed forces thereby missing out on the day-to-day operational experience of the NATO operation. 49 In contrast, Poland, Hungary, and the Czech Republic have contributed battalion sized contingents to the NATO operations in Bosnia since their inception.

Civilian Oversight. Under the Slovak constitution, the President is supreme commander of the armed forces and is able to declare a state of emergency in the republic. For over a year after the end of former President Kovac's term in March 1998, the Slovak presidency was unfilled. In June 1999, a new, directly elected head of state was inaugurated. Like in Poland, Hungary, and the Czech Republic, mechanisms for civilian control of the military and parliamentary oversight in Slovakia have been codified in several various laws on national security, defense strategy, and the armed forces, and in subsequent amendments to these laws. The Slovak parliament has been active and engaged in developing and shaping defense policy. 50 Toward the end of the Meciar government's term in office, some controversies surfaced over the government's apparent efforts to exert political influence over the armed forces. Beginning in January 2000, the armed forces general staff became formally integrated into the Defense Ministry. The intelligence services were also considered to be highly politicized under the Meciar government. Intelligence activities in Slovakia are carried out by the Slovak Information Service (SIS), which reports directly to the Prime Minister. Under the Meciar government, opposition parties were excluded from the parliamentary commission that conducted oversight over the SIS. Oversight committees are now open to membership, and even leadership, by opposition parties.

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Slovenia 51

Most Recent Developments

During a June 1999 visit to Slovenia, President Clinton praised Slovenia for its support for NATO actions in Kosovo. He said Slovenia had made progress " in creating a modern military. He noted Slovenia's efforts to create a trust to remove landmines in the Balkans and assist victims. He called Slovenia a "good partner " and "an excellent candidate for NATO [membership]. " Slovenia's 1999 defense spending was 56 208 million tolars, or $315.5 million, about 1. 55% of Slovenia's GDP Slovenia expects that defense spending in 2000 will amount to about 1. 7% of GDP.

Political and Economic Factors

Slovenia has a democratic political system. The 1998 State Department Human Rights Report says that Slovenia is a parliamentary democracy that has held "free, fair and open elections since winning independence from Yugoslavia in 1991. The report says that Slovenia has an independent judiciary. It adds that the government "respects the human rights of its citizens" and that minorities "are generally treated fairly in practice as well as in law." This positive assessment of Slovenia's political system is similar to the report's discussion of the democratic political systems of Poland, Hungary and the Czech Republic.

Slovenia has also made strong progress toward a market economy. Slovenia has the highest per capita GDP in central and eastern Europe. Indeed, its per capita GDP at 13,000 ECU in 1997, was 68% of the European Union average, and just under the levels of the two poorest EU members, Greece and Portugal. The privatization of Slovenian firms is virtually complete, with the exception of a few firms in key areas such as telecommunications, energy, insurance and banking. GDP grew by an estimated 3.0% in 1999, on a year on year basis. Average annual inflation in Slovenia in 1999 was 6.3%. Nevertheless, Slovenia's foreign investment levels are considered to be modest when compared with those of other central European states. Slovenian leaders say they will move to eliminate the country's few restrictions on foreign investment. Slovenia's progress in establishing a free market economy is broadly similar to that of Poland, Hungary and the Czech Republic.

Perhaps the strongest indication of progress towards a free market economy is the decision of the European Union to open membership talks with Slovenia. The negotiation process, which formally began in March 1998, will take years to complete. In its October 1999 report on Slovenia's progress toward EU membership, the European Commission said that Slovenia meets the EU's political criteria for membership and that it was a "functioning market economy." It said Slovenia should be able to cope with competitive pressures within the EU in the medium term if it completes structural reforms of its economy. These include completing the privatization process, including the selloff of the two government owned banks. It also says Slovenia needs to make more progress in making its laws, its administration and judiciary conform to EU standards.

Foreign Policy and Defense Factors

The United States and NATO have encouraged candidate states to join or participate where possible in a range of international institutions as a means to build stability. Like Poland, Hungary and the Czech Republic, Slovenia is a member of the OSCE, the Council of Europe, NATO's PFP and EAPC, the WTO, the IMF and the World Bank. Slovenia is also an Associate Partner of the WEU. Slovenia is a member of the Central European Free Trade Area and the U.S. sponsored Southeast European Cooperative Initiative.

After gaining independence from Yugoslavia in 1991, Slovenia had some difficulties with two of its neighbors, Italy and Croatia. In the case of Italy, the negotiation of an EU Slovenia association treaty (the first step toward membership) was held up over a dispute over the property of between 100 and 350 thousand Italians who left either voluntarily or by force after World War II when the region in which they lived became part of Communist Yugoslavia. Italy wanted Slovenia to allow these Italians the right to reclaim their former property or at least have the same right as Slovenian citizens to purchase their former property. Slovenia rejected the Italian demands, saying that the issue was settled by the 1975 Treaty of Osimo, under which Yugoslavia paid compensation to the Italian refugees. In October 1994, Italy vetoed the opening of negotiations between the EU and Slovenia on the association treaty. After the right wing Italian government that had taken a hard line against Slovenia was replaced by a more moderate government in December 1994, Slovenian-Italian tensions eased. In March 1995, Italy lifted its veto on negotiations. After Slovenia's parliament agreed to allow foreigners to own real estate in Slovenia within four years of the coming into force of an association agreement, the EU and Slovenia signed the association agreement in June 1996. At the July 1997 NATO summit, Italy strongly supported inviting Slovenia to join NATO. Italy also favors EU membership for Slovenia.

Slovenia's relationship with Croatia has been somewhat clouded by disputes arising from the breakup of Yugoslavia, including the exact demarcation of the Slovenia Croatia border, particularly the sea border in Piran Bay. Slovenia notes that the way the sea border is now drawn blocks Slovenia's direct access to the open sea, and wants to modify the border to rectify the situation, which Croatia has refused to do. Although not all of these issues have been settled, observers believe that they are not serious enough to pose a threat to regional stability. Observers believe that Slovenia ( like Poland, Hungary and the Czech Republic) has made progress in improving relations with its neighbors, and has demonstrated good faith in attempts to resolve outstanding issues.

A possible weakness in Slovenia's qualifications for NATO membership is that, given the small size of its population (just under 2 million), Slovenia may never be able to contribute as much to the collective defense capability of NATO as larger countries such as Poland, Hungary and the Czech Republic. On the other hand, Slovenia's armed forces may be able to make a modest contribution to future NATO peacekeeping efforts, similar to that of smaller current NATO members such as Luxembourg.

The Armed Forces. Slovenia's armed forces are engaged in a reform and restructuring effort. Slovenian officials assert that less reform and restructuring is needed for Slovenia than for other NATO candidate members, since Slovenia was never part of the Warsaw Pact (in contrast to Poland, Hungary and the Czech Republic), and indeed never had a full fledged army until after independence. For this reason, they claim, Slovenia has a nearly clean slate on which to create a new, NATO-oriented army. At the time of Slovenia's declaration of independence in June 199 1, Slovenia's armed forces consisted of territorial defense forces, somewhat similar in nature to U.S. National Guard units. Since that time, Slovenia has taken steps to form a core of combat ready "mobile units" to supplement its territorial units. The peacetime strength of Slovenia's army is about 10, 000 men (4,100 professionals and 5,000-6,000 conscripts). With the addition of reserves during wartime, the Slovenian army would number about 62,000 men. By 2010, Slovenia hopes to have an army with a peacetime strength of about 12,000 (7,700 professionals and 4,000-5,000 conscripts) and a wartime strength of about 47,000. Slovenia has inherited a significant amount of former Yugoslav weaponry, much of which is obsolete, including tanks, APCs and artillery. An important part of Slovenian army reform efforts is the creation of a 700 man motorized infantry battalion that is earmarked for participation in international peacekeeping activities. The battalion will form part of a rapid reaction brigade.

The armed forces of Poland, Hungary and the Czech Republic are much larger than those of Slovenia. All three countries have much larger weapons stocks than Slovenia, although many weapons are obsolete Soviet era arms that will gradually be replaced over the next few years by Western (and in a few cases modem Russian) equipment.

Slovenia's 1999 defense spending was 56.208 million tolars, or $315.5 million, about 1.55% of Slovenia's GDP. Slovenia expects that defense spending in 2000 will amount to about 1.7% of GDP. This percentage is smaller than that of Hungary and the Czech Republic (an estimated 1.6% of GDP for Hungary and an estimated 2.2% for the Czech Republic and Poland for 1999.) The current NATO Europe average is 2.2% of GDP. Aside from equipping the peacekeeping battalion, other procurement priorities for Slovenia are air defense, anti armor weapons and communications systems. Slovenia plans to gradually increase its defense spending to 1.98% of GDP by 2003, and 2.03% in 2004.

Slovenian officials say they are working hard to increase interoperability with NATO, including implementation of interoperability objectives laid out in Slovenia's Individual Partnership Program within the Partnership for Peace (PFP) program. In 1998, Slovenia participated in 4 PFP exercises and 4 exercises "in the spirit of' PFP. Slovenia also participates in the NATO/PFP Planning and Review Process (PARP). Within this process, Slovenia and NATO develop an implementation plan to achieve specific Interoperability Objectives (10s). Slovenia has also adopted Partnership Goals (PGs), aimed at increasing Slovenia's ability to participate in future operations with NATO. They also note that Slovenia has bought and will continue to buy NATO compatible weaponry for its units, as well as NATO compatible communications equipment. Slovenia also plans to develop an air defense system that will be compatible with NATO.

From May to July 1997, a Slovenian medical unit participated in the multinational European force deployed in Albania. Slovenia is also participating in the NATO led Stabilization Force (SFOR) in Bosnia. It has provided 26 military police and 41 air force personnel. Twenty nine Slovenian soldiers are serving in the Austrian battalion of U.N. peacekeeping forces in Cyprus. Slovenia has six liaison officers serving with KFOR in Kosovo.

While Slovenia has made progress in achieving interoperability with NATO, observers believe that it may currently lag somewhat behind Poland, Hungary and the Czech Republic, which, as part of NATO's "first wave" of enlargement, have necessarily had to move further sooner than Slovenia. Poland has also contributed a battalion to KFOR. Hungary has contributed a 324-man security unit to KFOR, and the Czech Republic has contributed a reconnaissance company. In addition, Poland, Hungary and the Czech Republic have each contributed battalion sized contingents to SFOR.

Oversight of the Military and of Intelligence Agencies. As in Poland, Hungary and the Czech Republic, legal mechanisms exist to guarantee civilian control of Slovenia's military and intelligence services. According to the Slovenian constitution, the National Assembly approves the defense budget and conducts oversight of military and intelligence programs. The Slovenian defense minister, a civilian, exercises control over the development and organization of the armed forces through the General Staff. The President of the Republic is commander in chief of the armed forces, and appoints top military officers. These mechanisms are similar to those in Poland, Hungary and the Czech Republic. However, as in the case of these three countries, the effective implementation of them has sometimes been a cause for controversy. Opposition political parties have complained about the lack of transparency in arms procurement decisions. Parliament members also expressed concern about a lack of effective oversight of Slovenian intelligence agencies after a January 1998 incident in which Slovenian agents were arrested by Croatian police while conducting surveillance operations on Croatian territory.

View of the Clinton Administration

During a July 12, 1997 visit to Slovenia, Secretary of State Albright said that Slovenia has made "major progress" toward meeting NATO eligibility criteria, 41 especially given its strong, stable democracy and relatively developed economy." She said Slovenia has "made a solid start in developing a small, but capable military," and that the United States would assist further efforts "to ensure that Slovenia achieves the capacity we expect from a NATO member of its size." Secretary Albright also stressed that Slovenia should "make an even greater contribution to the security of Europe as a whole, especially central and southern Europe." She said that Slovenia needs to "have a greater responsibility vis-a-vis the neighborhood in which Slovenia is" and pointed to Slovenia's participation in the multinational force in Albania and its future participation in Cyprus as a trend that should be continued. She noted that if Slovenia continues its progress in these areas, "Slovenia will have the strongest possible case for NATO membership in the years ahead."

During a June 1999 visit to Slovenia, President Clinton praised Slovenia for its support for NATO actions in Kosovo. He said Slovenia had made "progress" in creating a modern military. He noted Slovenia's efforts to create a trust to remove landmines in the Balkans and assist victims. He called Slovenia a "good partner" and cc an excellent candidate for NATO [membership]."

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Footnotes:

CRS Report to Congress

NATO Applicant States: A Status Report