Brussels, 15 May 2012
ENP Package, Country Progress Report – Egypt
The European Commission and the High Representative of the Union for Foreign Affairs and Security Policy published on 15 May 2012 the annual “neighbourhood package”, consisting of a joint communication (“Delivering on the new European Neighbourhood Policy”) making an assessment of the first year of implementation of the new ENP adopted in 2011, a separate joint communication proposing an “Eastern Partnership Roadmap”, a report on the “Partnership for Democracy and Shared prosperity” with Southern Mediterranean (including a roadmap for future action), an Eastern Partnership progress report, 12 country reports (on developments in 2011 and with a set of recommendations for the future), including one on Egypt, and a statistical annex.
Egypt faced profound change and enormous political and economic challenges in 2011. The 25 January democratic uprising toppled the authoritarian regime. The Supreme Council of the Armed Forces (SCAF) took over the presidential, legislative and executive powers in the country as a transitional measure to meet legitimate requests of the people for political freedom, respect for human rights and better socio-economic conditions. Ongoing political and economic uncertainty meant that little progress was made towards structural reform.
The EU adopted on 14 December negotiating directives for a Deep and Comprehensive Free Trade Area (DCFTA). However, the interim Egyptian authorities are not yet ready to engage. Similarly Egypt has declined the offer made by the EU to start a Dialogue on Mobility, Migration and Security, leading towards the conclusion of a Mobility Partnership.
On the basis of this year’s report and to sustain implementation of the ENP Action Plan in 2012, Egypt is invited to:
Ensure that all powers are handed over to a civilian administration and that the state of emergency is fully lifted before the presidential elections.
Draft and adopt, following an inclusive drafting process, a democratic constitution that enshrines respect for human rights.
Discontinue the use of military courts to judge civilians.
Create the conditions conducive to an active and independent NGO community and adopt NGO legislation in full compliance with international standards.
Preserve the freedom of religion and protect minorities.
Design and implement an Economic Reform Programme that ensures macro-economic stability and strengthens public finance management, in order, inter alia, to open the door to international financial assistance, including EU Macro-Financial Assistance.
Sign and ratify the regional Convention on Pan-Euro-Mediterranean Rules of Origin.
Political dialogue and reform
The electoral system was reformed. Parliamentary elections were organised between November 2011 and February 2012 in a generally free and transparent manner giving Islamic parties a strong lead in parliament.
The focus is now on drafting a new Constitution. SCAF, which had initially committed to handing over power to a civilian government by the end of 2011, plans now to do so in mid 2012.
The military’s conduct during the transition period has fallen short of respect for basic human rights and democratic standards. Police and military personnel that resorted to excessive use of force during the demonstrations were not investigated. Thousands of activists were arbitrarily detained. Military courts were used to try activists and bloggers. Torture and degrading treatment in detention and prison have continued.
The situation of foreign-funded CSOs has become precarious with the interim Egyptian authorities launching a public campaign and investigations against them.
Reform of the security sector has until now only been cosmetic. SCAF has tried to maintain and expand the privileged position of the military by establishing "supra-constitutional" principles allowing it to keep its budget outside civilian control and giving it legislative veto power over laws related to the army. The proposals created a public outcry and were blocked. The state of emergency was only partially abolished in January 2012.
Egypt still lacks a legal environment to protect girls and women from violence. The situation concerning children's rights has not improved.
Concerning freedom of religion, a number of incidents of sectarian violence took place particularly in the first half of 2011.
In 2011, Egypt has remained an active partner in the Middle East Peace Process, played an important and constructive role during the Libyan crisis, and showed a re-engagement on its Africa policy.
Economic and social reform
In the context of people's uprising, subsequent social unrest and war in neighbouring Libya, real GDP growth declined to -4.2% year-on-year in Q1 and unemployment increased to 12.4% (from 8.9% in Q4 2010). Inflation rose until June but dropped steeply from July onwards (7.1% in October), reflecting a fall in international and local food prices.
The fiscal situation deteriorated rapidly, as did the stock of foreign reserves as the authorities fought to defend the managed float from strong depreciation pressures. As a consequence, the administration is increasingly reliant on external financing.
The Fifth Economic Dialogue between the EU and Egypt took place in July 2011, at which representatives from the interim government and EU exchanged views on the macroeconomic situation and their relevant economic policies.
Official unemployment rose to 12 % (from 9 % in 2010). Egypt is reviewing its National Action Plan on Youth Employment 2010-2015. Egypt was lifted from the ILO list of the worst 25 violators of workers’ rights in June.
Amendments to Egyptian labour law are still required to fully ensure workers’ social rights in line with international standards. As regards social protection, in July 2011, the authorities approved a 700 EGP/month minimum wage for public sector employees.
Trade-related issues, market and regulatory reform
The EU is overwhelmingly Egypt's main trading partner covering almost 32% of Egypt's trade volume. Bilateral trade has more than doubled since the entry into force of the Association Agreement, from EUR 11,5 billion in 2004 to its highest ever level of EUR 23,3 billion in 2011.
Egypt adopted several new trade restrictive measures (ban on cotton, safeguard procedure with regard to cotton and mixed yarn, protectionist measures affecting ready-made garments and leather).
On the free movement of goods and technical regulations, Egypt continued its preparations for the negotiation of an Agreement on Conformity Assessment and Acceptance of Industrial Products (ACAA). On accreditation, the Egyptian Accreditation Council signed a cooperation contract with the European co-operation for Accreditation.
No progress can be noted in the field of establishment, company law, liberalisation of services on Intellectual Property Rights, public procurement and accounting.
Cooperation on justice, freedom and security
Egypt is generally respectful of the principle of non-refoulement, but it has not yet established a proper asylum legislation and management system. Particularly worrying in 2011 was the situation of asylum seekers and irregular migrants in the Sinai region, especially of those coming from the Horn of Africa.
In the area of border management, Egypt eased restrictions for Palestinians residing in Gaza, granting visa-free entry to certain categories (children, women, men over 40, students and Palestinians seeking medical treatment in Egypt).
In 2011, the EU signed with UNHCR a EUR 3.6 million Regional Protection Programme encompassing Egypt, Libya and Tunisia.
Egypt is part of the first region where the Visa Information System (VIS) became operational on 11 October.
Following exploratory talks in June, the EU offered to Egypt the opening of a comprehensive Dialogue on Mobility, Migration and Security, leading towards the conclusion of a Mobility Partnership. In September the Egyptian authorities declined the offer.
In relation to judicial cooperation in criminal and civil matters, cooperation between the EU and Egypt was supported via a EUR 2.5 million project carried out with the UN Office on Drugs and Crime (UNODC).
Egypt is also participating in the regional “Euromed Police III” project, which started in September.
Transport, energy, environment, the information society, research and development
Transport: The implementation of the ambitious transport reform programme (EUR 80 million EU budget support) suffered further delays, notably in the road and rail sector. The Egyptian flag moved from the black list up to the grey list of the Paris Memorandum of Understanding on Port State Control.
Energy: The Supreme Energy Council decided to update the Egyptian energy strategy–2030 in the light of the new situation in the country. The ENPI-Neighbourhood Investment Facility co-financed several projects in renewable energy and energy efficiency.
Environment and climate change: Egypt is encouraged to engage in the new carbon market mechanism to be developed following the UNFCCC COP 17, as well as to fully implement the Cancun and Durban agreements. The water sector reform programme will receive EU sector policy support (EUR 120 million).
Research and innovation: The 2nd phase of the Research Development and Innovation Programme (RDI-II) was officially launched in June 2011 with an EU Contribution of EUR 20 million. Egypt's participation in the 7th Framework Programme for Research and Technological Development increased (66 grant agreements).
People-to-people contacts, education and health
Education: Egypt’s education system is in need for structural reforms, including increased flexibility and efficiency in governance and institutional management. EU-Egypt higher education cooperation continued via the Tempus IV programme (four additional projects), the Erasmus Mundus programme (three new partnerships) and the Marie Curie scheme (23 higher education institutions and 20 researchers).
Culture: The number of young Egyptians and Egyptian youth workers benefitting from exchange opportunities offered by the Youth in Action programme increased to 140 in 2011. 16 new projects were approved in the context of the Euromed Youth IV Programme in 2011 in Egypt.
Health: Egypt pursued health sector reform, with considerable EU assistance (EUR 198 million under two programmes), in particular by further rolling out its “Family health model” for primary health care. Egypt participated in the EU supported ‘Episouth Plus’ project aimed at increasing health security in the Mediterranean region and South East Europe.
EU–Egypt – BACKGROUND
The European Neighbourhood Policy governs the relations between the EU and Egypt.
2004: EU-Egypt Association Agreement entered into force.
2007: EU-Egypt Action Plan was approved.
2008: Launch of the Union for the Mediterranean (UfM, reinforced Euro-Mediterranean Partnership).
FACTS AND FIGURES
2009: Neighbourhood Investment Facility (NIF) - two projects in Egypt were being implemented in 2009, in the environment and energy sectors. The European Investment Bank signed lending operations for EUR 130 million, of which EUR 120 million are linked to NIF projects.
2007-2010: The ENPI envelope for Egypt is EUR 558 million.
2011-2013: The new National Indicative Programme (NIP) 2011-13 for Egypt was adopted in March 2010 and has a budget of EUR 449.3 million. The programme is geared towards supporting the achievement of key policy objectives as outlined in the EU-Egypt ENP Action Plan and pursues three priorities: (1) political reform and good governance, (2) competitiveness and productivity of the economy, and (3) socio-economic sustainability of the development process.
2011: The Fifth Economic Dialogue between the EU and Egypt took place.
2011: Egypt declined the offer made by the EU to start a Dialogue on Mobility, Migration and Security, leading towards the conclusion of a Mobility Partnership.
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