Commission staff working document accompanying the Communication from the Commission to the European Parliament and the Council - Implementation of the European Neighbourhood Policy in 2008 - Progress Report Egypt {COM(2009) 188 final} {SEC(2009) 511} {SEC(2009) 512} {SEC(2009) 513} {SEC(2009) 514} {SEC(2009) 515} {SEC(2009) 516} {SEC(2009) 517} {SEC(2009) 518} {SEC(2009) 519} {SEC(2009) 520} {SEC(2009) 521} {SEC(2009) 522}
Date: 2009-04-23
Institutions: European Commission
Subjects: Egypt, European neighbourhood policy, impact study, the EU's international role

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COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 23.4.2009 
SEC(2009) 523 

COMMISSION STAFF WORKING DOCUMENT 

Accompanying the 

COMMUNICATION FROM THE COMMISSION  
TO THE EUROPEAN PARLIAMENT AND THE COUNCIL 

Implementation of the European Neighbourhood Policy in 2008 

Progress Report Egypt 

{COM(2009) 188 final} 
{SEC(2009) 511} 
{SEC(2009) 512} 
{SEC(2009) 513} 
{SEC(2009) 514} 
{SEC(2009) 515} 
{SEC(2009) 516} 
{SEC(2009) 517} 
{SEC(2009) 518} 
{SEC(2009) 519} 
{SEC(2009) 520} 
{SEC(2009) 521} 
{SEC(2009) 522} 

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1. 

BACKGROUND AND OVERALL ASSESSMENT 

Egypt and the European Community first established contractual relations in 1976 by signing 
a  Cooperation  Agreement.  The  Euro-Mediterranean  Partnership,  inaugurated  at  the  1995 
Barcelona  conference,  established  a  policy  with  ambitious  and  long-term  objectives.  This 
partnership was reinforced in 2008 by the establishment of the Union for the Mediterranean. 
The  Association  Agreement  with  Egypt,  which  entered  into  force  in  June  2004,  sets  out  in 
more detail the specific areas that can be developed bilaterally. On this basis, the EU-Egypt 
ENP Action Plan was adopted in March 2007 for a period of three to five years. A first report 
was adopted in April 2008.  

Institutional  cooperation  enabled  both  sides  to  progress  with  the  implementation  of  the 
Association  Agreement  and  the  ENP  Action  Plan.  Implementation  of  the  Action  Plan  was 
launched in June 2007 with the first meetings of subcommittees, and by the end of October 
2008 all eight subcommittees and one working group had met at least once. No meeting on 
the Economic Dialogue took place in 2008. The first EU-Egypt Association Committee was 
held in Cairo on 16 December 2008.  

This document reports on progress made on the implementation of the EU-Egypt ENP Action 
Plan  between  1  January  2008  and  31  December  2008,  although  developments  outside  this 
period  are  also  considered  when  deemed  relevant.  It  is  not  a  general  review  of  the  political 
and economic situation in Egypt.  

Egypt  has  so  far  shown  commitment  to  its  ENP  Action  Plan  and  is  an  active  partner  in  the 
different subcommittee meetings where implementation of the Association Agreement and the 
Action Plan priorities are discussed. While the process of implementation has clearly started 
in earnest, it is important to note that Egypt and the EU find themselves only at the beginning 
of this comprehensive bilateral engagement and that much work lies ahead. 

At  the  4th  meeting  of  the  EU-Egypt  Association  Council,  in  April  2008,  Egypt  submitted  a 
paper to the EU outlining a non-exhaustive set of proposals to enhance relations with the EU. 
In  that  paper  Egypt  underlines  its  longstanding  partnership  with  the  EU  and  expresses  the 
desire  that  its  proposals  should  contribute  positively  to  deepening  relations  with  the  EU 
through intensifying political dialogue, reinforcing trade and economic relations, and further 
strengthening  relations  in  various  sectors,  such  as  agriculture,  energy,  science  and 
technological cooperation, higher education, and culture.  

Overall  progress  on  the  implementation  of  the  Action  Plan  in  2008  can  be  summarised  as 
limited but encouraging, with a stronger commitment to social, economic and sector reforms, 
though with a lesser commitment to political reform.  

Good  progress  was  made  on  women’s  and  children’s  rights,  particularly  the  introduction  of 
measures against female genital mutilation and the adoption of a new Child Law to strengthen 
the rights of the child in line with international standards. Achievements were further noted in 
promoting  the  role  of  women  in  social  and  economic  life.  Egypt  ratified  the  Convention  of 
Rights of Persons with Disabilities as one of the first countries in the world. 

Limited progress was observed on implementing measures to promote the right of assembly 
and  association,  and  to  assert  freedom  of  expression  and  independence  of  the  media.  No 
significant progress can be noted as regards the independence of the judiciary, although some 

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progress  was  made  to  modernise  the  administration  of  justice.  Progress  in  guaranteeing 
freedom  of  religion,  improving  prison  conditions  and  tackling  torture  and  ill-treatment  was 
limited. 

Cooperation on foreign and security policy, combating terrorism and the non-proliferation of 
weapons of mass destruction continued in 2008.  

Progress  was  achieved  in  the  area  of  economic  reform,  particularly  on  fiscal  and  monetary 
policy and on general economic liberalisation, which was complemented by the establishment 
of fast-track economic courts. 

In  the  trade  sector,  good  progress  was  made  with  the  conclusion  of  negotiations  on 
agricultural  liberalisation  and  further  improvement  of  the  business  climate  for  SMEs,  while 
progress with market and regulatory reform was more limited. 

In  the  area  of  sector  reform,  good  progress  was  made  in  promoting  access  to  primary 
education, access to primary healthcare and the introduction of health insurance for the entire 
population.  Progress  also  continues  in  the  areas  of  research  and  innovation,  information 
society  and  audiovisual  cooperation,  while  limited  progress  was  made  on  improving  the 
environment.  Moreover,  Egypt  and  the  EU  signed  a  Memorandum  of  Understanding  on  a 
strategic  partnership  on  energy  in  December.  Progress  in  the  fight  against  corruption  was 
registered. 

Finally, Egypt assumed the co-Presidency of the Union for the Mediterranean (UfM). It also 
plays an active role in the Africa-EU political dialogue taking place in the framework of the 
Joint  Africa-EU  partnership,  in  particular  by  assuming  the  role  of  lead  country  in  the 
implementation of the partnership on Democratic Governance and Human Rights and in the 
partnership on Migration, Mobility and Employment. 

2. 

POLITICAL DIALOGUE AND REFORM 

Democracy and rule of law 

Objectives  in  this  area  include:  enhancing  the  effectiveness  of  institutions  dealing  with 
strengthening  democracy  and  the  rule  of  law,  decentralisation  and  reform  of  local 
administration,  consolidating  the  independent  and  effective  administration  of  justice  and 
improving prison conditions.  

In May 2008 the Egyptian Parliament extended the state of emergency, in place since 1981, 
by two more years until 2010 or until new anti-terror legislation is passed. In line with the EU 
Presidency  statement  of  May  2008,  this  further  extension  of  the  state  of  emergency  is 
regretted.  A  draft  counter-terrorism  law  is  under  preparation.  Under  2007  constitutional 
amendments, the state of emergency should have been lifted before the end of the legislative 
session  in  July  2008  with  the  introduction  of  a  new  institutional  framework  for  combating 
terrorism.  

Local municipal elections were held in April 2008 in accordance with the 2007 constitutional 
amendments  and  on  the  basis  of  local  administration  law.  The  elections  resulted  in  an 
overwhelming  victory  for  the  ruling  National  Democratic  Party  (NDP)  which  won  around 
95% of the 53.000 seats. Voter turnout remained low with 23% of registered voters, according 
to official figures, and between 1 and 5% according to local NGOs. Despite some delays, the 

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holding  of  local  elections  demonstrates  a  commitment  on  the  part  of  the  government  to  the 
electoral process. On the other hand, there are a number of concerns over shortcomings in this 
area. Thousands of candidates from the legal opposition parties and independent candidates, 
including  from  the  Muslim  Brotherhood  (MB),  were  either  prevented  from  registering  their 
candidacies, or had their candidacies rejected by the electoral committees. The results of the 
local  elections  have  a  direct  impact  on  the  2011  presidential  elections  since  the  2007 
constitutional amendments require any presidential candidate, standing as an independent, to 
be sponsored by at least 140 local representatives from 14 of the country’s 29 governorates.  

No  significant  developments  can  be  reported  on  extending  the  mandate  of  the  Supreme 
Electoral  Commission  to  supervise  local  municipal  ballots.  Ambiguities  remain  over  its 
administrative  structure  and  in  particular  its  independence  from  the  legislature,  given  that  a 
majority of its members (7 out of 11) are selected by one of the two houses of parliament. 

A new draft election law is under preparation, but has not yet been presented to Parliament. 
Of specific relevance will be the eligibility of candidates of political parties and independent 
candidates to participate in elections. As stated in the first Progress Report, the new electoral 
law  may  adopt  a  partial  lists  system.  The  draft  legislation  is  expected  to  increase  the 
participation  of  women  in  both  houses  of  Parliament.  Despite  a  specific  commitment  in  the 
Action Plan, no cooperation was developed in the field of elections. The EU made an offer for 
technical  assistance  to  improve  the  electoral  framework  including  voter  registration,  which 
was declined. 

The independence of the judiciary remains subject to the ongoing state of emergency. Special 
courts, such as the state of emergency security courts and military courts, continue to exercise 
jurisdiction  over  security  offences.  Although  announced  by  the  Government  in  2007,  no 
amendments  to  the  judicial  authority  law  to  enhance  judicial  independence  have  yet  been 
presented  to  Parliament.  The  degree  of  influence  retained  by  the  Executive,  principally  the 
Minister  of  Justice,  in  the  appointment  of  the  Chairman  of  the  Supreme  Council  of  the 
Judiciary  and  of  magistrates,  is  not  conducive  to  the  independence  of  the  profession.  With 
regard to the reform of the administration of justice, Egypt continues to invest in enhancing 
the efficiency and professionalism of the judiciary and public prosecutors by providing legal 
aid services, improving access to information and capacity building and training through the 
National  Centre  for  Judicial  Studies.  Modernisation  of  the  court  administration  is  being 
advanced  by  the  development  of  an  e-justice  programme  to  ensure  the  full  automation  of 
court records and procedures. In addition, the Court Construction Fund provides funding for 
the  construction  of  court  infrastructure  in  rural  areas  as  well  as  the  expansion  of  existing 
judicial support services. In this regard, the establishment and construction of a new Judicial 
Academy is envisaged.  

In October 2008, a new law establishing the system of Economic Courts entered into force. 
The  new  system  aims  to  improve  the  predictability  and  rapidity  of  justice  in  areas  such  as 
intellectual  property  rights,  anti-monopolies,  competition,  capital  markets  and  banking.  The 
law  also  provides  for  a  dispute  resolution  panel  based  upon  pre-court  conciliation.  Reforms 
also continue in the areas of criminal and juvenile justice and family law, where a guide on 
family litigation has been produced. Following the establishment of family courts in 2008, a 
draft law on regulating personal status and litigation is expected to be presented in Parliament 
during the current legislative session.  

The  national  Transparency  and  Integrity  Committee  on  Corruption  continued  to  work  on  a 
national strategy against corruption and relevant mechanisms for its implementation with and 

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between public authorities both at central and local level. In this context, the Ministry of State 
for  Administrative  Development  signed  in  April  2008  a  Memorandum  of  Understanding  on 
transparency  and  integrity  measures  with  the  Central  Audit  Authority,  while  the  Committee 
cooperated  on  a  national  corruption  perception  index.  The  Committee  also  established  a 
mechanism for the receipt and follow-up of public complaints. The Ministry of Justice is the 
mandated  body  for  implementation  of  the  United  Nations  Convention  against  Corruption  in 
cooperation  with  the  Public  Prosecutor.  Egypt  is  preparing  to  accede  to  the  2003  African 
Union Treaty on Preventing and Combating Corruption and is participating in the drafting of 
an Arab League convention on corruption and asset recovery. 

With  regard  to  local  administration  reform,  work  continues  on  developing  a  concept  for 
decentralisation  as  announced  by  the  President  during  the  opening  session  of  the  People’s 
Assembly  in  November  2008.  To  this  end,  discussions  took  place  with  some  EU  Member 
States  (France  and  Italy)  on  approaches  to  empower  local  administrations  to  better  deliver 
public  services,  and  a  draft  law  is  being  prepared.  Regarding  reform  of  the  public 
administration,  the  second  report  of  July  2008  by  the  national  Transparency  and  Integrity 
Committee  on  Corruption  underscored  the  need  to  issue  a  new  public  service  law  to 
implement  the  principles  of  accountability  and  effective  management  of  funds  within  the 
public service as well as to define mechanisms to manage its human resources in a transparent 
manner.  

Human rights and fundamental freedoms 

Objectives  include  broad  cooperation  to  strengthen  the  culture  of  human  rights  at  both  the 
social and institutional levels, the rights of women and children, freedom of association and 
of  expression,  the  fight  against  discrimination,  intolerance,  racism  and  xenophobia, 
fundamental social rights and core labour standards. 

Egypt’s national human rights  strategy, drafted by the National Council for Human  Rights 
(NCHR),  is  to  be  adopted  by  line  Ministries  in  the  2009  national  budget  through  the 
earmarking  of  specific  budget  lines  required  to  carry  out  the  strategy.  It  aims  inter  alia  at 
spreading  a  human  rights  culture  through  education,  the  media  and  institutional  capacity 
building.  

The NCHR continued to raise its visibility, reaching out to governorates. The use of mobile 
units ensured that the Human Rights Ombudsman was able to reach out to remote areas. In its 
4th annual report in March 2008 on the situation of human rights in Egypt in 2007, the NCHR 
condemns and expresses deep concern inter alia over the use of torture. It also raises serious 
concerns  about  the  Emergency  Law  and  repeats  its  call  that  the  new  anti-terror  legislation 
should not be a mere extension of the current Emergency Law. As noted in the first progress 
report, this law remains a major obstacle to the full enjoyment of human rights, allowing for 
arrests that do not have to be substantiated or challenged in law, detention without charge and 
trial, and restrictions on freedom of assembly. Court rulings under the Emergency Law often 
circumvent constitutional and international safeguards. Several thousands are estimated to be 
imprisoned under Emergency Law provisions.  

The  NCHR  reported  receiving  6  677  individual  complaints  during  the  year,  of  which  42% 
concerned  economic  and  social  rights.  The  NCHR  officially  forwarded  the  complaints  to 
relevant ministries and was able for the first time to publish data on answers  received from 
these  ministries.  Responses  by  the  authorities  up  to  the  end  of  February  2008  were 
forthcoming on around 53% of total referrals.  

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Egypt  is  party  to  a  number  of  international  and  regional  human  rights  instruments.  Egypt 
ratified the Convention of Rights of Persons with Disabilities in April 2008 as one of the first 
countries  in  the  world.  Egypt  announced  in  its  voluntary  pledges  to  the  UN  Human  Rights 
Council to ratify the Convention on Enforced Disappearances, but has not yet done so. Egypt 
has  not  ratified  optional  protocols  under  the  International  Covenant  on  Civil  and  Political 
Rights and the Convention Against Torture and it maintains reservations to the Convention on 
the  Elimination  of  all  Forms  of  Racial  Discrimination  and  to  the  Convention  on  the 
Elimination of All Forms of Discrimination against Women (CEDAW), see below. 

By the end of the reporting period, Egypt had not yet extended invitations to five UN special 
rapporteurs  and  had  seven  overdue  reports  to  Treaty  Bodies.  After  the  reporting  period 
however,  in  April  2009,  Egypt  invited  the  UN  Special  Rapporteur  on  the  Protection  and 
Promotion  of  Human  Rights  and  Fundamental  Freedoms  while  Countering  Terrorism.  This 
would be the first ever visit by a UN Special Rapporteur.  

In  December  2008,  Egypt  voted  against  the  2008  UNGA  resolution  63/168  calling  for  a 
worldwide moratorium on the use of the death penalty. The number of crimes punishable by 
death in Egypt is estimated at around 90. 

As  in  the  last  reporting  period,  the  authorities  showed  a  certain  determination  to  tackle  the 
reportedly  widespread  practice  of  torture  and  ill  treatment,  mainly  in  police  stations.  In 
November  2008  prison  sentences  were  handed  down  by  the  courts  to  police  officers  for 
torturing a detainee. However, the definition of torture as a criminal offence does not yet fully 
comply with the UN Convention against Torture. The training of police officers to counter the 
culture of impunity remains a priority.  

Prison conditions and the rights of prisoners and detainees remained a key concern in 2008. 
According to the Egyptian Government the improvement of conditions is an ongoing process 
and  measures  taken  include  the  introduction  of  conjugal  and  face-to-face  visits  for  certain 
types of prisoners, improved medical treatment as well as education and training. Egypt has 
not yet adopted ‘legislative amendments in the area of pre-trial detention’, as announced in its 
voluntary  pledges  to  the  UN  Human  Rights  Council.  The  Egyptian  authorities  have  shown 
some  openness  to  prison  inspections  by  local  independent  bodies  as  well  as  the  NCHR, 
though not as regards access by international human rights observers to prisons and detention 
centres. Most prisons suffer from overcrowding and poor sanitation, and conditions in police 
stations and temporary detention centres are poor.  

No major progress can be reported in guaranteeing freedom of expression. While freedom of 
the  media  and  press  increased,  especially  outspoken  criticism  in  the  independent  and 
opposition newspapers, 2008 continued to witness the harassment of journalists and internet 
bloggers, kept in arbitrary detention or charged with harsh prison sentences and heavy fines, 
although in some cases prison sentences were reduced and charges dropped. Although prison 
sentences  for  several  publishing  offences  were  replaced  by  fines  in  the  2006  Press  Law, 
severe restrictions on media reporting and arrests for press offences remain. In July 2008, the 
Egyptian  authorities  prepared  a  draft  Law  on  the  regulation  of  audiovisual  media  and  the 
Internet. No information on this draft Law was officially disclosed. 

Freedom  of  association  remains  a  problematic  area.  The  2002  law  on  non-governmental 
organisations and foundations – known as the NGO law - continues to impose certain legal, 
administrative and security restrictions on the activities of civil society organization in terms 
of  licensing,  funding  and  organizational  autonomy.  The  implementation  of  the  law  has 

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resulted  in  a  number  of  NGOs  being  prevented  from  operation  via  administrative  obstacles 
and harassment, such  as registration requirements (licensing), access to foreign funding and 
severe individual penalties for non-compliance with the law. A revision of the Law is under 
discussion, but no draft was officially presented for consultation by the government during the 
reporting period. 

The  implementation  of  measures  that  promote  the  right  of  assembly  and  association  in 
accordance  with  the  International  Covenant  on  Civil  and  Political  Rights  also  remains  a 
problematic  issue.  Several  violent  confrontations  between  security  forces  and  peaceful 
demonstrators  took  place,  most  notably  during  demonstrations  in  April  2008  by  striking 
workers and sympathisers at the state-owned Mahalla textile plant protesting against pay and 
service conditions. 

As regards freedom of religion, limited progress was made with the adoption of two decrees 
regarding the renovation of churches. In addition, two important court decisions were taken in 
early 2008. The first allowed Baha’is to have identification documents with no indication of 
their  religious  affiliation  (see  last  report).  This  decision  was  upheld  by  a  ruling  of  the 
Supreme Administrative Court in March 2009, outside the reporting period. The second ruling 
allowed Christians who converted to Islam and then reconverted to Christianity to have their 
original  religion  mentioned  in  their  ID  documents.  Other  court  cases  left  the  aspect  of 
religious conversion legally unclear.  

A draft unified Code on places of worship is under preparation, with the aim of setting criteria 
for the construction, extension, renovation and repair of places of worship. The NCHR in its 
2008 report provided a number of recommendations to the Government on non-discrimination 
concerning religious minorities. 

Violations  of  the  rights  of  migrants,  refugees  and  asylum  seekers  remain  a  matter  of 
concern. Twenty-four illegal migrants of sub-Saharan origin were shot by Egyptian security 
forces  at  the  border  with  Israel  in  2008.  In  June  2008,  the  Egyptian  authorities  forcibly 
returned  a  group  of  1400  Eritrean  migrants  to  their  country,  despite  the  risk  of  facing  ill-
treatment  if  returned.  UNHCR  Cairo  was  initially  denied  access  to  the  migrants  in  order  to 
establish  their  status  as  asylum-seekers  or  to  interview  those  with  refugee  claims.  UNHCR 
was  subsequently  granted  limited  access  to  the  Eritreans  and  the  Egyptian  Foreign  Minister 
reaffirmed  Egypt’s  commitment  to  uphold  its  international  obligations  relating  to  the 
protection  of  refugees.  Another  group  of  Eritreans  expelled  from  Israel  were  returned  to 
Eritrea  by  the  Egyptian  authorities  at  the  end  of  2008.  None  of  these  had  recourse  to  the 
services  of  the  UNHCR  in  Cairo.  Egypt  continues  to  maintain  reservations  in  respect  of 
several articles of the 1951 Convention relating to the Status of Refugees, and despite being 
party to a number of international conventions obliging to provide protection to refugees, the 
government has passed on the execution of this obligation to the UNHCR office.  

Some progress can be reported in the promotion of women’s rights. In January 2008 Egypt 
withdrew  one  reservation  on  CEDAW  regarding  the  right  of  women  to  pass  on  their 
nationality  to  their  children.  Egypt  still  maintains  reservations  to  CEDAW,  considering  for 
example  that  the  equality  of  women  in  matters  of  marriage  and  divorce  is  conditional  upon 
compatibility  with  Islamic  law.  The  Government  continued  its  campaign  to  combat  female 
genital mutilation. According to UNICEF, 77% of girls aged 15-17 years are still subject to 
such mutilation.  

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As regards violence against women, including domestic violence and sexual harassment, there 
were  a  number  of  well-publicised  trials  and  convictions  of  rapists  and  sexual  harassers  in 
2008.  The  first  ever  sexual  harassment  case,  in  June  2008,  led  to  a  three-year  term  of 
imprisonment and a fine of EGP 5,000– approximately EUR 700. The Penal Code lays down 
particularly  severe  penalties  when  the  victim  is  a  woman,  in  cases  such  as  abduction,  rape, 
abortion  resulting  from  abuse  and  other  acts  that  violate  a  woman’s  dignity.  Protective 
mechanisms  to  shelter  victims  of  violence  exist,  but  are  inadequate  and  not  known  to  the 
general public. 

Good  progress  was  made  on  consolidating  the  rights  of  the  Child.  A  new  Child  Law  was 
adopted in June 2008 amending the earlier Law. The new legislation makes the trial of minors 
as adults illegal, raises the age of criminal responsibility, allows children born out of wedlock 
to  obtain  birth  certificates,  restricts  corporal  punishment,  raises  the  age  of  marriage  to  18 
years of age, forbids the detention of minors in adult detention centres, modifies the status of 
street  children  from  criminals  to  victims  and  reinforces  the  standing  ban  on  female  genital 
mutilation.  The  National  Council  for  Childhood  and  Motherhood  (NCCM)  has  played  an 
important role in supporting the law, in close consultation and with the participation of civil 
society  organisations.  The  NCCM  is  also  actively  contributing  to  the  preparation  of 
implementing regulations to effectively enforce the Child Law.  

Furthermore,  Egypt  has  made  child  labour  a  criminal  offence  through  amendments  to  the 
Unified Labour Law and the adoption of implementing ministerial decrees. Three cooperation 
protocols  were  signed  with  ministries  with  the  aim  of  withdrawing  working  children  from 
hazardous  occupations  and  transferring  them  to  factories  implementing  health  and  safety  at 
work measures.  

Limited  progress  was  made  as  regards  fundamental  social  rights  and  core  labour 
standards,  including  guaranteeing  the  independence  of  trade  unions.  The  effective 
implementation  of  ILO  conventions  the  Right  to  Organise  and  Collective  Bargaining 
Convention, the Freedom of Association and Protection of the Right to Organise Convention, 
and  the  Collective  Bargaining  Convention  is  not  ensured.  The  current  legislation  on  labour 
unions  (the  Unified  Labour  Law  of  2002)  governs  trade  union  rights  and  excludes  the 
establishment of new trade unions other than the 23 syndicates federated in the general Union 
for  Workers’  Syndicates,  which  is  supervised  by  the  Ministry  of  Manpower.  There  were 
violent confrontations following the call for a public strike in April 2008. The ILO Committee 
of  experts  on  the  Application  of  Standards  reiterated  in  June  2008  its  remarks  on  some 
provisions regarding trade union rights and the right to strike. Declining economic growth and 
frustration at the limitations of the state-run unions have prompted a number of worker groups 
to  form  independent  unions  better  able  to  articulate  their  demands  for  improved  pay  and 
working conditions.  

Cooperation on foreign and security policy 

Egypt  is  an  important  partner  of  the  EU  on  CFSP  matters.  Political  dialogue  was  further 
intensified with the first meeting of the subcommittee on political matters in June 2008 and on 
the  occasion  of  the  first  meeting  of  the  Association  Committee  in  December  2008.  Egypt 
remained  actively  engaged  in  contributing  to  a  comprehensive  solution  to  the  Middle  East 
Peace  Process  (MEPP),  in  particular  through  its  mediation  efforts  between  the  Palestinian 
factions, which gained momentum in the second half of 2008, in brokering a ‘tadiya’ (calm) 
between Hamas and Israel, and in mediating terms for a ceasefire in the Gaza-Israel conflict at 
the end of 2008. Egypt and the EU continued to agree on the need for full implementation of 

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the  Agreement  on  Movement  and  Access  concluded  between  Israel  and  the  Palestinian 
Authority  in  November  2005.  During  the  reporting  period,  the  EU’s  monitoring  mission  to 
Rafah was still on standby. However, also in view of the Gaza crisis at the end of the year, 
Egypt and the EU agreed on the desirability of redeployment as soon as conditions allow.  

Egypt is also actively engaged in African affairs. It contributes to the peace-keeping forces in 
Darfur (including with a military field hospital), alongside UN/AU forces. Egypt assumed the 
co-Presidency  in  November  2008  of  the  Union  for  the  Mediterranean  (UfM),  significantly 
enhancing  its  role  in  this  newly-constituted  regional  grouping.  Egypt  was  instrumental  in 
bringing about the inclusion of the Arab League in the UfM.  

Egypt wishes to further deepen dialogue with the EU on counter-terrorism. Globally, Egypt 
seeks  EU  and  international  backing  for  its  initiative  to  combat  the  use  of  the  Internet  for 
terrorist  purposes  (such  as  recruitment,  incitement,  training  and  production  of  weapons  and 
explosives),  arguing  that  greater  effectiveness  could  be  achieved  on  controlling  and 
monitoring  internet  sites  with  international  cooperation,  without  sacrificing  freedom  of 
expression. Regarding the long-promised new anti-terror law needed to replace the provisions 
of  the  Emergency  Law,  the  Government  asserts  that  it  is  examining  EU  legislation  in  this 
field, seeking to strike the right balance between security and civil rights.  

The Rome Statute of the International Criminal Court was signed by Egypt in 2000, but it 
has not been ratified.  

Egypt  pursues  a  regional  policy  of  disarmament  and  non-proliferation  of  weapons  of  mass 
destruction,  in  particular,  a  Middle  East  free  of  nuclear  weapons.  Egypt  advocates  the 
peaceful  use  of  nuclear  energy,  under  NPT  conditions.  Following  its  announcement  to  re-
launch its nuclear energy programme, the European Commission offered technical assistance 
and  support  to  the  Egyptian  authorities  to  ensure  full  compliance  with  international  nuclear 
safety and security standards.  

3. 

ECONOMIC AND SOCIAL REFORM 

Macroeconomic framework and functioning of the market economy 

Despite the global financial and economic slowdown, the Egyptian economy has so far shown 
robust economic growth. Growth accelerated during the 2008 fiscal year (July 2007 until June 
2008)  to  7.2%,  fuelled  by  investment  and  exports.  Strong  expansion  of  investment  and 
exports  was  the  fruit  of  earlier  reforms  that  received  international  recognition  through  the 
improving international rankings of Egypt in the business environment. Economic growth in 
the  second  quarter  of  the  2009  fiscal  year  (October-December  2008)  slowed  down  to  4.1% 
year-on-year.  In  the  light  of  the  global  slowdown  this  growth  is  still  fairly  high.  The 
subsequent  quarter  will  however  show  a  lower  growth,  following  the  contraction  of 
production  by  4.5%  year-on-year  and  of  the  nominal  exports  by  16%  year-on-year  in 
December 2008. 

As  a  consequence  of  the  global  crisis,  foreign  investors  have  been  withdrawing  from  the 
Egyptian stock exchange, and foreign direct investments have been falling. Moreover, foreign 
demand  for  Egyptian  goods  and  receipts  from  tourism  and  from  the  Suez  Canal  have  been 
falling sharply. There are other risks for the Egyptian economy that are lingering already for a 
longer period, such as the high dependence on the imports of food – mainly wheat – for its 
steadily growing population and the high indebtedness of the government.  

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Soaring food and energy prices pushed up consumer price inflation to more than 24% year-
on-year in September 2008. Due to inefficient monopolies in the food supply chain in Egypt, 
the rapid global fall of food prices has not yet been transmitted into the Egyptian consumer 
price index; in February 2009 CPI inflation was still above 14%. These higher prices diminish 
the  purchasing  power  of  the  population;  low  income  households  are  affected  most.  The 
Central Bank of Egypt tightened monetary policy eight times during the year, but in view of 
the global crisis it has started to ease its policy. Due to the global financial crisis, global food 
prices  and  therefore  the  prices  for  imported  food  will  fall  further.  However,  the  food 
monopolies and the 30% increase in government wages in 2008 will keep domestic consumer 
prices high in the short term.  

Egypt  is  still  making  progress  in  improving  its  fiscal  stance.  Despite  soaring  global 
commodity prices, the general government deficit widened only slightly to 7.8% of GDP in 
the 2008 fiscal year. Moreover, the general government debt is on a steeply declining path. In 
addition, the government aimed to keep itself to the commitment of a budgetary government 
deficit  of  6.8%  of  GDP  in  the  2008  fiscal  year  and  is  on  track  for  the  further  fiscal 
consolidation,  implying  a  gradual  reduction  of  the  deficit  to  3%  of  GDP  by  the  2011  fiscal 
year.  In  response  to  the  economic  slowdown,  fiscal  authorities  have  however  initiated  an 
economic  stimulus  package  of  LE  15  billion  in  the  2009  fiscal  year,  representing  1.5%  of 
GDP.  On  the  positive  side  the  government  started  the  replacement  of  energy  and  food 
subsidies by a targeted income support. This period of lower inflation is perfectly suitable for 
intensifying  the  reforms  in  the  subsidy  system.  The  phasing  out  of  subsidies  is  needed  to 
strengthen government debt sustainability and reduce the vulnerability to shocks. Improving 
the structure of public spending, by reducing the share of the government wage bill, interest 
and subsidies in total expenditure, remains a priority.  

Financial  sector  reform,  a  key  aspect  of  the reform  agenda,  was  partly  stalled  in  2008.  The 
drying up of liquidity in the banking sector of advanced economies hampered the process of 
privatisation  of  a  major  Egyptian bank.  Broadening and  deepening of the financial sector is 
needed for the building of an efficient and well-functioning market sector, where households 
and companies can find easily access to funds from intermediaries such as commercial banks, 
and  for  giving  more  room  for  manoeuvre  for  capital  instead  of  current  spending  by  the 
government.  

Employment and social policy 

Egypt has declared poverty reduction to be one of its main objectives and intends to reduce 
poverty  to  6%  by  2022  from  the  current  level  of  around  40%  of  the  population.  The 
international food crisis and the rise  in oil prices affect the Government’s  efforts  to  combat 
poverty  efficiently,  despite  specific  measures  taken  in  April  to  lift  customs  duties  for  a 
number  of  imported  goods.  The  Supreme  National  Council  for  Wages,  which  convened  for 
the first time in February 2008, is studying fixing a minimum level for wages.  

Unemployment  remained  high  despite  the  acceleration  in  GDP  growth  since  2003,  but  fell 
according to the official statistics for the first time below 9% in fiscal year 2008. Many jobs 
will  have  to  be  created  in  order  to  absorb  the  new  entrants  in  the  labour  market  and  the 
existing  unemployed.  There  is  a  substantial  gender  gap  overall  (around  5.5%  for  men  and 
18%  for  women  –  according  to  labour  force  quarterly  data  compiled  by  ILO)  and  youth 

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unemployment  remains  high,  also  among  males.  In  July  2008,  Egypt  started  developing  its 
Youth Employment National Action Plan. The plan aims at increasing youth employment and 
promoting  decent,  productive  job  opportunities  for  young  job  seekers  and  enhancing 
vocational training. 

The Egyptian Observatory for Education Training and Employment (EOETE) continued to be 
developed  as  part  of  the  policy  measures  for  reducing  unemployment.  In  2008,  the 
Observatory’s  work  concentrated  on  developing  methodologies  for  labour  market  forecasts 
and databases on labour market information and educational training provision. After several 
years  of  suspension,  Egypt  revived  the  Executive  Committee  of  the  Supreme  Council  for 
Human Resources Development. The Industrial Training Council, whose task is to coordinate 
all training programmes, was consolidated and similar councils were created for building and 
construction, and for tourism. 

On social inclusion, Egypt continued its efforts to modernise its social system by 2010. Work 
is on-going to introduce a new pension system in 2009. Furthermore, the Ministry of Social 
Solidarity  completed  the  identification  of  eligible  groups  for  social  welfare  with  a  view  to 
setting up a data base of households eligible for social welfare programmes. Pilot experiments 
started in order to define the health insurance model. Studies are being finalized to ensure the 
fiscal  sustainability  of  the  future  universal  health  insurance.  The  improvement  of  the 
capacities  of  the  Health  Insurance  Organisation  as  well  as  the  renovation  of  primary  health 
care services are ongoing.  

During  the  reporting  period,  Egypt  continued  to  enhance  the  participation  of  women  in 
political, economic and social life, in particular through the activities of the National Council 
for Women and the creation of a Women’s business development centre. In February 2008, an 
Egyptian  court  appointed  a  woman  to  perform  and  register  marriages,  the  first  such 
appointment in the country's history. While the participation of women in higher education is 
on a par with that of men, their subsequent integration into the labour force (27%) remains a 
concern.  The  gender  gap  is  considerable,  with  unemployment  affecting  females  2.5  times 
more  often  than  males.  A  pending  challenge  is  to  absorb  young  women.  The  Council’s 
Ombudsman  office,  supported  by  European  Community  funding,  was  expanded  through 
branches  in  a  number  of  governorates.  Egypt  has  also  developed  a  strategy  to  empower 
women at the workplace. Equal opportunities’ units are being introduced in line ministries. At 
the  Annual  Congress  of  the  NDP  in  November  2008,  President  Mubarak  called  upon  the 
government  to put  forward  legislation  to be in place for the parliamentary election in 2010, 
aimed  at  increasing  the  number  of  seats  for  woman  in  the  People's  Assembly  and  Shura 
Council. However, issues such as unemployment and the pay gap between women and men 
remain a challenge.  

Egypt  continued  to  develop  its  national  strategy  on  sustainable  development,  involving 
stakeholders such as the ministries, the private sector, civil society as well as the media and 
research sectors. The work on a framework document for sustainable development progressed 
during  2008,  but  was  not  finished.  Once  finalised  it  will  be  incorporated  into  the  updated 
National  Environmental  Action  Plan  (NEAP)  and  the  National  Strategies  (e.g.  for  water, 
transport, energy). 

Egypt  continued  implementing  its  National  Strategy  on  Agriculture,  currently  covering  the 
period until 2017, and is working on a new National Strategy up to 2030. The revised Strategy 
aims  at  ensuring  food  security  and  at  improving  income  and  living  conditions  of  rural 

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population.  The  Strategy  focuses  on:  1)  modernising  irrigation  techniques,  aiming  at  a 
sustainable management of water resources; 2) increasing soil yields with new crop varieties; 
3)  increasing  animal  production  (fisheries,  eggs,  poultry,  milk  and  red  meat);  4)  ensuring  a 
balanced  use  of  pesticides  and  fertilizers;  and  5)  giving  a  key  role  to  cooperatives  in  the 
implementation  of  the  Strategy.  Egypt  established  an  inter-ministerial  core  task  force  to 
prepare  a  National  strategy  on  rural  development  focusing  on  good  agricultural  practices, 
environmental  issues,  and  improvement  of  basic  services  for  the  rural  population  and 
developing new economic activities in rural areas. The General Authority for Fish Resources 
Development (GAFRD), which is responsible for sustainable fisheries management, continues 
implementing the National Strategy on Fisheries and Aquaculture covering the period up to 
2030. A multi-annual planning to increase fish/shellfish consumption mainly based on marine 
aquaculture development and offshore redeployment of fishing effort is being implemented.  

4. 

TRADE-RELATED ISSUES, MARKET AND REGULATORY REFORM 

Following a slight decrease in 2007, Egypt’s exports to the EU rose in 2008 by 13.1% and EU 
exports to Egypt in the same period increased by 22.2%. The total trade volume with the EU 
was EUR 20.66 billion in 2008. The EU remains the first trading partner in 2008 with 35% 
total volume.  

The  dismantling  of  industrial  tariff  is  proceeding  well,  and  according  to  the  Association 
Agreement. Since March 2008, the Government maintains an export ban on rice. The ban is in 
force until April 2009. Also in March 2008, Egypt banned the export of cement for a period of 
6 months, in order to reduce prices of construction material on the local market. Egypt took 
these  measures  to  face  the  shortage  of  certain  commodities  (in  particular  foodstuffs  and 
construction materials), and to guarantee social and political stability in the country. Egypt did 
however  not  follow  the  rules  of  procedure  for  notification  and  consultation  as  laid  down  in 
Articles 17 and 25 of the Association Agreement. 

On 1 July 2008, the chief negotiators of Egypt and the EC signed a preliminary agreement on 
further liberalisation of bilateral trade in agricultural, processed agricultural products and fish 
and fishery products amending the current provisions of the Association Agreement for those 
products.  The  agreement  will  provide  for  the  dismantling  of  tariffs  applied  to  the  trade  of 
agricultural, processed agricultural and fish and fishery products, leaving only a very limited 
number of sensitive products subject to certain protections on both sides. 

Work is ongoing towards the establishment of a dispute settlement mechanism for an effective 
resolution  of  trade  disputes  in  the  framework  of  the  Association  Agreement.  The  bilateral 
negotiations  on  the  liberalisation  of  trade  in  services  and  the  right  of  establishment  were 
launched in 2008. Deeper discussions on the overall objectives of these negotiations and on 
sectoral provisions are needed in order to move forward according to the planned timetable. 
Egypt  actively  participated  in  the  Trade  Senior  Officials’  Working  Group  set  up  to  draw  a 
Euromed Roadmap of next steps in the field of trade till 2010 and beyond. The Roadmap is 
due to be adopted at the Trade Ministerial in autumn 2009.  

Despite  some  small  progress,  the  results  of  the  implementation  of  the  Agadir  Agreement 
appear  to  be  modest  and  trade  between  the  four  countries  (Jordan,  Egypt,  Morocco  and 
Tunisia)  remains  limited  also  due  to  the  presence  non  tariff  barriers.  Egypt,  along  with  the 
other  three  partners,  implements  the  pan-euro-med  system  of  cumulation  of  origin  in  the 
framework of the Agadir Agreement. However, practices such as the ad hoc arrangement for 
the  importation  of  specific  products  manufactured  in  the  context  of  the  Agadir  Agreement 

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should not be encouraged as they derogate from the pan-euro-med rules of origin. The same 
goes  for  the  agricultural  and  processed  agricultural  products,  covered  by  the  Agadir 
Agreement, to which pan-euro-med cumulation of origin in practice is not applied. 

The  Egyptian  Customs  Authority  progressed  with  the  implementation  of  the  2007 
comprehensive reform of the customs sector. The reforms subdivided the customs territory in 
three  regions  acting  independently  from  each  other  under  the  supervision  of  the  customs 
Commissioner and aimed at simplifying customs procedures by reducing their numbers. The 
Authority  introduced  several  Modern  Customs  Centres  (MCCs)  serving  as  a  one-stop  shop 
and  coupled  by  logistic  centres  allowing  for  faster  streamlined  customs  procedures.  The 
MCCs, where other border agencies such as the General Organization for Export and Import 
Control (GOEIC) are also present, were established in the main ports and airports. 

The  1963  customs  law  is  being  updated.  The  new  law,  which  is  expected  to  be  adopted  in 
2009,  will  introduce,  amongst  others,  new  provisions  on  intellectual  property  rights,  origin, 
deferred  payments,  higher  penalties  for  smuggling  based  on  international  standards.  It  will 
also  regulate  electronic  signature  and  simplify  the  procedures,  shifting  tasks  from  the 
administration to traders. Work is also ongoing in order to strengthen the computerisation of 
the Egyptian Customs Authority and the current automated customs system will be extended 
to  cover  the  entire  system  by  the  end  of  2009.  The  concept  of  post  clearance  control  is 
developing, however further efforts are necessary in the area of risk management. 

The Egyptian Customs Authority is implementing a comprehensive training plan for customs 
officials  with  the  aid  of  foreign  donors.  Egypt  made  some  progress  in  order  to  increase  the 
transparency of customs rules and tariffs and public access to customs-related information but 
the  Customs  Authority’s  website  is  not  fully  operational  in  English  yet  and  further  work  is 
needed. A code of ethics based on international standards is also being implemented.  

On free movement of goods and technical regulations, Egypt continued preparations for the 
negotiations  of  an  Agreement  on  Conformity  Assessment  and  Acceptance  of  Industrial 
Products  (ACAA).  Selected  priority  sectors  include  construction  products,  electrical 
appliances,  pressure  equipment,  medical  devices,  gas  appliances  and  machinery.  On  the 
occasion  of  the  annual  stakeholders’  meeting  on  the  Euro-Med  Charter  in  Cairo  in  March 
2008, the European Commission’s experts assessed the Egyptian progress towards the ACAA 
negotiations.  The  alignment  of  the  legislation  in  the  priority  sectors  and  the  upgrading  of 
quality infrastructure have begun, but the horizontal legislation is not yet harmonised with EU 
rules  and  standards.  The  adoption  of  EU  standards  in  the  priority  sectors  progressed  well. 
Further  progress  is  required  in  accreditation,  metrology,  conformity  assessment  procedures 
and  post-market  surveillance  systems.  In  order  to  separate  standardisation,  managed  by  the 
Egyptian Organisation for Standardisation (EOS) from testing, Egypt announced the creation 
of a new testing laboratory: the Central Laboratory for Industry. A Ministerial Decree is under 
preparation.  Also,  a  presidential  decree  on  market  surveillance  on  food  and  pharmaceutical 
products  is  underway.  The  National  Institute  for  Standards  (NIS)  responsible  for  scientific 
metrology  was  accepted  as  a  liaison  organisation  to  The  European  Association  of  National 
Metrology Institutes (EURAMET).  

Regarding sanitary and phyto-sanitary issues, Egypt took further steps to prepare a law on 
the  agro-industry,  which  includes,  inter  alia,  the  establishment  of  a  single  food  safety 
authority. It adopted a decree aiming to introduce in food and beverage establishments high 
hygiene standards based on the Hazard Analysis Critical Control Point system (HACCP). In 
the 2007/2008 season, for the first time, no interceptions took place regarding potato exports 

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to the Union. In November/December 2008, the European Commission’s Food and Veterinary 
Office (FVO) carried out a mission to Egypt on the issue of aflatoxine (a contaminant) that 
was repeatedly  found in peanuts  imported from Egypt. Egypt  continues  to take  measures to 
fight the consequences of the serious avian influenza outbreak of 2006, which caused human 
fatalities. In this context, Egypt hosted in October 2008 an international conference on avian 
influenza and influenza pandemic preparedness. Egypt continued to participate in workshops 
under the European Commission’s “Better training for safer food” programme. 

In order to improve the business climate, the Government continued implementing a strategy 
for regulatory reform and administrative simplification (‘Errada’). The strategy aims to revisit 
regulations and legislation related to economic activity. 

As regards establishment and company law, the Government Authority for Free-zones and 
Investment  (GAFI)  offers  one-stop  shop  services  to  carry  out  all  licences  required  for  the 
establishment and operations. The Social Fund for Development (SFD) also set up one-stop 
shops in many governorates to lessen the burden associated with company registration. Egypt 
established over the reporting period one stop shops in Cairo, Alexandria and Port Saïd, thus 
simplifying  the  procedures  and  reducing  the  time  span  to  establish  a  company  (48  hours). 
Commercial  registration  fees  were  also  reduced.  There  is  also  a  department  in  charge  of 
answering  questions  of  investors.  Corporate  governance  rules  are  being  set  down  for 
insurance  companies  and  mortgage  lenders  to  promote  greater  transparency  and  stability. 
Corporate  governance  standards  are  also  being  introduced  for  state-owned  enterprises. 
Finally, a Corporate Responsibility Institute was established in March 2008. Egypt is working 
on  modernising  its  bankruptcy  legislation.  In  October  2008  a  new  Economic  Courts  Law 
entered into force (see also section 2).  

On financial services, Egypt continued implementing the financial sector reform programme 
(FSRP) in line with the international best practices. The reforms target the foreign exchange 
market,  the  monetary  policy  framework  and  the  banking  and  the  non-banking  financial 
sectors. The banking sector reform aimed to privatise and restructure major state-owned and 
joint-venture  banks.  In  2008,  the  Central  Bank  of  Egypt  (CBE)  implemented  Basel  II 
principles for effective banking supervision. Egypt plans to consolidate its various regulatory 
bodies  for  financial  services  into  a  unified  financial  supervision  authority.  A  draft  law  was 
already  prepared.  The  insurance  market  is  currently  regulated  by  the  Insurance  Supervisory 
Authority, which will be merged with the Mortgage Finance Authority and the Capital Market 
Authority. The Investment Authority will remain as a separate body. 

Reports  by  PM  Nazif  in  2007  that  the  state  would  auction  67%  of  Banque  du  Caire  have 
stalled following strong criticism from the public and political opposition alike. In June 2008 
the  government  called  off  the  auction  of  the  Bank  citing  that  the  offers  submitted  by  five 
foreign banks were below-value bids.  

Other key areas 

Due  to  efforts  in  upgrading  its tax  administration  and  collection  procedures  and  despite  the 
decline of the corporate tax rate from 40% to 20%, and personal tax rate from 32% to 20%, 
the  tax  revenues  increased  from  EGP  75.76  billion  in  the  fiscal  year  2005  to  EGP  137.38 
billion in fiscal year 2008. According to estimations, tax revenues for the fiscal year 2009 are 
foreseen to increase to EGP 166.569 billion. 

The  Egyptian  Competition  Authority  (ECA)  continued  to  pursue  violations  of  competition 
rules.  Adopted  in  June  2008,  the  amendments  to  the  2005  Competition  Law  vested  some 

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increased powers in the Authority, which is  an independent body under the authority of the 
Prime Minister and has its own budget. The amendments included increasing the maximum 
penalty for the violation and to double the penalty in case of repeated violation. As part of the 
leniency programme, the amendments granted partial immunity to the first cartel member of 
an industry that provides evidence to the Authority. With regard to state aid, the Egyptian law 
addresses the issue of state aid in the sense of the WTO definition of subsidies.  

Limited progress was made as regards intellectual property rights. Egypt has not yet ratified 
the Madrid protocol relating to the Madrid agreement concerning the international registration 
of marks, nor the Treaty on the International Registration of Audiovisual Works. The newly 
established  economic  courts  are  now  in  charge  of  intellectual  property  rights  issues.  On  the 
enforcement side, procedures for the registration of pharmaceutical patents are being reduced 
from  eight  to  three  months.  Burdensome  administrative  procedures,  the  length  of  court 
proceedings  as  well  as  the  lack  of  trained  staff,  both  in  the  police  forces  and  public 
administration, contribute to the weak enforcement of IP rights. Circulation of counterfeit and 
pirated goods is still widespread. Awareness activities on IP rights remain a priority. Statistics 
on the number on seizures and the fines applied are not easily available. 

Egypt  continued  to  reform  its  public  procurement  system  towards  more  transparency  and 
better competition and works closely together with the OECD.  

Egypt  continued  to  improve  its  statistical  system,  with  considerable  assistance  from  the 
MEDSTAT programme. A twinning contract in the area of statistics was signed in July 2008 
to support the Central Agency for Public Mobilisation and Statistics.  

Progress can be reported in the field of audit and accounting, as auditors are legally liable 
for  reports  they  sign,  not  just  the  company  director.  The  Capital  Market  Authority  as  a 
supervising authority is holding a registrar of Certified Auditors. A quality control unit was 
established  over  the  reporting  period.  At  the  moment,  only  Egyptian  auditing  standards  are 
used, however, there are discussions about inter-Arab standards.  

With regard to public finance management, the second report of the national Transparency 
and Integrity Committee on Corruption in July 2008, drew attention to the issue of integrity 
and  the  determination  of  indicators  for  the  sound  management  and  expenditure  of  state 
resources citing the achievement of due financial control as one of the principal aims of the 
State budgetary policy. 

On  enterprise  policy,  Egypt  assessed  its  progress  in  implementing  the  Euro-Mediterranean 
Charter  for  Enterprise.  Results  were  compared  at  regional  level  and  presented  to  Euromed 
Industry Ministers in November 2008. Egypt has progressed in most sectors covered by the 
Charter,  with  the  exception  of  education  and  training  for  entrepreneurship.  Egypt’s  strong 
points include policy elaboration and strategic orientation. A national strategy for micro- and 
small  enterprises  2008-2012,  a  national  strategy  for  micro-credit,  and  an  industrial 
development strategy are in place. The main challenges ahead lie with policy implementation 
extending  to  the  whole  country  and  reaching  the  largest  possible  numbers  of  enterprises, 
including SMEs. In April 2008 the EU-Egypt Innovation Fund (EEIF) was created, which is 
the  main  component  of  the  Research,  Development  and  Innovation  (RDI)  programme.  The 
Fund supports projects for applied research and operates on a competitive basis. In addition, 
the European Commission has signed a Cooperation Agreement with the Egyptian Ministry of 
Trade and Industry that coordinates a network ensuring Egypt’s participation in the Enterprise 
Europe Network (EEN). 

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5. 

COOPERATION ON JUSTICE, FREEDOM AND SECURITY 

The second meeting of the EU Egypt Sub-committee on Justice and Security was held in June 
2008. 

There is no specific progress to report on border management. Although mentioned in the 
Action Plan, no dialogue has yet taken place on this issue.  

In the area of migration, there was limited progress throughout 2008. A positive development 
was  the  admission  of  Iraqi  refugees  to  benefit  from  social  assistance.  Dialogue  and 
cooperation  between  the  EU  and  Egypt  on  migration  issues  continued  expanding  steadily, 
particularly in the context of the Working Group on Migration, Social and Consular Affairs 
and the subcommittee on Justice and Security, which met in June 2008 for the second time. 
Egypt  is  benefiting  from  several  projects  under  the  AENEAS  programme  with  particular 
focus  on  dissemination  of  information  on  legal  migration.  On  violation  of  the  rights  of 
migrants, refugees and asylum seekers, see the section on human rights. 

With regard to the fight against organised crime, in February 2008 the National Committee 
to Combat and Prevent Trafficking in Persons established a committee to draft comprehensive 
anti-trafficking legislation in line with UN guidelines and relevant regional and international 
agreements. A special unit of the National Council for Childhood and Motherhood (NCCM – 
see section on Human Rights) launched a study to identify the scope of the problem of child 
and  adult  trafficking  while  the  Child  Law  criminalises  child  trafficking  with  stiff  penalties. 
Training workshops were organised for judges, prosecutors, relevant Ministry staff and social 
and legal experts. Egypt pursued efforts to combat organised crime and trafficking networks 
as well as a policy to combat internet use for terrorist purposes. Egypt did not ratify the Third 
Protocol  to  the  United  Nations  Convention  against  Transnational  Organized  Crime,  on  the 
Illicit  Manufacturing  of  and  Trafficking  in  Firearms,  Their  parts,  Components  and 
Ammunition.  

With  regard  to  the  fight  against  drugs,  cooperation  between  the  Anti-Narcotics  General 
Administration  (ANGA)  and  the  United  Nations  Office  on  Drugs  and  Crime  (UNODC) 
succeeded  in  controlling  and  reducing  supply  during  the  reporting  period.  Regional 
cooperation  through  the  Arab  Narcotic  Bureau  also  yielded  success,  while  anti-drug 
cultivation  campaigns  were  launched  in  remote  regions.  Capacity  building  of  ANGA 
personnel in terms of detection methods and application of information technology remains a 
priority alongside cooperation and coordination with relevant authorities in neighbouring ENP 
and  Arab  countries  on  intelligence  exchange  and  on  arrest  of  narcotic  traffickers.  The 
Ministry of the Interior in cooperation with the Ministry of Foreign Affairs provided training 
for  police  officers  from  the  Arab  League  and  African  countries  and  cooperates  with  other 
international  partners  on  precursor  detection  methods.  In  June  2008,  the  Fund  for  Drug 
Control  and  Treatment  of  Addiction  in  cooperation  with  the  National  Council  on  Addiction 
Control and Treatment finalised a national strategy on demand reduction and particularly in 
the  areas  of  prevention,  harm  reduction,  treatment  and  research.  Specialized  professional 
training  and  a  variety  of  therapeutic  services  including  detoxification  were  delivered 
alongside  the  provision  of  a  national  drugs  hotline.  Young  people  including  university 
students are a particular high risk group for which specific awareness raising and prevention 
programmes are important.  

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Egypt adopted amendments to the 2002 Law on combating money laundering in June 2008 
to include designated non-financial businesses and professions, such as real estate agents, as 
well as charities and foundations under its scope. Supervision authorities take into account the 
40 plus 9 Special Recommendations of the Financial Action Task Force (FATF), while KYC 
(know your customer) and KYB (know your business) practices have been introduced to the 
financial services industry. Moreover, the Financial Intelligence Unit within the Central Bank 
is obliged to report back to financial institutions and designated non-financial businesses on 
the  use  made  of  provided  financial  information.  The  FIU  continued  regional  cooperation 
within  the  Middle  East  &  North  Africa  Financial  Action  Task  Force  (MENAFATF)  and 
Egmont Groups. The Egyptian Banking Institute continued training for banking and financial 
professionals  on  anti-money  laundering  as  part  of  its  core  activity  while  law  enforcement 
agents were also targeted to improve their capacity to report suspicious transactions.  

With  regard  to  international  police  and  judicial  cooperation,  Egypt  is  a  member  of  the 
Hague  Conference  on  Private  International  Law  and  continues  work  on  the  signature  of  the 
various  relevant  instruments.  Egypt  appointed  a  liaison  judge  and  prosecutor  from  the 
Ministry  of  Justice  to  work  on  issues  related  to  the  Hague  Conference.  Consultations  with 
France  and  Italy  are  ongoing  with  regard  to  the  compatibility  of  bilateral  agreements  on 
mutual legal assistance and future cooperation with the former in the framework of Council of 
Europe Convention on Mutual Assistance in Criminal Matters.  

6. 

TRANSPORT,  ENERGY,  ENVIRONMENT,  THE  INFORMATION  SOCIETY,  RESEARCH 
AND DEVELOPMENT 

Egypt  is  reviewing  its  existing  national  strategy  for  the  transport  sector,  reported  on  last 
year: the “Multimodal transport and logistics system of the Eastern Mediterranean region and 
master plan in the Arab Republic of Egypt”, with a view to establishing a long term national 
strategy including the required transport investments over the next 20-25 years. Egypt set up a 
special  unit  in  the  Ministry  of  Transport  in  order  to  launch  a  number  of  Private  Public 
Partnership projects in the road and rail sectors.  

In the road sector, Egypt adopted a new traffic law that will allow it to effectively implement 
its  road  safety  action  plan.  Enforcement  is  being  coordinated  between  the  Ministry  of 
Transport and the Ministry of Interior. The Egyptian General Authority for Road Bridges and 
Land  Transportation  (GARBLT)  is  engaged  in  carrying  out  road  safety  audits,  redesigning 
infrastructure and strengthening its administrative capacity through intensive training. 

In  the  railway  sector,  which  is  the  backbone  of  passenger  transport  in  Egypt,  a  number  of 
structural  reforms  are  planned  in  three  phases  (restructuring,  commercialisation  and 
expansion)  over  the  next  five  years.  The  first  phase  of  separating  the  railways  into  distinct 
entities (freight, passenger, and infrastructure) was completed by June 2008. A new “Safety 
and  Risk  Management  Department”  was  set  up  in  May  2008.  As  an  important  step  in 
restructuring  the  railways,  the  Egyptian  Government  agreed  to  compensate  the  railways  for 
their  public  service  obligations,  namely  the  reduced  tariff  obligations  (for  e.g.  students, 
Government employees and other categories of passengers).  

In line with the agreement between the European Commission and the Egyptian authorities to 
amend  the  bilateral  air  services  agreements  in  force  with  Member  States  and  to  bring  them 
into conformity with EU law, Egypt has replaced the traditional nationality restrictions with a 
Community designation clause in seven of the bilateral air services agreements existing with 
EU  Member  States.  However,  the  majority  of  bilateral  agreements  is  still  not  in  conformity 

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with Community  law and the process needs to  be continued. To this purpose, the European 
Commission  is  maintaining  its  offer  to  negotiate  a  horizontal  agreement  with  Egypt,  which 
would allow amending the remaining bilateral agreements on behalf of the 27 Member States. 
In the field of civil aviation, Egypt made efforts to reform the sector and upgrading existing 
infrastructures. However some issues such as the privatisation of ground handling equipment 
are still pending. The Ministry of Civil Aviation is promoting Cairo International Airport as a 
hub.  

In the maritime sector, Egypt finalised a master plan for the development of East Port Said. 
Maritime safety remains an issue of concern and Egypt will need to step up enforcement in 
order to remove Egypt from the black list of the Paris Memorandum of Understanding on port 
state  control  A  twinning  project  with  the  Maritime  Safety  Authority  continued  to  be 
implemented.  

Egypt  and  the  EU  enhanced  energy  cooperation  inter  alia  by  the  signature,  in  December 
2008,  of  a  Memorandum  of  Understanding  on  a  strategic  partnership  on  energy.  Egypt  is  a 
significant  oil  producer  and  the  sixth  largest  natural  gas  supplier  of  the  EU.  It  wishes  to 
become an energy bridge connecting the Mashraq, Iraq, the Middle East, Africa and the EU. 
Egypt continued preparing a new energy strategy until 2030 and studied the potential to use 
oil  shale  and  uranium  reserves.  Egypt,  facing  high  electricity  demand  growth,  continued 
electricity  sector  reform  and  progressed  on  a  draft  electricity  law,  which  aims  to  introduce 
gradual market opening. Egypt pursued the preparation of a draft gas law and confirmed plans 
to  establish  a  gas  and  oil  regulatory  body.  Egypt  increased  energy  subsidies  considerably. 
Egypt studied methods to address price distortions, while taking account of social impact.  

In  April  2008,  Egypt  participated  in  an  EU-Mashraq  Ministerial  meeting  which  promoted 
energy cooperation in the Mashraq and the completion of the Arab gas pipeline. Ministers of 
Egypt, Lebanon, Jordan and Syria agreed to take steps to connect the pipeline to the European 
network. Gas exports to Jordan started through this pipe. Egypt pursued a strengthened role in 
the  EC  supported  Euro-Mashraq  gas  master  plan  project,  which  contributes  to  developing  a 
Euro-Mediterranean  natural  gas  market.  It  constructed  domestic  gas  pipelines  and  studied 
interconnection possibilities with Gaza, Libya and Sudan. A pipeline to Israel was completed 
and Egypt started gas exports. Egypt has plans to expand Liquefied Natural Gas and refinery 
capacity.  

Egypt  continued  work  on  electricity  interconnections  with  Mashraq  and  Maghreb  countries, 
which  serves  the  development  of  a  Euro-Mediterranean  electricity  ring.  It  assessed  the 
possibilities to enhance interconnections with Gaza and to create interconnections with Sudan 
and  Ethiopia  as  well  as  with  Gulf  countries.  Egypt,  Jordan  and  the  Palestinian  Authority 
explored the feasibility for further network interconnections. 

Egypt took some measures to enhance renewable energy use and an energy efficiency master 
plan and biofuels strategy are in preparation. In 2008, Egypt became host country to the EC, 
Denmark and Germany-funded Regional Centre for renewable energy and energy efficiency 
for Middle East and North Africa countries. The Centre was inaugurated in June 2008 and is 
supported by the EC, Denmark and Germany. The Supreme Council for Energy approved the 
objective  to  meet  20 %  of  electricity  demand  by  renewable  energy  by  2020.  Egypt  further 
constructed  major  wind  farms  and  (small)  hydro  plants  and  developed  plans  for  a  thermal 
solar  plant.  It  benefited  from  a  substantial  allocation  of  the  Neighbourhood  Investment 
Facility (under the European Neighbourhood and Partnership Instrument) for the wind farm at 
Gulf of El-Zeit. Egypt pursued Euro-Mediterranean energy cooperation, in particular through 

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the  multiple  projects  (see  Sectoral  report).  The  July  2008  Summit  of  the  Union  for  the 
Mediterranean endorsed the development of a Mediterranean Solar Plan.  

Egypt confirmed plans to build nuclear power plants and prepared a draft nuclear energy law, 
which  includes  the  establishment  of  an  independent  nuclear  regulatory  body.  In  May  2008, 
the European Commission and Egypt held a workshop on nuclear safety and security, which 
was  followed  up  by  an  EC  mission  aiming  to  develop  a  nuclear  safety  cooperation 
programme.  It  is  key  that  Egypt  will  ensure  a  high  level  of  safety  and  security  of  nuclear 
installations  and  that  the  research,  development  and  use  of  nuclear  energy  for  peaceful 
purposes are carried out in a  manner consistent with the objectives of the Non-Proliferation 
Treaty. 

In the field of climate change, Egypt continued preparing a second national communication, 
a greenhouse gas inventory, an assessment of climate impacts and adaptation measures. Egypt 
prepared  further  Clean  Development  Mechanism  (CDM)  projects.  Four  of  the  45  Egyptian 
projects that have been submitted to the Designated National Authority are registered at the 
UN  level.  Egypt  has  not  yet  adopted  a  formal  position  regarding  the  post-2012  climate 
regime.  Egypt  and  the  European  Commission  took  steps  to  enhance  contacts  on  climate 
change.  

to  require  further  development, 

The national environmental action plan (2002-2017) is under implementation. The legislative 
framework  continues 
to 
implementing legislation. In  this respect, Egypt initiated a revision of the 1994 Law for the 
Protection  of  the  Environment.  Implementing  legislation  on  water  quality  in  the  Nile  Basin 
was adopted. New legislation on water and wastewater is under preparation. A rural sanitation 
strategy  was  finalised.  Work  continued  to  develop  a  national  master  plan  for  water  and 
wastewater,  a  national  solid  waste  strategy  as  well  as  a  coastal  zone  management  strategy. 
The long term assessment of future water resources “Vision of 2050” continued. Egypt also 
took steps to implement existing strategies and plans, but continued attention is required.  

in  particular  with  regard 

Steps  were  taken  to  strengthen  administrative  capacity  in  the  field  of  waste  policy,  But  a 
major  challenge  is  still  to  strengthen  administrative  implementation  capacity  at  all  levels  of 
the  country,  including  coordination  between  authorities.  Some  activities  took  place  to 
integrate environment considerations into other policy sectors such as agriculture and energy. 
Monitoring  and  enforcement  still  require  special  attention.  Egypt  continued  to  publish 
environmental information on a regular basis, such as reports on the state of the environment 
(on 2007, published in 2008), and carried out some activities to inform and involve the public. 
A  communication  strategy  is  in  place  which  addresses,  inter  alia,  environmental  education 
and public participation. However, public consultation continues not to be mandatory for all 
environmental impact assessment studies. 

Egypt started procedures for ratifying the amendments to the Land-Based Sources Protocol to 
the  Barcelona  Convention  for  the  Protection  of  the  Marine  Environment  and  the  Coastal 
Region  of  the  Mediterranean,  and  to  accede  to  its  Integrated  Coastal  Zone  Management 
Protocol,  but  did  not  make  significant  progress  in  signing  its  new  Emergency  Protocol. 
Furthermore, the implementation of already ratified agreements requires particular attention. 
Egypt continued to participate in the Horizon 2020 Initiative, the Mediterranean Action Plan 
and the EU Water Initiative, including a national policy dialogue. Egypt also participated in 
the  December  2008  Euro-Mediterranean  Ministerial  Conference  on  Water,  launching  the 
preparation of a regional water strategy for the Mediterranean. Cooperation and information 
exchange took place between the European Commission and Egypt, including on water, waste 
management,  integrated  coastal  zone  management,  environmental  reporting  and  civil 

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protection. Other topics, such as further actions on water, were identified for possible closer 
cooperation. 

In  the  field  of  the  information  society,  the  National  Telecommunication  Regulatory 
Authority  (NTRA)  revised  the  Universal  Service  policy  in  order  to  provide  basic  telephony 
for all households. The  NTRA  introduced number portability for mobile telephony and will 
implement  it  for  fixed  line  services  once  a  second  fixed  operator  has  been  licensed. 
Furthermore,  the  NTRA  obliged  Telecom  Egypt  to  proceed  with  accounting  separation  and 
with  the  development  of  a  model  for  cost-oriented  interconnection  charges.  A  twinning 
project strengthening the capacity of the NTRA was launched during the reporting period; it 
covers organisation and management of NTRA, approximation of Egyptian regulations with 
the  EU  framework  and  monitoring  of  competition  in  the  sector.  During  the  first  phase  of 
implementation  in  2008,  experts  from  the  Italian  and  German  regulators  for  electronic 
communications visited Egypt.  

A new law on the regulation of audiovisual services and the Internet ('broadcasting law') was 
presented to Parliament in 2008. The law aims inter alia at putting different kinds of media 
and broadcasting under a national regulatory authority with the power to issue licences, and to 
remove them under certain circumstances (such as in cases of threats to social peace, national 
unity,  public  order  and  society’s  values).  It  allows  for  prison  sentences  and  fines  against 
journalists. During 2008, legal action was taken against Al Jazeera in Egypt (for broadcasting 
worker demonstrations in Mahalla in April) and against a local supplier of broadcast services 
and  equipment  to  many  foreign  news  media.  In  February  2008,  Egypt,  with  Saudi  Arabia, 
successfully  sponsored  an  Arab  League  non-binding  resolution  seeking  to  regulate  satellite 
TV stations and programme content.  

In  the  area  of  research  and  innovation  Egypt  is  successfully  implementing  its  national 
reform  strategy  (2007-2012).  The  second  meeting  of  the  Higher  Council  for  Science  and 
Technology was held in July 2008. During this meeting a list of broad national priorities was 
adopted  as  the  first  phase  of  a  priority-setting  exercise.  The  new  Fund  for  Science  and 
Technological  Development  (STDF)  completed  its first round of proposals in autumn 2008. 
Eighty-six  proposals  were  selected  for  funding,  most  of  which  were  for  basic  and  applied 
research. The first call for proposals under the EU-Egypt Innovation Fund (EEIF – see section 
on enterprise policy) was completed in October 2008. The results were beyond expectations, 
both  in  terms  of  the  number  and  quality  of  proposals  submitted.  In  preparation  for  the  next 
round  of  EEIF  calls  within  the  EU  Research  and  Development  and  Innovation  (RDI) 
programme, key topics for research and innovation have been identified in collaboration with 
the  research  and  industrial  communities.  Under  FP7,  Egyptian  researchers  were  particularly 
successful  in  their  participation  in  the  Marie  Curie  International  Research  Staff  Exchange 
Scheme (IRSES), which aims at strengthening research partnerships through staff exchanges 
and  networking  between  European  research  organizations  and  organizations  from  third 
countries.  The  network  of  FP7  focal  points  contributed  to  making  Egypt's  participation  the 
highest  among  Mediterranean  partner  countries.  Health,  environment,  food,  agriculture  & 
biotechnologies as well as Information and Communication Technologies were identified as 
thematic areas of Egypt's main interest.  

7. 

PEOPLE-TO-PEOPLE CONTACTS, EDUCATION AND HEALTH 

Reform of the education system has been carried out under the National Strategic plan 2007-
2012  focusing  on  basic  education,  general,  technical  and  vocational  secondary  education  as 
well as special needs. Additional reforms under the National Strategic Plan for the Reform of 

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Pre-University  Education  (2007–2012)  concentrate  on  quality  enhancement,  system 
management,  equal  access,  decentralization  and  community  participation.  Measures 
undertaken  to  date  include  a  first  phase  of  a  teachers’  career  framework  (cadre)  and 
expansion of early childhood and girls’ education provision.  

In  the  area  of  higher  education,  the  Ministry  of  Higher  Education  developed  the  second 
phase  of  the  Higher  Education  Enhancement  Plan  2008-2012,  alongside  a  forecasting 
perspective  for  the  period  2015-2022.  The  plan  focuses  in  particular  on  the  level  and 
distribution  of  resources  including  measures  to  encourage  balanced  higher  education 
enrolments between all governorates, away from larger urban centres. The National Authority 
for  Quality  Assurance  and  Accreditation  started  work  on  the  accreditation  of  all  Egyptian 
educational institutions while as of May 2008, national panels were convened to review and 
monitor  strategic  education  reform  objectives.  In  this  context,  Egypt  signed  a  Financing 
Agreement  of  EUR  120  million  with  the  European  Commission  for  an  Education  Sector 
Policy  Support  Programmes  in  June  2008.  Increases  in  school  enrolment  and  consequent 
decrease  in  youth  illiteracy  were  noted.  However,  tangible  improvements  to  the  quality  of 
education,  especially  the  pursuit  of  decentralization,  community  involvement  and  attention 
towards human resources development remain policy challenges. Measures to enhance links 
between  higher  education  institutions,  industry  and  innovation  centres  are  also  important  in 
this regard. 

Illiteracy  remained  a  key  area  of  concern  requiring  a  concerted  response.  The  General 
Authority for Literacy and Adult Education launched a plan to combat illiteracy, which was 
presented to the EU in July 2008. It aims at decreasing it by half in 2015. The National Plan 
for  Adult  Literacy  uses  an  innovative  approach  combining  educational  instruction  and 
vocational activities to equip new literates with skills targeting local labour market needs. It 
prioritises young people and women in rural areas.  

Reform of Technical Education and Vocational Training continued with significant EC and 
international  donor  assistance  in  line  with  the  principles  established  by  the  2002  policy 
statement  and  employment  reform.  The  development  of  labour-market  relevant  training, 
quality assurance and accreditation mechanisms as well as governance and financing reform 
remain important in order to foster the transition to a decentralised and demand-led system. 
Egypt  aims  to  establish  a  national  qualification  framework  based  on  the  European 
Qualifications Framework.  

A  total  of  nine  Egyptian  students  and  five  scholars  received  scholarships  under  Erasmus 
Mundus.  A  further  four  Egyptian  students  received  scholarships  in  European  integration 
studies at masters level for students from the ENPI region under a special pilot project for the 
academic  year  2008-9.  Egyptian  universities  and  higher  education  institutions  participated 
actively in first Call for Proposals under Tempus IV, resulting in seven projects selected for 
the  academic  year  2008-9.  Egypt  hosted  the  inter-regional  Tempus  Conference  on  Quality 
Assurance  in  Higher  Education  in  May  2008  gathering  some  250  participants  from  all  28 
participating  countries,  contributing  to  a  regional  policy  dialogue  on  how  to  enhance 
educational quality and student participation in higher education provision. 

In relation to youth policy, the National Council for Youth (NYC) continued work on a four- 
year  action  plan  (2006-10)  to  review  current  youth-related  legislation  while  the  Ministry  of 
Manpower  and  Migration  is  developing  a  Youth  Employment  National  Action  Plan.  The 
absence  of  a  comprehensive  policy  and  coordination  between  Ministries,  state  agencies  and 
civil  society  organizations  hinders  the  emergence  of  effective,  cross-sectoral  youth 

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development actions. In the area of non-formal education, an increase in the number of youth 
leadership  development  programmes  was  noted  including  those  provided  by  civil  society 
organizations.  Egyptian  young  people  and  youth  workers  benefitted  from  exchanges  and 
voluntary service activities under the Euro-Med Youth III programme as well as under Youth 
in Action. 

On  culture,  Egypt  participated  actively  on  a  regional  level  in  the  Euromed  Heritage  III 
programme  in  areas  such  as  the  establishment  of  a  virtual  museum  on  Islamic  art  in  the 
Mediterranean  and  the  rehabilitation  of  traditional  Mediterranean  architecture.  The  Anna 
Lindh Foundation, based in Alexandria, launched its “1001 Actions for Dialogue” campaign 
in May 2008 as part of the Euro-Mediterranean Year for Intercultural Dialogue. The Egyptian 
National  Network  is  the  second  largest,  involving  some  115  members,  including  academic 
institutions  and  NGOs  active  in  the  fields  of  youth,  community  development,  environment, 
the arts, human rights and the media,  

Egypt  pursued  health  sector  reform  targeting,  inter  alia,  the  implementation  of  a  “Family 
health model” throughout the country. The overall objective is universal coverage, financial 
sustainability and high quality of healthcare. On the basis of the investment plan 2007-2010 
Egypt implemented further “Family health units” in its governorates. It prepared a draft health 
insurance  law.  In  November  2008,  Egypt  and  the  EU  co-chaired  the  second  Euro-
Mediterranean  ministerial  health  conference.  The  conference,  held  in  Cairo,  opened  new 
perspectives for regional health cooperation. The European Commission invited Egypt to the 
EU Network of competent authorities in health information and knowledge. Egypt continued 
to  participate  in  the  “EpiSouth”  network  for  EU,  Mediterranean  and  Balkan  countries  on 
communicable diseases. 

8. 

FINANCIAL COOPERATION 

The ENPI financial envelope for Egypt under the National Indicative Programme 2007-2010 
is  EUR  558  million.  An  additional  EUR  10  million  was  allocated  in  support  for  education 
reform in 2008. The programme is geared towards supporting the achievement of key policy 
objectives  as  outlined  in  the  Action  Plan  and  pursues  three  priorities:  political  reform  and 
good  governance;  competitiveness  and  productivity  of  the  economy,  as  well  as  socio-
economic sustainability of the development process. 

The  implementation  of  the  measures  covered  by  the  2007  Annual  Action  Programme  is 
underway.  

In 2008, the European Commission continued to support the national reform efforts in Egypt 
and committed assistance for a total amount of EUR 149 million under the ENPI. Within this 
envelope,  EUR  3  million  were  allocated  to  support  the  Egyptian  government's  efforts  to 
improve good governance in public administration. EUR 17 million were earmarked for the 
promotion  and  protection  of  human  rights  focused  on  civil  and  political  rights,  women  and 
child  rights  and  environmental  rights,  supporting  both  Government  institutions  and  civil 
society  organizations.  EUR  80  million  were  directed  at  a  policy  support  programme  in  the 
transport sector covering administrative, regulatory and legal issues in the land, rail and inland 
waterway  sectors.  The  overall  aim  of  the  reforms  is  to  improve  access  and  quality  of 
transport. 

The  2008  package  includes  a  further  EUR  29  million  to  improve  water  and  waste  water 
services.  These  funds  will  be  combined  with  other  European  donors  (KfW,  EIB  and  AFD) 

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and  those  of  the  Egyptian  government  for  a  total  project  value  of  EUR  295  million.  The 
project  will  improve  water  quality  and  output  as  well  as  wastewater  services  in  several 
governorates, directly benefitting over 4 million people.  

Finally,  an  additional  EUR  20  million  was  allocated  to  further  strengthen  the  Education 
Sector Policy Support Programme (ESPSP), which had already received EUR 120 million in 
2007. Education reform is a key element of the Egyptian Government's reform agenda which 
is  supported  by  several  donors.  The  overall  aim  is  to  improve  the  quality  and  access  to 
education,  particularly  to  disadvantaged  children,  while  improving  cost  effectiveness  and 
financial sustainability. 

Egypt makes good use of the Twinning instrument and the possibilities offered under TAIEX, 
such as study trips and experts’ workshops allowing the sharing of EU experience in a wide 
range of policies. 14 Twinning projects are currently under implementation, 10 projects were 
launched  in  2008  in  sectors  such  as  transport  (maritime,  road,  railways),  tourism,  postal 
services, telecommunications and environment.  

In addition to the bilateral allocation, Egypt also benefits from cooperation activities financed 
under  the  ENPI  multi-country  (including  the  Neighbourhood  Investment  Facility)  and 
regional  programmes  and  is  eligible  under  the  ENPI  Cross  Border  Cooperation  component. 
Under the Neighbourhood Investment Facility (NIF), contributions for two projects in Egypt 
were approved in 2008, committing EUR 10 million in grant support and EUR 5 million in 
technical  assistance,  expecting  to  leverage  EUR  420.5  million  in  loans  from  European 
Finance Institutions in the energy and social sector.  

In 2008 the EIB signed a EUR 260 million EIB loan with the Egyptian national gas company 
EGAS  for  the  expansion  of  the  national  gas  grid  and  approved  sovereign  loans  of  EUR  70 
million for the Improved Water and Wastewater Services project (IWSP) and EUR 50 million 
for  the  Gabal  el  Zayt  Windfarm  project.  In  addition  to  its  long-term  lending  activity,  the 
European  Investment  Bank  continues  to  provide  considerable  risk  capital  resources  to 
underpin the successful development of the Egyptian private equity industry, in support of the 
private sector and the SME sector in particular. 

Egypt  is  an  active  partner  in  the  CBC  Mediterranean  Sea  basin  programme  (EUR  173,607 
million for the programme in the period 2007-13). Through this programme the populations 
of  the  maritime  regions  bordering  the  Mediterranean  Sea  will  receive  funding  for  joint  co-
operation projects aimed at fostering sustainable development and enhancing human contacts.  

Coordination  with  other  donors  has  been  pursued  in  the  context  of  the  Donor  Assistance 
Group  (DAG)  in  which  all  major  donors  are  represented.  The  DAG  operates  through  eight 
thematic  sub-groups.  The  main  obstacle  encountered  in  the  implementation  of  cooperation 
programme  is  the  lack  of  internal  coordination  within  the  large  and  complex  Egyptian 
administration.  

EN 

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   EN