EN    EN EN 
 
EN    EN  EUROPEAN COMMISSION  
Brussels, 12.5.2010 
SEC(2010) 519 final 
  
COMMISSION STAFF WORKING DOCUMENT 
Accompanying the 
 
COMMUNICATION FROM THE COMMISSION  
TO THE EUROPEAN PARLIA MENT AND THE COUNCIL 
Taking stock of the European Neighbourhood Policy (ENP) 
  
Implementation of the European  Neighbourhood Policy in 200: 
Progress Report Azerbaijan  
 
  
{COM(2010) 207 final} 
{SEC(2010) 513 final} {SEC(2010) 514 final} {SEC(2010) 515 final} {SEC(2010) 516 final} {SEC(2010) 517 final} {SEC(2010) 518 final} {SEC(2010) 520 final} {SEC(2010) 521 final} {SEC(2010) 522 final} {SEC(2010) 523 final} {SEC(2010) 524 final} {SEC(2010) 525 final} 
 
EN 2   EN 1. BACKGROUND AND OVERALL ASSESSMENT  
Azerbaijan and the EU first established contractual relatio ns in 1996 through a Partnership 
and Cooperation Agreement which entered into  force in 1999. On this basis, the EU-
Azerbaijan ENP Action Plan was approved in N ovember 2006 for a period of five years.  
EU-Azerbaijan meetings took place at the leve l of the Cooperation Council, the Cooperation 
Committee and of the two subcommittees. The st rengthening of the EU Delegation in Baku, 
established in 2008, contributed to the enhancing the EU-Azerba ijani bilateral relations.  
This document reports on progress made on th e implementation of the EU-Azerbaijan ENP 
Action Plan between 1 January and 31 Decembe r 2009, although developments outside this 
reporting period are also taken into consideration when d eemed relevant. It is not  a general 
review of the political and economic situati on in Azerbaijan. In addition, for information on 
regional and multilateral sector processes, please refer to the sectoral report. 
The EU and Azerbaijan agreed to move forw ard with deepening and broadening of the EU-
Azerbaijan relations. In parallel and within th e Eastern Partnership framework the EU started 
preparations for upgrading contractual relations  with Azerbaijan.  Negotiating directives for 
an Association Agreement were adopted by the EU in May 2010.  
Overall, Azerbaijan made some progress in  the implementation of the ENP Action Plan, 
notably in areas related to economic and social governance. It maintained a low inflation rate 
compared with the previous year and stab le un/employment levels. The country fared 
comparatively well during the year despite th e global financial crisis, which allowed the 
government to increase social sp ending and capital investment.  
While efforts towards economic diversificati on continue, energy remains the main revenue 
basis for Azerbaijan. Good progress was made  on energy cooperation with the EU on the 
basis of the Memorandum of Unde rstanding on a strategic partners hip in the field of energy. 
Progress was also made through Azerbaijan’s support for development of the Southern gas 
corridor including Nabucco. Progress was made in  the field of aviation through the signature 
of the horizontal air services agreement.  Good progress was ma de on fighting money 
laundering with the adoption of the new Anti-M oney Laundering law. A financial intelligence 
unit became operational. However, Azerbaijan has made only limited progress as regards 
negotiations on its accession to the World Trade Organisation (WTO). 
To meet Action Plan commitments, further efforts are needed in the field of political dialogue 
and reforms. Further reforms in the justice sect or and the strengthening of the rule of law, 
notably the independence of judi ciary, and proper implementation of adopted legislation in all 
areas would be of key importance. So would be  continued efforts to fight corruption, notably 
by enforcing the relevant legislation.  
The dialogue for negotiating a peaceful resolution of the Nagorno-Karabakh conflict 
intensified considerably at the highest level.  
The Azerbaijani civil society representatives part icipated actively and had a constructive input 
to the multilateral framework of the Eastern Partnership, in particul ar through open dialogue. 
The overall strengthening of EU -Azerbaijan relations and rein forcement of the follow-up on 
 
EN 3   EN the priorities of the ENP Action Plan was e nhanced through the Azerbaijani authorities’ 
contributions to the bilateral elem ents of the Eastern Partnership.  
2. POLITICAL DIALOGUE AND REFORM  
Democracy and rule of law  
Amendments to the Constitution were adopted by national referendum in March 2009. The 
amendments inter alia  removed the limits on the presidential  term of office a nd extended it in 
a state of war, which strengthened the power of  the executive against the prevailing European 
practice and signalled a serious setback on Azer baijan’s road to consolidated democracy. 
Very limited public debate took pl ace in the media before the referendum and some political 
interest groups refrained from participating in the vote. Azerbaijan requested advice from the 
Council of Europe’s Venice Commi ssion on the draft law on the stat us of municipalities in an 
effort to bring secondary legislation into line  with the Constitutional amendments. Issues of 
concern were raised by the Venice Commi ssion that will need to be addressed. 
A small delegation from the Parliamentary Asse mbly of the Council of Europe monitored the 
vote on the referendum day and gave an overall positive assessment of the technical process. 
However, there are reports of vo ting irregularities and of a lower turnout than the official 
figure of 71% announced by the Central Election Committee.  
Local  elections held in December 2009 were characteri sed as generally peaceful and well 
administered by the Election Commission but saw a low official turnout and reported 
irregularities during the process leading to th e election day. The absence of real political 
campaigns and the uneven allocation of medi a time between candidates were reported as 
weaknesses. The limited role and autonomy of the local authorities may explain the general 
lack of interest in the lo cal elections. The number of wo men winning seats in municipal 
councils rose sharply, as a result of a consci ous effort by both ruling and opposition parties to 
increase female participation.  
Some progress was made on development of the civil service . In September and October 
2009, new legislation and rules were approved on competition-based recruitment including on 
organisation and conduct of tests, ev aluation rules and passing scores.  
In the area of judicial reform, progress was made on selecti on of judges, training of 
prosecutors, judge candidates and judges and the select ion procedure of th e Bar Association. 
Some initiatives were implemented  to enhance human resources in  the judicial sector and to 
upgrade court infrastructure. Improvements were reported in execution of court rulings and 
the regional legal advice centres established by the Ministry of Justice are expected to improve people’s access to free of charge professional legal aid. Despite the insufficient 
number of lawyers in the country, in the medium term, these new developments should 
impact positively on the level of professionalism of the system as  a whole. However, the lack 
of independence of the judici ary remains a serious concern which needs to be addressed. 
Illustrating this phenomenon, in October 20 09, the Law on the Prosecutor General was 
amended, lifting the limits on th e number of terms of the Pr osecutor General and Military 
Prosecutor, as well as for their counterparts  in Nakhchivan Autono mous Republic, who can 
now serve for more than two consecutive terms.  
 
EN 4   EN Some progress was made in the fight against corruption . The authorities are becoming 
increasingly aware of the need and benefits  to address corruption and a series of anti-
corruption measures were taken in the field of provision of energy and water, of inter-
institutional cooperation and awareness-raising. Efforts were made to strengthen the capacity 
of authorities to deal with corruption cases and to train ci vil servants on prevention of 
corruption. Direct reporting of co rruption cases has been introdu ced but in order to comply 
with Action Plan commitments, whistleblower  protection should be improved. Azerbaijan 
slightly improved its standing in terms of pe rceived corruption in comparison with other 
countries, but corruption remains widespread at  all levels of soci ety and would require 
additional efforts to combat. 
Human rights and fundamental freedoms 
Progress was made through the ratification and en try into force of the UN Convention on the 
Rights of Persons with Disabili ties and its Optional Protocol in January, and of the Optional 
Protocol to the Convention agai nst Torture and Other Cruel, I nhuman or Degrading Treatment 
or Punishment in February 2009 (see last year’s report: SEC(2009)  512). The Commissioner 
for Human Rights  (Ombudsman) was designated to perform the function of National 
Preventive Mechanism under the Optional Prot ocol to the Convention against Torture 
following a Presidential decree  in January 2009. The office of the Ombudsman took up its 
work, which inter alia  included the examination of proposals from state agencies and 
international organisations, an alysis of international expe rience of NPMs and listing of 
penitentiary institutions . The OSCE provided support for capacity building.  
No progress was made on issui ng a standing invitati on to UN special procedures. In March 
2009, Azerbaijan was subject to the Universa l Periodic Review of the UN Human Rights 
Council and accepted most of the resulting 32 recommendations. In 2009, the country had no 
overdue reports to UN treaty bodies. 
The Azerbaijani authorities’ d ecision in November 2009 to p ublish the report of the Council 
of Europe’s anti-torture committee after its 2008 visit, and the c ontinuing upgrading of 
detention conditions, including refurbishment a nd construction of new jails, reflects an 
acknowledged need to make further improvements to the penitentiary system.   
Nonetheless, allegations of wi despread and routine use of torture of suspects and other 
detainees, failure to bring perpetrators to justic e, restricted access or no access of detainees to 
medical care and legal safeguards are some exampl es which have been raised as causes for 
concern by the UN Committee against Tort ure during its November 2009 session.  
In March 2009 the Parliament adopted an Amnesty Act allowing for 9,000 persons, including 
some opposition journalists, either to be releas ed (if they had less than one year of their 
overall prison term left) or having their pris on term sentences reduced, while libel charges 
against a human rights defende r were dropped. A pardoning decree was adopted by the 
President in December covering 99 persons including some journalists. 
The State support fund for mass me dia was created in April 2009. Members of its supervisory 
council were appointed by the president in  May. In addition the government publicly 
committed in 2009 to decriminalise defamation and draft legislation to that end was discussed 
in the parliament at the end of  the year. Despite these efforts,  freedom of expression and 
media freedom deteriorated during the reporting period. In January 2009, broadcasting by 
foreign radio stations on nati onal FM frequencies was banned, thus depriving the public of 
 
EN 5   EN alternative sources of information. In March 2009, the law on mass media was amended 
without prior consultation with  journalists or non-governmental  organisations, extending the 
grounds to suspend the activitie s of media outlets. The amendm ents allow interference by 
government with the media in ways that are not compatible with OSCE commitments on media freedom. Further restric tive amendments were adopted on the law on TV and Radio in 
April 2009, limiting media pluralism and including the activities of foreign broadcasters. 
Cases of harassment continue to  be reported of political ac tivists expressing independent 
views. The EU expressed concern over prison sentences and noted doubtful legal proceedings. 
Cases of intimidation of jour nalists through defamation court proceedings, imprisonment and 
threats continued to be reported and were cri ticized by the international community including 
the EU. In March 2009, the Council of Europe Parliament Assembly appointed a Rapporteur 
on political prisoners in  Azerbaijan. The EU continues to raise these cases with Azerbaijani 
authorities.  
Efforts were made to improve implementati on of the Law on access to information and an 
action plan was elaborated in cooperation with the OSCE. However, further efforts are needed 
in order to comply with ENP Action Plan com mitments. Refusals or inadequate responses by 
public authorities to requests for information and disregard of deadli nes were reported as 
common problems. The work of pub lic relations departments of pub lic authorities needs to be 
improved. The institution of the Information Ombudsman was not established as foreseen. 
During the reporting period, the Constitutional law on the Ombudsman  was amended, 
introducing the possibility of re-election of the holder of th e post, despite earlier criticism by 
the Venice Commission. The lega l proceedings of amending the Constitutional law on the 
Ombudsman were questionable with regard to th e work of the current post holder over several 
months without a legal mandate.  
Uneven developments were observed regarding civil society. Despite th e positive signal sent 
by the increase in funding available to non- governmental organisations (NGOs) from the 
Council of State Support to NGOs, which should however ensure independence of action by 
recipient NGOs, restrictive amendments to th e Law on non-governmental organisations were 
passed in June 2009, including with  respect to the es tablishment of foreign NGOs and the 
NGO financial reporting. In addition, new rules re garding the registration of grants came into 
force in December 2009, complicating the admi nistrative procedures for NGOs. A number of 
NGOs continued to be denied registration by the Ministry of Justice on unclear grounds. 
Restrictions on freedom of assembly  remained a cause for concern. 
Existing legislation ad dresses protection of minorities . However, Azerbaijan has yet to ratify 
Protocol 12 to the European Convention on Human Rights on the general prohibition of 
discrimination and the European Charter for Regional or Minority Languages.  
The Law on Religious Freedom  was amended in June 2009, introducing in particular the 
requirement for religious groups to re-regist er by the end of 2009 and the prohibition of 
religious activities outside fo reseen places. Moreover, the clos ure of several mosques and a 
number of closed court trials  involving alleged religious ex tremists took pl ace during the 
reporting period. In December 2009 the police interv ened in the village of Bananyar to put an 
end to the celebration of the Shia’a festival of Ashura. The situation in the region remained tense for several weeks after the events.  
Efforts were made to promote gender equality  and empowerment of women . While 
women’s participation in political  life remains low, with only 11% of parliamentarians being 
 
EN 6   EN women, the percentage of women elected in the last municipal elections increased from 1.2% 
to 26%. Women represented nearly half the economically active population in January 2009. 
The State Committee on Family, Women and Children’s issues carried out a number of 
awareness-raising activities in April 2009. Women entreprene urs also benefited from 
advantageous credits from the National Entrep reneurship Support Fund. Nonetheless, further 
efforts are needed on gender equality, gender vi olence, trafficking in women, early marriages 
and other areas, as noted in the concluding obs ervations of the Committee on the Elimination 
of Discrimination agai nst Women in August 2009. 
As regards  labour law and rights at work , some progress was made in the form of the 
amendments to the Labour Code in February 2009 on prohibition of termination of employment contracts in a number of specific cases (see also under Employment and social 
policy).  Azerbaijan benefits from the assistance of  the Council of Europe to foster social 
dialogue and collective bargaining on the basis of  the European Social Charter. However, no 
specific progress can be reported on improvi ng the implementation of the International 
Labour Organisation (ILO) Core Conventions. 
Some progress was made on  local governance,  notably with the considerable reduction of the 
number of municipalities in 2009. Howeve r, the division of powers between the 
municipalities and local executive authorities ne eds to be defined better. Amendments to the 
Constitutional provisions on local self-government  adopted in March 2009 were criticised by 
the EU and international organisations with respect to the potential  for compromising the 
independence of local self-government. In December 2009, the Veni ce Commission noted 
that the proposed implementing meas ures were limited and incomplete.  
Cooperation on foreign and security policy; conflict prevention and crisis management 
Azerbaijan pursued cooperation with the UN, the Organisation of th e Islamic Conference, 
GUAM, and the Organisation for De mocracy and Economic Developmen
t, participated in the 
NATO Partnership for Peace programme and coope rated with experts from United Nations 
Office on Drugs and Crime (UNODC), INTERPO L, the World Customs Organisation, CIS 
and CoE, in exchanging information on terrori sm issues. Azerbaijan is  cooperating with the 
United Nations Counter-Terrorism Committee (CTC) established under UN SC Resolution 
1373. 
Since June 2007, Azerbaijan has be en invited to align with CFSP declarations on a case by 
case basis. In 2009, Azerbaijan aligned with 56 out of 138 CFSP declarations to which it was 
invited to join. There was good political dial ogue with the Azerbaij ani government in 2009, 
including through two Political and Security Committee Troika meetings in February and 
December 2009, and an EU Foreign Ministers' Troika visit to Azerbaijan in July 2009. 
No developments took place towards acc ession to the Rome Statute of the International 
Criminal Court  (ICC). 
A draft Law on participation in peace operations was prepared a nd is expected to be adopted 
in the 2010 spring session of the Parliament. The dr aft foresees Azerbaijan 's participation in 
peace-keeping operations in line with the UN Charter.  
Strengthening regional cooperation  
 
EN 7   EN The Southern Caucasus Integrated Border Management (SCIBM), promoted by the EU 
among Armenia, Azerbaijan and Ge orgia, was to start in Janua ry 2009 but was delayed to 
address issues raised by Azerbaijan. The c onditions for implementation have now been 
accepted by all three countries and implementation started in March 2010 (See chapter 5 on 
cooperation on justice, freedom and security) . 
The South Caucasus Anti-Drugs Programme (S CAD V) came to an end in 2009. Discussions 
continue on how best to bring forward the results of the action and pursue regional efforts in 
the fights against illegal drugs. 
The new management (a Troika consisting of Armenian, Azerbaijani and Georgian executive 
directors) of the Regional Environmental Cent re for Caucasus (REC) took office in January 
2009. It consolidated the REC both financially  and in terms of internal organisation.  The REC 
carried out regional activities in 2009 notably in the fields of information and public 
participation, environmental policy and local environmental action plans, the protection and 
sustainable development of mount ain regions. It is an importa nt tool to promote regional 
cooperation and stability  for the future of the South Caucasus.   
In the area of higher educat ion, universities from Armeni a, Azerbaijan and Georgia 
cooperated together on a distan ce and e-learning project. This is the first time that such 
regional cooperation emerged under the Tempus programme. 
Contribute to a peaceful solutio n of the Nagorno-Karabakh conflict 
Negotiations within the Minsk Group on the peaceful  settlement considerably intensified in 
2009 and contributed to enhanced dialogue, with the Presidents of Armenia and Azerbaijan 
holding six bilateral meetings dur ing the year. In addition, the Foreign Minister s of the two 
countries met a number of times, including duri ng the OSCE Ministerial Council in December 
2009 in Athens. Courageous steps by both sides w ill be necessary to fi nd a resolution to the 
conflict. 
A joint statement by the OSCE Minsk Group at presidential level durin g the G8 Summit in 
L’Aquila in July 2009 urged "the presidents of  Armenia and Azerbaijan to resolve the few 
differences remaining between them and finali ze their agreement on these Basic Principles, 
which will outline a comprehensive settlement." However, overall tensions remain and the situation continues to be fragile . Incidents of exchange of fi re and casualties on the line of 
contact continued to be repor ted and are cause for concern. 
3. E
CONOMIC AND SOCIAL REFORM  
Macroeconomic framework and functioning market economy  
Following strong growth in 2008, of 11% of GDP,  on the back of rising oil prices, economic 
expansion moderated in 2009 due to the impact of the global financial and economic crisis. 
However Azerbaijan was much less affected th an other countries in the region. The global 
crisis has mainly affected exports, through waning energy demand, and investment due to 
heightened risk aversion towards emerging mark ets in general. On th e other hand, long-term 
energy export contracts and an expansionary fis cal stance have cushioned the negative impact 
of the crisis. In 2009 the overall GDP grew by 9.3 % and the industrial sector, which accounts 
for almost half of GDP, continued to grow strongly. Construction was the only sector that 
experienced a fall compared to 2008 while investment as a whole is likely to recover 
 
EN 8   EN gradually. The relatively small services sect or, approximately 30% of GDP, also expanded 
strongly mainly driven by the hotel, re staurant and communications sectors. 
Inflation plummeted to 2% (annu al average) in 2009, due to the base effect of very strong 
inflation in 2008 (21%), the tight er monetary policy, the decline in inte rnational commodity 
prices and the weaker private consumption growth. The slowdown in private consumption 
growth would have been sharper without the o ffsetting effect of increased government social 
expenditure. 
The Central Bank took significan t measures to loosen moneta ry policy and ea se liquidity 
conditions as restricted access to global capital markets and falling deposits obliged the banking sector to scale back lending.
 The Central Bank reduced the refinancing rate by 13 
percentage points to 2%, and reduced the re serve requirement on banks to 5% to support 
lending. The Manat remained stable against the Euro  and the US dollar even  as oil prices fell. 
After declining by nearly 20% at the beginning of 2009, foreign currency reserves stabilised 
during the later part  of the year.  
The Government’s 2009 budget target ed higher social spending and capital investment than in 
2008. Revenue was constrained due to the impact of  lower oil prices given that the State Oil 
Company of the Azerbaijan Republic (SOCAR) is  the main contributor to the budget. While 
expenditure was lower than in 2008, it was supported by transfer s to the state budget from the 
State Oil Fund of the Republic of Azerbaijan. Excluding these transfers, the budget deficit for 
2009 was estimated at 9% of GDP. 
Employment and social policy  
In October 2009, 6.1% were officially register ed as unemployed, of which 44% were women. 
Measures to contain unemployment  consisted essentially of tig htening conditions to employ 
foreign workers. In June 2009 Azerbaijan ad opted rules on determining labour migration 
quotas. The Azerbaijani Entrepreneurship Suppor t Fund increased regula rly over the reporting 
period the amount of its soft loans. The loans re portedly helped creati ng more than 3,400 jobs. 
As regards the social s ituation and reduction of poverty , the State programme on socio-
economic development  for the years 2009-2013 was adopted in April 2009. It aims inter alia  
at diversifying the economy and at improving the quality of public services and living 
standards of the population. According to the St ate Statistical Committee, the poverty level 
fell from 13.2% in 2008 to 11% in 2009.  
On social inclusion and protection , the State Programme on the development of the 
insurance and pension system in 2009-2015 was a dopted by a Presidential Decree issued in 
December 2009, aiming at improving the system  in accordance with EU standards. The 
Parliament approved amendments to the Law on pension in October 2009 including provisions on the raise of th e pension age, the number of children, the insurance pension 
period and the pension indexation.  According to official data from June 2009 the pensions of 
civil servants were three times higher than those in the private sector. A survey conducted 
throughout the country over the repo rting period to evaluate the targeted social assistance 
mechanism showed that it was oriented at th e poor and the poorest gr oups of the population: 
86% of the beneficiaries who r eceive 90% of targeted social assistance represent the poorest 
40% of the society. 
 
EN 9   EN In the case of agriculture, the implementing provisions for a law on organic farming were 
approved in January 2009. Extensive support wa s provided to the agricultural and agro-food 
sectors by means of projects and credit from the National Entrepreneurship Support Fund, the 
Agricultural Development and Credit Project,  the North East Project and by non-bank credit 
institutions. The Government also took meas ures to include fru it into the government-
supported insurance schemes. 
4. TRADE -RELATED ISSUES , MARKET AND REGULATORY REFORM  
As regards bilateral trade , in 2009, as a result of the globa l slow-down in economic activity 
due to the financial crisis, EU exports to Azerbaijan decl ined by 22.1% compared to the 
previous year, while exports of Azerbaijani products to the EU decreased by 31.2%. The EU 
nevertheless continued over the repo rting period to be Azerbaijan’s main trading partner. In 
terms of commodity structure, Azerbaijani exports to the EU still consist almost exclusively of mineral fuels – 98.8 % in 2009. 
From the beginning of 2009 until the end of  2011 Azerbaijan qualifies for the special 
incentive arrangement for sustainable development and good governance under the EU 
Generalised System of Preferences – GSP+. Benefitting from these enhanced preferences should contribute to diversifying of Azerbaija n’s export structure and improving its export 
performance. 
Limited progress can be reporte d on Azerbaijan’s acc ession negotiations to the World Trade 
Organisation (WTO).  The last Working Party m eeting and bilateral consultations with the EU 
were held in July 2009 and did not bring mu ch new development. A zerbaijan continued to 
request to be considered as a developing count ry, which would have direct implications for 
the application of a number of WTO provisions to Azerbaijan, particularly in the area of 
agriculture. Successful accomplis hment of Azerbaijan's accession to  the WTO is the first and 
foremost pre-condition for the EU to start considering the possibility to en ter into negotiations 
with Azerbaijan on a bilateral Deep  and Comprehensive Free Trade Area.
  
The revised Customs  code has yet to be adopted. A Pr esidential decree of February 2009 
introduced new provisions on customs valuation in order to harmonise national legislation 
with WTO rules. Implementing provisions were adopted in April 2009. The customs 
authorities continued the process of im plementation of the EU-compatible Single 
Administrative Document (SAD). They also made efforts to upgrade their relations and 
cooperation with the trading co mmunity. Based on the Single Wi ndow control procedure (see 
last report), since January 2009 the customs aut horities carried out preliminary, documentary 
and physical checks at the border on behalf of th e other services. Work also advanced in the 
area of computerisation: an IT–based pilot proj ect on the Single Window system was 
launched at road border crossing points and an interagency information exchange system was 
put in place between Customs and the Ministry of  Health, the State Veterinary Service and the 
State Phytosanitary Control System. Customs ethi cs as well as cumbersome control practices 
not based on proper risk analysis re main among the main causes of concern. 
Azerbaijan made some progress on free movement of goods and technical regulations. In 
June 2009, the State Committee for Standardis ation, Metrology and Patents adopted new 
standards of defining properties in the fields  of cement and food pr oduction. The same month, 
a Presidential decree establis hed a single State Service for Anti-monopoly Policy and 
Protection of Consumers’ Rights under the Ministry of  Economic Development. This unified 
 
EN 10   EN regulator has already prepared basic principles for an accreditation system. It established a 
Technical Council of Standardisat ion and a Technical Regulation with a view to developing a 
national standardisation system in line with region al and international standards. Just after the 
reporting period, in January 2010, Azerbaijan becam e an affiliate member of the European 
Committee for Standardisation (CEN). 
Azerbaijan continued, in the sanitary and phytosanitary  (SPS) area, preparation for 
accession to the WTO and the Codex Alimentari us, which included also some approximation 
with EU rules. It developed several food st andards on milk and canned meat and advanced 
work on amendments of the food safety and hy giene laws. Azerbaijan  continued to upgrade 
its laboratories under the 2008-20 10 “Programme for a security  system development of 
products of animal and vegetable origin”.  In 2009, the European Commission authorised 
Azerbaijan to export caviar to the EU as from  2010, thereby replacing a transitional bilateral 
regime. To meet ENP Action Plan objectives, faci litate trade and prepar e for a possible deep 
and comprehensive free trade area with the EU, Azerbaijan would have to make considerable 
further progress particularly in respect of  approximation of legislation, its effective 
implementation and enforcement and stre ngthening of admi nistrative capacity.  
In August 2009 the Ministries of Finance and of  Education approved an "Action Plan on the 
re-organisation of education on accounting and audit at high and secondary schools and 
application of a certification system verifying the professi onal level of education in 2010-
2012 in view of transition to the internati onal and national accounting standards", which 
includes among other things training for trainers from major education institutions. This is the 
last stage of the reform of the accounti ng system in Azerbaijan, launched in 2003. 
In order to minimise the impact of the financial crisis in the financial services  sector, the 
Central Bank tightened regulat ory requirements for banks a nd took measures to support 
liquidity. The planned adoption of a new capital framework law, based on Basel II principles 
for effective banking supervision, was delayed due  to the financial crisis. The Central Bank 
changed its system of domestic banks’ prud ential reporting. Progre ss was also made in 
information disclosure and mark et discipline. In October 20 09, a system of guarantees was 
created with the involvement of  the Central Bank to stimulate and foster internal financial 
markets at the Organised Interbank Credit Market.   
Other key areas 
The implementation of the Automated Tax Information System is continuing. A Code of 
Conduct for tax officials was adopted, but integrity  still remains one of the main causes of 
concern. Specific tax arrangements for Special  Economic Zones (SEZ) came into force in 
June 2009, stipulating notably that  SEZ residents shall be subj ect to simplified tax of 0.5% 
payable on gross sales and non-sa les revenues. Provisions concer ning the procedures for the 
registration of residents in SEZ and relate d certificates were adopted in December 2009. 
However, the SEZ legislation cont ains certain provisions that ar e subject to interpretation and 
could pose risks for investors. Therefore, it is  expected to be revised by Parliament in 2010. 
In June 2009, the Azerbaijani Parliament passed a package of 46 amendments to the Tax 
Code aimed at strengthening protection of ta xpayer rights, strengthening tax administration, 
improving tax control and reducing the ta x burden on taxpayers, including individual 
businesses with low turnover.  
Draft amendments to the competition  law were discussed in Parl iament with a third reading 
planned for spring 2010. In June 2009, a presid ential decree was issued on the improvement 
 
EN 11   EN of anti-monopoly policy and the protection of c onsumer rights. A single State Service for 
Anti-monopoly Policy and Protection of Consum ers’ Rights under the Ministry of Economic 
Development was created. This new service deals with prevention of monopolies in the 
economy. It also aims to upgrade state manageme nt in the field of consumer protection (see 
above under free movement of goods  and technical regulations). 
In the area of intellectual property rights, the law on trademarks and geographical 
indications was amended in Apri l 2009 to facilitate trademark registration. It also contained 
provisions on the infringement of trademark right s. The Parliament ratified amendments to the 
Law on patents in October 2009 to improve the enforcement infrastructure and align the 
enforcement legislation with Eu ropean Union standards. Draft amendments to the Criminal 
Code were also prepared during the reporti ng period. In May 2009 a bilateral agreement was 
signed with Georgia on cooperation in the field of protection of intellectual property. There is 
still no coordinating body to supervise enforcement activities, which remain weak and need to 
improve significantly.  
In the area of  public procurement, no progress can be reported on ensuring equal 
opportunities for foreign and domestic suppliers . Guidelines on the legitimacy of bids for 
products (goods and services) and the correct execution of these contracts were submitted to 
the Ministry of Justice. 
The regulation and a new structure for the State Statistical Committee were adopted in June 
2009, with a view to improving the standards and le gislation relating to st atistical activities. A 
twinning was launched in December 2009 to support upgrading of official statistics by 
introducing new compilation me thodologies, in line with Eu ropean Union standards. 
On enterprise policy , the State Programme on Socio- Economic Development for 2009-2013 
took measures to promote development of en trepreneurship, includ ing Small and Medium-
Sized Enterprises (SMEs), and sustainable business development. In October 2009, the 
President adopted the St atute and Rules of use of the National Fund for Entrepreneurial 
Support, which is managed by the Ministry of Economic Development. Public-private sector 
cooperation is still limited in Azerbaijan. A law on special economic zones  entered into force 
in June 2009 (see above under Tax).   
A gap analysis and draft PIFC ( public internal financial control ) Policy Paper were 
produced in 2008 with t echnical assistance fina nced by the World Bank. However, in 2009 
the Ministry of Finance deci ded that it had no need for foreign support to implement 
Azerbaijani public reforms in the area of public in ternal control despite th e fact that the need 
for improved inspection systems a nd capacities is deemed urgent. 
5. COOPERATION ON JUSTICE , FREEDOM AND SECURITY  
Azerbaijan continued participating in  the Southern Caucasus Integrated Border Management  
(SCIBM) regional programme, formally agreed between Armenia, Azerbaijan and Georgia in 
2007. The programme aimed at enhancing inter-agency cooperation, training and capacity of customs and border guard services in line wi th agreed regional standards and EU norms. 
Despite the regional character of this programme, Azerbaijan  chose to pursue cooperation 
only through its bi-lateral component with Geor gia, which delayed the start of implementation 
until March 2010. Nevertheless, in the framew ork of SCIBM, Azerbaijan’s customs and 
 
EN 12   EN border guard services participated in preparat ory training sessions in Austria, Croatia, Italy 
and Slovenia alongside representati ves from Armenia and Georgia. 
Further training was provided for border and pa trol police including cr oss-border seminars 
with border officials from bot h Georgia and Armenia in c ooperation with the OSCE.  
The State Migration  Service, which became fully operational in 2008, was granted the status 
of a law enforcement body in April 2009. A thir d regional branch was set up in November 
2009. The number of migrants deported has decr eased: a total of 598 foreigners were deported 
from the country in 2009 (970 in 2008). A wo rking committee on readmission under the State 
Migration Services, bringing t ogether a number of Government  institutions, was set up and 
drafted a readmission strategy. This is currently being reviewed by the Cabinet of Ministers.  
On the issue of the fight against organised crime and terrorism , a Presidential decree on the 
application of the law on the approval of the International Conve ntion against Nuclear 
Terrorism was issued in January giving effect to the ratification of the sa me convention by the 
Azerbaijani Parliament in December 2008. In addition, a cooperation agreement with Romania 
in the area of cross-border organised crime and international terrorism was signed. 
The national legal framework against trafficking in human beings  was improved and 
relevant mechanisms, such as a National Action Plan to Fight against Trafficking in Human 
Beings (2009-2013), the National Referral Mechanism for victims of Trafficking in Human 
Beings and Rules (Indicators) for the identification of victims of trafficking were adopted, in February, August and September 2009, respectively. In addition, a shelter for children victims 
of trafficking was opened in October 2009 and an Inter-agency Commission on Combating 
Trafficking in Human Beings was formed. A zerbaijan signed the 2005 Council of Europe 
Convention on Action against Human Trafficki ng in February 2010. Ratification is still 
pending. 
Progress was made on the fight against money laundering  with the adoption of a new Anti-
Money Laundering law in February 2009. A financial intelligence unit has become operational under the Central Bank. In Sept ember 2009 the Council of Europe Moneyval 
committee issued a public statement highlighting c ontinuing deficiencies in  Azerbaijan in this 
field, but it then withdrew the statement in Decem ber in the light of the implementation of the 
new law and of the work of the financial in telligence unit. Azerbaija n has now moved up in 
the Moneyval rating. However, the Council of  Europe Convention on Laundering, Search, 
Seizure and Confiscation of the Proceeds from  Crime and on the Financing of Terrorism 
remains to be signed and ratified. With regard to cooperation in criminal and civil law 
matters , no further developments took place on Azerbaijan’s accession to the 1980 Hague 
Convention on the Civil Aspects of International Child Abduc tion. Moreover, Azerbaijan has 
not signed or ratified the Additional Protocol  to the Council of Europe Convention on the 
Transfer of Sentenced Persons. As in 2008, no pr ogress was registered with regard to the 
development of a network for enhanced coopera tion with EU judicial and law enforcement 
authorities. 
As regards data protection , Azerbaijan did not sign the 198 1 Council of Europe Convention 
on the Protection of Individuals w ith regard to Automatic Proce ssing of Personal Data nor its 
Additional Protocol on supervisory aut horities and trans-border data flows. 
 
EN 13   EN 6. TRANSPORT , ENERGY , ENVIRONMENT , THE INFORMATION SOCIETY , RESEARCH AND 
DEVELOPMENT  
In the field of transport , the World Bank and Azerbaijan  signed in December 2009 a Loan 
and Project Agreements for a EUR 328 million Railway Trade and Transport Facilitation 
Project for Azerbaijan. The main objective is to improve railway services, as well as the 
competitiveness, financial sustainability, operating and cost efficiency and capacity of the Azerbaijan Railways in partic ular along the transport corridor  towards Georgia (east-west 
corridor).  
In the aviation sector, in July 2009 Azerbaijan  signed the horizontal air services agreement 
which brings all existing bilateral air services agreements between EU Member States and Azerbaijan into line with EU law. At the same time, a working arrangement on safety cooperation was signed between the European Av iation Safety Agency and the Azerbaijani 
authorities to strengthen their regulatory c ooperation with the Agency and progress towards 
convergence with European safety standards. In  order to fulfil the Ac tion Plan commitments, 
the Civil Aviation Authority needs further reinforcement.  
In the maritime sector, Azerbaijan started constructing an International Sea Trade Port 
Complex at Baku-Alyat in orde r to increase the capacity of the Baku port and to meet 
increasing freight and pa ssenger transport demands. 
Azerbaijan and the EU pursued energy cooperation, notably on the basis of the 2006 
Memorandum of Understanding on a strategic partnership in the field of energy. Azerbaijan, a 
key hydrocarbons producer and tran sit country for Caspian resour ces, repeatedly confirmed at 
the highest level its commitment to play a signifi cant role in the EU’s energy security. In this 
context, Azerbaijan continued to support develo pment of the Southern gas corridor including 
Nabucco and the trans-Caspian transportation  project. In May 20 09 President Aliyev 
participated in the Prague Summit on the S outhern Corridor. Furthermore, Azerbaijan 
participated in the ongoing EU study for a Ca spian Development Corporation, the central 
purpose of which is to aggregate gas demand in support of the said Corr idor’s development.  
Azerbaijan continued to increase hydrocarbons production including on the basis of its ‘Gas 
programme’. It sustained hydrocarbons expor ts notably through th e Baku-Tbilisi-Ceyhan 
(Turkey) oil pipeline and the Baku-Tbilisi- Erzurum (Turkey) gas pipeline. In 2009 the 
country reinforced cooperation with, inter alia, Kazakhstan on oil exports through Baku and 
the Black Sea. In July 2009, energy companies from Azerbaijan, Georgia, Lithuania, Poland 
and Ukraine completed a study on the Euro-Asi an Oil Transportation Corridor Project. In 
November 2009, Azerbaijan and Bulgaria agreed  to explore supply options for compressed 
natural gas across the Black Sea to the EU.  
Azerbaijan furthermore developed plans for liq uefied natural gas (LNG) exports to Romania 
from a Georgian Black Sea terminal. In 2009,  SOCAR (state oil company) and Gazprom 
agreed to 0.5 billion cubic meters up to larger quantities of gas to be exported to Russia in 
2010.
 Azerbaijan strengthened its cooperation on ga s with Iran including by the signature of 
an export contract. Azerbaijan strengthened th e security of oil and gas export pipelines inter 
alia by adopting, in April 2009, an updated opera tional plan for emergency situations. 
Azerbaijan continued active participation in th e Extractive Industry Transparency Initiative, 
which aims at transparency of oil and gas revenues.  
 
EN 14   EN Azerbaijan further implemented its energy sect or policy, framed in the state programme on 
fuel-energy complex development for 2005-2015. For example, it advanced work towards 
new energy sector legislation, which aims at a measure of approximation with EU rules. In 
July 2009, the Tariff Council increased gas tariffs . Also in July, Azerigas, the national gas 
company, was integrated into SOCAR. In 2009, Azerbaijan further reha bilitated electricity 
and gas infrastructure, put new electricity generators into operation and progressed on the 
reduction of network losses. Azerbaijan commis sioned a second electricity link with Iran and 
continued to work towards an Azerbaijan- Georgia-Turkey electricity interconnection. 
Azerbaijan has also confirmed at high political level its commit ment and policy priority to 
engage the country more forcefully into th e development of Renewable Energy Sources 
(notably wind, solar and hydro) , and of Energy efficiency. 
Azerbaijan continued to train nuclear experts with a view to possibly building a nuclear 
research reactor. It strengthened the State Agency for Atomic and Radiological Activity 
Control. The country continue d implementing the state progra mme on the use of alternative 
and renewable energy 2004-2013. Azerbaijan estab lished a state agency of alternative and 
renewable energy sources. The President issued a decree on additional measures regarding the 
use of alternative and renewable energy sources. The measur es aim in particular at studying 
opportunities for the use of wind, solar, hydro, biomass and ge othermal energy. Azerbaijan 
commissioned a 50 MW wind farm and continued th e development of projec ts particularly in 
the area of wind power and small hydro. 
In the field of climate change, Azerbaijan continued preparing its Second National 
Communication to the UN Framew ork Convention on Climate Change, which will include a 
greenhouse gas inventory, mitigation and adaptati on measures and vulnerability assessments.   
Azerbaijan took steps to prepare further  Clean Development Mech anism (CDM) projects, 
even if so far no CDM project has been regi stered at UN level. Az erbaijan has not yet 
associated itself with the Copenhagen Accord an d is therefore encouraged to do so as soon as 
possible and to provide information on the targ ets or actions that it will implement. The 
European Commission continued to support Azerbaijan to impl ement the Kyoto Protocol.  
Azerbaijan continued to  implement its 2006-2010 environment state programme and started 
to prepare its second phase. The legislativ e framework continues to require further 
development, in particular as  regards implementing legisla tion. A decree was adopted on 
measures to improve drinking water supply. Le gislation on environmental impact assessment 
and amendments of legislation related to ha zardous waste are under pr eparation. The action 
plan on approximation of legislation with that of the European Union, adopted in autumn 
2009, foresees amendments to the law on access to information related to environment as well 
as revisions of existing legislation on pollu tion prevention and control. Amendments to 
existing legislation on waste management, in par ticular with regard to hazardous waste, are 
under preparation as well as proposals design ed to strengthen management of chemical 
substances.  
Steps were taken to improve water and wast e management, includi ng continued work to 
develop a waste strategy for Greater Baku.  Continued attention is required to implement 
existing strategies and plans and to furt her enhance monitoring and enforcement.  
The Ministry of Environment and Natural Res ources set up a scientific centre for hydro-
meteorological and ecological research in the North-Eastern shoulder of the Great Caucasus 
 
EN 15   EN Mountains. The centre's objective will be to stud y the ecosystems of high mountain territories, 
as well as the impact of climate change on environment and biological diversity of mountain 
territories. The statute of the State Comm ission on Water Issues was developed and 
appointment is underway.  Further strengthening of administrativ e capacity at all levels of the 
country remains a major challenge. Coordinati on between authorities continues to require 
attention. Some actions were taken to promote the integration of environmental considerations 
into other policy sectors such  as energy and transport.  
Azerbaijan has not published comprehensive state-of-the-environmen t reports since 2002. It 
nevertheless continued to carry out some other activities to provide information to the public. 
Concerning access to information and public par ticipation, strengthening of the three Aarhus 
Centres continued, and some preparatory action was taken to open an additional centre. ( For 
the Regional Environmental Centre for the C aucasus, please see th e section on regional  
cooperation) . 
Some steps were taken to strengthen cap acity for conducting strategic environmental 
assessments.  Procedures and consultation with the publ ic in the context of environmental 
assessments continue to re quire particular attention .  
Some steps were taken towards accession to the Protocol on Strategic Environmental 
Assessment to the UNECE Convention on Envi ronmental Impact Assessment in a Trans-
boundary Context. However, there were no signi ficant developments as regards accession to 
the Protocols to the UNECE Convention on Long-Range Transboundary Air Pollution.  
Furthermore, the implementation of several al ready ratified agreements  requires particular 
attention. Azerbaijan particip ated in regional cooperation u nder the Framework Convention 
for the Protection of the Marine Environment of the Caspian Sea, the Caspian Environment Programme as well as the EU Water Initiati ve, where it presented a request for a national 
policy dialogue. 2010 has been made  the national Year of Ecology. 
Cooperation and exchanges of information took place between the European Commission and 
Azerbaijan, including on water, forestry, wast e management, environmental data, nature 
protection and air quality.  
In the field of civil protection , Azerbaijan participated in th e December 2009 in the launch of 
the Eastern Partnership flagship  initiative on prevention on, pr eparedness of and response to 
man-made-made and natural hazards.  
As regards the Information Society , the Ministry of Inform ation and Communications 
granted in 2009 the first Third Generation mob ile communications (3G)  licence to a mobile 
operator, which started to provide 3G servic es in Baku and seve ral other cities. The 
Government announced plans to privatise some of its holdings in the telecommunications 
sector. 
Azerbaijan has yet to sign the Council of Eu rope Convention on Transfrontier Television.  
Investment and capacity in research  continue to remain modest . Azerbaijan continued to 
increase the numbers of applications subm itted to the 7th Framework Programme (FP7), 
although the overall number of applic ations remains relatively low.  Applications involving 12 
Azerbaijani research groups were successf ul, as of November  2009, receiving EUR 414,000 
in EU support. 
 
EN 16   EN Azerbaijan continued to participate actively in the International S&T Cooperation Network 
for Eastern European and Central Asian countr ies (FP7 IncoNet EECA project), which aims 
to support a bi-regional EU-EECA policy dialogue on science and technology and to increase 
EECA participation in FP7. 
7. PEOPLE -TO-PEOPLE CONTACTS , EDUCATION AND HEALTH  
In June 2009, the new education law was adopted  by the Parliament, re-organising the levels 
and types of education including preschool, ge neral schooling and vocat ional training. Higher 
education was organised as a three-degree st ructure (bachelors, masters and a two-level 
doctorate) approximating relevant provisions  of the Bologna Process. A new State 
Programme on the reform of higher educati on for the period 2009-13 was approved by the 
Cabinet in May 2009 including the listing of speci alisation programmes for bachelor degree 
with its monitoring overseen by the Ministry of Education. 
In September 2009, this same new educatio n law was signed by Presidential decree, 
establishing a regulatory basis for all education  and training activities in Azerbaijan. It is 
presented as a framework law providing the basi s for more specific legi slation and regulatory 
acts and includes provisions on the division of competences within the national education 
system as well as definition of main education principles. Education is a priority in the 
country. 
Although a signatory of the Bologna  Declaration since 2005, Azerba ijan’s ability to match its 
commitment to align higher education to the Bologna principles remains weak. Much work 
remains to be done on the intr oduction of a Diploma Supplement.  The Ministry of Education 
did not make full use of the HERE (higher education reform expert team) funded under 
Tempus during 2009. Thanks to EU and other donor-funded projects, some faculties in some 
universities, mainly t hose in Baku, began implementing the European Credit Transfer System 
(ECTS) as well as some quality assurance measures in certain study programmes. Higher education reform in Azerbaijan continued to  benefit from cooperation under the Tempus 
programme with three projects selected under the second Call for Proposals of Tempus IV. A 
Tempus Information Day was held in December 2009.  
In the area of vocational training , the President signed a Decree on Additional Measures on 
strengthening of the logisti cal base of vocational training schools in September 2009, 
providing additional funding to  this end. The Ministry  accelerated work on the 
implementation of the 2007-2012 State Programm e for development of vocational training 
education in the area of constr uction and reconstruction of vo cational training schools. In 
support of EU assistance, the European Trai ning Foundation (ETF) reviewed reform-oriented 
concept notes developed under th e earlier TACIS support programm e. Significant delays were 
encountered in the development of the nationa l qualifications framew ork for Azerbaijan. In 
terms of sector focus for training, tourism rema ins a priority alongside agriculture and rural 
development. The Labour Market Review undert aken by ETF for the Black Sea region, in the 
context of the Eastern Partnership, re quires further work in Azerbaijan. 
Three Azerbaijani students and one scholar  received scholarships for Erasmus Mundus 
Masters Courses under Erasmus Mundus Action 1 for the academic year 2009-10. Academic and student mobility was further facilitated under Erasmus Mundus Action 2 during the same 
period through the award of 33 mo bility grants. Azerbaijani uni versities are encouraged to 
participate in the Jean Monnet programme. 
 
EN 17   EN In the area of culture , Azerbaijan ratified the 2005 UNE SCO Convention on  the Protection 
and Promotion of the Diversity of Cultural E xpressions in November. In parallel, it also 
ratified the Convention for the Protection of the Architectural Heritage of Europe. The Ministry 
of Culture and Tourism continued work on a draft Culture Concept of the Republic of 
Azerbaijan as well as a draft law on the creative worker and cr eative unions in the context of 
inter-departmental consultations and public debates. While formal  measures have been taken 
to review activities in the cultural field particul arly in the context of the Eastern Partnership, 
there is an absence of clarity regarding the cultural policy m odel that is being pursued. To 
advance its regional cooperation in the framew ork of the Eastern Partnership and the Kyiv 
Initiative, Azerbaijan is encouraged to ratify  the 2000 European Landscape Convention and to 
sign and ratify the 2005 Council of Europe Fram ework Convention on the Value of Cultural 
Heritage for Society.  
Azerbaijani young people and youth organisations continued to benefit from the opportunities 
offered by the Youth in Action Programme, through exchanges, voluntary service and youth 
cooperation activities in non-formal educatio n. A study visit on youth work reality in 
Azerbaijan took place in October, co-organised by the Ministry of Y outh and Sport and the 
SALTO Eastern Europe and Caucasus Resource  Centre. 17 participan ts visited youth policy 
makers and youth organisations  in Baku and in Gandja. 
Azerbaijan continued health reform with the aim of improving the sector’s organisation, 
enhancing quality and increasing efficiency. Emph asis was also put on rolling out health care 
to vulnerable groups and to the rural areas. The country conti nued the implementation of the 
“Concept of reforming the healthcare financi ng system and implementation of compulsory 
medical insurance” and the related acti on plan for the period 2008-2012. Its full 
implementation should contribute to reducing ou t-of-pocket payments by citizens. Compared 
with 2008, Azerbaijan considerab ly increased health sector expenditure in 2009. Azerbaijan 
took several measures to combat influen za A (H1N1) including by the adaptation of a 
preparedness plan and a vaccination campaign. It  continued to address the challenges posed 
by communicable diseases such as HIV/AIDS  and tuberculosis. In 2009, the European 
Commission invited Azerbaijan to participate in  the newly established EU enlarged health 
information committee. 
8. FINANCIAL COOPERATION – 2009  KEY FACTS AND FIGURES  
The European Neighbourhood and Partnership In strument (ENPI) envelope for Azerbaijan 
under the National Indicative Programme 2007-2010 was initially envisaged at the level of 
EUR 92 million. This indicative sum was however slightly decreased and the final amount 
totalled EUR 88 million.  
The programme is geared towards supporting the achievement of key policy objectives as 
outlined in the EU-Azerbaijan ENP Action Plan a nd pursues three priorities: 1) Support for 
democratic development and good governance; 2)  Support for socio-economic reform (with 
emphasis on regulatory approximation with the EU acquis ), fight against poverty and 
administrative capacity building; 3) Support fo r legislative and economic reforms in the 
transport, energy and environmen t sectors. Each Annual Action Plan (AAP) is divided into 
two parts. The first and financially more substa ntial part consists of  a Sector Budget Support 
(SBS) programme whose focus varies from year  to year. To date, SBS Programmes in the 
fields of Energy, Justice, and Agriculture  were developed for the AAPs 2007, 2008, and 2009 
 
EN 18   EN respectively. The SBS Programmes for AAPs 2007 and 2008 were signed by the Government 
of Azerbaijan in 2008 and 2009 re spectively. The request for the payment of the first tranche 
of the AAP 2007 SBS on Energy was received in  January 2009. The request for the payment 
of the first tranche of the AAP 2008 is expected  during second quarter 2010. The signature of 
the AAP 2009 is also expected in the second quarter 2010, after which implementation will 
commence.  
The 2009 Annual Action Programme amounts to EUR 20 million and focuses on two 
priorities: socio-economic reform (EUR 14 milli on) programmed in a fo rm of Sector Budget 
Support, particularly for agriculture rural development; and good governance and 
administration reform (EUR 6 million), for whic h twinning projects will be identified during 
2010 . 
An indicative financial envelope of EUR 122. 5 million will be available to support co-
operation activities in Azerba ijan in period 2011-2013, based on a European Commission 
decision of March 2010. 
In addition to the bilateral allocation, Azerba ijan also benefited from cooperation activities 
financed under the ENPI multi-country and re gional programmes, as well as horizontal 
thematic programmes, such as  the European Instrument fo r Democracy and Human Rights 
(EIDHR) and the Non-State Actors and Local Authorities in Development programme 
(NSA/LA). At the end of the year, the EU Delegation monito red 21 EIDHR – NSA contracts. 
Under the Neighbourhood Investment Facility (NIF), in 2009, the Board approved 
contributions to three projects/programmes from  which Azerbaijan could benefit. The total 
NIF contribution to these projec ts was EUR 24 million. These NIF grants are expected to 
leverage around EUR 600 million in loans from  European Finance Institutions. EBRD 
manages and implement two and KfW one of th e three above-mentioned projects/programmes 
which aim at addressing majo r challenges in the energy, financial and SME sector in the 
region. 
In November 2009, the process of ‘deconcentrati on’ (transfer of res ponsibilities for signing 
financial contracts from Eur opean Commission headquarters to the EU Delegation) was 
completed.