The historical area of Setomaa lies on both side of Estonian-Russian border. The region has succeeded to maintain its specific culture and traditional way of living, which differentiates the area from other regions in Estonia and Russia. At the same time the population of Setomaa is constantly decreasing on the both side of the border, which puts the maintenance of the traditional lifestyle and cultural heritage in danger. The main objective of the project is to develop the entrepreneurship in Setomaa based on local cultural traditions, which will strengthen the cultural identity in Setomaa, especially on Russian side. The sub-objectives of the project are: 1) to develop traditional handicraft skills among inhabitants of Setomaa on both sides of the border; 2) to develop business skills and knowledge among inhabitants of Setomaa on both sides of the border, who wish to make a living with handicraft skills; 3) to promote the handicrafts based on local traditions to the visitors of Setomaa from other regions of Estonia and Russia and from abroad as well as to local inhabitants; 4) to build a cross-border network between the handicraft masters and entrepreneurs from Estonian and Russian sides of Setomaa. The project partners are from Estonian side the Union of Setomaa Rural Municipalities and from Russian side the Administration of Pechory district. Both partners are responsible for the socioeconomic development of Setomaa region. Therefore both partners are interested in development of business activity in the region, which would motivate young people to stay in Setomaa, to find a job and to be active member of local community. The long-term impacts of the project are:1)the fields of local traditional handicraft are saved and developed;2 the business activity in the region is increased(16 new businesses both on Estonian and on Russian side will be created by the end of year 2008);3) Increased awareness and interest among the local inhabitants, incl. children and young people, in the whole region about the traditional handicrafts; 4)Increased awareness and interest among the visitors of Setomaa about traditional handicrafts. The project will also create better understanding and close contacts between local people from different side of the border. Main outputs: 1)research about the development needs and possibilities of traditional handicrafts;2)'Etno-map';3)4 training courses on 4 fields of handicrafts for 40 people;4)6 master classes of handicrafts;5)2 summer schools on handicraft for local children and youngsters in Estonia;6)development plan of traditional handicrafts;7)promotional catalogue;8)Business training program for 40 people;9)2 workshops for the participants of business training; 10)2 closing seminars of the project.;11)workshop for handicraft masters;12)active sellint training for 20 people;13)marketing research metholodolgy;14)Seto handicraft trademark;15)handicraft studio equipped for masters in Estonia Achievements: Progress reportThe project started in February 2006, when took place the first meeting.The main activities of the project are divided into 2 groups: activities related to the development and promotion of Seto traditional handicraft and activities related to the development of business skills of local persons,who wish to earn a living using handicraft skills.The first main activity was composing the research on Seto traditional handicraft.Using the results of the research both partners selected fields of handicraft for further training. 4 groups were formed in Estonia-engare of silver ornaments, stove-making, carpentry and needlework.5 groups were formed in Russia:stove-making, needlework, apiculture, smithing and pottery.All training groups have finished their programe.25 persons participated in trainings in Estonia,21 in Russia.The Union of Setomaa Rural Municipalities organized 2 summer schools of Seto traditional handicraft for children and young persons in 2006 and 2007. The master-classes of traditional handicraft took place in Lindora fair in October 2006 and 2007.Administration of Pechory district organized 4 master classes of handicraft during Izborsk fair(July 2006 and June 2007) and Pechory fair in August 2006 and 2007.The project partners have designed and implemented the business training program.Both partners selected 20-21 trainees and 6-7 mentors, who supervised the trainees during whole training program.8 trainings courses took place September 2006 - April 2007.The 1-day training of Estonian mentors took place on August 2006, two 3-days trainings for Russian mentors took place in Pechory, in September and December 2006.The joint seminar of mentors took place on August in Kiidjärve,where the first steps for network building between Estonian and Russian mentors were made. Joint workshops for the Estonian and Russian trainees and mentors was organized in December 2006 in Pechory and in May 2007 in Põlva.In 2007 four handicraft exhibitions were organized-in Värska, Pskov, Pechory and Obinitsa.Project partners composed together an etnomap (5000 copies) and handicraft catalogue (2000 copies), which present Seto handicraft masters.The development plan of Seto traditional handicraft was composed and the criterias and conditions of Seto handicraft trademark were developed.Estonian masters organized 2-days study tour to Russia in October 2007.Estonian partner prepared a methodology and electronic analysis tool for implementation of future marketing researchis. Estonian partner prepared 2 lay figures with Seto traditional costumes which will be presented in Seto museums. Two 2-days active selling trainings were organized for Estonian masters.1-day joint seminar of Estonian and Russian masters took place in October 2007 during Lindora fair. Estonian partner opened a handicraft studio in Obinitsa.Investments for renovation and equipment were made. The closing seminar of the project was organized in Värska on December 2007.