Neighbourhood Policy: 2008 Report

The 2008 Report on the European Neighbourhood Policy (ENP) presents the reforms accomplished by European Union (EU) partner countries and the development of their cooperation actions. Despite slowdown, in particular due to global economic conditions, and political conflicts and challenges in certain neighbourhood countries, this progress demonstrates the necessity to strengthen the ENP.

ACT

Communication from the Commission to the European Parliament and the Council of 23 April 2009 - Implementation of the European Neighbourhood Policy in 2008 [COM(2009) 188 final - Not published in the Official Journal].

SUMMARY

In 2008, relations between the European Union (EU) and countries covered by the European Neighbourhood Policy (ENP) intensified. Progress in bilateral and multilateral cooperation demonstrates an increased interdependence between partners as well as the necessity of continuing to strengthen the ENP.

The main progress accomplished by the partner countries concerns trade agreements, the strengthening of political cooperation, public finance and customs duty, competition policy, the business environment and the fight against corruption. More efforts should be made to achieve democratic reforms and promote human rights.

However, 2008 was marked by an economic climate which was unfavourable to reforms. Several events destabilised the neighbourhood area: the conflict between Russia and Georgia in August 2008, the disruption of gas supplies between Ukraine and Russia, and the Israeli intervention in Gaza in December 2008/January 2009. The global financial crisis also affected all ENP partner countries.

Regional cooperation

The EU and its partners adopted new cooperation frameworks aimed at increasing the regional strand of the European Neighbourhood Policy.

The Union for the Mediterranean, launched at the Paris summit in July 2008, gives new impetus to Euro-Mediterranean relations. It should in particular lead to better sharing of responsibilities between partners and increase the visibility of their actions. Regional projects should be conducted in the following areas: the fight against maritime pollution, against natural and man-made disasters, the development of maritime and land links, renewable energies, and enterprises. The Euro-Mediterranean University was inaugurated in 2008 in Slovenia.

Following the Kiev meeting in 2008, the Black Sea Synergy entered its operational phase. Projects with a regional dimension should be launched in the fields of energy, transport, communications, trade, the environment, maritime policy, fisheries, migration, law enforcement and the fight against organised crime. Discussions are under way to move forward on the de-pollution of the Black Sea, maritime links and security, as well as the creation of a Common Aviation Area.

In 2008 the Commission proposed to establish an Eastern Partnership, in order to intensify its relations with Central European and South Caucasus countries. This framework should advance political and democratic reforms, the economic integration of the region, energy security and mobility.

Impact of the global financial crisis

The ENP contributes to strengthening trade links between the EU and its neighbours, and to pursuing their regional economic integration. The impact of the financial crisis has been different in the Southern and Eastern regions:

• Eastern partners have been the most affected due to the reduced contribution of foreign capital that is indispensable for their growth, the vulnerability of their banking sector and the drop in export prices in some key sectors (metal, agriculture, trade);
• Mediterranean partners were less affected by the credit crisis. Their economies were protected by low rates of debt, few needs for foreign capital, and the low regional integration of their financial sector.

Regarding economic sectors, tourism, construction and export industries are likely to be seriously affected given the fall in demand, particularly European demand, and increased competition from lower-wage countries. The crisis is likely to cause a reduction in investments, and an increase in youth unemployment and migratory flows.

Recommendations

In the current context, and in view of the necessity to make progress towards a liberalisation of trade, the ENP should:

• hold regular dialogues, in order to meet the socio-economic needs of the most vulnerable countries and support their sustainable development.
• increase macro-economic aid, by granting European loans which are coordinated with International Monetary Fund (IMF) stand-by arrangements;
• strengthen the regulatory environment of the financial sector and the supervision of its activities, by widening the scope of existing technical assistance programmes;
• encourage the EIB and EBRD to accelerate their lending operations;
• support trade and investment, particularly for small and medium-sized enterprises (SMEs).

The 2011-2013 programming of the European Neighbourhood and Partnership Instrument (ENPI) should take these priorities into account.

Last updated: 30.09.2009