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Source: European Union (EU)
16 June 2004


Brussels, 16 June 2004

The EU, the Mediterranean and the Middle East - A longstanding partnership

In December 2003 the European Council asked the Presidency and the Secretary General/High Representative, in co-ordination with the European Commission, to present concrete proposals on a strategy toward the Middle East region. An interim report on an EU Strategic Partnership with the Mediterranean and the Middle East was adopted by the European Council on 22 March 2004. The final report will be adopted at the European Council in Brussels, on June 17-18 2004.

From its inception in the 1950s, the European Union (EU) has placed a high priority on establishing and maintaining a close and special relationship with its neighbours from the Mediterranean and Middle East. This is a longstanding partnership which today is governed by three distinct but complementary “frameworks”:

1. the global Euro–Mediterranean partnership (EMP) also known as the Barcelona Process,

2. the EU’s relations with the countries of the Gulf and the Middle East region, and

3. the separate but complementary Middle East Peace Process.

The EU provides financial assistance to all Arab countries except GCC Member States and Libya.

EU policy in the region is being further reinforced by the European Neighbourhood Policy.

I. The Euro-Mediterranean Partnership (EMP) - The Barcelona Process[1]

After more than 20 years of intense bilateral and trade cooperation, the EU Member States, and the 12 Mediterranean Partners (Algeria, Cyprus Egypt, Israel, Jordan, Lebanon, Malta Morocco, the Palestinian Authority, Syria, Tunisia, and Turkey)[2] launched an ambitious and far-reaching Euro-Mediterranean Partnership in Barcelona in 1995, which is therefore also known as the Barcelona Process. This initiative is the first attempt in modern history to create strong and durable bonds between the shores of the Mediterranean. It comprises three objectives:

· The definition of a common area of peace and stability through the reinforcement of political and security dialogue.
· The construction of a zone of shared prosperity through an economic and financial partnership and the gradual establishment of a free trade zone.
· The rapprochement between peoples through a social, cultural and human partnership aimed at encouraging understanding between cultures and exchanges between civil societies.

The partnership has two complementary dimensions:

· The bilateral dimension: the EU carries out substantial co-operation activities bilaterally with each country, the most important being the Euro-Mediterranean Association Agreements
· The regional dimension: one of the most innovative aspects of the Partnership, covering the political, economic and cultural areas of regional co-operation.

The EU is the largest donor of non-military aid to the Mediterranean and Middle East, giving roughly €1 billion in grants and another €2 billion in soft loans in 2003. This is in addition to the assistance given by the EU Member States through their national programmes.

The MEDA Programme[3] is the principal financial instrument of the European Union for the implementation of the Euro-Mediterranean Partnership. For the period 1995-2003 MEDA accounted for €5.4 billion of the total € 6.4 billion of budgetary resources allocated for financial co-operation between the European Union and its Mediterranean Partners. MEDA is now in its second programming period (2000-2006) with a budget of €5. billion.

MEDA grants from the EU budget are accompanied by substantial lending from the European Investment Bank (EIB). EIB loans in the Mediterranean region are designated for specific investment projects, particularly for the support of small and medium-sized enterprises, and are administered in close co-operation with the European Commission and, if necessary, with other international financial institutions. For 2000-2007, the EIB’s Euromed[4] lending mandate is €6.4 billion. The EIB committed itself to contribute a further €1 billion from its own resources and at its own risk over the same period for trans-national projects.

There are other ways in which the EU devotes resources to the region, for example: in case of a humanitarian crisis via ECHO (European Commission Humanitarian Office); or for a major catastrophe via the budget line of “Rehabilitation in Mediterranean countries” through which the EU earmarked €30 million to help Turkey after the earthquake in August 1999. Moreover, the Mediterranean countries participate in community programmes such as LIFE and TEMPUS, dealing respectively with the environment and higher education.

II. The EU relations with the Gulf and Middle East region[5]

EU relations with Saudi Arabia, Bahrain, Kuwait, Oman, Qatar and the United Arab Emirates, are governed by a Cooperation Agreement signed in 1989 between the European Union and the Gulf Cooperation Council (GCC). The EU relations with Iran, Iraq and Yemen are of bilateral nature.

In 1989, the European Commission and the GCC concluded a Co-operation Agreement under which the EU and GCC Foreign Ministers meet once a year at a Joint Council/Ministerial Meeting, and senior officials at a Joint Co-operation Committee as well as Regional Directors’ Political Dialogue.

The objective of this Agreement is to contribute to strengthening stability in a region of strategic importance and to facilitate political and economic relations. Working groups have been established in the fields of energy and environment.

The 1989 Co-operation Agreement contained a commitment from both sides to enter into negotiations on a Free Trade Agreement between the EU and the GCC. The Free Trade Agreement negotiations were initiated in 1990 but soon reached a standstill. Finally in 1999, the GCC made a significant gesture of their willingness to resume the negotiations by announcing their decision to create a customs union by March 2005. Negotiations resumed in March 2002 and have been continuing at an accelerated rate. The last round took place in June, in Riyadh. Two new rounds will take place in Brussels in July and September. The EU and the GCC remain committed to do their utmost to conclude these negotiations in 2004.

The European Commission’s co-operation with the GCC is focused on energy and economic issues. There is a regular experts’ dialogue on energy questions which has led to the launching of seminars, workshops and international conferences. Furthermore, an Economic Dialogue meeting was launched in 2003 with the objective of facilitating dialogue and better understanding in areas of shared interest.

The EU and Yemen

Yemen and the European Commission concluded a new Co-operation Agreement in 1998, under which the Commission implements a variety of economic and development co-operation projects with new commitments worth an average of more than €25 million per year. A political dialogue will begin this year. The EU assists Yemen in strengthening democracy, human rights, and civil society, as well as in technical assistance for World Trade Organisation (WTO) negotiations.

The EU and Iran

In June 2002, the European Union agreed to open negotiations with Iran, which would cover political aspects (WMD, Human Rights, Terrorism, Middle East Peace Process) as well as a trade and co-operation agreement. Once concluded, this agreement should put Iran’s trade and co-operation relations with the European Union on a contractual basis. The negotiations were launched in Brussels in December 2002, although there has been no new negotiating round since June 2003. Since last year, relations have to a large extent been influenced by the International Atomic Energy Agency’s (IAEA) close scrutiny of Iran’s ambitious nuclear program.

The EU has also established a Human Rights Dialogue with Iran, and a non-contractual Comprehensive Dialogue on issues including conflict prevention and crisis management, the fight against terrorism and the proliferation of weapons of mass destruction.

Following the humanitarian disaster resulting from the earthquake in Bam at the end of 2003, the Commission contributed €8.5 million in emergency assistance.

The EU and Iraq

Under Saddam Hussein’s 24-year regime, the European Union had no contractual relations with Iraq and very limited political relations. The Commission’s role from 1991 has been restricted to implementing UN Security Council sanctions and providing humanitarian assistance. As a result, Iraq is not covered by any EU co-operation framework.

However, on 9 June, the Commission adopted a Communication on EU relations with Iraq making proposals for engaging with the newly appointed Iraqi government and with Iraqi civil society.

The EU has shown its determination to play a role in supporting reconstruction. At the Madrid Donors’ Conference for Iraq in October 2003, the EU (European Commission and Member States) and the then accession countries pledged more than €1.25 billion. The European Commission contribution to Iraq in 2003/4, including humanitarian aid, will amount to €305 million.

The European Commission adopted on 4 March 2004 a programme setting priorities for re-construction assistance to Iraq in 2004.

The three priorities are: restoring the delivery of key public services; boosting employment and reducing poverty; strengthening governance, civil society and human rights. The funds will be distributed largely through the International Reconstruction Fund Facility for Iraq, managed by the United Nations and the World Bank.

III. Middle East Peace Process[6]

Through economic, diplomatic and humanitarian means, the EU is a major contributor to the Middle East Peace Process (MEPP). As one of the four players in the Quartet (with Russia, the United States, and United Nations), the EU promotes a comprehensive, just and lasting peace and prosperity for the area.

The EU (EC plus Member States) is the largest donor of financial and technical assistance to the Palestinian Authority, providing over 50% of the international community's financing for the West Bank and Gaza Strip since 1994. Total EC aid to the Palestinians since the beginning of the Peace Process has been €1.8 billion in grants of which €1.2 billion have been allocated to Palestinian institutions-building and promotion of reform, good governance, tolerance and respect for human rights; to the humanitarian aid provided by ECHO; and €581 million as humanitarian support through UNRWA (United Nations Relief and Works Agency for Palestinian Refugees) for support to the refugees and food aid. The role the EU has played in promoting reform in the Palestinian Authority, (with the objective of laying the foundations for the viable Palestinian state foreseen in the Road Map) through the conditions attached to its financial assistance, has been recognised internationally by the Ad Hoc Liason Committee of donors.

At the same time, the EU is the biggest trading partner and major economic, scientific and research partner of Israel and a major political and economic partner to Lebanon, Syria, Jordan and Egypt. More than €630 million go to Israel’s neighbouring countries.

The EU, the Mediterranean and the Middle East - what has been achieved?

Regional dialogue: one of the key successes of the Euro-Mediterranean Partnership is to have provided a forum for dialogue between Mediterranean Partners involved in the Middle East Peace Process. The Partnership still remains the only multilateral context outside the United Nations where all the parties affected by the Middle East conflict meet. The Palestinian Authority is recognized as an equal Mediterranean Partner. Libya has lately expressed interest in joining the Barcelona Process.

Regional integration: the EU has promoted and supported regional economic integration and the promotion of free trade in the region. Bilateral Association Agreements between the EU and the partner countries of the Euro-Mediterranean Partnership have been concluded (with the exception of Syria), which enhance north-south regional integration and trade. As a result of Turkey’s Association Agreement, a customs union with the EU entered into force on 1 January 1996. Cyprus and Malta joined the EU as of 1 May 2004. As for south-south integration, on 25 February 2004 Egypt, Jordan, Morocco and Tunisia, signed, with the support of the EU, a regional free trade agreement, known as the Agadir Agreement.

Trade: the EU is a major trading partner for every country in the region. It accounts for almost 50% of goods traded by them (imports and exports of €141billion in 2002) compared to 13 percent (€38 billion) for the US. Trade in services with the EU amounted to €32 billion in 2001. FDI flows from the EU into the region accounted for €2 billion (2001), and FDI assets were €25 billion (end 2001). FDI flows from the US (2001) amounted to US$3 billion (2001), and US FDI assets amounted to US$18 billion (end 2001) for the Mediterranean and Gulf region combined.

Support to the development of the region: since 1995 the EU has provided financial support, now running at nearly €1 billion a year, to economic, social and political reforms in the region through tailor-made assistance programmes to each of the partners except Israel (whose prosperity level is too high to warrant such aid). In addition regional programmes cover the promotion of intra-regional co-operation among the partners themselves in areas such as political issues, trade, infrastructure interconnection, sustainable development, justice and home affairs and cultural and social matters. Moreover, following the reform of the Commission’s external assistance service, the MEDA programme has shown a remarkable improvement in its operational effectiveness since 1999. Nowadays, all funds available each year for the Mediterranean are fully contracted within the same year and payments under these contracts have accelerated.[7]

Investment and loans: in 2003, the EIB launched the facility for Euro-Mediterranean investment and partnership (FEMIP), to support modernization of the economies of the Mediterranean partner countries, while also promoting social cohesion, environmental protection and communications infrastructure. FEMIP is based on a closer involvement of the Mediterranean partners themselves through the creation of a forum for dialogue (the policy dialogue and co-ordination committee). In its first year of operation, FEMIP committed more than €1.8 billion in new financing.

Promoting Human Rights and Democracy: The EU is working with partners in the region to promote democracy, the rule of law, and respect for human rights and fundamental freedoms. Action programmes in these areas are being negotiated with the countries; they will be financed by MEDA and an additional €50 million will be available as from 2006 to those countries in the Mediterranean who make progress in reform in these areas. MEDA countries also profit from the European Initiative for Democracy and Human Rights (EIDHR) that funds every year in the region a number of projects in the areas of electoral assistance and observation missions, gender equality, women rights, media, etc.

The EU’s Neighbourhood Policy[8]

For those countries that do not currently have the prospect of membership but which share borders with the Union – the southern Mediterranean plus Ukraine, Moldova, Belarus – the EU has recently developed the European Neighbourhood Policy (ENP).

Through the ENP the EU is offering a more intensive political dialogue and greater access to EU programmes and policies, including the Single Market, as well as reinforced co-operation on Justice and Home Affairs, to those who demonstrate commitment to common values and common principles. The Neighbourhood Policy reinforces the Barcelona Process and represents an essential plank in the implementation of the EU Strategic Partnership with the Mediterranean countries. A Strategy Paper was approved by the Commission on 12 May 2004 and the first wave of Action Plans under the policy is expected in July.


[2] Cyprus and Malta became EU members on 1 May 2004.





[7] MEMO/04/103: MEDA: improved operational effectiveness since 1999.


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