Special Report No 4/2013 ‘EU Cooperation with Egypt in the Field of Governance’
Date: 2013-06-19
Institutions: European Court of Auditors
Subjects: Egypt, European cooperation, corruption, democratisation of education, economic support, governance, human rights movement

EUROPEAN
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EU COOPERATION WITH EGYPT IN THE 
FIELD OF GOVERNANCE

EN

 
 
 
 
Special Report No 4 

 2013

EU COOPERATION WITH EGYPT IN THE 
FIELD OF GOVERNANCE

(pursuant to Article 287(4), second subparagraph, TFEU)

EUROPEAN COURT OF AUDITORS

EUROPEAN COURT OF AUDITORS
12, rue Alcide De Gasperi
1615 Luxembourg
LUXEMBOURG

Tel. +352 4398-1
Fax +352 4398-46410
E-mail: eca-info@eca.europa.eu
Internet: http://eca.europa.eu

Special Report No 4 

 2013

A great deal of additional information on the European Union is available on the Internet.
It can be accessed through the Europa server (http://europa.eu).

Cataloguing data can be found at the end of this publication.
Luxembourg: Publications Office of the European Union, 2013

ISBN 978-92-9241-226-5
doi:10.2865/80625

© European Union, 2013
Reproduction is authorised provided the source is acknowledged.

Printed in Luxembourg

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CONTENTS

Paragraph

ABBREVIATIONS

I–XI 

EXECUTIVE SUMMARY

1–17 

INTRODUCTION

2–9 

 RECENT DEVELOPMENTS IN EGYPT

10–14 

 EU CO-OPERATION FRAMEWORK

15–17 

 EU FINANCIAL ASSISTANCE

18–22 

AUDIT SCOPE AND APPROACH

23–71 

OBSERVATIONS

23–56 

FEW RESULTS ACHIEVED BEFORE THE UPRISING

23–25 

INEFFECTIVE TREATMENT OF HUMAN RIGHTS BEFORE THE UPRISING

26–30 

MAIN HUMAN RIGHTS PROJECT LARGELY UNSUCCESSFUL 

31–36 

LITTLE FUNDING BEFORE UPRISING FOR CIVIL SOCIETY THROUGH EIDHR AND DCI-NSA THEMATIC PROGRAMME

37–41 

DIALOGUE BUT LITTLE ACTION ON HUMAN RIGHTS AND DEMOCRACY

42–45 

NO PFM REFORM PLAN

46–50 

 MAJOR SHORTCOMINGS IN PFM NOT TACKLED

51–52 

LITTLE PROGRESS IN FIGHTING AGAINST CORRUPTION

53–56 

 THE COMMISSION DID NOT ADEQUATELY USE THE ENP COOPERATION FRAMEWORK  
TO ADDRESS PFM AND CORRUPTION

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4

57–71 

FEW CHANGES IN RESPONSE TO THE UPRISING

57–61 

ASSISTANCE PROGRAMMES REMAINED LARGELY UNCHANGED DESPITE ENP REVIEW

62–64 

LESS ATTENTION TO WOMEN’S AND MINORITIES’ RIGHTS

65–68 

NEW SUPPORT FOR CSOS HAS SO FAR HAD LITTLE IMPACT

69–71 

BUDGET SUPPORT: POTENTIAL PROGRESS BUT REVISED CONDITIONS NEED TO BE STRICTLY APPLIED

72–82 

CONCLUSIONS AND RECOMMENDATIONS

72–79 

CONCLUSIONS

80–82 

RECOMMENDATIONS

ANNEX I  — 

 ENPI PROGRAMMED ALLOCATIONS FOR EGYPT 2007 –13

ANNEX II  —  OVERVIEW OF AUDITED PROGRAMMES AND PROJECTS

REPLY OF THE COMMISSION AND THE EEAS

Special Report No 4/2013 – EU Cooperation with Egypt in the Field of Governance

 
 
 
ABBREVIATIONS

5

CAO: Central Audit Organisation

CSF: Civil Society Facility

CSOs: civil society organisations

CSP: country strategy paper

DCI-NSA: Development Cooperation Instrument — non-state actors

EEAS: European External Action Service

EED: European Endowment for Democracy

EIDHR: European Instrument for Democracy and Human Rights

ENP: European neighbourhood policy

ENPI: European Neighbourhood and Partnership Instrument

FGM: female genital mutilation

GDP: gross domestic product

IfS: Instrument for Stability

IMF: International Monetary Fund

MEDA: Measures to accompany the economic and social reform in the Mediterranean non-member countries

MoF: Ministry of Finance

MTEF: medium-term expenditure framework

NCCM: National Council for Childhood and Motherhood

NCHR: National Council for Human Rights

NCW: National Council for Women

NGO: non- governmental organisation

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6

NIP: national indicative programme

PEFA: public expenditure and financial accountability

PETS: public expenditure tracking survey

PFM: public finance management

SBS: sector budget support

SCAF: Supreme Council of the Armed Forces in Egypt

SIGMA: support in governance and management

TA: technical assistance

TSA: treasury single account

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EXECUTIVE SUMMARY

I.
Egypt is the largest country in the Arab world and has 
traditionally played a leading role in north Africa and 
the Middle East. It has also been a major part of the 
Arab Spring through the uprising against the Mubarak 
regime in early 2011.

II.
Both before and after the uprising Egypt was one of 
the main beneficiaries of assistance from the European 
Neighbourhood and Partnership Instrument (ENPI) 
which the EU uses to support its European neighbour-
hood policy (ENP).

III.
For the period 2007–13 Egypt received an allocation 
of approximately 1  billion  euro. Approximately 60 % 
of these funds are channelled through sector budget 
support (SBS) to the Egyptian government, the rest 
through projects agreed with the Egyptian authorities. 
The EU has also made much smaller amounts available 
directly to civil society organisations (CSOs), notably 
through the European Instrument for Democracy and 
Human Rights (EIDHR).

IV.
The audit addressed the question of whether the Euro-
pean Commission and the European External Action 
Service (EEAS) managed effectively the EU support 
to improve governance in Egypt before and after the 
2011 uprising.

V.
The audit covered the period up to September 2012. It 
focused on two key areas of governance: human rights 
and democracy on the one hand, and public finance 
management (PFM) and the fight against corruption 
on the other hand. The audit examined 25 projects and 
the three main SBS programmes. It also examined how 
the EU managed the wider ENP cooperation framework 
with Egypt to achieve progress in these areas.

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EXECUTIVE SUMMARY

VI.
The audit found that overall the Commission and EEAS 
have not been able to manage EU support to improve 
governance in Egypt effectively. This was partly due 
to the difficult conditions they have faced in Egypt 
but also to shortcomings in the way the Commission 
and EEAS have managed their cooperation with Egypt.

VII.
Before  the  uprising  the  Commission  managed  to 
include a large number of human rights and democ -
racy issues in the ENP EU–Egypt action plan for reforms 
and also made this area one of its priorities for ENPI 
assistance. However, it was unable to achieve progress 
either in the framework of its ENP dialogue or through 
the main ENPI project it funded in this area. Notwith-
standing these difficulties the Commission continued 
to provide significant financial assistance to the Egyp-
tian government, notably through budget support.

VIII.
Before the uprising, projects which directly funded 
CSOs  tended  to  be  relatively  more  successful  but 
received very limited funding. Despite the consider-
able funding provided through budget support, this 
instrument has not been effective in promoting PFM 
and only slow progress has been made. The Commis-
sion funded a very relevant anti- corruption project 
but the project has also been slow to start and has 
not been sufficiently closely monitored.

IX.
After the uprising the ENP review marked a significant 
effort by the newly created Commission and EEAS to 
improve the effectiveness of EU support. However, the 
review has not yet been translated into a significant 
revision of EU support to Egypt. While the review’s 
focus on promoting ‘deep democracy’ is very relevant 
to Egypt, women’s and minorities’ rights are key issues 
in Egypt which have not been strongly emphasised in 
the review and subsequent new assistance. The added 
value  of  new  mechanisms  to  support  civil  society 
remains to be demonstrated while additional funding 
allocated to CSOs in Egypt has been modest.

X.
The related review of EU budget support identifies 
some  impor tant  ways  to  strengthen  Commission 
management but these changes will not be effective 
unless the Commission is more strict in applying its 
conditionality.

XI.
The  repor t  sets  out  recommendations  on  how  to 
strengthen support to human rights and democracy 
and PFM and the fight against corruption and on the 
need to review the use of budget support to Egypt.

Special Report No 4/2013 – EU Cooperation with Egypt in the Field of Governance

INTRODUCTION

9

1. 

2. 

3. 

4. 

5. 

This audit report assesses the European Commission’s and European 
External Action Services’ (EEAS) efforts to promote good governance in 
Egypt before and after the events of 2011.

RECENT DEVELOPMENTS IN EGYPT

Egypt with 84 million inhabitants is the largest country in the Arab world 
and has traditionally played a leading role in north Africa and the Mid -
dle East. It also has one of the biggest Muslim populations in the world 
but with a significant Christian minority. Its relations with neighbouring 
Israel are of critical importance to peace in the region and beyond.

Following the overthrow of the monarchy in 1952, Egypt was ruled until 
2011 by three autocratic presidents, each with a military background: 
firstly, Colonel Nasser until his death in 1970, then Colonel Sadat before 
his assassination by Muslim radicals in 1981 and from 1981  to  2011 by 
Sadat’s Vice-President, Hosni  Mubarak, who had also  been the  Com-
mander of the Air Force.

Mubarak maintained the emergency laws, originally put in place follow-
ing Sadat’s assassination, throughout his 30 years in power. Until 2005, he 
was the only candidate to run for the presidency and consequently won 
five consecutive elections with a huge majority. His National Democratic 
Party similarly dominated the parliament. He finally yielded to pressure 
to allow competitive presidential elections in 2005 but then placed such 
restrictive conditions on them that it was hard for a viable competitor 
to run against him.

In contrast, particularly from 2005, Mubarak undertook a range of lib -
eralising economic reforms which were generally welcomed by the in-
ternational community. However, these reforms reinforced rather than 
reduced inequality with both the military and circles linked to his family 
holding major interests in the economy.

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6. 

7. 

8. 

9. 

On 25 January  2011 a popular uprising began with demonstrators pro -
testing against the continued emergency laws, including related po-
lice  brutality  and  torture,  the  lack  of  free  elections  and  limited  free-
dom  of  speech. The  protests  were  also  directed  against  widespread 
corruption and high levels of unemployment coupled with rising food  
prices. These largely unexpected events led to Mubarak’s resignation on 
11 February 2011.

From February 2011 to June 2012 Egypt was de facto run by the Supreme 
Council of the Armed Forces (SCAF). The SCAF in many ways continued 
the authoritarian approach of previous governments, including a major 
crackdown on foreign NGOs starting in autumn 2011. Nevertheless, fol-
lowing several postponements, presidential elections held in May and 
June 2012 led to the candidate of the Muslim Brotherhood, Mohamed 
Morsi, gaining a narrow victory.

This success of the Muslim Brotherhood was consistent with their strong 
showing in the parliamentary elections at the end of 2011 where their 
candidates won 235 out of the 498 seats. At the same time, a more con -
servative Islamic bloc led by the Salafists won 123 seats. Secular, liberal 
groups, despite having played an important role in the uprising, only 
obtained approximately 20 % of the seats. However, in June 2012 the 
Supreme Court ruled aspects of the election were unconstitutional and 
new elections are now scheduled for 2013.

In December 2012 Egyptians voted in favour of a new constitution. How -
ever, large sections of Egyptian society expressed strong concerns about 
what they perceived to be a shift towards Sharia law, restrictions on both 
the freedom of expression and women’s and minorities’ rights, and the 
continued privileged role of the military.

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10. 

11. 

12. 

13. 

EU COOPERATION FRAMEWORK

Egypt’s association agreement with the EU, which entered into force in 
2004, provides the legal basis and institutional framework for its cooper-
ation with the EU. An association council is foreseen to meet at minister-
ial level at least once a year for dialogue on major issues related to the 
agreement or on other bilateral or international issues of mutual interest. 
An association committee, supported by subcommittees, is intended to 
enable dialogue at the level of senior officials to ensure the implementa-
tion of the agreement.

A key feature of the association agreement is its insistence on the respect 
of democratic principles and fundamental human rights (Article 2). This 
reflects the EU’s long-standing commitment to promoting human rights 
and democracy in its international relations which is also enshrined in 
Article 21 of the Treaty on European Union1.

Egypt is the largest country in terms of population covered by the EU’s 
ENP2. The ENP was launched in 2004 with the objective of avoiding the 
emergence of new dividing lines between the enlarged EU and its south-
ern and eastern neighbours by strengthening the prosperity, stability 
and security of both the EU and its neighbours.

Central to the ENP are the bilateral action plans between the EU and each 
ENP partner country. These set out a range of short- and medium-term 
priorities for political and economic reforms agreed between the two 
sides. The EU–Egypt action plan was adopted by the EU–Egypt Council 
in March 2007 and covers six areas 3. It was due to expire in March 2012 
but its duration has been extended while a new action plan is prepared 
in conjunction with the new Egyptian authorities. The European Com-
mission publishes ENP progress reports annually on the implementation 
of the planned reforms set out in the action plans.

11

1  Article 21(1) of the Treaty 
on European Union states 
that: ‘The Union’s action on 
the international scene shall 
be guided by the principles 
which have inspired its own 
creation, development and 
enlargement, and which it 
seeks to advance in the wider 
world: democracy, the rule 
of law, the universality and 
indivisibility of human rights 
and fundamental freedoms, 
respect for human dignity, 
the principles of equality 
and solidarity, and respect 
for the principles of the 
United Nations Charter and 
international law. The Union 
shall seek to develop relations 
and build partnerships 
with third countries, and 
international, regional 
or global organisations 
which share the principles 
referred to’.

2  The other ENP beneficiary 
neighbours are: Algeria, 
Armenia, Azerbaijan, 
Belarus, Georgia, Israel, 
Jordan, Lebanon, Libya, 
Moldova, Morocco, occupied 
Palestinian territories, Syria, 
Tunisia and Ukraine.

3  1. Enhanced political 
dialogue, economic and 
social development and 
reform; 2. Trade-related issues, 
market and regulatory reform; 
3. Transport, energy and 
environment; 4. Migration, 
social integration, justice 
and security; 5. Science 
and technology, research 
and development, 
information society and 
audiovisual cooperation; 
6. People-to-people contacts.

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14. 

15. 

16. 

Up until the end of 2010 the European Commission was responsible for 
developing the ENP approach and then programming and implementing 
the assistance and the overall ENP cooperation framework. Following 
the establishment of the EEAS in December 2010, the EEAS became re -
sponsible for policy development and the overall cooperation framework 
and the EEAS and Commission shared responsiblities for programming 
assistance. Implementation of assistance remains the responsibility of 
the Commission.

EU FINANCIAL ASSISTANCE

The ENPI4 was launched in 2007 to provide financial assistance to help 
partner countries implement the action plan. The ENPI replaced the pre-
vious EU ‘MEDA’ financial assistance programme, which had just  covered 
southern and eastern Mediterranean countries5. ENPI assistance is con-
ditional  on  the  respect  of  democracy  and  human  rights  (Article  28). 
Egypt is one of the main beneficiaries of the ENPI, receiving an allocation 
of approximately 1  billion  euro in the framework of EU’s Egypt country 
strategy paper (CSP) for 2007–13. The CSP identifies three priority areas 
for ENPI assistance (see Annex I  for details of allocations):

(a) 

supporting reforms in the areas of democracy, human rights and 
justice (90 million euro);

(b)  developing  the  economy ’s  competitiveness  and  productivity 

(409 million euro);

(c) 

ensuring the sustainability of development (508 million euro).

4  Regulation (EC) 
No 1638/2006 of the 
European Parliament 
and of the Council of 
24 October 2006 laying 
down general provisions 
establishing a European 
Neighbourhood and 
Partnership Instrument 
(OJ L 310, 9.11.2006, p. 1).

5  Council Regulation 
(EC) No 2698/2000 of 
27 November 2000 amending 
Regulation (EC) No 1488/96 
on financial and technical 
measures to accompany 
(MEDA) the reform of 
economic and social 
structures in the framework 
of the Euro-Mediterranean 
partnership (OJ L 311, 
12.12.2000, p. 1).

6  The Commission’s budget 
support can take two forms: 
general budget support 
(GBS) or sector budget 
support (SBS). GBS focuses 
more on supporting national 
development plans while SBS 
focuses on sector strategies. 
In accordance with its general 
approach to providing 
budget support in lower 
middle income countries, 
the Commission has used 
exclusively SBS in Egypt.

Approximately 40 % of ENPI assistance to Egypt is used to finance pro-
jects  while  in  the  order  of  60 %  of  ENPI  assistance  to  Egypt  is  being 
implemented through SBS. This involves the channelling of EU funds 
directly to Egypt’s national budget subject to Egypt meeting sectoral 
and PFM reform conditions 6. In recent years the Commission in its aid 
programmes has placed a major emphasis on improving PFM  — how 
beneficiary governments plan, implement and control their  budgets  — 
in  order  to  help  improve  the  economy,  efficiency,  effectiveness  and 
transparency  of  both  how  they  use  their  own  national  finances  and 
also EU funds. Budget support is the main instrument the Commission 
has used for this purpose in Egypt.

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17. 

While EU assistance in Egypt is mainly financed through the ENPI, fur-
ther, much smaller support in the area of governance has been provided 
through the European Instrument for Democracy and Human Rights 
(EIDHR), and thematic programmes funded from the Development Co-
operation Instrument (DCI), the Instrument for Stability (IfS) and the 
more recently established Civil Society Facility. A key characteristic of this 
support is that the Commission can provide it directly through grants 
to civil society organisations (CSOs) and other non-state actors (NSAs) 
without having to enter into financing agreements with the national 
authorities.

Special Report No 4/2013 – EU Cooperation with Egypt in the Field of Governance

7  The audit did not include 
EU support provided 
through the previous 
‘MEDA’ programme (see 
paragraph 15).

8  The audit examined only 
the PFM and anti-corruption 
aspects of these programmes.

AUDIT SCOPE AND APPROACH

14

18. 

The audit addressed the overall question:

‘Have the European Commission and the European External Action 
Service (EEAS) managed effectively the European Union support to 
improve governance before and after the 2011 uprising?’

19. 

20. 

21. 

22. 

The audit covered the period from the launch of the ENPI in 2007 to 
September 2012 7.

The  audit  focused  on  two  key  areas  of  governance:  democracy  and 
 human rights on the one hand, and PFM and the fight against corrup-
tion on the other hand.

(a) 

In the area of democracy and human rights the audit examined:

(i) 

(ii) 

the largest human rights programme funded from the ENPI (17 mil-
lion euro);

the annual funding from the EIDHR and the related DCI thematic 
programme on NSAs, including a sample of 15 projects with a total 
value of 2,95 million euro;

(iii) 

two projects funded from the Instrument for Stability with a total 
value of 2,86 million euro.

(b) 

In the area of PFM and the fight against corruption:

(i) 

the three largest SBS programmes (total value of 304 million euro)8;

(ii) 

the main anti-corruption project financed by the ENPI (2,5 mil-
lion euro).

More detailed information on all the interventions audited is given in 
Annex II .

For  each  of  these  areas  of  governance  the  audit  also  assessed  the  
EU–Egypt action plan, the dialogue between the EU and Egypt on the im-
plementation of the action plan, and the Commission’s progress reports.

The Court gathered evidence for its assessment through documentary 
review and interviews with the EEAS, the Commission, the Egyptian au-
thorities and CSOs, as well as other donors. The audit included a 2-week 
visit to Egypt in June 2012. An international expert provided advice to 
the audit team in the field of democracy and human rights.

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9  COM(2005) 72 final of 
2 March 2005.

10  (i) enhance political 
dialogue and cooperation on 
shared values; (ii) enhance the 
effectiveness of institutions 
entrusted with strengthening 
democracy; (iii) promote the 
protection of human rights in 
all its aspects.

AUDIT SCOPE AND APPROACH

OBSERVATIONS

FEW RESULTS ACHIEVED BEFORE THE UPRISING

INEFFECTIVE TREATMENT OF HUMAN RIGHTS BEFORE THE UPRISING

As for all ENP countries, before negotiating the action plan with the 
Egyptian authorities, the European Commission issued in 2005 a country 
report9 setting out its assessment of the situation in Egypt. The report in-
cluded critical observations on the political situation and highlighted the 
negative impact of the emergency law on human rights and democracy.

Following negotiations with the Egyptian authorities, the Commission 
was able to have three high priority areas relating to human rights and 
democracy included among the 19 high priorities areas in the action 
plan10. However, at a more detailed level, the action plan contained as 
many as 39 priority actions in the field of human rights and democracy. 
This represented an overly ambitious agenda which was not based on 
clearly spelled-out priorities on the part of the Commission.

The actions foreseen covered sensitive topics such as cooperation in the 
field of elections, the right of assembly and association, and the rights of 
detainees. Nevertheless, a number of key issues which had been raised in 
the country report were not directly addressed, in particular the continu-
ance of the emergency law, the role of military and state security courts 
and the widespread use of torture. In addition some actions were rather 
vaguely defined and without clear benchmarks to assess progress.

MAIN HUMAN RIGHTS PROJECT LARGELY UNSUCCESSFUL

The 2007–13 CSP was the first time that human rights and democ racy 
had  been  selected  as  a priority  area  for  EU  financial  assistance  (see 
paragraph 15). This  represented  a success  for  the  Commission  in  its 
 efforts to push these topics up the political agenda in its relations with 
Egypt.

23. 

24. 

25. 

26. 

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11  Funding for the 2002–06 
CSP came from the MEDA 
instrument (support in the 
field of democratisation, 
human rights and civil society 
programme and children at 
risk programme).

12  National Council for 
Childhood and Motherhood 
(NCCM), National Council for 
Women (NCW).

27. 

28. 

The main intervention launched in this area in the framework of the CSP 
was an ENPI programme for the promotion and protection of human 
rights and civil society. It aimed to increase the capacity of Egyptian 
institutions as well as CSOs to effectively implement international con-
ventions in this area. The programme was intended to help address the 
high priority given in the action plan to human rights. It was approved 
in 2008 for 17 million euro (for details see  Annex II ).

There were several weaknesses in the programme’s design. It was to 
a large extent the continuation of different projects financed under the 
2002–06 CSP 11. However, these projects were not well integrated with 
each other in the new programme, particularly the project ‘Promotion 
of environmental rights through CSOs’. Moreover, the Commission when 
designing the programme did not sufficiently take into account les-
sons learnt from these earlier projects. Two of the organisations selected 
to implement the programme, while reformist in their approach, were 
public bodies created by the Mubarak regime, and specifically linked to 
the President’s wife, rather than government ministries 12. This link has 
become a handicap for the programme after the uprising.

29. 

Implementation  of  the  programme  has  been  subject  to  major  de -
lays, largely attributable to a lack of commitment from the Egyptian 
authorities.

(a) 

(b) 

(c) 

The financing agreement was signed by the Egyptian authorities 
only on 23  December  2009, the last day before the deadline for 
this. This followed a difficult negotiation process between the Com -
mission and the Egyptian authorities over the content of the pro-
gramme and how it was to be implemented.

Implementation following the signature continued to be very slow. 
After 30 months, and just 6 months before the contracting dead-
line, only 53 % of the programme funds had been contracted and 
22 % paid. There were particular delays in getting the programme 
management unit operational which have affected implementation 
of the programme as a whole.

The cancellation in April 2012 of the component for enhancing CSO 
capacity (4  million  euro) was a major setback for the programme. 
It was the result of the lack of agreement between the Egyptian 
authorities and the Commission on the wording to be used in re-
lation to minorities and gender when drafting the call for project 
proposals. The Commission services themselves did not take a clear 
decision on these points.

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13  Some of the CSOs 
which the audit team met 
with during its work in 
Egypt expressed particular 
frustration at the limited 
EU funding channelled 
to CSOs for human rights 
and democracy support 
compared to the amounts 
allocated to the Egyptian 
authorities.

14  The 2010 NSA thematic 
programme allocation was 
970 000 euro. Forty-eight 
applications were received 
and three grant contracts 
awarded.

15  For example, the size of the 
grants to be awarded or the 
required level of co-financing.

30. 

31. 

32. 

Despite the efforts the Commission made to keep the programme alive, 
it has produced few outputs so far and their sustainability is very much 
dependent on political developments in Egypt. While the Commission 
intended the programme to be a way to raise the profile of human rights 
issues, in practice it was not able to use it as a means of developing 
dialogue with the Egyptian authorities on this subject.

LITTLE FUNDING BEFORE UPRISING FOR CIVIL SOCIETY THROUGH 
EIDHR AND DCI-NSA THEMATIC PROGRAMME

The  Commission  has  used  the  EIDHR  to  address  some  very  sensitive 
subjects such as the electoral process and the combating of torture 
and ill-treatment. These could not be addressed in the framework of the 
ENPI assistance given that this requires the Commission to enter into 
financing agreements with the national authorities. While the EIDHR 
initially was used more to focus on socio-economic rights, the Com-
mission’s introduction of the DCI-NSA thematic programme in this area 
since 2010 has allowed it to concentrate the EIDHR on democracy and 
political rights. The funding was used to build up the capacity of CSOs 
to act effectively in these areas and to provide support to the victims of 
human rights abuses.

However, the very limited funding made available before the uprising for 
these two instruments does not reflect the policy importance which the 
EEAS and Commission gave to democracy and human rights in the action 
plan (see paragraph 24). It is also low compared to the assistance allo-
cated from the ENPI to human rights and democracy (see previous sec-
tion)13 and the amounts allocated to budget support. For the EIDHR the 
average annual funding from 2008  to 2010 was as little as 875 000  euro, 
despite there being an average of 40 applications a year. Only between 
four and seven grants were awarded each year for an average amount 
of approximately 150 000  euro. Allocations were equally modest for the 
DCI-NSA thematic programme when it was introduced in 201014.

33. 

The Commission has not yet carried out a mapping exercise on Egyptian 
CSOs. Its lack of detailed information on CSOs made it harder to ensure 
that the views of a variety of CSOs on the content of the annual calls for 
proposals for EU programmes were taken into account. It also made it 
more difficult to design calls for proposals appropriate to their capacity15.

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Implementation of assistance through the EIDHR and the DCI-NSA the-
matic programme was slowed down by the length of the procedures 
for the Commission’s call for proposals. The average time between the 
deadline for CSOs to submit their project proposals and the Commis-
sion’s signature of the grant contract to fund the project was 8,5 months 
for the sample of contracts examined. This is despite the small contract 
amounts and the fact that the timeframe for their implementation is 
often only 24 months.

16  In order to comply with 
Law 84/2002, NGOs must 
obtain approval of each 
project funded from foreign 
sources before carrying out 
the activities.

Nine of the 14 signed projects in the sample suffered delays due to long 
approval procedures by the Egyptian Ministry of Solidarity and Social 
Justice 16. In these cases the Commission adopted a flexible and sup -
portive approach, systematically suspending the timeframe for project 
implementation until the CSOs received the necessary approval.

Of the five projects in the sample that had been completed, three had 
delivered the planned outputs to the benefit of the target groups. The 
other two projects did not fully achieve their objectives, mainly due to 
interference from the Egyptian authorities. The projects’ contribution to 
improving governance has been mostly at very local level.

DIALOGUE BUT LITTLE ACTION ON HUMAN RIGHTS AND DEMOCRACY

After lengthy negotiations, the Commission was able to obtain the agree-
ment of the Egyptian authorities to set up a subcommittee on political 
matters within the framework of the association committee. However, 
the  name  of  the  subcommittee  reflected  the  compromise  involved: 
 ‘Subcommittee on Political Matters: Human Rights and Democracy — 
International and Regional Issues’. While the Commission wished to focus 
dialogue on human rights and democracy, the Egyptian side wanted to 
concentrate on international security issues in line with its ambition to 
develop a strategic partnership with the EU.

34. 

35. 

36. 

37. 

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19

The subcommittee met once a year from 2008  to  2010. The EU side in-
creasingly raised critical issues relating to human rights and democracy 
in Egypt, including torture, freedom of association and expression, the 
restrictive law on NGOs 17 and the continuance of the emergency law 
itself. However, the response of the Egyptian side was to focus on in-
ternational issues and reassure the EU side that action was being taken 
on domestic governance issues or to play down their importance. The 
Egyptian authorities also argued that they were addressing human rights 
issues through the ENPI programme on this subject although in reality 
they were constantly delaying this project (see paragraph 29).

17  Law 84/2002.

18  From 2011, the progress 
report is a joint staff working 
document between the 
Commission and the EEAS, 
and is under the responsibility 
of the latter.

The Commission did not succeed in ensuring that the issues it brought 
up in the subcommittee dialogue were subsequently followed up by 
the Egyptian authorities with concrete actions. Even when issues raised 
were included as action items at the end of the meeting, they were not 
generally implemented. For example, the 2009 subcommittee included 
as an action point ‘exploring the possibility to use EU technical assistance 
to advise Egypt on NGO legislation in Member States’. This was not fol-
lowed up.

The Commission’s progress reports on the implementation of the action 
plans similarly raised sensitive issues concerning human rights and dem-
ocracy and took an increasingly critical stance. However, they did not 
refer to the problems faced in implementing EU assistance intended to 
address these issues. At the same time, until the 2011 progress report18, 
no proposals were made by the Commission in the reports on measures 
to be taken by the Egyptian authorities to tackle the issues raised.

The Commission made no link between its criticisms of human rights 
violations made in the progress reports and the option of reducing or 
suspending EU assistance. This is despite the fact that human rights 
clauses are included in the association agreement, the ENPI regulation 
(see paragraphs 11 and 15) and the financing agreements for individual 
programmes. While  the  reduction  or  suspension  of  budget  support, 
 given  that  it  was  directly  financing  the  national  budget,  could  have 
been a particularly potent way of backing up human rights concerns, 
this was not done before the uprising.

38. 

39. 

40. 

41. 

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20

42. 

43. 

44. 

NO PFM REFORM PLAN

The EU–Egypt action plan addresses a number of PFM reform priorities 
although not in a detailed way. It also referred to the need for more 
transparency and a revised anti-corruption policy but without emphasis-
ing the importance of tackling corruption and including it among the 
19 high priority areas.

19  This report has not been 
made publically available by 
the Egyptian authorities.

Budget support is a key instrument used by the Commission for promot -
ing PFM reform in partner countries. Commission policy emphasises the 
need for countries receiving budget support to put in place a PFM re -
form plan in order to prioritise and coordinate reforms. However, despite 
the fact that approximately 60 % of EU assistance is being channelled 
through budget support, the Commission did not require the Egyptian 
authorities to establish such a plan.

In 2009 the Commission funded a public expenditure and financial ac -
countability (PEFA) assessment on the state of PFM in Egypt which high-
lighted weaknesses in key areas of PFM, including external audit and 
legislative scrutiny of audit reports. However, the PEFA exercise was not 
followed up by firm steps to put in place a reform programme. Only 
in December 2011 did the Ministry of Finance (MoF) endorse an Inter -
national Monetary Fund roadmap which provided the basis for a PFM 
reform programme19.

45. 

Egypt still does not have an anti- corruption strategy although one of 
the objectives of the ENPI anti- corruption project launched in 2011 is 
to produce such a strategy (see paragraph 52).

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21

20  The Commission organised 
a regional seminar covering 
several north African 
countries using SIGMA 
(support in governance and 
management).

MAJOR SHORTCOMINGS IN PFM NOT TACKLED

46. 

The pace of PFM reform in Egypt has been slow and SBS programmes 
have made only a limited contribution to reforms. For example:

(a)  No significant progress has been made in introducing an effective 
internal audit function despite this area being highlighted in the 
2007 EU–Egypt action plan. The MoF originally requested the Com-
mission’s support in this area in June 2009 but the Commission’s 
only concrete input at the time of the audit was the organisation 
of a regional seminar on the subject held in June 2011 20.

(b)  The  Egyptian  authorities  initiated  work  in  2006  on  establishing 
a treasury single account ( TSA), which is an essential tool for con -
solidating and managing government cash resources. By June 2012 
approximately 500 of the government’s accounting units out of 
a total of 2 600 had been integrated in the TSA. Although the Com -
mission included progress in this area as a condition in the health 
SBS programme, this condition did not have a significant incentive 
effect.

(c)  Progress in implementing the government financial management 
information system (GFMIS) has also been slow due to a lack of re -
sources and the low priority attached to it by the MoF. This is again 
despite Commission conditionality in this area.

(d)  Progress was made in developing a pilot medium-term expenditure 
framework (MTEF) and programme-based budgeting for the educa-
tion sector. However, subsequent roll-out of these pilot projects to 
other ministries is still ongoing.

47. 

The Commission has not used its SBS programmes to address the fol-
lowing major shortcomings in PFM.

(a) 

Important areas of the budget are not transparent. Military expend-
iture is not declared and there is also no information on presidential 
expenses.

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22

(b)  The Egyptian authorities hold at least 36  billion Egyptian pounds 
(approximately 4 billion euro), equivalent to 2,4 % of Egyptian GDP, 
outside the state budget in so-called ‘special funds’. Their exact size 
is unknown, as are the purposes for which, and the way in which, 
they are used. The Commission has not used the SBS programmes 
to specifically address this issue.

21  A ‘Support to public 
administration reform’ project 
(9 million euro), for which 
the financing agreement was 
signed in December 2011, 
foresaw the contracting of TA 
contract for PFM reform.

(c)  No progress has been made in reforming external auditing. The 
Central Auditing Organisation (CAO), the supreme audit institu-
tion in Egypt, reported directly to President Mubarak and its audit 
reports are largely secret. The CAO’s lack of reform and transparency 
is a serious impediment to improving PFM.

According to Commision policy, the satisfactory overall implementation 
of PFM reforms is a general condition for budget support. However, the 
Commission did not establish clear criteria in terms of annual reform 
milestones and benchmarks for monitoring and assessing what consti-
tuted an adequate pace of reform and continued to disburse budget 
support despite the slow implementation of reforms.

The Commission has been the only donor providing budget support 
to  Egypt.  As  a result  there  has  been  no  scope  for  coordinating  with 
other donors to increase the funding attached to conditions and thereby 
strengthen their incentive effect.

While EU budget support programmes in most countries are generally 
accompanied by technical assistance ( TA) to advise on PFM reforms, 
little use has been made of such TA in Egypt. In addition, no specific TA 
project on general PFM reforms was funded until December 2011 21. The 
SBS programmes have also not been accompanied by any funding for 
CSOs to develop their role in monitoring the national budget.

48. 

49. 

50. 

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23

LITTLE PROGRESS IN FIGHTING CORRUPTION

Despite Egypt’s serious problems in the area of corruption22, the SBS 
programmes have done little to directly address this issue. Some EU 
budget support programmes in other countries have included specific 
conditions on corruption but this was not the case in Egypt. The main 
exception was the provision in the framework of the education SBS pro-
gramme of TA for a public expenditure tracking survey (PETS). The survey 
was partly intended to identify ‘leakages’ in the education sector but the 
exercise was not very effective.

22  Egypt was ranked 
77th in the Transparency 
International Corruption 
Perception Index in 2004, and 
112th in 2011 (183 countries 
surveyed). The World Bank’s 
worldwide governance 
indicators (WGIs) show that 
the control of corruption in 
Egypt has worsened over the 
period from 2001 to 2011.

The main EU project specifically directed at fighting corruption was ap-
proved in 2008 for 2,55  million  euro. It was the only significant donor 
project launched in this area in the years before the uprising. However, 
its implementation has been difficult and the Commission has not suf-
ficiently monitored the project despite its importance. Given the recent 
start of the project and the delays already encountered, its outputs so 
far are limited. Nevertheless its prospects for sustainability appear good 
given the current widespread public concern in Egypt about corruption.

THE COMMISSION DID NOT ADEQUATELY USE THE ENP COOPERATION 
FRAMEWORK TO ADDRESS PFM AND CORRUPTION

Neither the Commission nor the Egyptian authorities put PFM issues on 
the agenda of the association committee, while none of the eight sub-
committees included PFM in its remit. The annual EU–Egypt economic 
dialogue meetings could have potentially been used to address PFM 
issues, but were not.

Corruption matters were discussed in the Subcommittee on Justice and 
Security, which met annually from 2007 to 2010. There was some ex-
change of information on anti- corruption initiatives but regular calls for 
cooperation from both sides were not followed up by concrete actions. 
The dialogue also did not lead to new ENPI projects nor did it address the 
difficulties faced in starting up the 2008 ENPI project (see paragraph 52). 
The broad scope of the subcommittee and the limited time scheduled 
for its meetings made more in- depth discussions, decision-making and 
follow-up difficult.

51. 

52. 

53. 

54. 

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24

23  COM(2011) 303 final of 
25 May 2011.

24  These potential benefits 
offered by the EU are 
sometimes described as the 
three ‘M’s: money, markets 
and mobility.

25  Council 
Decision 2011/424/CFSP 
of 18 July 2011 appointing 
a European Union special 
representative for the 
southern Mediterranean 
region (OJ L 188, 19.7.2011, 
p. 24).

26  ‘A strong neighbourhood 
policy’, COM(2007) 774 final 
of 5 December 2007 (p. 2).

55. 

56. 

57. 

58. 

The ENP progress reports have devoted little attention to PFM. The re-
ports have, however, become more critical. Thus the 2010 report noted 
the overall slow pace of PFM reform while the 2011 report touched for 
the first time on the military budget, criticising the military’s efforts to 
keep its budget outside any civilian or democratic control, although this 
subject still warrants much more attention.

Similarly, the Commission only briefly addressed the subject of corrup-
tion in the progress reports. From 2007 to 2010 the reports were mod-
erately positive on progress made, ignoring fundamental challenges in 
this area. The 2011 report adopted a more critical stance, recognising 
corruption as a major issue.

FEW CHANGES IN RESPONSE TO THE UPRISING

ASSISTANCE PROGRAMMES REMAINED LARGELY UNCHANGED 
DESPITE ENP REVIEW

Before the Arab Spring in 2011, the High Representative and the Com-
mission launched an overall review of the ENP in July 2010 involving 
consultations with Member States, partner countries and civil society 
to  assess  how  it  could  be  made  more  effective. The  outcome  of  this 
review was published in a joint communication in May 2011 entitled ‘A 
new response to a changing neighbourhood’ 23. Its main focus was to 
emphasise the EU’s support for democratic reform and it proposed to 
give countries incentives to move in this direction by offering what it 
termed ‘more for more’: more EU funding, better trade access to the EU 
and better travel possibilities to the EU in return for more democratic 
reforms24. An EU special representative (EU SR) for the southern Mediter-
ranean was appointed in July 2011 to help implement the review 25.

In fact a 2007 Commission communication following the launch of the 
ENPI  had  already  referred  to  a ‘more  for  more’  approach: ‘ The  ENP  is 
a partnership for reform that offers ‘more for more’: the more deeply 
a  partner  engages  with  the  Union,  the  more  fully  the  Union  can  re -
spond,  politically,  economically  and  through  financial  and  technical 
cooperation’26.

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25

27  Two projects, one on family 
planning (20 million euro) 
and one on demining 
(10 million euro) were 
cancelled because they were 
not considered high priority. 
They were replaced by one 
on support to agricultural 
SMEs (22 million euro) and 
the doubling of funding for 
a project to improve slums in 
Cairo.

59. 

While overall the ENP review involved an extensive consultation process, 
consultations specifically with stakeholders involved in Egypt were quite 
limited.

(a)  No specific in-depth study or evaluation to identify the reasons for 
the limited effectiveness of ENPI assistance to Egypt prior to the 
uprising was made.

(b)  While the Commission organised a meeting for senior officials from 
ENP partner countries, including Egypt, in October 2010 as part of 
the ENP review, the planned ministerial meeting in early 2011 was 
not held.

(c) 

ENP review consultations with NGOs working in Egypt were very 
limited. While  the  Commission  organised  a meeting  in  Novem -
ber 2010 in Brussels with NGOs from all ENP partner countries, the 
invitation was sent at short notice to only six Egyptian NGOs, of 
which just one attended.

60. 

61. 

Following the uprising the EEAS and Commission also carried out a re -
view of the  CSP 2007–13 and NIP 2011–13  to  assess  their  continued 
relevance. The EEAS and Commission concluded that there was no need 
to formally revise these two documents as the assistance set out in them 
was sufficiently broad-ranging and flexible. The NIP 2011–13 had been 
based on a 2009 review of the CSP which took a positive view of devel -
opments in Egypt in the area of human rights and democracy, referring 
to the need to ‘consolidate achievements made so far and to encourage 
further bold steps towards political reform’. Similarly the EU delegation’s 
review of the proposed ENPI assistance programme for 2011 did not lead 
to major changes27.

Particularly at the level of the CSP and NIP, it would have been expected 
that the EEAS and Commission would propose more changes in the light 
of the uprising and the ENP review. This is notwithstanding the fact that 
the SCAF, while in power as a caretaker government in the 18 months 
after the uprising, limited the scope for developing a completely new 
assistance strategy with the Egyptian authorities.

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26

62. 

63. 

LESS ATTENTION TO WOMEN’S AND MINORITIES’ RIGHTS

The ENP review emphasises the need for ‘deep democracy’, highlighting 
the importance not only of elections but the independence of the judi-
ciary, the accountability of the police and army, and the need to combat 
corruption. All of these are major issues in Egypt, the concept of ‘deep 
democracy’ contrasting with the lip service paid to democracy by the 
authorities before the uprising.

28  ‘Egypt: investigate violence 
against Coptic Christians’, 
Human Rights Watch, 
10.10.2011 (http://www.
hrw.org/news/2011/10/10/
egypt-investigate-violence- 
against-copticchristians).

On the other hand the review pays less attention to two aspects of ‘deep 
democracy’ which are particularly important in Egypt and under threat 
after the uprising.

(a) 

The rights of minorities: sectarian violence has been increasing with 
Christians suffering the brunt of the violence. Investigations into 
the violence have been sluggish or non- existent28.

(b)  The rights of women: while this was an area where some advances 
were made over the last decade of the Mubarak regime, this pro-
gress is at risk since the uprising. Following the uprising the new 
parliament called for the abolition of several institutions support-
ing women’s rights. It also demanded a reduction in the age of 
marriage, the decriminalising of female genital mutilation (FGM) 
and a review of the personal status law and child law in line with 
Sharia principles.

Apart from the human rights aspects, further regression in these areas 
also threatens to exacerbate current economic problems, particularly 
through their negative impact on tourism and foreign and domestic 
investor confidence.

64. 

The EEAS and Commission have so far taken only a few new funding 
initiatives in these two areas as a result of the review. They included new 
themes in the 2011 and 2012 EIDHR calls for proposals on promoting 
tolerance, pluralism and intercultural dialogue although funding only 
amounted to approximately 500 000  euro for the 2011 budget. The main 
new funding initiative on women’s rights was a proposal to transfer the 
4  million euro from the cancelled component of the ENPI human rights 
and democracy programme (see paragraph 29(c) to a project with UN 
Women to support women’s rights and livelihood.

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27

65. 

66. 

67. 

68. 

NEW SUPPORT FOR CSOS HAS SO FAR HAD LITTLE IMPACT

As part of its stress on developing ‘deep democracy’, the review under-
lines the important role of civil society. Accordingly it proposes two new 
initiatives in this area: the Civil Society Facility (CSF) instrument and the 
European Endowment for Democracy (EED) foundation.

One particular purpose of the EED is to support unregistered CSOs. This is 
potentially a useful measure to address the problems which CSOs faced 
in Egypt both before and after the uprising. The EED is also intended to 
allow more flexible procedures for funding CSOs than is currently the 
case. However, the EED is yet to start delivering assistance as it was only 
still in the process of being set up in mid 2012 and experiencing difficul-
ties attracting funding.

The  CSF  was  only  starting  to  become  operational  at  the  time  of  the 
audit and Egypt’s allocation for 2011 was only 600 000  euro. Additional 
funding for the EIDHR and the DCI-NSA thematic programme following 
the uprising has also been modest despite an increase in the number of 
applications from CSOs. There is a  risk of overlap between the CSF, the 
EED, and the existing EIDHR and the DCI-NSA thematic programme.

While the Egyptian authorities have been reviewing the current restrict-
ive law on NGOs, it remains unclear how far the new law foreseen for 
2013 will bring significant liberalisation.

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28

29  COM(2011) 638 final of 
13 October 2011.

30  The communication 
refers to the reduction 
or suspension of GBS as 
a response to a ‘significant’ 
deteriorating trend in 
a country’s commitment to 
human rights and democracy. 
However, in such cases 
funding may be transferred 
to SBS programmes. In 
the case of SBS political 
governance issues are to be 
weighed against the needs 
of service delivery. Thus SBS 
programmes are only to be 
suspended as part of the 
suspension of all assistance 
programmes following 
a ‘severe’ deterioration in 
political governance.

BUDGET SUPPORT: POTENTIAL PROGRESS BUT REVISED CONDITIONS 
NEED TO BE STRICTLY APPLIED

69. 

The ENP review also referred to planned changes in budget support. The 
actual changes were subsequently set out in the Commission communi-
cation ‘ The future approach to EU budget support to third countries’29. 
Several elements of the revised approach are relevant to Egypt:

(a) 

as part of its PFM general condition for budget support, the Com-
mission will pay particular attention to the fight against corruption;

(b) 

transparency and oversight of the budget will be a new eligibility 
criterion for budget support;

(c) 

closer coordination with other donors to increase leverage on pol-
itical and policy reform dialogue and the impact of the funds.

70. 

71. 

However, the potential benefits of the new approach will not be realised 
unless the Commission takes a stricter approach than before the upris -
ing to assessing whether the eligibility criteria have actually been met. 
Moreover, while the revised approach to budget support now makes 
a commitment  to  human  rights  and  democracy  a condition  for  GBS 
(now termed ‘good governance and development contracts’), this is not 
so clearly the case for SBS (now termed ‘sector reform contracts’) which 
has been the form of budget support used in Egypt30.

Ongoing SBS programmes in Egypt have not been modified following the 
uprising to take account of the revised approach. Work on implementing 
the IMF roadmap (see paragraph 44) did not start during the first half of 
2012.

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CONCLUSIONS AND RECOMMENDATIONS

29

72. 

73. 

74. 

75. 

CONCLUSIONS

Overall the EEAS and Commission have not been able to effectively man-
age EU support to improve governance in Egypt. This was partly due to 
the difficult conditions they have faced in Egypt but also to shortcom-
ings in the way the EEAS and Commission have managed EU cooperation 
with Egypt. Before the uprising, the Commission attempted to address 
some key governance issues but was unable to find a way to obtain 
concrete results. After the uprising, the EEAS and Commission’s review 
of the ENP highlighted a number of areas where cooperation needed to 
be made more effective but little has been achieved so far.

Before the uprising the Commission included a large number of human 
rights and democracy issues in the action plan but did not have a clear 
strategy for prioritising and implementing them. While it also raised 
important issues in the framework of its dialogue, it did not ensure that 
discussions were followed up by specific actions. This was similarly the 
case for its annual ‘progress reports’ on Egypt.

Before the uprising, the Commission made considerable efforts to set 
up and implement a sizeable ENPI programme on human rights but the 
programme has so far achieved few ouputs due, principally, to the lack of 
cooperation from the Egyptian authorities. Despite the lack of progress 
on  human  rights  and  democracy  the  Commission  continued  to  pro-
vide large sums of money to the Egyptian government, notably through 
budget support. While the projects which the Commission funded dir-
ectly through CSOs, were more successful, the money allocated to this 
area was very limited.

PFM and corruption issues were not given a high priority in the EU–Egypt 
action plan despite the significant challenges in these areas. No forum 
was established for dialogue on PFM within the framework of the as-
sociation committee while the progress reports devoted only limited 
attention to these areas and until recently tended to take too optimistic 
a view of results being achieved in these areas.

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30

76. 

77. 

78. 

Budget support has been the main Commission mechanism for imple-
menting assistance to Egypt, and one of budget support’s main object-
ives is to improve the management of public finances. Progress towards 
achieving this objective has been very slow and some key shortcom-
ings in PFM were not addressed. The Commission, the only donor to 
use budget support, has been too flexible in its assessments that the 
Egyptian authorities were satisfactorily implementing PFM reforms, a key 
condition for granting budget support.

The Commission did not use budget support to directly address corrup-
tion although this was common practice in other countries. The Com-
mission has funded an important anti- corruption project but the project 
has been delayed and the Commission has not monitored it sufficiently. 
It has not yet achieved major results and its prospects for sustainability 
will depend on the follow up given by the Egyptian authorities to the 
public demand for action in tackling corruption.

After the uprising, the ENP review marked a significant effort by the 
EEAS and Commission to improve the effectiveness of support to ENP 
countries, including Egypt. However, they have not yet translated the 
review into significant changes in the support to Egypt, mainly because 
of the difficult conditions prevailing on the ground in Egypt. The em-
phasis on ‘deep democracy’ is very relevant to Egypt but women’s rights 
and minority rights are key issues in Egypt which have not been strongly 
emphasised  in  the  review  and  subsequent  new  assistance. Two  new 
mechanisms have been established to support civil society but so far 
new assistance on the ground in Egypt has been limited.

79. 

The recent review of budget support identifies some key areas for im-
provement and specifies new stricter eligibility conditions. The impact of 
these new conditionalities will greatly depend on the rigour with which 
they are implemented.

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31

RECOMMENDATIONS

80. 

In relation to human rights and democracy the EEAS and Commission 
should use the new context following the uprising to:

(a) 

(b) 

identify a limited number of benchmarked human rights and dem-
ocracy priorities, and develop an intensive dialogue on them with 
the Egyptian authorities;

review the budget for the EIDHR and DCI-NSA thematic programme 
in line with the ENP review’s commitment to ‘deep democracy’ and 
reallocate resources from ENPI assistance to these instruments in 
cases where the Egyptian authorities do not sufficiently cooperate 
in ENPI governance programmes;

(c) 

avoid overlap and dispersion of funding between the different in-
struments used in this area (EIDHR, DCI-NSA, CSF, EED);

(d)  accelerate support to CSOs, notably at the calls for proposals stage, 
and make it more flexible and responsive to their organisational 
capacity;

(e) 

apply conditionality rigourously in relation to human rights and 
‘deep democracy’.

81. 

In relation to PFM and the fight against corruption the EEAS and Com-
mission should accelerate the progress made in this area by:

(a)  placing  more  emphasis  on  these  issues  in  the  new  action  plan, 
particularly in relation to guaranteeing budgetary transparency and 
fully independent external auditing;

(b)  establishing an association agreement subcommittee specifically 

devoted to PFM and the fight against corruption;

(c) 

supporting the Egyptian authorities in the implementation of the 
IMF roadmap and agree on clear milestones for its implementation.

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32

82. 

Specifically in relation to strengthening the management of budget sup-
port, the EEAS and Commission should carry out a review on the basis 
of the revised EU approach to budget support of the appropriateness 
of providing budget support to Egypt. Eligibility criteria such as respect 
for human rights, transparency and oversight of the budget and tackling 
seriously the issue of corruption should be strictly applied.

ANNEX I

This report was adopted by Chamber III, headed by Mr Karel PINXTEN, 
Member  of  the  Cour t  of  Auditors,  in  Luxembourg  at  its  meeting  of 
14 May 2013.

For the Court of Auditors

Vítor Manuel da SILVA CALDEIRA
President

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33

ANNEX I

ENPI PROGRAMMED ALLOCATIONS FOR EGYPT 2007–13 

(million euro)

NIP 2007–10

NIP 2011–13

Priority 1 — Supporting reforms in the area of democracy,  
human rights and justice
Support for political development, decentralisation and promotion of 
good governance
Promotion and protection of human rights
Support for the modernisation of the administration of justice
Upgrading of regulatory, institutional and legislative environment
Priority 2 — Developing the competitiveness and productiv-
ity of the economy
Support for the implementation of the action plan programme (SAAP)

 — Trade facilitation and customs reform
 — Economic legislation and the business environment
 — Agriculture and sanitary and phytosanitary system 
 — Transport, energy science and technology
 — Modernisation of the statistical system

Priority 3 — Ensuring the sustainability of development
Support for education reform
Support for public health reform 
Interest rate subsidies (transport, energy, environment)
Water and waste water services
Support to rural development
Local community development
Support to agricultural SMEs
Solid waste management

40

13

17
10
0
220

220

298
120
120
58
0

0

Source: Egypt national indicative programmes 2007–10 and 2011–13. 

TOTAL NIP

558

50

5

15
10
20
189

20

169

210
105
0
0
50

35

20

449

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34

ANNEX II

OVERVIEW OF AUDITED PROGRAMMES AND PROJECTS 

HUMAN RIGHTS AND DEMOCRACY

ENPI programme on the promotion and protection of human rights and civil society in Egypt 
(17 million euro)

Component title

Contracted amount
(euro)

Paid amount
(euro)

‘Family and child rights’ programme
Support NCW Ombudsman Office in promoting women’s rights and 
increase its efficiency
Support NCHR Ombudsman Office to enhance a culture of Human 
Rights through its structure
Promotion of environmental rights through civil society 
organisations — Percso
Technical assistance to the ‘Protection of human rights and civil 
society’ and ‘Support to political development and good govern-
ance’ programmes
Ministry of International Cooperation. Start-up programme — 
 estimate for the Programme Management Unit (PMU) ‘Promotion 
and protection of human rights and civil society in Egypt’ and ‘Sup-
port to political development and good governance’ programmes
‘Abandonment of FGM and empowerment of families’ joint 
programme

2 000 000
1 200 000

1 000 000

500 000

1 161 700

821 736
578 666

470 224

282 654

531 915

128 035

76 821

3 000 000

1 006 320

Subtotal ENPI Programme

8 9 89 735

3 7 68 336

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35

ANNEX II

EIDHR

Title

Contracted amount
(euro)

Paid amount
(euro)

Supporting women leadership and participation in elections 
‘Elections supportive to women’s engagement in public life’
Combating impunity and stopping torture in Egypt (a multi-level 
integrated approach)
Socio-economic rights advocacy empowerment programme for 
marginalised producers network
Enforcing economic and social rights through transition to adult life 
disabled children and young people in Minia governorate
The Egyptian platform for non-partisan parliamentarian and 
presidential electoral observation
Legislative and judicial obstacles to economic and social rights
Protect the at-risk children through giving them access to their 
rights
Mechanisms for legal protection of oppressed women
Speak up Egypt! Women’s voices
Get it right! Enhancing knowledge of legal professionals on public 
law and fundamental rights
Promoting intercultural dialogue: Building civic values and capacity 
for peaceful coexistence and cooperation

134 071

135 457

56 123

72 780

300 000

111 645 
111 280

173 578
235 046
246 239

213 840 

134 071

75 986

28 649

72 136

269 149

106 051 
53 002

156 220
87 884
95 920

49 045 

Subtotal EIDHR

1 790 059

1 128 113

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36

ANNEX II

DCI-NSA

Title

Contracted amount
(euro)

Paid amount
(euro)

Water and sanitation for the poor in upper Egypt
Support services for the reintegration of street children and youth 
into society
Empowering street children to claim their rights as citizens

Civic engagement through social networking

257 000
350 000

281 237

Originally planned 
amount:

272 787

167 107
87 442

85 918

Cancelled

Subtotal DCI-NSA

1 161 024

340 647

IfS

Title

Contracted amount
(euro)

Paid amount
(euro)

Support to democratisation in Egypt
Support activities to electoral processes in Egypt

1 654 235
1 203 431

2 857 666

846 171
962 745

1 808 916

Subtotal IfS

Special Report No 4/2013 – EU Cooperation with Egypt in the Field of Governance

37

ANNEX II

PUBLIC FINANCE MANAGEMENT AND FIGHTS AGAINST CORRUPTION 

ENPI — sector budget support 1

Title

Transport sector policy support programme (TSPSP)
Education sector policy support programme (ESPSP)
Education sector policy support programme (ESPSP) —  
additional commitment
Health sector policy support programme II (HSPSP II)

Subtotal ENPI–SBS
3 SBS programmes
(plus one additional commitment)

Allocated amount
(euro)

Contracted 
amount
(euro)

Paid amount
(euro)

80 000 000
120 000 000
20 000 000

78 947 955

36 543 674

118 178 898

75 549 034

110 000 000

107 700 000

20 700 000

330 000 000

304 826 853

132 792 708

ENPI programme on the support for political development, decentralisation and promotion of good  
governance (3 million euro allocated)

Supporting measures to combat corruption and money  
laundering, and to foster asset recovery in Egypt one project

2 5 48 657

487 528

Grand total:

 ο  
 ο  

25 projects for 17,3 million euro contracted.
3 SBS programmes for 304,8 million euro contracted.

1  The auditors examined only the aspects of the SBS programmes relating to PFM and the fight against corruption at country or sector 
level.

Source: Common Relex Information System (CRIS) at 30.9.2012.

Special Report No 4/2013 – EU Cooperation with Egypt in the Field of Governance

 
 
38

REPLY OF THE 
COMMISSION AND  
THE EEAS

EXECUTIVE SUMMARY

I.
The  Commission/EEAS  welcome  the  ECA  special  report 
on Egypt but regret the negative nature of many of the 
titles/subtitles  in  the  report,  since  they  actually  do  not 
reflect the Court’s observations, many of which are more 
balanced. The  Commission/EEAS  believe  that  the  titles/
subtitles also mislead the reader since they do not take 
sufficiently into consideration the local political context 
and the efforts made by the Commission/EEAS over the 
years to establish a dialogue and cooperation on the dif -
ficult issues of governance, democracy and human rights, 
including rights for women and minorities. The outcome 
of the EU political dialogue and support is the result of dif-
ficult negotiations with the Egyptian side, and the impact 
of EU engagement and assistance on governance might 
therefore be considered as relatively limited in comparison 
with other countries. However, it can also be considered 
as a very positive achievement bearing in mind the local 
context and the effects of the January 2011 uprising.

III.
The amounts allocated to CSOs are comparatively smaller 
if compared to other types of assistance, but they are ade-
quate for the kind of targeted local organisations and the 
kind of activities.

VI.
The  Commission/EEAS  in  the  given  circumstances  have 
been able to adequately manage EU support and, where 
possible, improve governance in Egypt. Conditions under 
the authoritarian Mubarak regime were already very chal-
lenging and left little room for engaging in a meaningful 
and substantive dialogue and cooperation on all human 
rights issues.

The analysis of the political situation in the period covered 
by this report clearly shows that since the January 2011 
events  there  has  been  a slow  down  if  not  a paralysis  of 
the decision-making process at government level and an 
increased aversion towards civil society and human rights 
more broadly. It is not only a matter of coping with ‘dif -
ficult conditions’ but also with a completely new situ ation, 
different  from  that  when  the  projects  examined  were 
designed and launched. The protracted political instability 
and lack of commitment by the government only allow ed 
for a partially successful review of the governance port -
folio. Time  is  needed  to  see  results,  especially  in  a non-
conducive and still unpredictable environment. The deci-
sion to keep open human rights projects and give them 
a chance to be revamped was certainly very well politically 
motivated.

Special Report No 4/2013 – EU Cooperation with Egypt in the Field of Governance

VII.
Efforts made by the Commission/EEAS to include a large 
number of human rights and democracy issues in the ENP 
EU–Egypt action plan for reforms were huge and perma-
nent, despite the difficulties encountered to reach signifi-
cant results. 

T h e   C o m m i s s i o n / E E A S   c o n s i d e r   t h a t   p r o g r e s s   w a s 
achieved. The  continuous  pressure  led  to  the  establish-
ment  of  a subcommittee  discussing  human  rights,  the 
earmarking of 10 % of the bilateral budget in support of 
human rights, good governance and democracy projects, 
including support for child rights and women rights, with 
indeed  a  significant  positive  and  measureable  impact. 
Regarding the ENPI project, and given the short period of 
time for its implementation before the uprising, it is pre-
mature to conclude on the level of outputs, as there is still 
time to deliver.

The budget support operations in reference were designed 
before  the  uprising.  Cancelling  those  operations  would 
have gone to the detriment of the Egyptian population, 
already badly affected by the increased hardship that fol-
lowed the 2011 January revolution. The Commission sup-
port adopted in 2012 does not comprise any BS operations 
but includes significant programmes in the social and edu-
cation fields that are highly relevant in the current context.

Finally, the decision to continue providing financial assis-
tance despite all the obstacles encountered is of a political 
nature, and should also be seen in the regional context 
and  in  consideration  of  the  crucial  strategic  role  Egypt 
is playing. The decision by the Commission/EEAS, in this 
respect, is in line with the decisions taken by other devel-
opment partners, including EU Member States. 

39

REPLY OF THE 
COMMISSION AND  
THE EEAS

VIII.
D espite  the  budgetar y  constraints,  as  an  immediate 
response to the Arab Spring, the EU created the new Civil 
Society  Facility  (CSF)  to  strengthen  the  capacity  of  civil 
society  actors  to  promote  national  reform  and  increase 
public accountability. At the end of 2012, the total amount 
of  ongoing  thematic  grants  awarded  under  this  new 
instrument, the DCI and the EIDHR, and managed by the 
EU delegation in Egypt was 17.4  million  euro. An equiva-
lent amount has also been allocated through the bilateral 
human rights and democracy programmes in Egypt, show-
ing  that  the  Commission  attaches  equal  importance  to 
reinforcing human rights through both governmental and 
non-governmental channels.

Before  the  Januar y  2011  uprising,  the  Commission  had 
granted several SBS programmes. It has to be underlined 
that,  although  a credible  and  relevant  PFM  reform  pro -
gramme  is  an  indispensable  eligibility  criterion  for  SBS, 
the aim of an  SBS lays primarily in improvements in the 
sector (basic services for health and education). The Com-
mission recognises that progresses could and should have 
been more rapid. However, it should be noted that dur-
ing the period the Egyptian authorities for the first time 
conducted a constructive dialogue on PFM with the donor 
community, were supportive of a PEFA and subsequently 
agreed on a roadmap to enhance PFM. 

The  fight-against-corruption  project  started  late  due  to 
the absence of agreement between the Commission and 
Egypt regarding its implementation method. The Commis-
sion/EEAS diligently made its utmost efforts to obtain the 
agreement signed by the Egyptian authorities, putting the 
project on the political agenda. After the 2011 uprising, 
the EUD immediately requested the addition of a specific 
component  on  asset  recovery  as  a  direct  answer  to  the 
regime change. 

Despite the difficult context, the Commission has closely 
monitored this file. This has been confirmed through the 
independent ROM mission that took place in November 
2012 (see Commission reply to paragraph 52). Concern-
ing the outputs, the project will run until 20 July  2014. We 
are therefore halfway through the implementation period 
and it is therefore premature to conclude on the level of 
achievement.

Special Report No 4/2013 – EU Cooperation with Egypt in the Field of Governance

IX.
The review marked a new policy direction by introducing 
the concepts of increased differentiation and revamping 
the ‘more for more’ approach. This has already been applied 
to Egypt in considering how to allocate the overall Spring 
(‘Support for partnership, reforms and inclusive growth’) 
funding in 2012  and  2013. The policy will be further rein-
forced when the new ENI regulation is adopted.

Suppor t  to  women  has  been  high  on  the  Commission 
agenda in terms of both policy and financial assistance; 
a number  of  grants  to  civil  society  organisations  were 
devoted to this area. Also a project of 4 million euro was 
signed  in  December  2012  with  UN  Women  aiming  at 
 women’s empowerment.

The new mechanism to support civil society was set up 
after the uprising. It is therefore premature to try to assess 
its achievements and its added value. 

X.
Based  on  the  new  budget  suppor t  guidelines,  the  EU 
applies  and  will  apply  conditionality  in  a strict  sense. 
Assessment of general and special conditions is made thor-
oughly before any BS disbursement. Tranches are released 
based on the progress achieved in meeting agreed reform 
benchmarks. No payments are made for non-performance.

40

REPLY OF THE 
COMMISSION AND  
THE EEAS

INTRODUCTION

9.
The analysis of the Egyptian population concerns on the 
new constitution and the reasons for boycott need to be 
carefully spelled out. Following President Morsi’s constitu-
tional declaration at the end of November 2012 and rushed 
adoption of the draft constitution and subsequent call for 
a referendum, the constitution was adopted on 25 Decem-
ber with a slight majority and with very low voter partici -
pation (some 30 %). It has to be noted that at the time of 
the President’s constitutional declaration, all non-Islamists 
had  left  the  constituent  assembly  (CA)  in  charge  of  the 
drafting of the constitution since the CA was considered 
‘too Islamist’. Despite the EU and the international com-
munity’s calls for inclusive dialogue in order to bridge the 
domestic political divide between Islamists and the secular 
opposition, the political polarisation has deepened. 

16.
The  Commission  has  increasingly  emphasised  improve-
ment of PFM as an eligibility criterion to budget support, 
most  recently  with  a new  approach  to  budget  support 
reflected in new guidelines in force since 1 January 20131. 

The support to PFM was not only carried out through SBS 
programme, as the Commission, in its programme ‘Public 
administration  reform  and  local  development’,  has  allo-
cated  2  million  euro  of  technical  assistance  support  for 
PFM issues (budget preparation). 

17.
The amounts allocated to CSOs are comparatively smaller 
if compared to other types of assistance; they are however 
adequate for the kind of targeted local organisations and 
the kind of activities.

1  Concerning footnote 6, the description is correct concerning the audited 
period, but as of 1.1.2013, new mechanisms with three types of budget 
support have been put in place: good governance and development 
contracts (GGDC), sector reform contracts (SRC) and state building contracts 
(SBC). 

Special Report No 4/2013 – EU Cooperation with Egypt in the Field of Governance

41

REPLY OF THE 
COMMISSION AND  
THE EEAS

OBSERVATIONS

Few results achieved before the uprising
The Commission/EEAS do not share the Court’s point of 
view and consider that the results have been achieved to 
the extent of the difficulties encountered.

25.
The Commission/EEAS consider that the degree to which 
human rights issues are addressed in the action plan was, 
and remains, a significant achievement.

Ineffective treatment of human rights before the 
uprising 
The Commission/EEAS do not share the Court’s point of 
view as regards the treatment of human rights before the 
uprising. 

24.
The  ENP  action  plan  is  an  ambitious  document  and  the 
strategic approach from the Commission was to include 
a vast set of priority areas in order to, later in the program -
ming process, define a more specific focus. The reasons 
being the following.

First, it has to be emphasised that the action plan is a joint 
EU–Egypt  document. The  Egyptian  authorities  certainly 
wanted  to  dilute  human  rights  elements  of  the  action 
plan, in particular with regard to civil and political rights. 
and negotiations were extremely difficult. Second, human 
rights are indivisible, and the Commission considers that 
it is appropriate to engage a dialogue on all aspects and 
concerns. Finally, the Commission/EEAS consider that the 
degree to which human rights issues are addressed in the 
action plan was, and remains, a significant achievement. 
It paved the way for the establishment of a subcommit -
tee that focuses on human rights and has been invaluable 
in  providing  a forum  for  discussion  of  issues  that,  until 
the  action  plan  was  established,  could  not  be  properly 
addressed. The action plan also enabled bilateral cooper-
ation programmes in human rights and governance to be 
set up.

Main human rights project largely unsuccessful 
The Commission/EEAS do not share the Court’s point of 
view as regards this human rights project.

The  Commission/EEAS  consider  that  this  was  a relevant 
project which faced implementation challenges.

26.
The  Commission/EEAS  would  like  to  underline  the  suc-
cess it represented to have human rights and democracy 
selected  as  a priority  area.  In  this  context,  it  should  be 
mentioned that already in 2005, the Commission negoti-
ated  the  first  EU–Egypt  bilateral  programme  on  human 
rights amounting to 5 million euro. 

28.
Specific  effor ts  were  made  to  integrate  the  four  com-
ponents  of  the  programme  by  creating  a PMU  that  was 
responsible for the internal coordination between them. 
Furthermore, it was not possible to integrate lessons learnt 
from the previous projects in the new programme because 
at the time of the programme’s identification the old pro-
jects were still ongoing and delivering; in other words, it 
was too early to include lessons learnt. 

The organisations selected (NCCM, NCHR, NCW and EEAA) 
to act as implementing partners of the programme were 
the relevant public bodies in charge of these issues at the 
time of the project design, and are still relevant and oper-
ational today. Like all other Egyptian ministries and institu-
tions, these organisations had to adjust to the radical polit-
ical changes that took place in the country after the fall of 
Mubarak regime, as would have happened anywhere else 
in the world going through such a  rapid transformation. 
By supporting these public institutions through a financing 
agreement signed by the Ministry of International Cooper-
ation, the Commission/EEAS consider that the government 
of Egypt was fully on board and endorsing this initiative 
whatever association these institutions had or not with the 
former first lady. The NCW and the NCCM performed well 
as they did very positive work on women’s rights that was 
recognised by the EU and other donors at the time. 

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42

REPLY OF THE 
COMMISSION AND  
THE EEAS

30.
Developing a constructive dialogue on human rights with 
the Egyptian authorities was particularly challenging in the 
period since the adoption of the Commission decision in 
2008. 

The programme obliged Egyptian authorities to continue 
a dialogue about human rights issues with the Commission 
and to implement concrete activities in the field of human 
rights.  Closing  the  project  would  have  suited  the  Egyp-
tian government, as it would have been a way for them to 
avoid implementing specific human rights activities. The 
EU engagement and discussion on these issues kept the 
human rights question high on the dialogue agenda.

The programme has been extended until December 2015. 
It is therefore premature to conclude on the level of out-
puts,  as  there  is  still  time  to  deliver.  Even  if  only  a few 
outputs have been achieved so far, it is important to note 
their value given that they have been achieved in a very 
challenging environment in which the human rights situa-
tion continues to deteriorate. 

31.
Different instruments to support civil society were used in 
a complementary manner with a view to achieving ambi-
tious political and human rights objectives in Egypt. 

32.
The type of support provided to CSOs through the the -
matic  budget  lines  cannot  be  compared  to  traditional 
bilateral programmes, for example in support of reforms, 
due to the kind of organisations and actions targeted by 
these instruments and the complementary nature of both 
EIDHR and DCI-NSA instruments.

29. (a)
The Commission made huge efforts to have the financing 
agreement signed by the Egyptian authorities in time. As 
a result,  the  Egyptian  authorities  committed  to  moving 
forward with the EU on human rights issues, which is an 
important achievement in itself. 

29. (b)
The biggest delay in the programme’s implementation was 
due to (1) the call for proposals component and (2) the 
contribution agreement with UNDP on integrating human 
rights in higher education institutions. By the end date for 
contracting (23 December 2012), all contracts were finally 
signed despite the difficult context around these issues 
(human rights in higher education and women’s rights), 
the  volatile  political  context  after  the  uprising  and  the 
numerous changes in leadership especially within the Min-
istry of Higher Education. 

29. (c)
The Commission/EEAS do not consider that the cancella-
tion of the component for enhancing CSO capacity was 
a major setback for the programme. By being firm in its 
position  on  minorities,  the  Commission/EEAS  took  into 
account  the  political  dimension  concerning  minorities 
and the European Council conclusions of 23  October 2011, 
which  stated  that ‘the  European  Council  is  concerned 
about the recent tragic clashes in Egypt and underlines the 
importance of the promotion and protection of freedom 
of religion or belief, including the protection of religious 
minorities as an essential component of any democratic 
society’. 

While the Commission/EEAS are aware that the decision 
to  maintain  the  original  wording  on  minorities  caused 
delays  in  the  programme,  this  decision  also  allowed  for 
the re-design of the call for proposals component, which 
led to the financing of a  new project with UN Women on 
 women’s rights, with a  strong focus on violence against 
women. The project on women is politically very timely in 
the current Egyptian context. Considering the rapid dete-
rioration of women’s rights in the country and the risk of 
 losing funds earmarked to human rights support, the Com-
mission/EEAS showed good political judgment and took 
clear decision when shifting the funds to a  highly relevant 
UN-led activity on women’s rights.

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43

REPLY OF THE 
COMMISSION AND  
THE EEAS

33.
The need for a mapping had already been identified by the 
Commission early 2012. This mapping exercise is expected 
to take place during 2013.

Dialogue but little action on human rights and 
democracy
The Commission/EEAS have been very active, however the 
dialogue on human rights and democracy was challenging.

While mapping is useful to get an overview of active civil 
society actors in different sectors, it is not the only rele -
vant tool to help design guidelines for calls for proposals, 
as  it  does  not  give  detailed  information  about  different 
organisations’ management or absorption capacities. This 
information is gathered more effectively through the del-
egation’s experience 2 managing over 40 grants with civil 
society organisations.

34.
The average length of time was not governed by a specific 
rule of the former financial regulation. It was in any case 
within the timeframe allowed by the applicable financial 
regulation, and lower than the reduced timeframe foreseen 
in the new financial regulation 2013 (9 months between 
the submission of the full proposal and the signature of 
the contract).

The duration of the call for proposals procedure is not pro-
portional to the duration of a contract or to the amount. 
The  Commission  considers  that  the  average  amount 
(150 000 euro) and the duration (2 years) of the sample of 
contracts examined are neither small nor short. The call for 
proposals procedure allows for a thorough review of appli -
cations and gives reasonable assurance of benefi ciaries’ 
ability to manage the funds effectively. All these checks 
are made with a view to ensuring the sound financial man -
agement of public funds. 

36.
The  fact  that  the  contribution  of  projects  to  improving 
governance is mostly at the local level is to be expected 
considering that the beneficiaries are often small organisa-
tions working at the local level, and that the DCI and EIDHR 
instruments support and encourage this type of work. It is 
important to note that these small pilot projects can be 
symbolically and politically very important. For example, 
one  of  the  projects  financed  under  EIDHR  followed  and 
gave visibility to the Khaled Said torture case, which ended 
up triggering the uprising against the Mubarak regime.

2  This experience continues to show that the maximum size of grants 
should be kept under 300 000 euro, especially for local organisations, in 
order not to overwhelm generally weak internal management systems. In 
terms of co-financing levels, the delegation has strived to minimise the co-
financing requirements for Egyptian organisations as much possible in line 
with the applicable regulations (in the calls for proposals 2011 and 2012, the 
EU co-financing rate was 95 %). The delegation has deliberately maintained 
a wide range of priorities and funding requirements that are as flexible as 
possible to maximise the number and type of proposals, covering the broad 
spectrum of human rights challenges faced in Egypt. The need for a broad 
coverage has been highlighted repeatedly by all stakeholders.

38.
The Commission/EEAS confirm that during 2008–10, the EU 
side increasingly raised critical issues in the human rights 
subcommittee. 

The Commission/EEAS would like to reiterate the import-
ance of the reference to the ‘informal road map’ of Novem-
ber 2010 paving the way for enhancing relations between 
the EU and Egypt. This informal road map consists of politi-
cal, social, economic and other objectives from the action 
plan with concrete benchmarks for Egypt to achieve. Only 
when  these  benchmarks  were  achieved  would  the  EU  
enter  into  negotiations  of  possible ‘enhanced’  or  deep-
ened EU–Egypt relations as initially requested by Egypt in 
2008 and endorsed by the EU in 2009, the fulfilment of the 
action plan being the key reference tool. 

39.
The Commission/EEAS did actually succeed in following 
up on action items. Meetings were held where concrete 
action points were raised, including the offer to use Euro-
pean  exper tise  for  advising  Egypt  on  NGO  legislation. 
The fact that implementation did not take place did not 
depend on Commission/EEAS lack of insistence but rather 
on a lack of will and commitment from Egypt’s side. 

As a mark of the Commission/EEAS continued insistence to 
offer, in particular, TA support to the NGO law, the Commis-
sion/EEAS have in March 2013 provided TA support to the 
NGO legislation currently debated.

40.
It was only in 2011 that Commission/EEAS ENP progress 
reports for all partner countries began to include action 
points addressed to partner countries and to be monitored 
the following years. 

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44

REPLY OF THE 
COMMISSION AND  
THE EEAS

41.
Any decision on aid suspension and cutting needs to be 
handled  carefully  by  the  Commission/EEAS.  In  fact,  the 
negative impact of such decisions on the most vulnerable 
has to be assessed against achieving no or little progress 
on human rights issues. Egypt not being an aid-dependent 
countr y  and  with  aversion  to  ’foreign‘  inter ference,  the 
Commission has considered that strengthening its politi-
cal dialogue with Egypt is a more efficient approach. 

43.
Although a credible and relevant PFM reform programme 
is a critical eligibility criterion for SBS, the primary aim of 
an SBS lays in improvements in the sector (basic services 
for health and education). During the period, the Egyptian 
authorities for the first time began to recognise the prob-
lem, conducted a constructive dialogue on PFM with the 
donor community, were supportive of a PEFA and subse -
quently agreed on a roadmap to enhance PFM. 

The decision to remain engaged with Egypt despite the 
challenging political and human rights context has been 
tak en  not  only  by  the  Commission  but  also  by  other 
donors, including EU Member States.

The  Commission/EEAS  regularly  underlined  in  its  policy 
dialogue the need for a proper PFM reform plan and has 
taken steps to assist the Egyptian authorities in this area, 
including the conducting of the first PEFA exercise.

44.
The  Commission/EEAS  recognise  that  more  rapid  pro-
gress by the Egyptian authorities on PFM would have been 
desirable. 

The Commission/EEAS followed up to the extent possible 
on the PEFA results, in particular taking the low absorp-
tion capacity and willingness of the Ministry of Finance 
into account. The Commission/EEAS has prepared the first 
technical assistance programme focusing on budget prep-
aration signed with the Egyptian authorities in December 
2011 and coordinated with other donors who tackle other 
weaknesses of Egypt’s PFM reform system, which was con-
sidered by the other donors as a great success. 

45.
The  anti-corruption  strategy  drafting  process  began  in 
September 2012 (first workshop) and is on track. This activ-
ity  is  implemented  closely  with  the  Ministr y  of  Justice 
(human rights department).

No PFM reform plan
The EU–Egypt action plan addresses a number of 
PFM reform priorities although not in a detailed 
way  (see  paragraph  42). The  Commission/EEAS 
consider that substantial progress has been made 
during the period under audit.

42.
The  action  plan  is  a jointly  agreed  document  follow -
ing long and difficult negotiations. The fact that the EU 
achieved to include numerous key EU priorities is in itself 
an achievement. Problems in Egypt are plentiful and need 
to be addressed in one way or the other.

The Commission/EEAS also wish to draw attention to the 
‘informal road map’ referred to under paragraph 38 where 
for example the PFM priorities are detailed with specified 
benchmarks. 

In this context, it should be noted that the increased atten-
tion placed on PFM reflects the recognised need for full 
coherence between political ambitions and financial and 
technical cooperation. At the time of the negotiations on 
the first action plan, issues that were more clearly politi-
cal in nature were given more emphasis while it was con-
sidered that more technical issues such as PFM, while not 
being  less  important,  would  be  addressed  more  exten-
sively through the EU–Egypt cooperation programme.

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REPLY OF THE 
COMMISSION AND  
THE EEAS

Major shortcomings in PFM not tackled
Th e   Co m m i s s i o n / E E A S   a d d re s s e d   n u m e ro u s 
weaknesses in the PFM area although progress 
was slower than expected.

46. (a)
In the years before the uprising, the Ministry of Finance 
paid lip service to the need to introduce an internal audit 
function.  However,  it  rejected  any  concrete TA  that  was 
finally mobilised early 2013 by the Commission/EEAS by 
using top-quality experts from the OECD. 

46. (b)
The integration of Egypt’s accounting units into the TSA is 
a gradual process, following Egypt’s reform capacity and 
willingness. The TSA reform benchmark assisted positively 
in maintaining/keeping of momentum in this process. 

47.
In  the  absence  of  a specific  request  from  the  Egyptian 
government, there is no specific PFM sector support pro-
gramme. To  the  extent  possible,  the  Commission/EEAS 
focused in the context of sector support programmes on 
key priorities of PFM for which agreement with the Egyp-
tian government could be found. The importance of trans-
parency  has  been  acknowledged  and  in  the  2011  com-
munication  on  a modern  approach  to  budget  support, 
a  fourth eligibility criterion has been added: ‘ Transparency 
and oversight of the budget’. The comprehensiveness of 
the budget is assessed in PEFA exercises (PI 6 and 7) as well 
as in the risk management framework (RMF) of the Com-
mission (question 4.1.)3. 

47. (a)
See also reply to paragraph 47.

So far, given that the condition has not been fulfilled yet, 
only one out of the four scheduled fix tranches has been 
paid.

46. (c)
The process of implementation of GFMIS is a gradual pro -
cess,  following  Egypt’s  reform  capacity  and  willingness. 
This area has been identified among priority areas of EU 
support in the next programming for 2014–15, and is yet 
to be formally adopted.

46. (d)
The roll-out exercise was delayed due to the institutional 
and political instability as well as to budgetary constraints. 
EU support will continue as Egyptian authorities recently 
renewed their commitment to pursuing the roll-out.

47. (b)
The Commission/EEAS tackled the issue of ‘special funds’ 
in the context of the establishment of the TSA and its pro-
gressive coverage. Special funds are expected to become 
marginal in the future through treasury control that will be 
exercised once TSA has integrated all public sector insti-
tutions’ bank accounts. The Commission/EEAS have used 
the  SBS  programmes  to  address  this  issue,  for  instance 
the health SBS includes a reform indicator monitoring the 
expansion  of  the  centralised  budget  control  systems  to 
a number of ministries, which is related to a more com -
prehensive control of accounts. The ongoing energy and 
water  SBS  operations,  not  covered  under  this  repor t, 
also include reform indicators related to increased fiscal 
transparency and accountability of broader public sector 
institutions.

See also reply to paragraph 47 and 47 (a).

3  EFA indicators: PI-6: Comprehensiveness of information included in 
budget documentation; PI-7: Extent of unreported government operations. 
RMF — 4.1 Comprehensiveness of the budget, which takes up the two 
PEFA indicators: 
It  should  be  noted  also  that  an  important  new  element  of  internal 
governance is the Budget Support Steering Committee (BSSC) chaired 
by the Director-General of DEVCO, with representatives of DEVCO, EEAS 
and ECFIN at management level. It has been working since mid 2012 
strengthening continuous steering and enhancing political and policy 
scrutiny, and ensuring coherence of EU budget support operations.

Special Report No 4/2013 – EU Cooperation with Egypt in the Field of Governance

47. (c)
The uprising gave rise to a new constitution with provi -
sions as well as staff changes at the CAO that appear to 
create valuable openings in the area of transparency and 
reform. 

48.
The  Commission  applied  stric tly  the  budget  suppor t 
guidelines which include clear criteria, in particular for the 
dynamic approach, looking at past and recent policy per-
formance benchmarked against reform commitments, but 
allowing for situational adjustment. In the particular politi-
cal context of Egypt, already a slow pace of PFM reform 
implementation can be hailed as progress. 

49.
The  Commission  will  seek  in  its  future  BS  operations  to 
associate other donors and so to create necessary leverage 
for influencing reforms.

50.
The TA  envelopes  embedded  in  SBS  programmes  are  in 
most countries devoted to the beneficiaries of the sector 
targeted and not to PFM reform. In Egypt, despite resist-
ance from the Ministry of Finance, the Commission/EEAS 
successfully  developed  a first TA  project  (FA  signed  in 
December 2011) focusing on improvements in the budget 
preparation process.  The Commission/EEAS acknowledge 
that SBS was not accompanied by any funding for CSOs to 
develop their role in monitoring the national budget, but 
at the time it was not compulsory and was viewed only as 
an example of good practice, which actually proved to be 
difficult to  implement in this case. The political context is 
indeed not conducive to the establishment of CSOs with 
sufficient capacities in this area. 

46

REPLY OF THE 
COMMISSION AND  
THE EEAS

Little progress in fighting corruption
More progress is needed on the fight against corruption.

51.
Reform benchmarks for Egypt’s SBS programmes are focus-
ing on the sectoral reform programme as agreed with the 
beneficiary. As regards the PFM, reform benchmarks the 
Egyptian government did not accept nor propose reform 
benchmarks in the corruption area. Since the uprising, the 
fight against corruption has become an important issue. 
However the (significant) inclusion of the fight against cor-
ruption would be overcharging the SBS instrument. Pre-
vention  of  corruption  or  fraud  that  could  be  associated 
with the implementation of the SBS programmes was gov-
erned under Articles 14 and 18 of the general conditions of 
their financing agreements.

52.
The fight against corruption project started late due to the 
absence of agreement between the Commission and Egypt 
regarding its implementation method, since the Commis-
sion insisted on having the project managed by UNODC, 
custodian of the UNCAC. The Commission diligently made 
its utmost efforts to obtain the agreement signed by the 
Egyptian authorities, putting the project on the political 
agenda at a time when corruption was a major challenge 
and when no other donors managed to tackle this issue 
bilaterally with the government. After the 2011 uprising, 
the  Commission  immediately  requested  the  addition  of 
a specific component on asset recovery as a direct answer 
to the regime change. 

The  project  star ted  in  August  2011.  UNODC  could  not 
fully implement all activities due to the context of deep 
political crisis. This uncertainty prevailed until the elec-
tion of President Morsi. During this period, the project did 
not have the backing of the transition authorities, which 
resulted in a slowdown in implementation. 

Special Report No 4/2013 – EU Cooperation with Egypt in the Field of Governance

This file has been closely monitored by the Commission. 
Exchanges between the EU delegation and UNODC have 
been regular since the beginning of the project, with at 
least one meeting a month in addition to specific project 
activ ities  (workshops,  seminars,  etc.),  which  are  closely 
followed  by  the  delegation. Those  meetings  resulted  in 
requests  and  exchanges  on  both  sides,  to  ensure  that, 
despite the situation, the project was still up and running. 
Due  to  the  positive  evolution  of  the  political  situation, 
steering committees are now taking place on a more regu -
lar basis, with more stable interlocutors confident enough 
to discuss sensitive issues in a more open manner.

The independent ROM (result-oriented monitoring) mis-
sion that took place in November 2012 does not share the 
opinion of the Court regarding the project, in particular on 
insufficient monitoring of the project. 

According to the ROM report (efficiency and implemen-
tation to date — p.2): ‘Inputs were provided on time and 
at the planned costs. UNODC manages them in transpar-
ent and accountable manner, uses them cost effectively 
and monitors them regularly. The contractual procedures 
are understood by all. The legal framework and workplan 
are  used  in  management. The  project  copes  well  in  the 
current political transition. Activities are implemented as 
scheduled;  some  are  shifted  in  2013,  without  impairing 
implementation. The project is underspent, but likely to be 
on track in 2013. A Project National Experts Coordinating/
Steering Committee was formed with representation from 
UNODC, MSAD, MoJ, MoI, and MoFA. The project is moni-
tored by UNODC and the EU delegation project manager. 
The project is adequately flexible; it monitors the benefi-
ciaries’ actual needs and adjusts workshops and trainings 
accordingly.  […] The  communication  among  the  stake -
holders, the contractor and the EU delegation project man-
ager is very good.’

C o n c e r n i n g   t h e   o u t p u t s,   t h e   p ro j e c t   w i l l   r u n   u n t i l 
20 July 2014. It is therefore halfway through the implemen-
tation period and it is premature to conclude on the level 
of achievement as there is still time to deliver. 

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REPLY OF THE 
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THE EEAS

The Commission did not adequately use the 
ENP cooperation framework to address PFM and 
corruption 
The Commission/EEAS do not share the Court’s point of 
view as regards the way the ENP cooperation framework 
has been used to address PFM and corruption.

The Commission/EEAS faced continuous resistance from 
the Egyptian side when increasingly addressing PFM and 
corruption within the ENP cooperation framework.

53.
The EU delegation suggested several times the inclusion 
of  PFM  issues  on  the  agenda  of  the  informal  economic 
dialogue where it would be appropriate, but it has to be 
noted  that  all  agenda  items  within  the  formal  dialogue 
structure are jointly agreed on.

The purpose of the Association Committee is to take stock 
of technical discussions during the year. If the Egyptian 
side had accepted PFM in the informal economic dialogue, 
it would indeed also have been raised at Association Com-
mittee level. 

54.
The fight against corruption is a  key element of PFM, and 
the action plan, by addressing PFM, paved the way for pol-
icy dialogue on the issue, and corruption to be addressed 
in  cooperation  initiatives.  After  the  uprising,  the  fight 
against corruption has become a national top priority and 
the Commission/EEAS are planning initiatives in the new 
SSF (single support framework) to support the Egyptian 
anti-corruption programmes.

55.
The ENP progress reports follow progress made in areas of 
the action plan. Given that PFM issues are not widespread 
in the action plan, they are not widespread in the ENP pro-
gress reports. 

56.
See replies to paragraphs 53 and 54.

Special Report No 4/2013 – EU Cooperation with Egypt in the Field of Governance

Few changes in response to the uprising
The Commission/EEAS consider that significant changes 
were introduced in response to the uprising, such as the 
revision of the ENP policy, the appointment of two EUSRs, 
additional instruments to support civil society and the cre-
ation of a task force for Egypt.

59. (a)
The  Commission  carried  out  a comprehensive  study  in 
2009, ‘Evaluation of European Commission’s support with 
Egypt — Country level evaluation’, which was presented in 
2010 and covered the 1998–2008 period, and which was 
taken into consideration for the ENP review. 

60.
By the time the uprising took place and the Commission 
decided to reorient its planned cooperation for 2011, the 
decision process (a complex process that normally lasts up 
to 1 year), was almost at its end and it would have been 
impossible  to  make  more  radical  changes. The  biggest 
changes in the NIP 2011–13 took place in 2012–13.

61.
The Commission’s review of its assistance programme con-
firmed the pertinence of the underlying priorities and the 
complementarity with the demands of the revolution. See 
also answer to paragraph 60.

Less attention to women’s and minorities’ rights
The  Commission/EEAS  underline  that  throughout  the 
audited period high attention was paid to women’s and 
minorities’ rights. This was further emphasised politically 
and financially after the uprising.

63.
In their joint letter to foreign ministers of 3  February  2013, 
HRVP Ashton and Commissioner Füle indicated that ‘in line 
with the ENP review communication, the assessment of 
partners’ progress in democratisation will be based on pro-
gress against the following criteria:

48

REPLY OF THE 
COMMISSION AND  
THE EEAS

 ο

the respect of other human rights (abolition of capital punish-
ment, freedom of religion, non-discrimination on the basis of 
gender or sexual orientation, non-discrimination of minor-
ities, rights of the child, abolition of torture and degrading 
punishments).

They also wrote that ‘particular attention will be paid to 
women’s rights, reflecting the major role once again played 
by women in recent events in the south’.

Both  factors  are  specifically  assessed  in  allocating  the 
Spring budget which is allocated to countries having dem-
onstrated progress in implementing political and democ-
ratisation reforms.

63. (a)
The  delegation  in  Egypt  closely  monitors  this  issue  and 
stresses the importance of minority rights as for instance 
in the ENP report and at the latest Association Committee 
meeting held on 28 February 2013.

63. (b)
The  People’s  Assembly  elected  in  2011  debated  about 
women’s rights but no formal draft law has been put for-
ward  yet. The  entire  legislative  framework  on  women’s 
rights  is  still  in  place. The  Commission/EEAS  are  closely 
m o n i to r i n g   t h i s   i s s u e   a n d   s t re s s   t h e   i m p o r t a n c e   o f 
women’s  rights  at  ever y  high-level  event,  for  instance 
at  the  latest  Association  Committee  meeting  held  on 
28 February 2013.

64.
The themes identified by the Court as being most at risk 
have  been  followed  up  by  the  Commission  with  spe -
cific and adequate measures: women’s rights have been 
included systematically in all local calls for proposals, the 
Egyptian government request for a derogation to include 
the rights of minorities as an added value element in the 
calls for proposals was not accepted, a new project to pro -
mote women’s rights through UN Women was set up fol-
lowing the reallocation of 4  million  euro for civil society 
under the bilateral human rights programme. 

Special Report No 4/2013 – EU Cooperation with Egypt in the Field of Governance

49

REPLY OF THE 
COMMISSION AND  
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70.
There are now three different contracts for budget sup-
p o r t :   g o o d   g ove r n a n c e   a n d   d e ve l o p m e n t   c o n t r a c t s 
(GGDCs), sector reform contracts (SRCs) and state building 
contracts (SBCs).

The respect for the fundamental values of human rights, 
democracy and the rule of law set out in the Lisbon Treaty 
is in particular a pre-condition for GGDCs, which are widely 
seen as providing an endorsement of a country’s overall 
policy and governance stance. 

Where the conditions do not permit a GGDC, an SRC may 
be provided based on an assessment balancing fundamen-
tal value concerns with the need to protect and serve the 
population. For fragile countries or in a situation of transi -
tion SBCs can be provided. For these the risk of inaction 
will be balanced against fundamental value concerns.

The Commission applies conditionality in a strict sense. 
Tranches are released based on progress achieved in meet-
ing agreed reform benchmarks. No payments are made for 
non-performance.

71.
The  impac t  of  the  revised  budget  guidelines  on  the 
 ongoing budget support programmes is to be seen on the 
occasion of the next tranche of payment assessments. 

New support for CSOs has so far had little impact
The  new  support  for  CSOs  was  launched  in  September 
2011 and it is too early to conclude on its impact.

66.
The  EED  was  set  up  at  the  end  of  2012  and  several  EU 
Member States have made financial contributions to its 
operating budget. 

The EED is not an EU instrument managed by the Commis-
sion or the EEAS and therefore no responsibility for the late 
starting of activities can be imputed to the Commission/
EEAS.

67.
E g y p t   h a s   r e c e i v e d   t h e   h i g h e s t   a l l o c a t i o n   o f   C S F 
funds  for  2012–13  in  the  south  neighbourhood  region 
(2 100 000 euro for Egypt out of 22 000 000 for neighbour-
hood south). Furthermore, it should be noted that in Egypt 
local NSA calls for proposals include CSF funds, and calls 
for  proposals  for  NSA  are  launched  at  the  same  time  as 
local EIDHR calls for proposals. As such, there is no risk of 
overlap as they are treated as one pool of funds with differ-
ent thematic strands. 

68.
The Commission/EEAS is closely monitoring the situation 
regarding  the  new  draft  NGO  law.  During  the  EU–Egypt 
Association  Committee  that  took  place  on  28  Febru-
ary  2013, the EU reiterated its concerns i.a. about freedom 
of association in Egypt. The EU strongly highlighted the 
impor tance  of  ensuring  a favourable  environment  for 
civil  society  and  called  for  the  adoption  of  a  new  NGO 
law in line with international standards that eases regis-
tration procedures and limits the discretionary power of 
the government of Egypt to authorise or reject registra-
tion requests. Due to the insistence of the Commission/
EEAS, the Minister of Justice finally accepted the EU offer 
to provide peer advice on the draft NGO law, in order to 
draft a law in line with international standards. This TA was 
provided in mid March 2013.

Special Report No 4/2013 – EU Cooperation with Egypt in the Field of Governance

50

REPLY OF THE 
COMMISSION AND  
THE EEAS

CONCLUSIONS

72.
The  Commission/EEAS  in  the  given  circumstances  have 
been able to effectively manage EU support and, where 
possible, improve governance in Egypt. Conditions under 
the authoritarian Mubarak regime were already very chal-
lenging and left little room for engaging in a meaningful 
and substantive dialogue and cooperation on all human 
rights issues.

The analysis of the political situation in the period covered 
by this report clearly shows that since the January 2011 
events  there  has  been  a slow  down  if  not  a paralysis  of 
the decision-making process at government level and an 
increased aversion towards civil society and human rights 
more broadly. It is not only a matter of coping with ‘dif -
ficult conditions’ but also with a completely new situ ation, 
different  from  that  when  the  projects  examined  were 
designed and launched. The protracted political instability 
and lack of commitment by the government only allowed 
for a partially successful review of the governance port -
folio. Time  is  needed  to  see  results,  especially  in  a non-
conducive and still unpredictable environment. The deci-
sion to keep open human rights projects and give them 
a chance to be revamped was certainly very well politically 
motivated.

73.
The action plan includes a large number of human rights 
and  democracy  issues,  which  was  the  result  following 
long and difficult negotiations with the Egyptian side. The 
fact that the Commission/EEAS achieved the inclusion of 
numerous  key  human  rights  and  democracy  issues  is  in 
itself an achievement. Human rights problems — whether 
relating to socioeconomic or to civil and political rights — 
are plentiful and need to be addressed. 

74.
Support  provided  by  the  Commission/EEAS,  in  particu-
lar under budget support, has allowed the provision and 
extension of basic social services (health, education, etc.) 
to reach out to the poorest and the most vulnerable popu-
lation.  Suspension  of  EU  suppor t  would  have  affected 
negatively these populations and slowed down the path 
of highly needed reforms. Disbursements were made upon 
progress in the agreed reforms and actual performance in 
these areas.

As  regards  the  funds  allocated  to  CSOs,  despite  the 
budget ary constraints and as an immediate response to 
the Arab Spring, the Commission/EEAS created the new 
Civil Society Facility to strengthen the capacity of civil soci-
ety actors to promote national reform and increase public 
accountability. An amount of almost 70 million euro has 
been allocated to this new instrument that targets all ENP 
countries and complements other initiatives to support 
civil society such as EIDHR and NSA/LA instruments. 

At the end of 2012, the total amount of ongoing thematic 
grants awarded under the DCI, EIDHR and ENPI-CSF pro-
grammes  managed  by  the  EU  delegation  in  Egypt  was 
17.4 million euro. 

75.
The progress report painted a fair picture of Egypt’s reform 
efforts in the PFM reform area and in line with the weight 
given to the PFM issues in the action plan. 

76.
The  main  objective  of  an SBS  (or  SRC)  is  to  accompany 
sector-related reforms but not per se the management of 
public finances (except in case of a PFM SRC). 

Again, the Commission/EEAS wish to draw attention to the 
‘informal road map’, referred to above, where sectors I and 
II refer to basic human rights with benchmarks. 

As part of the SBS, few benchmarks were added to tackle 
also PFM issues in key priority areas for which government 
agreement could be found. 

Special Report No 4/2013 – EU Cooperation with Egypt in the Field of Governance

Satisfactory implementation of PFM reforms is one of four 
eligibility criteria for budget support operations but not 
a condition. The Commission applied stringent monitoring 
of Egypt’s PFM reform efforts and gave a fair assessment in 
its annual PFM progress reports.

During  the  period,  the  Egyptian  authorities  for  the  first 
time began to recognise the problem, conducted a con -
structive  dialogue  on  PFM  with  the  donor  community, 
were supportive of a  PEFA and subsequently agreed on a 
roadmap to enhance PFM. 

77.
The fight against corruption project started late due to the 
absence of agreement between the Commission and Egypt 
regarding  its  implementation  method. The  Commission 
diligently made its utmost efforts to obtain the agreement 
signed by the Egyptian authorities, putting the project on 
the political agenda at a time when corruption was a major 
challenge and when no other donors managed to tackle 
this issue bilaterally with the government. After the 2011 
uprising, the Commission immediately requested the addi-
tion  of a specific component on asset recovery as a direct 
answer to the regime change. 

The project started in August 2011, but not all activities 
could be fully implemented due to the context of deep 
political crisis. This uncertainty prevailed until the elec-
tion of President Morsi. During this period, the project did 
not have the backing of the transition authorities, which 
resulted in a slowdown in implementation. 

This file has been closely monitored by the Commission. 
Exchanges between the EU delegation and the implement-
ing agency have been regular since the beginning of the 
project, with at least one meeting a month in addition to 
specific project activities (workshops, seminars, etc.), which 
are closely followed by the delegation. Due to the positive 
evolution of the political situation, steering committees 
are now taking place on a more regular basis, with more 
stable interlocutors confident enough to discuss sensitive 
issues in a more open manner.

51

REPLY OF THE 
COMMISSION AND  
THE EEAS

The independent ROM (result-oriented monitoring) mis-
sion that took place in November 2012 does not share the 
opinion of the Court regarding the project, in particular on 
insufficient monitoring of the project. 

C o n c e r n i n g   t h e   o u t p u t s,   t h e   p ro j e c t   w i l l   r u n   u n t i l 
20  July  2014. We are therefore halfway through the imple-
mentation period and it is premature to conclude on the 
level of achievement as there is still time to deliver.

78.
The Commission/EEAS closely monitor the issues of minor-
ities and women rights and stress regularly their impor-
tance to the Egyptian authorities. For instance, in the 2012 
ENP  progress  report  and  at  the  latest  Association  Com-
mittee meeting held on 28  February  2013. Women’s rights 
have been included systematically in all local calls for pro-
posals, while the incorporation of the minorities’ issue in 
calls  for  proposals  was  always  rejected  by  the  Egyptian 
government. Furthermore, a new 4 million euro project to 
promote women’s rights through UN Women was set up in 
December 2012. 

The  CSF  mechanism  is  yet  to  deliver  results  as  granted 
projects are just starting. The EED mechanism is financially 
sponsored by the Commission and EEAS without manage-
ment responsibility.

79.
No  new  BS  operation  has  been  initiated  in  Egypt  since 
the adoption of the new guidelines by the Commission. 
All upcoming BS operations will follow the new guidelines 
with full rigour. 

Special Report No 4/2013 – EU Cooperation with Egypt in the Field of Governance

52

REPLY OF THE 
COMMISSION AND  
THE EEAS

80. (e)
The Commission/EEAS accept this recommendation. The 
new ENP approach has emphasised the conditionality of 
deepening  democracy  and  commitment  to  fundamen-
tal values for those countries willing to strengthen their 
partnership with the EU. The design of the new European 
Neighbourhood Instrument currently under interinstitu-
tional negotiation is giving more space to the ‘incentive-
based  approach’  which  will  be  applied  strictly  by  the 
Commission.

81. (a)
The Commission/EEAS agree with the recommendation to 
place more emphasis on these issues during negotiations 
on the new action plan. However, it should be noted that 
this action plan is the result of negotiations with the Egyp-
tian government and has therefore to be agreed jointly.

As regards cooperation, it has already been agreed that 
support to anti-corruption including PFM should be a key 
priority for the period 2014–15. 

81. (b)
The Commission/EEAS do not agree with the recommen-
dation. However, the Commission/EEAS will continue to 
suggest the inclusion of PFM issues on the agenda of the 
informal economic dialogue where it would be and still is 
appropriate.

81. (c)
The Commission/EEAS accept this recommendation and 
are  committed  to  aligning  PFM  suppor t  with  the  IMF 
roadmap.

82.
The Commission/EEAS will ensure that future budget sup-
port operations to Egypt will be in line with the provisions 
of the new approach and the new BS guidelines, including 
the review of the four eligibility criteria. 

RECOMMENDATIONS

80. (a)
This recommendation is already being implemented.

As  par t  of  the  new  ENP  policy,  where  focus  on  human 
rights and democracy is systematically taken on board. This 
approach  will  be  further  reflected  in  the  new  EU–Egypt 
ENP action plan that will include appropriate benchmarks. 

There is for instance an ongoing dialogue on these issues 
in the context of the design of a new SBC under AAP 2013, 
which will include democratic governance indicators.

80. (b)
This recommendation is already implemented.

The  Commission  and  the  EEAS  regularly  review  budget 
lines and budgetary allocations, especially in the light of 
new information, reviews and evaluations, and reallocate 
resources as and when necessary.

The  Commission/EEAS  will  follow  closely  the  politi-
cal developments in Egypt and especially in the field of 
human rights and democracy and will strive to have the 
most balanced programme for this country and make an 
adequate allocation for the various instruments for future 
cooperation.

80. (c)
The recommendation is implemented already. The Com-
mission/EEAS  will  continue  to  avoid  the  risk  of  overlap 
between the different instruments. 

80. (d)
The  recommendation  is  implemented  already. The  new 
financial regulation which entered into force on 1 Janu-
ary 2013 reflects a more flexible and responsive support 
of the provisions on grants, for example lighter procedures 
for  low-value  grants,  possibility  of  using  cost-simplified 
options (lump sums, etc.), changes in subgranting (higher 
threshold/purpose of the action) and shortened time. It 
also reduces the length of time between the submission 
of the full proposal and the signature of the contract to 
9 months.  It  should  be  noted  that  the  Commission  has 
already met this ambitious target in Egypt (8.5 months).

Special Report No 4/2013 – EU Cooperation with Egypt in the Field of Governance

European Court of Auditors

Special Report No 4/2013
EU cooperation with Egypt in the field of governance

Luxembourg: Publications Office of the European Union

2013 — 52 pp. — 21 × 29.7 cm

ISBN 978-92-9241-226-5
doi:10.2865/80625

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EGYPT IS ONE OF THE MAIN BENEFICIARIES OF ASSISTANCE OF THE EUROPEAN NEIGHBOURHOOD 

AND PARTNERSHIP INSTRUMENT (ENPI). 

THIS REPORT ADDRESSED THE QUESTION OF WHETHER THE EUROPEAN COMMISSION AND THE 

EUROPEAN EXTERNAL AC TION SERVICE MANAGED EFFEC TIVELY THE EU SUPPORT TO IMPROVE 

GOVERNANCE IN EGYPT BEFORE AND AFTER THE 2011 UPRISING. IT FOCUSED ON KEY AREAS OF 

GOVERNANCE: HUMAN RIGHTS AND DEMOCRACY, PUBLIC FINANCE MANAGEMENT AND THE FIGHT 

AGAINST CORRUPTION. 

IT CONCLUDES THAT OVERALL THE COMMISSION AND EEAS HAVE NOT BEEN ABLE TO MANAGE EU 

SUPPORT TO IMPROVE GOVERNANCE IN EGYPT EFFEC TIVELY. THIS WAS PARTLY DUE TO THE DIF-

FICULT CONDITIONS THEY HAVE FACED IN EGYPT BUT ALSO TO SHORTCOMINGS IN THE WAY THE 

COMMISSION AND EEAS HAVE MANAGED THEIR COOPERATION WITH EGYPT.

EUROPEAN COURT OF AUDITORS