Communication from the Commission to the Council - European Neighbourhood Policy - Recommendations for Armenia, Azerbaijan, Georgia and for Egypt and Lebanon {SEC(2005) 285} {SEC(2005) 286} {SEC(2005) 287} {SEC(2005) 288} {SEC(2005) 289}
Date: 2005-03-02
Institutions: European Commission
Subjects: Armenia, Azerbaijan, Egypt, Georgia, Lebanon, common foreign and security policy, foreign policy

COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 2.3.2005 
COM(2005) 72 final 

COMMUNICATION FROM THE COMMISSION 
TO THE COUNCIL 

European Neighbourhood Policy 

Recommendations for Armenia, Azerbaijan, Georgia and for Egypt and Lebanon 

{SEC(2005) 285} 
{SEC(2005) 286} 
{SEC(2005) 287} 
{SEC(2005) 288} 
{SEC(2005) 289} 

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1. 

INTRODUCTION AND SUMMARY 

The European Commission’s European Neighbourhood Policy (ENP) Strategy Paper1 of May 
2004, as endorsed by the Council in June 20042, set out the orientations for the ENP for the 
coming years, defining  the objectives and principles, geographical scope and methods to be 
used  to  implement  the  ENP.  This  was  accompanied  by  Country  Reports  on  Israel,  Jordan, 
Moldova,  Morocco,  the  Palestinian  Authority,  Tunisia  and  Ukraine  and  was  followed,  in 
December  2004,  by  the  Commission’s  Communication3  on  proposals  for  Action  Plans  with 
those  countries.  These  Action  Plans  were  adopted  by  the  Council  and  are  in  the  process  of 
being endorsed by partner countries. 

In June 2004, the Council decided, on the basis of the Strategy Paper by the Commission, to 
include  Armenia,  Azerbaijan  and  Georgia  in  the  ENP,  opening  up  the  prospect  of  a 
significantly  enhanced  partnership  and  thus  marking  an  important  step  forward  in  the  EU’s 
engagement  with  the  Southern  Caucasus  region.  The  Commission  services  have  prepared 
reports on these countries, which provide a comprehensive overview. 

With the entry into force of the Association Agreement with Egypt and soon with Lebanon4, 
the Commission services have prepared reports on these two countries. These Reports provide 
a comprehensive overview of the political and economic situation in those countries. 

The present Communication presents the key elements of the five Country Reports drawn up 
by Commission services, with a contribution from the High Representative on matters related 
to political co-operation and the CFSP, and makes recommendations on Action Plans. 

2. 

COUNTRY ASSESSMENTS 

The Southern Caucasus5  

Armenia 

During the first years following Armenia’s independence, EU-Armenia relations focused on 
dealing  with  the  difficult  humanitarian  situation  resulting  from  the  break-up  of  the  Soviet 
Union and the conflict with Azerbaijan over Nagorno-Karabakh. Some steps were taken to lay 
the foundations for the transition to democracy and a market economy. The entry into force of 
the Partnership and Cooperation Agreement (PCA) in 1999 marked an important stage in EU-
Armenia relations. 

Armenia has achieved a good macro-economic performance in recent years with impressive 
economic growth rates. There are indications that this is starting to have some impact on the 
high levels of poverty in Armenia. Its accession to the WTO in 2003 indicates that it has made 
progress  towards  key  market-oriented  reforms.  There  has  also  been  progress  in  aligning 

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5 

COM(2004) 373, 12.5.2004. 
Council  Conclusions,  GAERC,  14.7.2004;  Presidency  Conclusions,  European  Council  17-18  June 
2004. 
COM(2004) 795, 9.12.2004. 
The Interim Agreement with Lebanon entered into force in March 2003. 
Commission staff working papers SEC(2005) 285, SEC(2005) 286 and SEC(2005) 288. 

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Armenian legislation with that of the EU. The adoption of an anti-corruption strategy and the 
creation of an anti-corruption council are important steps. 

However,  major  challenges  remain  for  Armenia,  particularly  in  the  field  of  democracy  and 
human rights and in implementing its obligations as a member of the Council of Europe and 
OSCE. Considerable improvement is needed in the electoral system notably to implement the 
recommendations  of  ODIHR  following  the  2003  presidential  and  parliamentary  elections. 
Reform in the rule of law and law enforcement sectors is necessary to strengthen the respect 
for  human  rights.  Considerable  change  is  needed  to  develop  a  civil  society  including 
guarantees  on  freedom  of  the  media.  In  the  economic  area,  respect  for  the  rule  of  law  is 
essential to improve the business and investment climate. Improvement in the tax and customs 
systems will be important if there is to be a real impact on corruption. Implementation of the 
Poverty  Reduction  Strategy  Programme  will  be  central  to  the  efforts  to  develop  sustainable 
economic  growth  and  to  reduce  poverty  and  income  disparities.  Further  restructuring  of  the 
energy sector will also be necessary including steps towards decommissioning the Medzamor 
Nuclear Power Plant. Pervading all aspects of  political and economic life in Armenia is the 
conflict with Azerbaijan over Nagorno-Karabakh. Only if a peaceful, fair and lasting solution 
to this conflict is found will Armenia fully be able to develop its potential. 

The  Armenian  government  has  declared  its  determination  to  address  these  challenges,  to 
develop  relations  with  the  EU  and  to  integrate  further  in  European  structures.  The 
Commission  is  therefore  of  the  view  that,  building  on  the  commitments  of  the  Armenian 
government, an ENP Action Plan could be used to strengthen relations between the EU and 
Armenia and to promote the implementation of the necessary reforms.  

Key objectives for an Action Plan should include: strengthening the rule of law, of democratic 
structures  and  pluralism  (e.g.  the  reform  of  electoral  legislation  in  line  with  CoE/OSCE 
recommendations  and  the  holding  of  democratic  elections;  constitutional  reform  taking  into 
account  CoE  recommendations;  reform  of  local  self-government);  strengthening  respect  for 
human  rights  and  fundamental  freedoms,  especially  regarding  freedom  of  expression  and 
freedom  of  assembly;  improvements  in  the  business  climate  as  well  as  public  sector 
modernisation;  effective  combating  of  corruption  and  fraud;  reform  of  tax  and  customs 
administrations  and  legislation  in  line  with  international  and  EU  standards;  progress  in 
poverty 
the 
decommissioning of the Medzamor Nuclear Power Plant; progress towards conflict resolution 
and enhanced regional cooperation. Prudent macroeconomic policies need to be maintained to 
support effective implementation of an Action Plan. 

environmental  protection; 

sustainable  development 

reduction; 

and 

Taking the current political, economic and institutional context, as described in the Country 
Report,  as  a  starting  point,  an  Action  Plan  for  Armenia  should  provide  for  strengthened 
political dialogue; further implementation of the PCA; support for market economy reforms 
leading  to  gradual  economic  integration  into  the  EU’s  Internal  Market;  further  support  for 
economic  rehabilitation  of  conflict  zones  in  the  context  of  conflict  settlement;  increased 
financial support including an extension of the EIB mandate to Armenia as of 2007; enhanced 
support for regional cooperation; enhanced cooperation in the field of justice and home affairs 
possibly  including  establishment  of  a  dialogue  on  visa  cooperation/readmission  agreement; 
intensification  of  cooperation  in  the  energy,  electronic  communications  and  transport, 
environment and public health sectors as well as enhanced cooperation in the field of science 
and  technology;  intensification  of  people-to-people  contacts  in  particular  in  the  area  of 
education, training and youth and also in the context of the Nagorno-Karabakh conflict; and 

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consideration  to  be  given,  if  progress  is  being  made  with  the  implementation  of  an  Action 
Plan, to the possibility of a new enhanced agreement to replace the PCA upon its expiry. 

Azerbaijan 

In the initial years following Azerbaijan’s independence, EU-Azerbaijan relations focused on 
dealing  with  the  difficult  humanitarian  situation  resulting  from  the  break-up  of  the  Soviet 
Union,  the  Nagorno-Karabakh  conflict  with  Armenia  and  the  unstable  domestic  situation. 
Some  steps  were  also  taken  to  lay  the  foundations  for  the  transition  to  democracy  and  a 
market economy. The entry into force of the Partnership and Cooperation Agreement (PCA) 
in  1999  marked  an  important  stage  in  EU-Azerbaijan  relations,  providing  in  particular  for 
regular  political  dialogue.  The  relations  between  EU  and  Azerbaijan  have  been  steadily 
developing  over  recent  years.  Today’s  dialogue  is  much  more  focused  and  cooperation  has 
been strengthened notably in the energy and transport sectors. 

The  overriding  challenge  still  facing  Azerbaijan  is  the  need  to  strengthen  the  rule  of  law, 
democratic checks and balances (including free and fair elections), the fight against corruption 
and fraud and the protection of human rights, in line with its obligations as a member of the 
Council of Europe and OSCE. In the economic field, further improvement of the investment 
climate  and  diversification  of  economic  activity  will  be  a  key  factor  for  sustained  growth. 
Effective  implementation  of  the  State  Programme  for  Poverty  Reduction  and  Economic 
Development  will  provide  the  framework  for  tackling  some  of  the  structural  economic 
challenges  facing  Azerbaijan.  In  addition  to  these  political  and  economic  challenges,  the 
resolution  of  the  Nagorno-Karabakh  conflict  would  remove  a  very  serious  obstacle  to  the 
development of Azerbaijan and the region. 

The  Azerbaijani  government  has  declared  its  determination  to  address  these  challenges,  to 
develop  its  relations  with  the  EU  and  to  integrate  further  into  European  structures.  The 
Commission  is  therefore  of  the  view  that,  building  on  the  commitments  of  the  Azerbaijani 
government,  an  ENP  Action  Plan  could  be  used  to  further  strengthen  relations  between  the 
EU and Azerbaijan and to promote the implementation of the necessary reforms.  

Key objectives for an Action Plan should include: strengthening the rule of law, democratic 
structures  and  pluralism  (improved  institutional  division  of  powers,  reform  of  local  self 
government)  and  strengthening  of  electoral  legislation  and  processes  so  as  to  enhance 
democratic  election  standards;  implementation  of  effective  reform  in  field  of  rule  of  law 
(judiciary,  law  enforcement  agencies);  enhanced  protection  of  human  rights  and  of  freedom 
and  independence  of  the  media;  increased  efforts  towards  a  balanced  development  of  the 
overall  economic  system;  improvements  in  the  business  climate  as  well  as  public  sector 
modernisation;  reform  of  tax  and  customs  administrations  and  legislation  in  line  with 
international  and  EU  standards;  effective  combating  of  corruption  and  fraud;  increased 
transparency in the management of oil revenues and in the privatisation process; progress in 
poverty  reduction;  sustainable  development  and  environmental  protection;  WTO  accession; 
progress  in  conflict  resolution  and  enhanced  regional  cooperation.  Prudent  macroeconomic 
policies need to be maintained to support effective implementation of an Action Plan. 

Taking the current political, economic and institutional context, as described in the Country 
Report,  as  a  starting  point,  an  Action  Plan  for  Azerbaijan  should  provide  for  strengthened 
political dialogue; further implementation of the PCA; support for market economy reforms 
leading  to  gradual  economic  integration  into  the  EU’s  Internal  Market;  further  support  for 
economic  rehabilitation  of  conflict  zones  in  the  context  of  conflict  settlement;  increased 

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financial  support  including  an  extension  of  the  EIB  mandate  to  Azerbaijan  as  of  2007; 
enhanced  financial  support  for  regional  cooperation;  enhanced  cooperation  in  the  field  of 
justice  and  home  affairs  possibly 
including  establishment  of  a  dialogue  on  visa 
cooperation/readmission  agreement;  the  intensification  of  cooperation  in  the  energy, 
electronic  communications  and  transport,  environment  and  public  health  sectors  and  of 
people-to-people  contacts  in  particular  in  the  area  of  education,  training  and  youth;  and 
consideration  to  be  given,  if  progress  is  being  made  with  the  implementation  of  an  Action 
Plan, to the possibility of a new enhanced agreement to replace the PCA upon its expiry. 

The Commission intends to open a Delegation in Azerbaijan in the course of 2005. 

Georgia 

Following Georgia’s independence in 1991, EU-Georgia relations focused on dealing with the 
difficult  humanitarian  situation  in  Georgia  resulting  from  the  break-up  of  the  Soviet  Union 
and  Georgia’s  internal  conflicts.  Some  steps  were  also  taken  to  lay  the  foundations  for  the 
transition  to  democracy  and  market  economy.  The  entry  into  force  of  the  Partnership  and 
Cooperation Agreement (PCA) in 1999 marked an important stage in EU-Georgia relations, 
providing in particular for regular political dialogue. Insufficient progress towards democracy 
and  market  economy  was  noted  by  the  Commission  in  its  2003  revised  Country  Strategy 
Paper: “Georgia’s political situation is dominated by widespread poverty, serious problems of 
governance and weak rule of law, including high levels of corruption, strained relations with 
Russia,  and  internal  conflicts,  involving  in  particular  the  breakaway  republics  of  Abkhazia 
and South Ossetia, as well as a high level of external debt.” 

The  “Rose  Revolution”  in  November  2003  was  therefore  welcomed  by  the  EU  and  the 
broader  international  community.  The  subsequent  holding  of  relatively  free  and  fair 
presidential and parliamentary elections and the launching of an extensive reform programme 
are  positive  steps.  Achievements  include:  1)  tackling  certain  forms  of  corruption;  2) 
improvement in tax collection; 3) salaries and pensions paid on time, 4) curbing of smuggling; 
5)  good  macro-economic  performance;  6)  reintegration  of  Adjara  into  the  economic,  social 
and  administrative  system  of  Georgia;  7)  renewed  donor  confidence  in  Georgia  (successful 
donor conference in Brussels in June 2004).  

The  overriding  challenge  still  facing  Georgia  is  the  need  to  strengthen  the  rule  of  law 
including  public  service  reform  and  reform  of  the  judiciary.  Strengthening  the  democratic 
checks and balances within Georgia, in line with the membership obligations of the Council 
of  Europe  and  OSCE,  is  also  essential  for  the  respect  of  the  rule  of  law.  Developments  in 
these areas should help cement Georgia’s fight against corruption in a law-based framework. 
In the economic field, further improvement of the investment climate will be a key factor for 
sustained  economic  growth.  Effective  implementation  of  the  Economic  Development  and 
Poverty  Reduction  Programme  will  be  a  key  means  of  tackling  the  structural  economic 
challenges facing Georgia. In terms of EU-Georgia relations, much remains to be done in the 
field  of  PCA  implementation.  Improving  its  relations  with  Russia  and  furthering  its  efforts 
aimed  at  the  peaceful  resolution  of  its  internal  conflicts  will  also  be  important  factors  for 
Georgia to build the foundations of its long-term security and prosperity. 

The Georgian government is committed to address these challenges, to develop relations with 
the EU and to integrate further into European structures. The Commission is therefore of the 
view  that,  building  on  the  commitments  of  the  Georgian  government,  an  ENP  Action  Plan 

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could be used to further strengthen relations between the EU and Georgia and to promote the 
implementation of the necessary reforms.  

Key  objectives  for  an  Action  Plan  should  include  strengthening  respect  for  the  rule  of  law 
(reform  of  judiciary,  law  enforcement  agencies,  penitentiary)  and  enhanced  human  rights 
protection;  the  strengthening  of  democratic  structures  and  pluralism  (reform  of  parliament, 
strengthening  independence  of  media,  reform  of  local  self  government,  electoral  reform); 
improvements  in  the  business  climate  as  well  as  public  sector  modernisation;  reform  of  tax 
and customs administrations and legislation in line with international and  EU  standards and 
effective  combating  of  corruption  and  fraud;  a  transparent  privatisation  process;  progress  in 
poverty  reduction,  sustainable  development;  environmental  protection;  progress  in  the 
resolution  of  conflicts  and  enhanced  regional  cooperation.  Prudent  macroeconomic  policies 
need to be maintained to support effective implementation of an Action Plan.  

Taking the current political, economic and institutional context, as described in the Country 
Report,  as  a  starting  point,  an  Action  Plan  for  Georgia  should  provide  for  strengthened 
political dialogue; further implementation of the PCA; support for market economy reforms 
leading  to  gradual  economic  integration  into  the  EU’s  Internal  Market;  further  support  for 
economic  rehabilitation  of  conflict  zones  in  the  context  of  conflict  settlement;  increased 
financial  support  including  an  extension  of  the  EIB  mandate  to  Georgia  as  of  2007  and 
enhanced  financial  support  for  regional  cooperation;  enhanced  cooperation  in  the  field  of 
justice  and  home  affairs  possibly 
including  establishment  of  a  dialogue  on  visa 
cooperation/readmission  agreement;  intensification  of  cooperation  in  the  energy,  electronic 
communications and transport, environment, maritime affairs and fisheries and public health 
sectors as well as enhanced cooperation in the field of science, technology and innovation and 
of  people-to-people  contacts,  in  particular  in  the  area  of  education,  training  and  youth;  and 
consideration  to  be  given,  if  progress  is  being  made  with  the  implementation  of  an  Action 
Plan, to the possibility of a new enhanced agreement to replace the PCA upon its expiry. 

Egypt and Lebanon 

In  June  2004,  the  Council  invited  the  Commission,  with  the  contribution  of  the  SG/HR  on 
issues  related  to  political  cooperation  and  the  CFSP,  to  begin  preparations  for  Action  Plans 
with Mediterranean countries whose Association Agreements with the EU have been ratified 
by the countries. As a basis for the preparation of Action Plans, the Commission has therefore 
prepared the present reports on Egypt and Lebanon6. 

For  both  countries,  the  full  implementation  of  the  Association  Agreements  remains  the 
primary objective of bilateral relations. The ENP goes beyond this to offer the prospect of an 
increasingly  close  relationship  involving  a  significant  degree  of  economic  integration  and  a 
deepening  of  political  cooperation.  On  the  basis  of  the  content  of  the  Country  Reports,  the 
Commission,  in  close  cooperation  with  the  Presidency  and  the  High  Representative  where 
appropriate,  will  initiate  as  soon  as  possible  formal  consultations  with  Egypt  and  Lebanon 
aimed at concluding comprehensive and balanced Action Plans. 

The key priorities of an Action Plan will cover two broad areas: first, commitments to specific 
actions which reinforce adherence to shared values in areas including respect for international 
obligations,  democracy  and  the  rule  of  law,  including  the  holding  of  democratic  elections, 

6 

Commission staff working papers SEC(2005) 287 and SEC(2005) 289. 

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administration of justice and human rights and to certain objectives in the area of foreign and 
security  policy;  secondly,  commitments  to  actions  which  will  bring  these  partner  countries 
closer  to  the  EU  in  a  number  of  priority  fields  such  as  economic  and  social  development 
policy (including poverty reduction and sustainable development), trade and internal market 
(including  sectors  such  as  energy,  transport,  environment,  maritime  affairs  and  fisheries, 
information  society,  research  and  innovation,  justice  and  home  affairs  and  people-to-people 
contacts). 

Priorities for action will be as specific as possible, depending on the issue at stake, and thus 
will  constitute  benchmarks  which  can  be  monitored  and  assessed.  The  Action  Plans  will 
identify key actions in a limited number of fields which need to be addressed as a particularly 
high priority, as well as actions in a wider range of fields, corresponding to the scope of the 
bilateral agreements in force. A clear time horizon will be given for addressing these different 
priorities. 

3. 

CONCLUSION AND RECOMMENDATIONS  

The reports for the countries of the Southern Caucasus indicate the need for continued reform 
in  Armenia,  Azerbaijan  and  Georgia  and  for  progress  in  a  number  of  key  areas.  The 
Commission considers that Action Plans would be a useful tool by which the EU can further 
strengthen its relations with the countries and actively encourage the necessary changes. The 
Commission  therefore  recommends  that  the  Council  approve  the  general  orientations 
proposed here and agree that work should begin on preparing Action Plans for each of these 
countries,  on  the  basis  of  which  the  Commission  will,  in  close  cooperation  with  the 
Presidency  and  High  Representative  where  appropriate,  make  contact  with  the  partner 
countries  concerned.  Work  on  these  Action  Plans  would  begin  immediately..  The 
Commission  emphasises  that  the  Action  Plans  will  be  tailored  to  the  needs  of  each  country 
and  each  country  will  be  treated  on  its  individual  merits.  Member  States  will  be  kept  fully 
informed of the development of these consultations. 

On  the  basis  of  the  Country  Reports  on  Egypt  and  Lebanon,  the  Commission  will  begin 
preparing Action Plans with each of these countries. It is recommended that consultations on 
these  Action  Plans  should  begin  as  soon  as  possible.  With  the  resignation  of  the  Lebanese 
Government,  and  elections  scheduled  for  May,  the  evolution  of  the  situation  there  will 
influence the timing of consultations. The aim is to achieve balanced Action Plans with each 
country,  covering  the  same  general  areas  as  with  previous  partners  mutatis  mutandis  i.e. 
political  (including  respect  for  international  obligations  and  democracy  and  the  rule  of  law) 
and  economic  aspects,  including  sustainable  development  and  sectoral  aspects  (internal 
market  and  trade-related  issues;  justice  and  home  affairs;  environment  issues;  people  to 
people contacts). Member States will be kept fully informed during these consultations. 

For  all  five  of  these  countries,  and  as  in  the  case  of  the  other  ENP  countries,  the  relevant 
Association  or  Cooperation  Councils  will  be  invited  to  endorse  the  Action  Plans,  once 
adopted.  The  Action  Plans  should  have  a  duration  of  three  to  five  years  and  monitoring  of 
implementation  of  the  Action  Plans  will  take  place  within  the  institutions  of  the  relevant 
Association or Cooperation Agreements. On the basis of its assessments of the results of this 
monitoring  process  and  of  information  provided  by  partners,  the  Commission,  with  the 
contribution  of  the  High  Representative  on  issues  related  to  political  co-operation  and  the 
CFSP,  will  present  a  mid-term  review  of  progress  achieved  within  two  years  and  a  further 
review within three years of the formal approval of each Action Plan. 

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