Commission staff working document - Accompanying the Communication from the Commission to the European Parliament and the Council - Taking stock of the European Neighbourhood Policy (ENP) - Implementation of the European Neighbourhood Policy in 2009: Progress Report Egypt {COM(2010) 207 final} {SEC(2010) 513 final} {SEC(2010) 514 final} {SEC(2010) 515 final} {SEC(2010) 516 final} {SEC(2010) 518 final} {SEC(2010) 519 final} {SEC(2010) 520 final} {SEC(2010) 521 final} {SEC(2010) 522 final} {SEC(2010) 523 final} {SEC(2010) 524 final} {SEC(2010) 525 final}
Date: 2010-05-04
Institutions: European Commission
Subjects: Egypt, European neighbourhood policy, democracy, economic integration, energy policy, environmental protection, geographical mobility, human rights, legal system, political cooperation, report, settlement of disputes

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EUROPEAN COMMISSION  

Brussels, 12.5.2010 
SEC(2010) 517 final 

COMMISSION STAFF WORKING DOCUMENT 

Accompanying the 

COMMUNICATION FROM THE COMMISSION  
TO THE EUROPEAN PARLIAMENT AND THE COUNCIL 
Taking stock of the European Neighbourhood Policy (ENP) 

Implementation of the European Neighbourhood Policy in 2009: 
Progress Report Egypt 

{COM(2010) 207 final} 
{SEC(2010) 513 final} 
{SEC(2010) 514 final} 
{SEC(2010) 515 final} 
{SEC(2010) 516 final} 
{SEC(2010) 518 final} 
{SEC(2010) 519 final} 
{SEC(2010) 520 final} 
{SEC(2010) 521 final} 
{SEC(2010) 522 final} 
{SEC(2010) 523 final} 
{SEC(2010) 524 final} 
{SEC(2010) 525 final} 

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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. An EU- Egypt Association Agreement entered into force in June 
2004.  It  sets  out  in  more  detail  the  specific  areas  that  can  be  developed  bilaterally.  On  this 
basis, the EU-Egypt ENP Action Plan was approved in March 2007 for a period of three to 
five  years.  The  framework  for  regional  co-operation  is  the  Euro-Mediterranean  Partnership, 
inaugurated  in  1995  and  reinforced  in  2008  with  the  creation  of  the  Union  for  the 
Mediterranean (UfM), which establishes a policy with ambitious and long-term objectives. 

EU-Egypt  meetings  took  place  at  the  level  of  the  Association  Council,  the  Association 
Committee, and seven of the eight subcommittees. An Economic Dialogue took place and the 
Working Group on Migration, Social and Consular Affairs met. 

This document reports on progress made on the implementation of the EU-Egypt ENP Action 
Plan  between  1  January  and  31  December  2009,  although  developments  outside  this  period 
are  also  taken  into  consideration  when  deemed  relevant.  It  is  not  a  general  review  of  the 
political  and  economic  situation  in  Egypt.  In  addition,  for  information  on  regional  and 
multilateral sector processes, please refer to the sectoral report. 

In  April  2009,  Egypt  and  the  EU  jointly  decided  to  work  towards  enhancing  relations,  as 
proposed by Egypt in 2008. It was agreed that an ad hoc group would be created to consider 
ways for enhancing relations, present policy options for strengthening bilateral relations, and 
explore possibilities for incorporating the results of reflections into the ENP Action Plan. A 
first meeting of the Ad hoc Group took place in July 2009. Ideas for enhancing relations were 
also discussed by the different technical sub-committees. 

Egypt continues to show commitment to its ENP Action Plan and to be active in the different 
sectoral sub-committee meetings, enabling wide-ranging and fruitful discussions to take place 
on  the  implementation  of  priorities  set  down  in  the  Association  Agreement  and  the  Action 
Plan. In many technical areas progress is encouraging, while much work still lies ahead.  

2009  was  a  year  marked  by  Egypt’s  commitment  to  continue  its  reforms,  despite  the 
slowdown  of  the  economy  as  a  result  of  the  international financial  crisis.  Economic  growth 
was  at  an  overall  4.7%,  outperforming  expectations,  yet  not  enough  to  cope  with  the 
combined challenges of poverty, inflation and unemployment.  

Concerns remain on the pace of the implementation of reforms in the field of democratisation 
and  human  rights,  although  the  Government  seems  increasingly  convinced  of  the  need  to 
tackle governance issues as part of its domestic reform agenda. 

Egypt  remained  an  important  trading  partner  for  the  EU  despite  the  slowdown  of  bilateral 
trade in 2009. With the free trade agreement in the field of agricultural products adopted in 
2009, there are good prospects that the economy will move up quickly to take advantage of 
the new opportunities offered by this agreement. Negotiations on the liberalisation of trade in 
services continued through 2009. 

Overall  progress  on  the  implementation  of  the  Action  Plan  in  2009  can  be  summarised  as 
encouraging,  with  a  strong  commitment  to  social,  economic  and  sector  reforms,  and  to  a 
lesser extent to political reform. Moving towards enhanced relations is a shared objective of 

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both Egypt and the EU. Continued and consolidated progress in areas related to human rights 
and democracy will be an important foundation for these. 

2. 

POLITICAL DIALOGUE AND REFORM 

Democracy and rule of law 

The state of emergency, instituted in 1981, continued to be in force, having been extended in 
May  2008  for  a  further  two  year  period,  or  until  new  anti-terrorism  legislation  is  passed.  A 
draft  counter-terrorism  law  is  still  under  preparation.  The  further  extension  of  the  state  of 
emergency  is  cause  of  concern  and  disappointment.  While  its  lifting  as  soon  as  possible  is 
important, it will be equally important that the counter-terrorism legislation adopted is in line 
with  international  standards,  thus  striking  an  effective  balance  between  security  and 
individual rights.  

Amendments to the Electoral Law in advance of the 2010 parliamentary elections had been 
anticipated, but are now unlikely. Such amendments, which would be in accordance with the 
last  constitutional  amendments,  would  allow  for  parties  and  candidates'  lists  to  coexist  with 
the  current  individual  candidacy  system.  Egyptian  NGOs  will  be  permitted  to  monitor  the 
2010 parliamentary elections. The EU reiterated its offer for technical assistance to improve 
the electoral framework including voter registration, but this was not taken up. 

No  progress  was  made  on  the  independence  of  the  judiciary  which  remains  subject  to  the 
Emergency  Law.  Special  courts,  such  as  the  emergency  state  security  courts  and  military 
courts, continue to exercise jurisdiction over security offences. Civilians, especially in cases 
involving  national  security  or  terrorism,  continue  to  be  tried  before  such  courts.  No 
amendments to the law of judicial authority aiming at enhancing judicial independence were 
presented  to  Parliament.  The  Ministry  of  Justice  is  still  capable  of  influencing  the  career  of 
the  judges.  There  have  been  continuous  calls  by  a  growing  number  of  judges  to  move  the 
judicial inspection to the Supreme Council of Judiciary in order to minimise the possibilities 
of  the  executive  intervention  in  the  judicial  affairs.  With  regard  to  the  reform  of  the 
administration  of  justice,  Egypt  continues  to  strive  to  improve  efficiency,  working  on 
training and capacity building for legal professionals and moving into a second stage of court 
modernisation and making progress towards automation in the seven main Governorates. All 
courts of appeal and all primary courts now have some level of automation. A legal assistance 
programme was launched within some family courts, and literature is available to inform the 
public  about  legal  provisions  in  place  for  domestic  and  international  family  disputes.  A 
performance evaluation programme for primary courts, based on a decree passed in 2009, was 
introduced,  and  a  permanent  committee  for  economic  courts  was  established,  charged  with 
monitoring the performance of such courts. 

Egypt has still not adopted legislative amendments in the area of pre-trial detention, already 
announced in its 2007 voluntary pledges to the UN Human Rights Council. 

During the first quarter of 2009 the national Transparency and Integrity Committee (TIC) on 
corruption  held  three  meetings  aimed  at  maintaining,  developing  and  implementing  anti-
corruption  policies.  The  TIC  is  currently  working  to  develop  a  national  anti-corruption 
strategy.  Egypt’s  position  improved  in  terms  of  perceived  corruption  in  international 
comparison. 

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With  regard  to  local  administration  reform,  the  Government  is  finalising  a  National 
Decentralisation  Strategy  and  a  decision  was  taken  to  roll  out  nationwide  a  pilot  project  in 
three governorates,  designed  to strengthen the local authorities’  financial and  administrative 
competences especially in key sectors such as education.  

The EU-Egypt subcommittee on Political Matters, Human rights and democracy, international 
and regional issues met for the second time in July 2009. Dialogue was constructive. 

Human rights and fundamental freedoms 

Egypt was among a number of countries for which a Universal Periodic Review (UPR) under 
the UN Human Rights Council took place in February 2010. Considerable preparatory work 
was  carried  out  by  the  Government  in  2009,  through,  for  instance  consultations  with  civil 
society organisations and other stakeholders. The Government issued a National Report with 
voluntary  pledges.  Several  civil  society  organisations  submitted  their  own  reports  in 
preparation for the UPR. The Government agreed to accept 119 of the 165 recommendations 
made during the review, covering inter alia such issues as release of administrative detainees, 
amending the definition of torture, investigating and prosecuting torture cases, lifting the state 
of emergency, ensuring compliance of any new anti-terror law with international human rights 
standards,  and  protecting  the  rights  of  human  rights  defenders.  Fourteen  recommendations 
were rejected, seven considered factually incorrect, and 25 were deferred to later. 

The  application  of  the  Emergency  Law  continues  to  represent  a  major  obstacle  to  the  full 
enjoyment of human rights and fundamental freedoms. Provisions allow for, in particular, the 
imposition  of  administrative  detention  for  45  days  without  trial,  which  is  renewable 
indefinitely. The state of emergency also provides for the curtailing of the right to assembly at 
any  moment,  for  the  lawfulness  of  the  use  of  force  by  the  police  being  judged  by  the 
executive only, and for administrative detention cases being tried by State Security (military) 
courts.  Court  rulings  under  the  Emergency  Law  often  circumvent  constitutional  and 
international safeguards such as the guarantee for a fair and impartial trial.  

The  National  Council  for  Human  Rights  (NCHR)  continued  to  become  more  active,  for 
example  by  working,  together  with  the  Human  Rights  Ombudsman’s  Office,  to  resolve 
complaints  made  against  the  police  in  remote  areas  through  the  use  of  mobile  units.  The 
NCHR has also increasingly made its voice heard, for instance in its report in advance of the 
UPR, and could still be further empowered.  

Egypt is party to the main international and regional human rights instruments1, but still not to 
most  of  their  optional  protocols.  Egypt  has  lodged  special  or  general  reservations  when 
ratifying treaties when they were judged incompatible with Islamic law.  

Egypt is currently late in submitting a total of six mandatory periodic reports to five UN treaty 
bodies. In 2009, Egypt accepted for the first time a visit of a UN Special Rapporteur, on the 
Protection  and  Promotion  of  Human  Rights  and  Fundamental  Freedoms  while  Countering 
Terrorism (April), and hosted a visit of the Independent Expert on Water and Sanitation. 

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e.g. The International Convention on the Elimination of All Forms of Racial Discrimination (ICERD), 
the  International  Covenant  on  Economic  Social  and  Cultural  Rights  (ICESCR),  the  International 
Covenant on Civil and Political Rights (ICCPR), the Convention on the Elimination of Discrimination 
against Women (CEDAW), the Convention against Torture (CAT), the International Convention on the 
Protection  of  the  Rights  of  All  Migrant  Workers  and  Members  of  Their  Families  (ICRMW),  and  the 
Convention on the Rights of Persons with Disabilities (CPRD). 

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Egypt retains the death penalty for 29 crimes and uses it as a deterrent. Death sentences are 
regularly handed down, including for less serious crimes, but the number of executions is not 
known. There are no reliable statistics on the death penalty. 

Although  the  problem  is  acknowledged  by  the  authorities,  limited  progress  was  made  in 
tackling the practice of torture and ill treatment, mainly in police stations and premises of 
the State Security Investigations.  This remains one of the most serious human rights issues. 
The  definition  of  torture  as  a  criminal  offence  does  not  yet  fully  comply  with  the  UN 
Convention  Against  Torture.  Egypt  has  not  yet  responded  to  repeated  requests  made  since 
1996 (and echoed by the EU) for an invitation to the UN Rapporteur on Torture to visit Egypt. 
It is not a party to the Optional Protocol of the UN Convention Against Torture. 

The  Egyptian  authorities  made  efforts  in  2009  to  improve  prison  conditions  and  to  respect 
prisoners’ rights. A human rights department was established within the Prisons Sector at the 
Ministry  of  the  Interior  with  the  mandate  of  examining  any  ill-treatment  allegations  and 
ensuring  prisoner  protection.  There  was  some  progress  in  2009  as  regards  access  of 
international human rights observers to prisons and detention centres, as both the Executive 
Director  of  the  UN  Office  on  Drugs  and  Crime  and  the  deputy  Head  of  the  African 
Committee  on  Human  Rights  were  able  to  visit  prisons.  The  National  Council  for  Human 
Rights, the National Council for Women and some local independent organisations were also 
allowed  to  carry  out  prison  inspections.  However,  most  prisons  continue  to  suffer  from 
overcrowding and poor sanitation, and conditions in police stations and temporary detention 
centres are a further cause for concern. The ICRC and the Special rapporteur on terrorism has 
not been granted prison access. 

Freedom of expression is guaranteed by the Egyptian constitution and protected by law. The 
number  and  readership  of  independent  newspapers  continued  to  grow  in  2009,  generally 
adopting a critical line on Government and State policy. The number of court actions against 
internet  bloggers  and  activists  increased  in  2009,  with  several  tried  under  emergency  rather 
than civil law and sentenced to prison. A draft broadcast law under preparation in 2008 was 
not finalised for submission to the People's Assembly in 2009. Under the draft law a national 
authority for broadcasting regulation is to be established, vested with powers to regulate both 
broadcasting and trade in broadcasting equipment, including licensing of broadcasters and the 
issue of permits. It also provides for the regulation of broadcast content and the imposition of 
fines or imprisonment in certain circumstances. A draft law on the regulation of audiovisual 
and the internet has been under preparation for some time.  

With regard to freedom of association and assembly, although these are guaranteed by the 
constitution, they are restricted by the provisions of the  Emergency Law and the NGO law. 
Associations  face  restrictive  registration  processes,  require  prior  clearance  of  foreign  funds, 
are  required  to  work  within  a  narrow  scope  of  activities,  face  repeated  security  and  audit 
inspections and are vulnerable to closure by ministerial decision.  

With regard to freedom of religion, the Egyptian constitution provides for freedom of belief 
and the free practice of religion. Islam is the official religion and the Islamic Sharia law the 
primary  source  of  legislation.  In  March  2009  the  Minister  of  the  Interior  issued  a  decree 
recognising  the  right  of  adherents  of  non-recognised  religions  to  obtain  identification 
documents without having to declare themselves as Christian, Jews, or Muslims. Two Bahá'ís  
had  their  first  national  identity  cards  issued  in  August  2009  that  did  not  specify  a  religious 
affiliation. A unified code on places of worship was to be presented to the National Assembly 
in  November  2009,  but  was  withdrawn.  Acts  of  discrimination  and  sectarian  violence 
continue to be reported. 

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Although Egypt is a signatory to the 1951 Refugee Convention and to its 1967 Protocol, there 
continue  to  be  reports  of  violations  of  rights  of  migrants,  refugees  and  asylum  seekers. 
According  to  official  reports,  28  illegal  migrants  of  sub-Saharan  origin  were  killed  at  the 
Egyptian-Israeli border in 2009, and in June 2009 up to 1,200 Eritrean asylum-seekers were 
forcibly  returned  to  their  country  of  origin.  Migrants  and  refugees  are  subject  to  arbitrary 
arrest  and  detention,  trials  before  military  courts,  and  forcible  deportation  without  the 
opportunity to make asylum claims. It is estimated that several hundred were arrested in 2009.  

Although Egypt continued to enhance the participation of women in political, economic and 
social life (see also "Employment and Social policy"), limited progress can be reported in the 
promotion  of  women’s  rights.  Egypt  maintains  reservations  on  the  provisions  of  the 
Convention on the Elimination of all forms of Discrimination against Women (CEDAW) on 
marriage  and  divorce  and  is  not  party  to  its  optional  protocol.  The  Government  pledged  to 
enact  legislation  on  violence  against  women  before  its  UPR.  A  draft  law  on  sexual 
harassment,  including  amendments  to  the  Penal  Code,  is  currently  under  review  by  the 
People’s  Assembly  Legislative  Committee.  The  National  Council  for  Women  is  currently 
working  on  a  strategy  to  combat  violence  against  women  and  is  expected  to  produce  the 
document in 2010.  

The  Government,  including  the  Ministry  of  State  for  Family  and  Population  established  in 
March  2009,  made  continued  progress  in  its  efforts  to  combat  Female  Genital  Mutilation 
(FGM).  Following  the  legal  proscription  of  FGM  in  2008,  the  first  person  was  charged  for 
performing it in 2009.  

Good  progress  continues  to  be  made  to  consolidate  the  rights  of  the  child,  following  the 
introduction of new legislation in 2008 in line with the UN Convention on the Rights of the 
Child.  The  National  Council  for  Childhood  and  Motherhood  carries  out  a  number  of 
programmes  to  protect  and  enhance  children’s  rights.  However,  school  drop-out  rates, 
especially among girls, are high and child labour, despite the existence of legislation banning 
it,  continues,  especially  in  agriculture.  In  January  2009,  Egypt  launched  its  National  Child 
Rights  Observatory.  It  aims  at  promoting  child  rights-based  and  evidence-based  legislation 
and  programmes  by  carrying  out  surveys  on  children  rights  and  managing  a  dedicated 
database.  

No  progress  was  made  in  2009  as  regards  fundamental  social  rights  and  core  labour 
standards,  including  guaranteeing  the  independence  of  trade  unions.  The  Unified  Labour 
Law  of  2002  continues  to  govern  trade  union  rights  and  excludes  the  establishment  of  new 
trade unions that are not federated in the General Federation of Trade Unions, thus does not 
allow  for  trade  union  pluralism.  Effective  implementation  of  the  Conventions  of  the 
International Labour Organisation (ILO) on the right to organise and collective bargaining as 
well as on the freedom of association and the right to organise is still not ensured. A union of 
Real  Estate  Tax  Authority  tax  collectors  was  formed  in  2009,  initially  tolerated  by  the 
Government,  but  their  activities  have  since  met  with  resistance,  placing  in  doubt  the  legal 
status of the independent union (not registered with the Egyptian Trade Union Federation – 
existence of trade unions outside this entity is prohibited.) A Memorandum of Understanding 
was signed in April 2009 at the occasion of an ILO technical cooperation mission. It includes 
a  number  of  commitments,  including  an  organisation  of  a  workshop  with  the  ILO  on 
exchanges of best practices in the field of labour rights. This workshop, initially foreseen for 
July 2009, was postponed twice sine die during the reporting period at the request of Egypt.  

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With  regards  to  rights  of  minorities,  relations  between  the  Bedouin  and  the  Egyptian 
authorities remain tense, especially over land issues. 

Cooperation on foreign and security policy 

Egypt  is  an  active  partner  on  CFSP  matters.  Egypt  continued  to  explore  ways  for  a 
comprehensive solution to the MEPP, in particular through its mediation efforts between the 
Palestinian factions, although these did not achieve success during the reporting period. Egypt 
hosted a Pledging Conference for the occupied Palestinian territory in March 2009 following 
the  Gaza  conflict.  Egypt  is  also  actively  engaged  in  Africa,  and  continues  to  play  an  active 
role in the Africa-EU political dialogue taking place in the framework of the Joint Africa-EU 
partnership,  in  particular  through  its  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.  

Egypt  actively  supported  the  continued  unification  of  Sudan  and  backed  Arab  League  and 
African  Union  moves  to  foster  peace  in  Darfur,  providing  humanitarian  assistance  and 
contributions  to  peace-keeping  forces.  It  invited  rebel  movements  to  Cairo  for  peace  talks. 
Egypt  backs  anti-piracy  efforts  in  the  Horn  of  Africa,  and  continues  negotiations  with  Nile 
Basin  states  who  seek  a  greater  share  of  Nile  river  waters.  Egypt  was  co-president  of  the 
Union for the Mediterranean (UfM) throughout 2009 (its two year term ends in mid-2010).  

Egypt continued to work with the EU to identify opportunities for tri-lateral co-operation, in 
the context of which Egypt and the EU would join forces as donors to provide support to Sub-
Saharan African countries consistent with the joint Africa-EU Strategic Partnership. 

Discussions  between  the  EU  and  Egypt  on  counter-terrorism  took  place  in  March  2009, 
concluding  with  a  call  for  further  cooperation  of  a  concrete/operational  nature.  The  UN 
Special  Rapporteur  on  the  protection  of  human  rights  while  countering  terrorism  made  his 
first ever visit to Egypt in April 2009, albeit under a limited mandate (only to discuss Egypt's 
draft anti-terror law). A request to make a follow-up visit to Egypt was not accepted. Egypt 
seeks EU and international backing for its initiative to combat the use of 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.  

Egypt continues to actively pursue a regional policy of disarmament and non-proliferation of 
weapons of mass destruction, in particular in the Middle East. Bilaterally and in its capacity 
as chair of the  Non-Aligned Movement,  Egypt is pressing for a NPT review in 2010 which 
includes  the  issue  of  a  nuclear-free  Middle  East.  Dialogue  between  the  EU  and  Egypt  on 
disarmament issues continued in 2009, with the EU agreeing in January 2010 to putting the 
dialogue on a regular basis. 

Egypt has not yet signed the Ottawa Convention on the Prohibition of the Use, Stockpiling, 
Production  and  Transfer  of  Anti-Personnel  Mines  and  on  their  Destruction,  thus  hindering 
possible EU support for mines clearance in Sinai and El Alamein. 

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

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3. 

ECONOMIC AND SOCIAL REFORM 

Macroeconomic framework and functioning of the market economy 

The  Egyptian  economy  fared  quite  well  during  the  global  economic  and  financial  crisis  in 
2009. GDP growth decelerated to 4.7% in fiscal year 2009 that runs from July 2008 until June 
2009,  after  growth  of  around  7%  in  the  years  before.  Meanwhile  the  Government  has  been 
stimulating  economic  activity  by  monetary  easing  and  the  implementation  of  three  fiscal 
packages. 

In  February  2009,  despite  high  inflation,  the  Central  Bank  of  Egypt  lowered  its  policy  rate 
from 11.5% to 8.25% in order to support economic growth. In June 2009 the fiscal authorities 
launched  a  second  fiscal  stimulus  package  (after  the  first  package  of  EGP  15  billion  in 
October  2008)  that  amounted  to  EGP  8  billion  and  in  October  2009  a  third  one  of  EGP  10 
billion.  

Although the gross debt is still high at 73% of GDP, public finances deteriorated only slightly. 
The Government kept to its commitment of a deficit of around 7% of GDP in fiscal year 2010 
and  seems  on  track  for  further  fiscal  consolidation,  which  initially  would  imply  a  gradual 
reduction of the deficit to 3% of GDP by fiscal year 2011.  

The  current  account  became  negative  in  fiscal  year  2009,  after  several  years  of  surplus. 
Revenues from tourism, private transfers, remittances and the Suez Canal no longer counter-
balanced the trade deficit. The negative current account and lower foreign direct investments 
also pushed the balance of payment into deficit. 

The Central Bank pursued an inflation targeting policy, but started to manage the float more 
strictly  when  the  global  crisis  started,  by  intervening  occasionally  in  the  foreign  exchange 
market.  Nonetheless,  official  foreign  exchange  reserves  remain  stable,  at  more  than  15%  of 
GDP. 

As  already  reported  last  year,  the  drying  up  of  liquidity  in  the  banking  sector  of  developed 
countries hampered the process of privatisation in the Egyptian banking sector. Strengthening 
of  the  financial  regulatory  framework  is  in  progress,  in  agreement  with  international 
arrangements and current reforms of the international framework (the Basel II principles for 
effective  banking  supervision),  in  order  to  maintain  financial  stability.  Broadening  and 
deepening  of  the  financial  sector  is  however  needed  to  develop  an  efficient  and  well-
functioning market sector.  

Major  reforms  are  still  ongoing  in  the  pension  and  health  insurance  systems.  The  National 
Investment  Bank  and  Social  Insurance  Funds  are  being  restructured  with  the  result  that  the 
Government no longer borrows from these institutions.  

The Egyptian economy remains vulnerable. While the main risk for the economy has changed 
in the aftermath of the economic and financial crisis, it is still essentially fiscal sustainability 
that is most at stake.  

Employment and social policy 

In 2009, Egypt faced set-backs in terms of human development. It is still committed to reduce 
poverty to 6% of the population by 2022. However, the international food crisis and the rise 
in oil prices hampered the Government’s efforts to combat poverty: living conditions remain 

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poor  for  the  estimated  20%  of  Egyptians  living  under  the  national  poverty  line.  Getting  the 
right  social  policy  mix  to  provide  access  to  education  and  health  remains  challenging.  The 
Government’s  food  subsidy  programme  covered  up  to  63  million  people  (compared  to  38 
million in 2008). Poverty is particularly widespread in the South of the country and in rural 
areas. 

Social dialogue remains over-structured and bilateral social dialogue is underdeveloped. The 
Economic  and  Social  Council  has  still  not  been  established  and  the  draft  decree  on  its 
establishment,  currently  under  the  President’s  review,  was  not  consulted  with  the  social 
partners.  Criteria  for  the  distribution  of  seats  remain  unclear.  The  global  crisis  exacerbated 
social tensions and led to workers’ strikes.  

In  October  2009,  Egypt  hosted  the  Euro-Mediterranean  Summit  of  Economic  and  Social 
Councils  and  Similar  Institutions.  Egypt  continued  to  work  with  the  International  Labour 
Organisation on a Decent Work Country Programme. 

from  Gulf  countries 

The  labour  market  was  hit  hard  by  the  financial  crisis  with  the  return  of  many  Egyptian 
workers 
(approximately  500,000  migrant  workers).  Official 
unemployment remains estimated at 9% with a substantial gender gap: around 5.5% for men 
and  18%  for  women.  Youth  unemployment  is  still  high  and  job  creation  for  newcomers 
remains  a  key  challenge  (around  600,000  young  workers  per  year).  In  May  2009,  Egypt 
launched the National Action Plan dedicated to youth employment for 2010-2015. It aims to 
increase  youth  employability,  promoting  decent  work  and  vocational  training  and  easing 
recruitment in SMEs. A national employment agency is yet to be established. The Ministry of 
Manpower and Migration benefits currently from a twinning project in the field of health and 
safety at work. 

Concerning social inclusion and social protection, a special support scheme already exists 
for those not covered by existing funds and the very poor. The new system of pensions and 
social  insurance  was  not  yet  introduced.  Egypt  also  worked  over  the  reporting  period  on  a 
new law for a comprehensive social assistance system (a safety net). 

Egypt continued to enhance participation by women in political, economic and social life. A 
limited  Cabinet  reshuffle  took  place  in  March  2009  with  the  appointment  of  Egypt’s  third 
female Minister in charge of the new Ministry for Family and Population Affairs, created in 
March  2009,  to  supervise  e.g.  the  National  Council  for  Childhood  and  Motherhood,  the 
National  Council  for  Population  as  well  as  the  Anti-Narcotics  General  Administration.  The 
Law  on  the  People's  Assembly  was  amended  in  June  2009  to  add  an  additional  64  seats 
reserved solely for women to the total 454 seats in the People's Assembly, bringing their total 
number to 518 with a 12% allocation for women.  

The  Egyptian  Environmental  Affairs  Agency  under  the  aegis  of  the  Ministry  of  State  for 
Environmental  Affairs  continued  to  develop  of  a  national  strategy  on  sustainable 
development, which is expected to be finalised it in 2010. 

A  new  Strategy  for  the  Sustainable  Agricultural  Development  (SADS)  towards  2030  was 
finalised  during  the  reporting  period  with  the  support  of  the  Food  and  Agriculture 
Organisation  (FAO),  and  inputs  from  the  International  Fund  for  Agricultural  Development 
(IFAD)  and  the  World  Bank.  The  aim  is  to  modernise  Egyptian  agriculture  based  on 
achieving food security and improving the livelihood of rural inhabitants through the efficient 
use  of  development  resources,  the  utilisation  of  geopolitical  and  environmental  advantages, 
and the comparative advantages of the different agro-ecological regions. The strategy pursues 

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several strategic objectives, among them the sustainable use of agricultural natural resources, 
the  improvement  of  the  competitiveness  of  the  agricultural  products  in  local  and  foreign 
markets, higher rates of food security in strategic goods, better opportunities for agricultural 
investment  and  the  improvement  of  the  living  standards  of  rural  inhabitants.  The  proposed 
implementation  mechanisms  for  achieving  these  strategic  objectives  include  institutional 
reform and support of the Ministry of Agriculture and Land Reclamation, of the civil society 
organisations  engaged  in  rural  development  as  well  as  of  agricultural  cooperatives. 
Consequently they will also require the review and development of all policies related to the 
above-mentioned objectives. 

Despite the existing incentives, including the signature of the agreement on liberalisation of 
trade in agricultural, processed agricultural and fisheries products with the EU (see section 4), 
the share of investments in agriculture fell from 4% in 2008/9 to 3% in 2009/10. 

In  June  2009,  the  Government  decided  to  abolish  the  right  to  acquire  land  under  the 
jurisdiction of the General Authority for Construction and Agricultural Development, known 
as  the  Agricultural  Development  Authority,  in  all  national  projects  such  as  Toshka,  Sinai, 
Western  Delta  and  East  Oweinat.  This  right  is  to  be  replaced  by  the  right  of  usufruct  for  a 
period of between 49 and 90 years, especially with regard to the lands that will be open for 
agricultural investment.  

The  General  Authority  for  Fish  Resources  Development  implements  its  strategy covering 
fisheries resources development as well as marine and freshwater aquaculture. During 2009 
the  Authority  was  working  on  amendments  to  the  existing  fishing  law  in  order  to  make  it 
compatible  with  the  recommendations  and  resolutions  of  the  main  international  fishing 
organisations,  such  as  the  General  Fisheries  Commission  for  the  Mediterranean.  These 
include measures against illegal unreported and unregulated fishing, as well as monitoring of 
vessels fishing in the Mediterranean by creation of the Vessel Monitoring System. 

4. 

TRADE-RELATED ISSUES, MARKET AND REGULATORY REFORM 

During  the  reporting  period  bilateral  trade  between  Egypt  and  the  EU  slowed  down 
compared with 2009: Egypt’s exports to the EU contracted by 26.2% and EU exports to Egypt 
in the same period decreased by 0.9%. The total volume of trade with the EU was EUR 18.7 
billion in 2009. The EU remained the first trading partner of Egypt in 2009. The agreement on 
further liberalisation of bilateral trade in agricultural, processed agricultural products and fish 
and  fishery  products,  was  signed  by  the  two  parties  in  October  2009  and  following  the 
approval  by  the  Egyptian  Parliament,  is  expected  to  enter  into  force  in  June  2010.  The 
agreement provides 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.  

During  the  reporting  period  the  dismantling  of  industrial  tariffs  proceeded  in  line  with  the 
Association Agreement. However, for a limited number of industrial and agricultural products 
the  Ministry  of  Trade  and  Industry  adopted  trade-distortive  measures  aiming  either  at 
protecting  some  sectors  from  international  competition  or  at  supplying  the  domestic  market 
with low priced products. In October 2009, the ban applicable to exports of rice was modified: 
export is currently allowed only for holders of export licences, which may be obtained after a 
procedure  of  a  public  tender  and  may  not  be  transferred  from  one  company  to  another.  In 
January 2009, the Egyptian Government imposed a duty of EGP 500 per tonne on imports of 

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white  sugar  to  protect  the  local  sugar  industry.  In  August  2009,  all  import  duties  on  sugar 
(whether on raw or refined sugar) were lifted until the end of December 2009. In December 
2009, the exemption of duties on sugar was extended until the end of June 2010. The measure 
aims  at  lowering  domestic  prices  for  sugar,  in  line  with  the  policy  of  subsidising  basic 
foodstuffs for citizens, especially those of the low income segment. 

In  April  2009,  Egypt  re-established  an  export  ban  on  cement  and  clinker,  as  a  measure  to 
reduce prices on the local market. In July 2009, Egypt decided to extend this export ban. 

No  progress  was  registered  in  the  negotiations  on  the  establishment  of  a  dispute  settlement 
mechanism. An action plan to set up a customs union with Jordan was adopted in December 
2009. The two countries have agreed to aim for a unified customs law and common external 
tariff and to harmonise other relevant laws. 

The new customs law which was expected to be adopted during the reporting period has yet 
to be approved by Parliament. The interactive English version of the website of the Egyptian 
Customs Authority is still not operational. 

On free movement of goods and technical regulations, Egypt speeded up preparations for 
negotiations  of  an  Agreement  on  Conformity  Assessment  and  Acceptance  of  Industrial 
Products (ACAA) and requested opening of the negotiations soon. In December 2009, an EU 
expert mission reviewed the  progress of  Egypt’s ACAA  preparations.  A  new  harmonisation 
strategy  was  adopted  by  the  Egyptian  Organisation  for  Standardisation.  The  Egyptian 
Accreditation  Council was recognised  as an associate member  of European Cooperation for 
Accreditation  and  as  a  full  member  of  both  International  Laboratory  Accreditation 
Cooperation and the International Accreditation Forum in October 2009. Sector legislation in 
harmonisation  with  EU  directives  was  issued  for  toys  and  electric  appliances.  EU  standards 
were adopted as Egyptian standards, and conflicting norms were abolished for toys, vehicles 
and vehicle parts, low voltage equipment as well as milk and milk products. The Consumer 
Protection  Agency  became  fully  operational  in  2009.  Egypt  signed  cooperation  agreements 
with  some  European  laboratories  which  could  provide  services  directly  to  Egyptian 
companies in 2009. 

In  the  sanitary  and  phyto-sanitary  field,  the  Government  submitted  to  Parliament  a  draft 
law  aiming  to  establish  a  single  food  safety  authority.  A  unified  food  law  is  also  in 
preparation.  Due  to  the  interception  of  brown-rot  infested  potatoes  from  Egypt  during  the 
2008/2009 import season, the European Commission banned, as from August 2009, imports 
into the EU of Egyptian ware potatoes. Thanks to Egyptian guarantees, trade has resumed for 
the 2009/2010 season. In April 2009, the European Commission’s Food and Veterinary Office 
carried out a mission to Egypt on the control of fishery products. Egypt subsequently provided 
an action plan to address the deficiencies identified.  

Egypt continued to combat, on the basis of the National Integrated Plan for Avian and Human 
Influenza,  the  serious  avian  influenza  outbreak  of  2006,  which  continues  to  cause  human 
fatalities.  Referring  to  the  outbreak  of  A  (H1N1)  influenza  (‘swine  flu’),  Egypt  decided  to 
slaughter  pigs  raised  in  the  country.  It  is  however  noted  that  international  organisations 
(WHO,  FAO,  Codex  Alimentarius,  OIE) stated  that  pork  and  pork  products,  handled  in 
accordance with good hygienic practices will not be a source of infection for human beings 
(see also the section on health). In 2009, Egypt linked up to the external window of the EU’s 
Rapid Alert System for Food and Feed.  

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Limited  progress  can  be  reported  in  the  field  of  establishment,  business  climate  and 
company law.  The  draft  Unified  Company  Law  is  under deliberation  and is expected to be 
passed  to  Parliament  for  possible  adoption  by  mid-2010.  Its  aim  is  to  unify  the  rules  on 
corporate  governance,  transparency,  limits  of  commitments  of  boards  of  directors  and  on 
internal  and  external  audit.  It  also  addresses  problems  concerning  legal  forms,  individual 
project systems, mergers and acquisition as well as exit rules and liquidation. Since July 2009, 
the General Authority for Investments has been the only institution responsible for company 
registration. It is working on a system of electronic registration for companies. 

Bilateral negotiations on liberalisation of services and establishment continued in 2009.  

On financial services, banking supervision reforms are on-going. Since 2009, they have been 
focusing on restructuring specialised  banks, sustaining operational structures of state owned 
banks, developing access to finance and enforcing corporate governance in the banks. Draft 
regulations  are  under  preparation.  Banks  continued  to  prepare  for  adoption  of  International 
Financial  Reporting  Standards  (IFRS)  by  the  end of  2010.  A  project  on  the  adoption  of  the 
Basel II principles for effective banking supervision started in January 2009. The initial phase 
is focusing on strategic issues. Roll-out of the system is expected by 2011. A unified financial 
supervision authority, the Egyptian Financial Supervisory Authority, was established in July 
2009 on the basis of the February 2009 law. The new Authority replaced the Capital Market 
Authority,  the  Egyptian  Insurance  Supervisory  Authority  and  the  Mortgage  Finance 
Authority,  and  will  supervise  all  non-banking  financial  transactions  and  markets  including 
capital markets, derivative markets on financial assets and commodities, insurance contracts 
and services, mortgage finance, financial leasing, factoring and securitisation. Amendments to 
the  mortgage  law  are  underway.  In  October  2009,  in  order  to  develop  the  micro-finance 
sector,  the  Ministry  of  Investment  finalised  the  preparation  of  a  law  on  micro-finance 
companies.  

Other key areas 

Modernisation and simplification of the tax administration continued during 2009, including 
external assistance. The average time necessary needed by businesses to prepare and file tax 
returns and to pay taxes decreased considerably. 

The  Egyptian  Competition  Authority  (ECA)  continued  to  pursue  violations  of  competition 
rules  on  the  basis  of  its  strengthened  powers,  granted  by  the  2008  amendments  to  the 
competition law. The law addresses three types of violations: horizontal agreements, vertical 
agreements and abuse of dominance. Criminal cases are dealt by the Economic Courts which 
have  been  operational  since  2008.  In  2009,  the  ECA  organised  several  training  courses, 
conducted  research  and  advocacy  activities,  and  coordinated  with  regulatory  bodies.  ECA 
staff have law enforcement powers and may seize documents. ECA also participates actively 
in the working groups of the International Competition Network (ICN). With regard to state 
aid,  the  Egyptian  authorities  expressed  interest  in  developing  legal  provisions  for  state  aid 
based  on  the  EU  model  and  in  conducting  a  technical  dialogue  on  the  subject  with  the 
European Commission. 

Limited  progress  was  made  on  intellectual  property  rights.  In  September  2009,  Egypt 
ratified  the  Madrid  Protocol  relating  to  the  Madrid  Agreement  concerning  the  International 
Registration of Marks. It is also in the final stage of acceding to the International Convention 
for  the  Protection  of  New  Varieties  of  Plants  (UPOV).  In  order  to  fulfil  its  Action  Plan 
commitments,  Egypt  still  needs  to  accede  to  the  Rome  Convention  for  the  Protection  of 

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Performers,  Producers  of  Phonograms  and  Broadcasting  Organisations  and  to  the  Budapest 
Treaty on the International Recognition of the Deposit of Micro-organisms for the Purposes of 
Patent Procedures; as well as to ensure sound enforcement of intellectual property rights. 

A  public  procurement  gap  analysis  was  completed  in  September  2009  with  a  view  to 
amending the legislation by May 2010. The Government continued to work closely with the 
OECD to prepare a public procurement assessment of the country. A number of measures are 
also  on-going  to  strengthen  the  capacities  of  the  procurement  operators  in  the  public  and 
private sectors. Provisions for e-bidding and e-evaluation are under preparation. In the area of 
statistics,  Egypt  cooperated  fully  over  the  reporting  period  in  the  regional  working  group 
bringing  together  representatives  of  the  statistical  offices  of  Israel,  Jordan,  the  Palestinian 
Authority  and  Egypt  which  aims  in  particular  at  defining  a  work  programme  to  reduce 
asymmetries in the future. Egypt worked over the reporting period on a draft national statistics 
law. Draft action plans were also developed with a view to improving input data to national 
accounts and to enhancing the quality of domestic trade statistics. 

As regards accounting,  translation of international financial reporting standards into  Arabic 
was completed over the reporting period and Egypt worked on the revision of its accounting 
law.  Discussions  about  inter-Arab  auditing  and  accounting  standards  are  on-going.  A  new 
authority,  the  Audit  Oversight  Board,  is  now  responsible  for  supervising  the  quality  of  the 
work of registered auditors.  

With  regard  to  public  internal  financial  control,  the  Ministry  of  Finance  received  an  IMF 
mission  in  June  2009  to  advise  on  fiscal  decentralisation  and  on  the  public  finance 
management measures necessary to implement it, including the priority areas of internal audit 
and control. In addition, a public expenditure financial accountability assessment carried out 
by the European Commission and the World Bank in December 2009 raised the need to put in 
place  an  effective  internal  audit  and  financial  control  system.  However,  the  pace  of  reform 
remains slow with no internal audit function established for overall budgetary expenditure. 

On  enterprise  policy,  Egypt  continued  to  implement  the  Euro-Mediterranean  Charter  for 
Enterprise.As part of wider banking reforms, access to finance for SMEs has been facilitated 
since the end of 2008. In 2009, Technology and Innovation Centres also expanded their range 
of  services,  increased  a  number  of  industrial  sectors,  and  enhanced  innovation  capacity  in 
existing  priority  sectors.  There  is  now  better  geographical  coverage  of  services  in  greater 
Cairo  and  beyond.  Egypt  also  participated  in  a  pilot  project  on  entrepreneurial  skills 
development  in  higher  education  and  established  a  National  Entrepreneurship  Committee 
whose mandate includes lifelong entrepreneurial learning. Preliminary results of a joint study 
on  business  climate  conducted  under  the  Business  Climate  Development  Strategy  (BCDS) 
were presented in October 2009. 

5. 

COOPERATION ON JUSTICE, FREEDOM AND SECURITY 

The third meetings of the EU-Egypt subcommittee on Justice and Security and the Working 
Group on Migration, Social and Consular Affairs took place in May 2009.  

No progress was reported on border management. Egypt has declined to enter into dialogue 
on this issue. 

Egypt has bilateral migration agreements in place including provisions on the economic and 
social  rights  of  migrants.  No  major  developments  were  noted  in  the  reporting  period  (see 
further chapter 2). 

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In the fight against organised crime, in June 2009 the National Committee to Combat and 
Prevent  Trafficking  in  Persons  prepared  comprehensive  anti-trafficking  legislation  covering 
penalties,  measures  to  assist  victims,  establishment  of  a  special  assistance  fund  and 
international  cooperation.  The  legislation  adopts  a  victim-based  approach,  emphasising  de-
criminalisation  of  illegal  acts  committed  by  victims  in  line  with  international  standards  and 
practice. In this context, the Ministry of the Interior established special anti-trafficking units 
for  illegal  migration,  women  and  children.  In  addition,  separate  draft  legislation  to  control 
transfers of human organs was prepared.  

Egypt co-chaired the first comprehensive world report on trafficking in persons in February 
2009 and continued negotiations, initiated in 2008, on the adoption of a Global Action Plan to 
combat trafficking in human beings in the context of the UN and the African Union. In April 
2009,  members  of  the  National  Committee  and  representatives  of  relevant  line  ministries 
participated in a TAIEX study visit on border control and organised crime organised by the 
Serious Organised Crime Agency in the UK. Moreover, the National Committee cooperated 
with  the  National  Centre  for  Social  and  Criminological  Research  on  a  survey  of  human 
trafficking including forced marriages and trafficking of children for labour exploitation. To 
combat cybercrime, the National Centre for Judicial Studies organised a specialized training 
for  judges  and  prosecutors  in  cooperation  with  the  Ministry  of  the  Interior.  Egypt  made  no 
progress  with  ratification  of  the  Third  Additional  Protocol  to  the  2003  United  Nations 
Convention  against  Transnational  Organised  Crime  on  the  Illicit  Manufacturing  of  and 
Trafficking in Firearms, Their Parts, Components and Ammunition. 

In  the  fight  against  drugs,  limiting  drug  supply  and  trafficking  remained  Egypt’s  priority 
with  particular  attention  to  eradicating  drug  cultivation,  trade  networks  and  precursors. 
Cooperation with EU and international counterparts and with authorities in neighbouring ENP 
and Arab countries yielded positive results in terms of increased seizures. The Fund for Drug 
Control  and  Treatment  of  Addiction  and  the  National  Council  on  Addiction  Control  and 
Treatment were placed under the authority of the Ministry of the Family and Population, now 
vested with overall responsibility for implementation of the National Drugs Strategy. In this 
respect,  preventive  and  harm  reduction  programmes  were  implemented  via  schools,  youth 
networks, family empowerment initiatives and higher education institutions. Cooperation with 
civil society groups on implementation of the strategy continued. However, to fulfil the ENP 
Action Plan commitment, a greater flow and exchange of information is needed between all 
agencies  involved,  with  renewed  attention  to  developing  drug-abuse  and  harm-reduction 
programmes in prisons.  

With  regard  to  the  fight  against  money  laundering,  the  relevant  supervisory  authorities 
continued  to  implement  the  national  control  regime  based  upon  the  ‘40  plus  9’  Special 
Recommendations  by  the  Financial  Action  Task  Force  (FATF)  while  the  financial  services 
industry  pursued  application  of  KYC  (‘know  your  customer’)  and  KYB  (‘know  your 
business’)  practices.  The  National  Centre  for  Judicial  Studies  added  basic  training  on  anti-
money laundering for both prosecutors and judges to its curriculum in 2009. Egypt pursued 
regional  cooperation  within  the  Middle  East  and  North  Africa  Financial  Action  Task  Force 
(MENAFATF) and Egmont Groups. 

With regard to international police and judicial cooperation, Egypt participated in the Hague 
Conference on Private International Law and continued work on the signature and ratification 
of the various instruments to which it is party. Legal jurisdiction issues may possibly hinder 
Egypt’s  accession  to  instruments  such  as  the  1996  Hague  Convention  on  Protection  of 
Children and the 1980 Hague Convention on Child Abduction. However, international police 

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and  judicial  cooperation  was  successfully  pursued  particularly  in  the  area  of  cross-frontier 
family disputes.  

6. 

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

In  the  field  of  transport,  Egypt’s  reform  agenda  is  supported  by  the  EU  under  a  EUR  80 
million transport sector policy support programme, signed in March 2009. These reforms aim 
to establish an institutional and regulatory framework best suited for an efficient, competitive, 
safe  and  sustainable  multimodal  land  (“rail  &  road”)  and  inland  waterway  freight  transport 
system. This target will be achieved through establishing an appropriate legal framework and 
institutional set-up for policy making and planning, improving the efficiency of state-owned 
and  private  operators,  preparing  for  independent  market  regulators  and  applying  adequate 
safety  and  environmental  rules  and  standards.  The  reforms  also  encourage  effective 
investment  planning  and  appropriate  budget  allocation  for 
transport 
infrastructure  and  through  facilitating  public  private  partnerships.  Three  ongoing  twinning 
projects on road safety, railway safety and maritime safety are complementing this reform. 

the  necessary 

In the road sector, Egypt took steps to establish a transparent regulatory process for issuing 
road freight transport operator licenses and granting access to the profession in line with EU 
standards. Egypt is also preparing a law and relevant regulations which will make road safety 
audits (RSA) and road safety inspections mandatory for all public roads. 

In  the  rail  sector,  a  number  of  structural  reforms  (such  as  on  safety,  customer  service  and 
freight transport) are being implemented in three phases over five years (until 2011) albeit at a 
somewhat slower pace in 2009. 

In the field of civil aviation, Egypt made efforts to reform the sector and upgrade the existing 
infrastructures. In April 2009, the third terminal was officially opened at Cairo international 
airport. It is now fully operational. Negotiations between the European Commission and the 
Egyptian authorities on the horizontal agreement continued in 2009 and the two parties agreed 
to hold a final round of negotiations by July 2010. As regards aviation safety, certain Egyptian 
air carriers had difficulties complying with international safety standards in 2009. This led to 
the introduction and implementation of corrective actions under the supervision of the Civil 
Aviation Authority of Egypt. 

In  2009  the  Egyptian  Government  continued  to  promote  inland  waterways  as  an  alternative 
mode of transport. Dredging and setting of navigation aids for some routes were completed 
during the reporting period. 

In the maritime sector, Egypt continued to strengthen its administrative capacity, in particular 
regarding the training of Port State surveyors and the setting up of an accident investigation 
bureau.  A  maritime  framework  law,  bringing  Egypt’s  maritime  legislation  closer  to 
international and EU standards, was sent to the Cabinet for approval. However, the October 
2009 decree stating that the Egyptian ‘partner share’ in all companies in the maritime services 
must  be  not  less  than  51%  creates  a  barrier  to  liberalization  of  services.  Foreign  companies 
have one year to make the necessary adaptations. Although Egypt took steps to improve flag 
state implementation, the Egyptian flag is still on the black list of the Paris Memorandum of 
Understanding on Port State Control.  

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Egypt and the EU further strengthened energy relations inter alia in the context of the 2008 
Memorandum  of  Understanding  on  a  strategic  partnership  on  energy.  Egypt,  a  major 
hydrocarbons producer and consumer, recalled that it wished to play a role in the EU’s energy 
security and to become an energy bridge connecting the Mashraq countries, Iraq, the Middle 
East, Africa and the EU. In this context, Egypt supported the development of the Southern gas 
corridor  inter  alia  by  participating,  in  May  2009,  in  the  Prague  Summit  on  the  Southern 
Corridor. Egypt also promoted completion of the Arab Gas Pipeline, which currently reaches 
Syria and should - via Turkey - connect with the EU. Egypt also supported the establishment 
of  Mediterranean  electricity  and  gas  interconnections  and  the  Mediterranean  Solar  Plan, 
which, once realised, could be a basis for electricity exports to the EU. 

During 2009 Egypt moved forward with the preparation of a new energy strategy until 2030. 
The strategy should become the framework for energy sector liberalisation including reform 
of  the  current  system  of  energy  subsidies.  Egypt  continued  its  preparations  for  necessary 
reforms  in  the  electricity,  gas  and  petroleum  sectors.  The  reforms  would  include  the 
establishment  of  a  gas  and  oil  regulator.  Egypt  pursued  studies  to  assess  potential  use  of 
domestic oil shale and uranium reserves.  

Egypt further constructed domestic gas pipelines and completed the Gizah-Aswan pipe with a 
view to expand the number of households connected. It pursued work on gas interconnection 
options with the occupied Palestinian territory (Gaza), Libya and Sudan.  

In 2009, Egypt upgraded and extended domestic electricity networks including in rural areas, 
which  contributed  to  reducing  network  losses.  It  continued  to  promote  electricity 
interconnections between Mashraq and Maghreb countries and to study interconnections with 
the  occupied  Palestinian  territory  (Gaza)  and  other  neighbours.  Egypt  started  to  export 
electricity  to  Lebanon,  through  Jordan  and  Syria.  Plans  were  made  to  upgrade  the  undersea 
cable to Jordan. 

Egypt continued working towards increased use of renewable energies with a view to reach its 
objective  to  meet  20 %  of  electricity  demand  by  renewable  energy  by  2020.  A  renewable 
energy plan is being prepared. Regarding energy efficiency, it created a special unit directly 
attached to the Prime Minister's office. Egypt continued to implement a package of measures 
in this area such as on labelling of domestic appliances and on the development of major wind 
farms and solar projects.  

Egypt  prepared  the  future  construction  of  nuclear  power  plants  including  by  advancing  the 
draft  nuclear  energy  law.  This  law  provides,  inter  alia,  for  the  establishment  of  an 
independent nuclear regulator. The EU and Egypt started a project, under the Nuclear Safety 
Cooperation  Instrument,  aiming  at  developing  and  strengthening  Egyptian  nuclear 
institutions. 

The  National  Steering  Committee  for  Climate  Change  started  operations  focusing  on 
adaptation.  Egypt  continued  to  prepare  its  Second  National  Communication  to  the  UN 
Framework  Convention  on  Climate  Change,  including  a  greenhouse  gas  inventory,  an 
assessment  of  climate  impacts  and  adaptation  measures.  Egypt  also  took  some  steps  to 
prepare  a  national  strategy  on  adaptation  to  climate  change.  Egypt  adopted  guidelines  on 
Clean  Development  Mechanism  Projects  (CDM)  and  took  steps  to  prepare  and  approve 
further CDM projects. One new such project was registered at UN level, bringing the overall 
number of registered projects to five. Egypt did not yet associate itself with the Copenhagen 

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Accord and is therefore encouraged to do so as soon as possible and to provide information on 
the targets or actions that it will implement.  

In the field of environment, implementation of the national environmental action plan (2002-
2017)  continued  during  2009.  The  legislative  framework  continues  to  require  further 
development,  in  particular  with  regard  to  implementing  legislation.  In  this  respect, 
amendments  to  the  Law  for  the  Protection  of  the  Environment  were  adopted,  inter  alia 
strengthening requirements with regard to environmental impact assessments.  

Existing  implementing  legislation  was  modified  and  new  legislation  adopted  to  further 
strengthen the protection of the Nile River and waterways from pollution. New legislation on 
water and wastewater as well as on waste management is under preparation. A national master 
plan for water and wastewater was approved. A national solid waste management strategy and 
an  integrated  coastal  zone  management  strategy  are  under  preparation.  Steps  were  taken  to 
provide training and capacity building on air quality issues and to increase the number of air 
pollution monitoring stations. Continued attention is required to implement existing strategies 
and plans and to further enhance monitoring and enforcement.  

Training was provided to judges to enable their participation in the specialised courts (Green 
Courts) for environment-related cases. Some steps were taken to enhance the capacities of the 
regional  administration  with  regard  to  environment  issues,  but  a  major  challenge  is  still  to 
strengthen  administrative  implementation  capacity  at  all  levels  of  the  country,  including 
coordination  between  authorities.  Some  actions  were  taken  promote  the  integration  of 
environmental considerations into other policy sectors such as energy and transport.  

Egypt continued to publish environmental information on a regular basis, such as reports on 
the state of the environment, and carried out some activities to inform and involve the public. 
Steps  were  taken  to  implement  the  communication  strategy  which  addresses,  inter  alia, 
environmental  education  and  public  participation.  Requirements 
for  conducting 
environmental  impact  assessments  (EIA)  were  strengthened.  However,  public  consultation 
continues  not  to  be  mandatory  for  all  EIA  studies.  Some  preparatory  steps  were  taken  to 
strengthen the capacity of the administration to undertake strategic environment assessments, 
such as with regard to the Gulf El Zeit wind park.  

Egypt took steps towards 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  took  some  steps  towards  acceding  to  its  Integrated  Coastal  Zone 
Management Protocol and its Emergency Protocol. However, the implementation of already 
ratified agreements requires particular attention. Egypt continued to participate in the Horizon 
2020 Initiative and the Mediterranean Action Plan. Egypt has contributed to the preparation of 
a strategy for water in the Mediterranean (which failed to get approval at the recent ministerial 
meeting  of  the  Union  for  the  Mediterranean),  and  the  EU  Water  Initiative,  including  a 
national  policy  dialogue.  Cooperation  and  information  exchange  took  place  between  the 
European  Commission  and  Egypt, 
the 
Mediterranean region and environmental reporting. 

including  on  water,  pollution  reduction 

in 

In  the  field  of  civil  protection,  Egypt  took  part  in  a  new  phase  of  activities  of  the  Euro-
Mediterranean  Programme  for  the  Prevention,  Preparedness  and  Response  to  Natural  and 
Man-Made  Disasters  that  started  in  2009,  continuing  the  process  of  strengthening  civil 
protection activities in the region, enhancing capacities at regional, national and local levels, 
and  promoting  institutional  cooperation.  Hereby,  further  steps  were  taken  to  bring  Egypt 

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closer  to  the  European  Civil  Protection  Mechanism,  contributing  at  the  same  time  to  the 
development  in  the  region  of  a  civil  protection  culture  based  on  an  integrated  approach 
covering disaster prevention, preparedness and response. 

In  the  field  of  the  information  society,  the  Ministry  of  Communications  and  Information 
Technology  continued  in  2009  to  advance  its  ”Strategic  Plan  of  Information  Technology” 
promoting the application of ICT to various sectors, such as the health sector through the e-
Health, which includes initiatives such as remote diagnosis possibilities. Egypt continued to 
improve  access  to  ICT  throughout  its  school  network,  through  the  provision  of  hardware, 
teacher training, and community involvement in school management.  

In order to promote access for all to high-quality digital content, including Arabic language 
content,  and  the  safe  use  of  internet  for  children,  including  raising  awareness  of  the  risk  of 
child pornography, a draft law on data protection, privacy and cyber crime is being prepared. 
Egypt  announced  in  November  2009  that  it  would  open  the  world's  first  Arabic  language 
Internet domain, called ".masr". 

The  National  Telecommunication  Regulatory  Authority  continued  to  align  the  regulatory 
framework  with  that  of  the  EU,  in  2009  notably  to  enhance  licensing  and  competition, 
regulate interconnection and local loop unbundling. A public consultation took place on the 
framework  for  assessing  dominance  in  cooperation  with  the  national  competition  authority. 
The  Authority  issued  a  decision  to  tender  the  provision  of  triple  play  services  (cable,  voice 
and internet) in 'closed residential compounds' of up to 5,000 residential units per compound. 
The deadline for submitting applications is March 2010 and the two licences will be granted 
after evaluation.  

The procedure to grant a second fixed license was postponed due to the financial crisis and a 
new deadline has not been set yet. 

In the audiovisual sector, the draft broadcasting law has yet to be agreed by the Cabinet of 
Ministers for presentation to the Government (see chapter 2).  

In  the  area  of  research  and  innovation,  the  Egyptian  Ministry  of  Higher  Education  and 
Scientific Research continued to implement its reform strategy (2007-2012). In October 2009 
the  Ministry  launched  the  Innovation  investment  initiative,  which  focuses  on  marketing 
products  that  emerge  from  research,  building  on  the  EU-Egypt  Innovation  Fund.  This 
Initiative is a new funding instrument with a total budget of some EUR 2 million to exploit 
opportunities  for  investment  in  innovative  R&D-based  products  or  services  by  Egyptian 
Research Centres affiliated to the Ministry of Scientific Research. 

Egypt  significantly  increased  the  participation  of  Egyptian  researchers  in  the  European 
framework  programme  for  research  (FP7),  also  thanks  to  the  setting  up  of  a  network  of 
National  Contact  Points.  Three  new  thematic  National  Contact  Points  were  appointed  for 
Energy, Environment and Science in Society, bringing the total number of Focal Points to 42. 

The total number of Mediterranean partner countries' applicants in FP7 since its start until end 
2009,  was  some  1,600.  Egypt  is  the  Mediterranean  country  with  the  highest  number  of 
applicants  -  464,  of  which  59  were  successful  in  submitting  a  proposal,  receiving  a  total 
contribution  of  about  EUR  3.4  million.  Health,  Environment,  Food,  Agriculture  & 
Biotechnologies and ICT are the thematic areas of main interest. A project to further enhance 
the participation of Egyptian R&D stakeholders started in December 2007. 

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7. 

PEOPLE-TO-PEOPLE CONTACTS, EDUCATION AND HEALTH 

Egypt  continued  education  reforms  in  line  with  the  National  Strategic  Plan  2007-12 
increasing budgetary resources for its implementation, in particular for the modernisation of 
the  three-level  schooling  system  (early  childhood,  basic  and  secondary  education).  In  this 
respect,  policy  commitments  to  the  reorganisation  of  education  as  well  to  its  fiscal 
decentralisation  on  a  pilot  basis  remained  consistent  and  solid.  The  Ministry  of  Education 
implemented  specific  measures  to  address  the  quantitative  gap  between  teacher  supply  and 
demand,  definition  of 
teacher  quality  and  performance  standards  coupled  with  a 
corresponding  reform  of  the  salary  structure  (implementation  of  the  teachers’  cadre).  New 
curricula  and  the  revised  textbooks  apply  active  learning  methods  and  integrate  education 
technology into teaching and learning processes. In terms of inclusion of vulnerable groups, 
the enrolment rate of children with special needs increased as well as that of special schools 
providing services for students with learning difficulties. Similar advances were noted in the 
area of enrolment ratios for girls and out-of-school children. However, significant challenges 
remain  in  terms  of  expanding  institutional  capacity,  availability  of  adequate  human  and 
financial resources and retaining stakeholder support and consensus. 

The  Ministry  of  Higher  Education  updated  the  Master  Plan  for  a  reform  vision  until  2022 
identifying amongst others, lifelong learning, equity and access, human resource development 
and quality assurance as well as accreditation as the main foci for the period 2009-13. Egypt’s 
reforms  were  implemented  with  reference  to  relevant  aspects  of  the  Bologna  Process,  in 
particular the development of student and academic mobility, quality assurance and to lesser 
extent, the system of comparable degrees. The Ministry of Higher Education adopted the legal 
framework  for  university  autonomy  predicated  on  a  gradual  approach  to  increase  flexibility 
and  effectiveness  in  higher  education  provision.  Work  continued  on  enhancing  equity  and 
transparency by developing standard approaches for university admission tests including the 
planning of e-tests by 2014. Work on a national qualifications’ framework with references to 
the  European  Qualifications  Framework  made  progress  but  would  benefit  from  enhanced 
cooperation with all main sector stakeholders. 

The General Authority for Literacy and Adult Education implemented the National Plan for 
Adult  Literacy  focusing  on  integrating  literacy,  adult  education  and  school  drop-out 
prevention  measures  in  a  comprehensive  and  flexible  approach  in  cooperation  with  civil 
society  and  community-based  organisations.  Illiteracy  has  been  reduced  to  only  7%  in 
Damietta governorate, serving as a viable model in this regard. Retaining active community 
participation will be key to securing success of anti-illiteracy programmes.  

In  the  area  of  technical  education  and  vocational  training,  an  Inter-Ministerial  Group 
including representatives from six Ministries launched a 25 year strategy to reform the whole 
system. The strategy will be implemented over five stages until 2032, the first of which covers 
the  years  2009-12  and  through  its  respective  ‘pillars’  will  address  among  other  priorities, 
systemic  reorganisation  and  clarification  of  mandates,  development  of  a  job-market 
information system, quality enhancement and public awareness. In this respect, added efforts 
will  be  required  to  begin  addressing  the  serious  mismatch  between  training  content  and 
delivery  and  labour-market  needs.  The  TEVT  programme  is  a  key  catalyst  in  promoting 
sector reform. In July 2009, the European Training Foundation published a study on women 
and  work  in  Egypt,  examining  the  barriers  and  opportunities  for  women‘s  training  and 
employment with a focus on the tourism and information technology sectors. 

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Egyptian  students  and  scholars  continued  to  benefit  from  Erasmus  Mundus  scholarships, 
including  139  mobility  grants.  Egyptian  universities  and  higher  education  institutions 
participated actively in second Call for Proposals under Tempus IV, resulting in the selection 
of  six  projects.  Through  the  introduction  of  different  concepts  and  themes  of  the  Bologna 
Process,  Tempus  acted  as  one  of  the  main  catalysts  for  the  modernisation  and  reform  of 
higher  education.  Egyptian  universities  are  encouraged  to  participate  in  the  Jean  Monnet 
programme. 

The National Council for Youth (NCY) implemented a series of empowerment programmes 
across all governorates on civic education and participation, youth  parliament  and dialogue, 
youth  camp  development  and  volunteering  as  well  as  targeted  actions  in  support  of  family 
planning and against female genital mutilation in remote areas. In 2009, particular focus was 
placed  on  developing  ‘digital  citizenship’  for  young  people  through  working  with  NGOs  to 
provide  improved  and  safer  youth  internet  content  as  well  as  on  outreach  activities  to  rural 
areas. Egyptian young people benefitted from exchanges and voluntary service actions under 
the Euro-Med Youth III programme as well as under Youth in Action. 

In  the  area  of  culture,  Egypt  participated  actively  at  regional  level  in  the  new  Euro-Med 
Heritage  IV  programme  with  involvement  in  three  projects  covering  areas  such  as  the 
preservation of the diversity of written heritage, promotion of intangible cultural heritage in 
the context of the 2003 UNESCO Convention on the Safeguarding of Cultural Heritage and 
sustainable  development  of  the  cultural  specificity  of  the  Siwa  oasis.  In  the  context  of 
cooperation with the EU, work began inter alia on a project to enhance the cultural action of 
Bibliotheca Alexandrina, focusing on increasing access to culture and cultural activities as a 
means of development. Egyptian cultural organisations participated in the Call for Proposals 
of the 2009 ENP Special Action under the Culture Programme. 

Egypt continued reform in the health sector by further rolling out the “Family health model”. 
The  EU  continued  providing  substantial  assistance  to  underpin  the  reform.  The  aim  of  the 
reform  remained  universal  coverage,  financial  sustainability  and  enhanced  quality  of 
healthcare. Egypt further expanded, on the basis of the above model, the number of primary 
care “Family health units” in the governorates. The country worked further on a draft health 
insurance  law  and  launched  a  pilot  project  on  health  insurance  management  in  the  Suez 
governorate. In April  2009, the Parliament adopted the Law for the care of mental patients. 
Egypt set up an Inter-ministerial Committee to coordinate and monitor the implementation of 
the  National  Preparedness  Plan  for  Pandemic  Influenza.  On  this  basis,  Egypt  took  several 
measures  to  combat  influenza  A  (H1N1)  including  by  increasing  surveillance,  quarantine 
measures  and  drugs  stockpiling.  In  the  context  of  the  influenza  A  (H1N1)  epidemic,  the 
European  Commission  proposed,  in  June  2009,  to  establish  communication  channels  with 
Egypt for the exchange of epidemiological information in the case of health crisis situations. 
In October 2009, Egypt participated in the newly established EU enlarged health information 
committee. Egypt pursued participation in the ‘Episouth’ network on communicable diseases 
for the EU, Mediterranean and Balkan countries. 

8. 

FINANCIAL COOPERATION – 2009 KEY FACTS AND FIGURES 

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

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The  implementation  of  the  measures  covered  by  the  2007  and  2008  Annual  Action 
Programmes is underway. In the Education Sector, the National Strategic Plan is being rolled-
out  to  improve  the  quality  and  access  to  education  with  most  of  the  major  system  reforms 
advancing,  particularly  those  targeting  school-based  reform,  reform  of  the  civil  service  and 
modernisation of schooling. In the transport sector the reform programme is at an early stage 
with  many  steps  aimed  at  benchmarking  and  analysing  the  existing  situation.  Twinning 
operations  are  proceeding  in  the  areas  of  maritime  safety,  postal  management  and  tourism 
among others. Other programmes from 2007 and 2008 include a Waste Water project, as well 
as  support  to  Good  Governance,  Human  Rights  and  Civil  Society  which  are  now  just 
commencing. 

In  2009,  the  European  Commission  continued  to  support  Egypt  with  EUR  140  million  of 
assistance.  The  2009  Annual  Action  Programme  (AAP)  focused  on  supporting  reforms  in 
health  sector,  in  particular  by  improving  primary  health  care  for  the  poorest  members  of 
society 
through  a  EUR  110  million  reform  support  programme.  In  addition,  an 
environmentally  sustainable  rural  development  programme  (EUR  10  million)  and  further 
twinning projects (EUR 20 million) are planned. 

An  indicative  financial  envelope  of  EUR  449.3  million  will  be  available  to  support  co-
operation activities in Egypt in period 2011-2013, based on a European Commission decision 
of March 2010. 

In  addition  to  the  bilateral  allocation,  Egypt  also  benefited  from  cooperation  activities 
financed  under  the  ENPI  multi-country  and  regional  programmes,  as  well  as  horizontal 
thematic  programmes  such  as  the  European  Instrument  for  Democracy  and  Human  Rights 
(EIDHR) and the Non-State Actors and Local Authorities in Development (NSA/LA). 

Egypt  also  participates  in  the  Cross-Border  Cooperation  (CBC)  Mediterranean  Sea  Basin 
programme  (EUR  173.6  million  for  the  whole  programme  in  the  period  2007-13).  The 
priorities  of  the  programme  are:  social-economic  development;  renewable  energy;  cultural 
dialogue and local development.  

Under  the  Neighbourhood  Investment  Facility  (NIF),  two  projects  in  Egypt  were  being 
implemented in 2009, respectively in the environment and energy sectors. These projects are 
expected  to  leverage  around  EUR  440  million  in  loans  from  the  European  Finance 
Institutions. The European Investment Bank signed lending operations in 2009 for EUR 130 
million, of which EUR 120 million are being linked to NIF projects. 

Other EU Instruments complement the ENPI assistance package, such as the NSCI (Nuclear 
Safety  Cooperation  Instrument)  strengthening  the  capabilities  of  Egypt  Atomic  Energy 
Authority  (EAEA)  and  its  National  Centre  for  Nuclear  Safety  and  Radiation  Control 
(NCNSRC)  by  linking  it  to  EU  nuclear  regulatory  authorities  (please  see  also  chapter  on 
energy). 

In  2009,  the  EU  Delegation  ensured  the  coordination  of  assistance  activities  within  the 
Development Partners Group (DPG) and took an active part in the "Cairo Agenda for Action 
on Aid Effectiveness" focusing on Accra and Paris principles. Within the ENP framework, the 
EU  Delegation  is  also  strengthening  coordination  and  division  of  labour  between  Member 
States through careful monitoring of aid projects and regular updates of the ENP Action Plan 
matrix,  and  already  implements  NIF  projects  together  with  other  important  donors:  Agence 
Française de Développement, KfW Bankengruppe and the EIB.  

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