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MEMO/08/207

Brussels, 3 April 2008

European Neighbourhood Policy – GEORGIA

EU–Georgia relations: basic facts

The EU-Georgia Partnership and Cooperation Agreement (PCA) entered into force in 1999.

An Action Plan was adopted in November 2006, with the aim of further strengthening the economic integration of Georgia with the EU.

Major developments in 2007 and overall assessment

Good progress has been achieved on the reform of the criminal justice sector and in the fight against corruption.

New legislation was enacted in the areas of democracy, the functioning of state and local administrative bodies, human rights and fundamental freedoms, including media. However the events at the end of 2007, including the introduction of the state of emergency, have demonstrated the need for a proper implementation of this legislation.

Presidential elections in January 2008 were, for the first time, genuinely competitive but concerns about shortcomings in the election process were voiced by international observers. The EU has raised with the Georgian authorities the need to address these shortcomings before legislative elections in May 2008.

Economic growth in 2007 has been very strong, at about 12%. State revenues have increased substantially thanks to the modernisation of the taxation and customs administration.

The EU-Georgia bilateral trade is growing steadily (€1.6 billion in 2007) and the EU has become Georgia’s main trading partner (nearly 30% share in Georgia's overall external trade). The European Commission is currently carrying out a feasibility study exploring the possibility of establishing a free trade agreement with Georgia.

Positive changes can be recorded regarding the business climate. Investor protections were strengthened and the tax code, as well as permitting and registration procedures were further simplified.

Georgia is positioning itself as a key transit country for the transport of Caspian energy resources to the EU. The full operation of the Baku-Tbilisi-Ceyhan oil pipeline and the first gas flows through the Baku-Tbilisi-Erzurum gas pipeline are significant in this context.

The establishment of an EU-Georgia Sub-Committee on Justice, Freedom and Security is imminent.

Overall Georgia made a good start in implementing the Action Plan and has achieved progress in several areas. 2008 needs to be a year of consolidation of the legislative improvements introduced in 2007.

Some examples of how the EU supports reforms in Georgia

Through the diplomatic activity of its Special Representative for the Southern Caucasus, the EU actively supports the peaceful resolution of Georgia's internal conflicts in Abkhazia and South Ossetia. The Commission is also the largest international donor in both conflict zones and programmes are designed to benefit both communities.

In Abkhazia, €10 million of Community assistance has been provided for rehabilitation of the Enguri hydro-power complex. A €4 million package has supported an infrastructure rehabilitation programme, the development of local economic activities and confidence-building measures involving non-governmental organisations (NGOs). In South Ossetia, a €2.5 million programme (part of a €7.5m package) of infrastructure and shelter projects was completed in 2007.

EU assistance for the reform of the Georgian Border police is underway with already some degree of success. Work is also starting on a regional programme for the implementation of integrated border management systems in Georgia, Azerbaijan and Armenia.

Support for the consolidation of the rule of law: the one-year EUJUST THEMIS advisory mission has helped Georgia to draw up a comprehensive blueprint for reforming the country’s criminal justice system. The implementation is being assisted through Community funded projects, including supporting the reorganization of the prison system, the reform of the public prosecutor office, the establishment of a civil register (to be used for voters’ lists and to tackle corruption) and of a free legal aid system.

Georgia has readmission agreements in place with three EU Member States, and is negotiating with others. The Commission has funded several AENEAS projects, including document security, reintegration of returning migrants and informed migration.

Through the Food Security Programme (€91 million of EU funds channeled into the national state budget since 1996) the Commission has successfully provided an impetus for key reforms in sectors that directly impact on poverty reduction and public expenditure management. This includes the elaboration of a medium-term development plan for agriculture which focuses on certain areas (tea, wheat, wine, automation services, etc.) and the social sector, statistics and public finance.

Assistance to Georgia

In 2007, €24 million in Community assistance was allocated for Georgia to focus on the reform priorities agreed in the ENP Action Plan. The overall allocation for 2007-2010 is over €120 million, under the European Neighbourhood Policy Instrument.

Since 1992 Georgia has received €505 million of Community assistance.

The Communication from the Commission to the Parliament and the Council Implementation of the European Neighbourhood Policy in 2007 (3 April 2008) and a country report on Georgia are available at

http://ec.europa.eu/world/enp/documents_en.htm

More on Georgia and ENP:

http://ec.europa.eu/external_relations/georgia/index_en.htm

http://ec.europa.eu/world/enp/index_en.htm


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