Brussels, June 2004 – Update December 2004
The EU Strategic Partnership with the Mediterranean and the Middle East was adopted by the European in Brussels, in June 2004. It provides a policy framework for these two regions with a view to promoting political, economic and social reform, generated from within the affected societies, as well as contributing to their socio-economic development.
From its inception in the 1950s, the European Union (EU) has placed a high priority on establishing and maintaining a close and special relationship with its neighbours from the Mediterranean and Middle East. This is a longstanding partnership which today is governed by two distinct but complementary “frameworks”:
The EU’s involvement in the Middle East Peace Process, to which the EU attaches great importance, is of crucial significance to both these frameworks.
The EU provides financial assistance to all Arab countries except GCC Member States and Libya.
I.1 The Euro-Mediterranean Partnership (EMP) - The Barcelona Process
After more than 20 years of intense bilateral and trade cooperation, the EU Member States, and the 12 Mediterranean Partners (Algeria, Cyprus, Egypt, Israel, Jordan, Lebanon, Malta, Morocco, the Palestinian Authority, Syria, Tunisia, and Turkey) launched an ambitious and far-reaching Euro-Mediterranean Partnership in Barcelona in 1995, which is therefore also known as the Barcelona Process. This initiative is the first attempt in modern history to create strong and durable bonds between the shores of the Mediterranean. It comprises three objectives:
The partnership has two complementary dimensions:
The EU is the largest donor of non-military aid to the Mediterranean and Middle East, giving roughly €1 billion in grants and another €2 billion in soft loans in 2003. This is in addition to the assistance given by the EU Member States through their national programmes.
The MEDA Programme is the principal financial instrument of the European Union for the implementation of the Euro-Mediterranean Partnership. For the period 1995-2004 MEDA accounted for €6.2 billion of the total €8.8 billion of budgetary resources allocated for financial co-operation between the European Union and its Mediterranean Partners. MEDA is now in its second programming period (2000-2006) with a budget of €5.3 billion.
MEDA grants from the EU budget are accompanied by substantial lending from the European Investment Bank (EIB), through the Facility for Euro-Mediterranean Investment and Partnership (FEMIP). EIB loans in the Mediterranean region are designated for specific investment projects, particularly for the support of small and medium-sized enterprises, and are administered in close co-operation with the European Commission and, if necessary, with other international financial institutions. For 2000-2007, the EIB’s Euromed lending mandate is €6.4 billion. The EIB committed itself to contribute a further €1 billion from its own resources and at its own risk over the same period for trans-national projects.
There are other ways in which the EU devotes resources to the region, for example: in case of a humanitarian crisis via ECHO (European Commission Humanitarian Office); or for a major catastrophe via the budget line of “Rehabilitation in Mediterranean countries” through which the EU earmarked €30 million to help Turkey after the earthquake in August 1999. Moreover, the Mediterranean countries participate in community programmes such as LIFE and TEMPUS, dealing respectively with the environment and higher education.
I.2 The EU relations with the Gulf and Middle East region
EU relations with Saudi Arabia, Bahrain, Kuwait, Oman, Qatar and the United Arab Emirates, are governed by a Cooperation Agreement signed in 1989 between the European Union and the Gulf Cooperation Council (GCC). The EU relations with Iran, Iraq and Yemen are of bilateral nature.
In 1989, the European Commission and the GCC concluded a Co-operation Agreement under which the EU and GCC Foreign Ministers meet once a year at a Joint Council/Ministerial Meeting, and senior officials at a Joint Co-operation Committee as well as Regional Directors’ Political Dialogue. The objective of this Agreement is to contribute to strengthening stability in a region of strategic importance and to facilitate political and economic relations. The 1989 Co-operation Agreement contained a commitment from both sides to enter into negotiations on a Free Trade Agreement between the EU and the GCC.
The Free Trade Agreement negotiations were initiated in 1990 but soon reached a standstill. Finally in 1999, the GCC made a significant gesture of their willingness to resume the negotiations by announcing their decision to create a customs union by March 2005. The EU and the GCC remain committed to do their utmost to conclude these negotiations in the near future.
The European Commission’s co-operation with the GCC is focused on energy and economic issues. There is a regular experts’ dialogue on energy questions which has led to the launching of seminars, workshops and international conferences. Furthermore, an Economic Dialogue meeting was launched in 2003 with the objective of facilitating dialogue and better understanding in areas of shared interest.
The EU and Yemen
Yemen and the European Commission concluded a new Co-operation Agreement in 1998, under which the Commission implements a variety of economic and development co-operation projects with new commitments worth an average of more than €20 million per year. The political dialogue that started in July 2004 represents an upgrading of the EU-Yemen relations. In this occasion, the parties adopted verbally a joint-declaration formalising the dialogue. The EU assists Yemen in implementing its poverty reduction strategy and in strengthening democracy, human rights, and civil society, as well as in technical assistance for World Trade Organisation (WTO) negotiations. The EU assistance programme for 2005-2006, with a total budget of €26 million, will focus on two priority areas: poverty reduction and reinforcing pluralism and civil society.
The EU and Iran
In June 2002, the European Union agreed to open negotiations with Iran, which would cover political aspects (WMD, Human Rights, Terrorism, Middle East Peace Process) as well as a trade and co-operation agreement. Once concluded, this agreement should put Iran’s trade and co-operation relations with the European Union on a contractual basis. The negotiations were launched in Brussels in December 2002, although there has been no new negotiating round since June 2003. In November 2004 the UK/France and Germany reached a nuclear deal with Iran (the so called “Paris Agreement”) by which Iran agreed to suspend its enrichment related and reprocessing activities, to be verified by the IAEA. Following confirmation of the suspension by the IAEA Board Resolution of 29 November, the Commission is prepared to relaunch the Trade Co-operation Agreement negotiations.
The EU has also established a Human Rights Dialogue with Iran, and a non-contractual Comprehensive Dialogue on issues including conflict prevention and crisis management, the fight against terrorism and the proliferation of weapons of mass destruction.
Following the humanitarian disaster resulting from the earthquake in Bam at the end of 2003, the Commission contributed €8.5 million in emergency assistance.
The EU and Iraq
Under Saddam Hussein’s 24-year regime, the European Union had no contractual relations with Iraq and very limited political relations. The Commission’s role from 1991 has been restricted to implementing UN Security Council sanctions and providing humanitarian assistance.
As a result, Iraq is not covered by any EU co-operation framework. However, on 9 June, the Commission adopted a Communication on EU relations with Iraq making proposals for engaging with the newly appointed Iraqi government and with Iraqi civil society.
The EU has shown its determination to play a role in supporting reconstruction. At the Madrid Donors’ Conference for Iraq in October 2003, the EU (European Commission and Member States) and the then accession countries pledged more than €1.25 billion. The European Commission contribution to Iraq in 2003/4, including humanitarian aid, will amount to almost €320 million.
The European Commission adopted on 4 March 2004 a programme setting priorities for re-construction assistance to Iraq in 2004. The three priorities are: restoring the delivery of key public services; boosting employment and reducing poverty; strengthening governance, civil society and human rights. The funds will be distributed largely through the International Reconstruction Fund Facility for Iraq, managed by the United Nations and the World Bank.
A €31.5 million package to support the elections has been provided in 2004, including European election experts to work with the Independent Electoral Commission of Iraq and the United Nations in Baghdad, and training of Iraqi election observers.
The Commission is now preparing the new assistance programme for 2005 for which an additional contribution of €200 million is to be made available.
II. The Middle East Peace Process
Through economic, diplomatic and humanitarian means, the EU is a major contributor to the Middle East Peace Process (MEPP). As one of the four members in the Quartet (with Russia, the United States, and United Nations), the EU promotes a comprehensive, just and lasting peace and prosperity for the area. The EU takes a leading role in the international donors’ conference for the Peace Process (Ad Hoc Liaison Committee) and the international Task Force on Palestinian reform. Through its Partnership for Peace programme (approximately €10 million per year) the EU supports activities that promote direct contacts and dialogue between the parties and contribute to the reawakening of the peace process.
The EU (Commission plus Member States) is the largest donor of financial and technical assistance to the Palestinian Authority, providing over 50% of the international community's financing for the West Bank and Gaza Strip since the beginning of the peace process. Total community aid to the Palestinians since 1994 has been over €2 billion in grants of which the largest part has been allocated to Palestinian institutions-building and promotion of reform, good governance, tolerance and respect for human rights; €187 million to the humanitarian aid provided by ECHO; and €581 million as humanitarian support through UNRWA (United Nations Relief and Works Agency for Palestine Refugees) for assistance to the refugees, including food aid.
The role the EU has played in promoting reform in the Palestinian Authority (with the objective of laying the foundations for the viable Palestinian state foreseen in the Road Map), through the conditions attached to its financial assistance, has been recognised internationally by the Ad Hoc Liaison Committee of donors, which at its December 2004 meeting commended the Palestinian Authority for its continued strong efforts at public financial reform that now place the Palestinian Authority in the front rank of regional performers.
In addition, the EU is also providing extensive support to the electoral process. €14 million have been earmarked and a substantial EU Election Observation Mission (over 260 observers) has been deployed for the Presidential elections, to reflect the importance of these elections and the EU’s continuing engagement in the democratisation process.
III. The EU, the Mediterranean and the Middle East - what has been achieved?
Regional dialogue: one of the key successes of the Euro-Mediterranean Partnership is to have provided a forum for dialogue between Mediterranean Partners involved in the Middle East Peace Process. The Partnership still remains the only multilateral context outside the United Nations where all the parties affected by the Middle East conflict meet. The Palestinian Authority is recognized as an equal Mediterranean Partner. The Barcelona Process is open for Libya to join if the country accepts the Barcelona acquis.
Regional integration: the EU has promoted and supported regional economic integration and the promotion of free trade in the region. Bilateral Association Agreements between the EU and the partner countries of the Euro-Mediterranean Partnership have been concluded, except for Syria, with whom negotiatons have been concluded and the Agreement awaits signature. These agreeements enhance north-south regional integration and trade. As a result of Turkey’s Association Agreement, a customs union with the EU entered into force on 1 January 1996. Cyprus and Malta joined the EU as of 1 May 2004. As for south-south integration, on 25 February 2004 Egypt, Jordan, Morocco and Tunisia, signed, with the support of the EU, a regional free trade agreement, known as the Agadir Agreement.
Promoting Human Rights and Democracy: the EU is working with partners in the region to promote democracy, the rule of law, and respect for human rights and fundamental freedoms. Actions in these areas are being negotiated with the countries under the European Neighbourhood Policy see below); they will be financed by MEDA and an additional €50 million will be available as from 2006 to those countries in the Mediterranean who make progress in reform in these areas. MEDA countries also profit from the European Initiative for Democracy and Human Rights (EIDHR) that funds every year in the region a number of projects in the areas of electoral assistance and observation missions, gender equality, women rights, media, etc.
Trade: the EU is a major trading partner for every country in the region. It accounts for almost 50% of goods traded by them (imports and exports of €141billion in 2002) compared to 13 percent (€38 billion) for the US. Trade in services with the EU amounted to €32 billion in 2001. FDI flows from the EU into the region accounted for €2 billion (2001), and FDI assets were €25 billion (end 2001).
FDI flows from the US (2001) amounted to US$3 billion (2001), and US FDI assets amounted to US$18 billion (end 2001) for the Mediterranean and Gulf region combined.
Support to the development of the region: since 1995 the EU has provided financial support, now running at nearly €1 billion a year, to economic, social and political reforms in the region through tailor-made assistance programmes to each of the partners except Israel (whose prosperity level is too high to warrant such aid). In addition regional programmes cover the promotion of intra-regional co-operation among the partners themselves in areas such as political issues, trade, infrastructure interconnection, sustainable development, justice and home affairs and cultural and social matters. Moreover, following the reform of the Commission’s external assistance service, the MEDA programme has shown a remarkable improvement in its operational effectiveness since 1999. Nowadays, all funds available each year for the Mediterranean are fully contracted within the same year and payments under these contracts have accelerated.
Investment and loans: in 2003, the EIB launched the facility for Euro-Mediterranean investment and partnership (FEMIP), to support modernization of the economies of the Mediterranean partner countries, while also promoting social cohesion, environmental protection and communications infrastructure. FEMIP is based on a closer involvement of the Mediterranean partners themselves through the creation of a forum for dialogue (the policy dialogue and co-ordination committee). FEMIP is now lending approximately €2 billion per year to the region.
IV. The EU’s Neighbourhood Policy
For those countries that do not currently have the prospect of membership but which share borders with the Union – the southern Mediterranean plus Ukraine, Moldova, Belarus – the EU has recently developed the European Neighbourhood Policy (ENP).
Through the ENP the EU is offering a more intensive political dialogue and greater access to EU programmes and policies, including the Single Market, as well as reinforced co-operation on Justice and Home Affairs, based on a joint commitment to common values and common principles principally within the fields of the rule of law, good governance, the respect for human rights, including minority rights, the promotion of good neighbourly relations, and the principles of market economy and sustainable development. The level of ambition of the EU’s relationships with its neighbours will take into account the extent to which these values are effectively shared.
The Neighbourhood Policy reinforces the Barcelona Process and represents an essential plank in the implementation of the EU Strategic Partnership with the Mediterranean countries. Following a Strategy Paper, approved by the Commission on 12 May 2004, Morocco, Tunisia, Jordan, Israel and the Palestinian Authority have been the first of the EU’s Mediterranean neighbours to agree Action Plans, that will make concrete the European Union’s new offer under the European Neighbourhood Policy (ENP). These first plans – approved on 9 December 2004 – are the product of negotiations with each country, and in each case the plan is specifically designed to reflect the specific interests of the country concerned.
 Cyprus and Malta became EU members on 1 May 2004.
 See European Neighbourhood Policy: The First Action Plans