1. Introduction: from the European Neighbourhood
Policy to the Eastern Partnership
1. The crumbling of the Berlin Wall twenty years ago
set a new tone for European co-operation. The emerging new states
in the eastern part of Europe embarked upon major transformations
of their political and economic systems, supported in this grand
endeavour by the West. Their gradual integration into western European
structures was assisted by a series of targeted measures and programmes.
2. The Council of Europe and the more recently created European
Bank for Reconstruction and Development (EBRD) were among the first
institutions to open their doors to eastern European states eager to
embrace democratic development and market-oriented economic growth.
This was the beginning of new partnership relations in Europe. As
these countries joined the Council of Europe one after another,
we could see the notion of "Greater Europe" taking shape.
3. The dialogue of eastern European states with the European
Union started via the Phare strategy and Association Agreements
leading to the accession of eight eastern block countries (Czech
Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Slovak Republic
and Slovenia) in 2004 and two countries (Bulgaria and Romania) in
2007. In the case of the western Balkans, a special procedure –
the Stabilisation and Association Process (which may lead to accession)
– was put in place.
4. Under the European Neighbourhood Policy (ENP), launched in
2004, the Mediterranean countries and the eastern European Union
(EU) neighbours (except Russia) entered a new stage of co-operation
with the European Union, building on an explicit commitment to common
values (democracy, human rights, rule of law, good governance, market
economy principles and sustainable development), a closer political
relationship and stronger economic integration. The ENP covers Algeria,
Armenia, Azerbaijan, Belarus, Egypt, Georgia, Israel, Jordan, Lebanon,
Libya, Moldova, Morocco, Occupied Palestinian Territory, Syria,
Tunisia and Ukraine.
5. The Russian Federation opted to stay out of the ENP and to
pursue co-operation with the European Union towards creating four
Common Spaces: a common economic space; a common space of freedom, security
and justice; a space for working together in the field of external
security; and a space of research, education and cultural exchange.
In reality, however, the format chosen is very similar to the pattern
of ENP Action Plans. It also receives funding from the European
Neighbourhood and Partnership Instrument (ENPI), which also funds
the ENP.
6. The Eastern Partnership, officially launched at the Prague
Summit of 7 May 2009, follows the Union for the Mediterranean, the
Strategic Partnership with Russia, the Black Sea Synergy and the
European Union’s strategy on Central Asia, as an important European
instrument for the creation of an area of dialogue with countries
geographically belonging to the eastern part of the European continent
(Armenia, Azerbaijan, Belarus, Georgia, Moldova and Ukraine).
7. The Eastern Partnership initiative builds on the strong points
of the ENP and complements the points which have drawn criticism
of partners, namely that the policy proposed was not designed to
deal effectively with the substantial geographical, historical,
cultural, economic, political and social differences between the southern
and the eastern neighbours of the European Union, and that it was
rather ambiguous on prospects of closer integration with the EU.
8. The Partnership’s ambitious and challenging goal is to forge
the necessary conditions for stronger economic growth, to enhance
stability, to promote good governance and the rule of law in the
countries concerned. To this end, the Partnership foresees, amongst
other things, the creation of a comprehensive free trade area, enhanced
co-operation in the fields of energy security and energy efficiency,
environment, small and medium-sized enterprises, visa facilitation
and support for civil society in these countries. The Partnership introduces
a multilateral framework which welcomes participation of international
institutions and private donors, and which is supposed to make the
Eastern Partnership objectives easier to reach.
9. The six Eastern Partnership "target" countries have a largely
untapped potential for economic growth; the European Union – as
their principal and, due to geographic proximity, obvious trading
partner – has a direct interest in supporting their economic development.
These
countries’ closer integration with the EU economy would strengthen
Europe’s energy security, foster people-to-people contacts and would
facilitate co-operation with third countries, in particular Russia.
10. In fact, the Russian Federation might be about to assume a
new and more active role in the Eastern Partnership, which would
facilitate dialogue. The European Parliament is considering offering
third countries the opportunity (to be examined on a case-by-case
basis) of participating in concrete projects, activities and meetings
relating to thematic platforms and flagship initiatives, provided
that the countries in question contribute to the realisation of
goals that further certain of the Eastern Partnership's general
objectives. In the case of Russia, this eventuality would certainly
be contingent on Moscow's becoming more deeply engaged in the European
area that shares borders with Russia and, by virtue of history and
culture, is close to it in other ways, too.
11. The Partnership’s supporters point out that although in times
of economic uncertainty and enlargement fatigue, the European Union
may feel that it has more pressing issues to deal with than its
eastern neighbours, a focused and engaged neighbourhood policy would
be an expression of principled and far-sighted self-interest.
12. This report aims to analyse and understand the impact that
this new co-operation instrument will have on the six partner countries
and on their relations with the European Union and the Greater Europe
from a socio-economic and political perspective. It will look at
the expectations of the different players involved and the potential
for involvement of various European institutions with a view to
building a relationship based on genuine solidarity, pan-European
economic co-operation and human progress. The rapporteur is grateful
to the authorities of Armenia, Georgia and Ukraine for having shared
their views on the matter during his fact‑finding visits.
2. Aspirations of the stakeholders
2.1. Avoiding overlaps, overstretching, top-down approaches
and tensions
13. The Eastern Partnership is not the first initiative
directly involving the European Union’s eastern neighbours. From
this point of view, avoiding overlaps is a very serious concern
for it. Concerns about possible internal overlapping are linked
to some activities under the thematic platforms and the flagship
initiatives (regarding environment, energy efficiency, etc.), as
well as other European Union sub-regional programmes (such as the
Black Sea Synergy). The European Commission has so far been careful
to stress the “complementarity” of the Eastern Partnership and the
Black Sea Synergy in the areas of good governance, energy, trade,
environment, transport and visa facilitation.
14. As the European Union is currently experiencing “enlargement
fatigue”, most EU member states praise the Eastern Partnership as
a good alternative to enlargement, less radical than the ENP and
a means of avoiding overstretching of both the EU and its "partners"
in the East. However, some may see overstretching in the wish to
devote the same attention to all states rather than focusing on
those where the EU’s policy is estimated to have greatest effect,
such as in Ukraine, Moldova and Georgia.
15. Further clarifications from the European Commission on the
financing of activities under various programmes would be welcome,
in particular as there are doubts linked to the current financial
crisis as to whether the European Union will be able to allocate
the funds earmarked.
Under the association
agreements with its eastern partners, the EU will be constricted
to the sum of €600 million to achieve the objectives of the partnership
(on top of funds channelled through the European Neighbourhood Policy
Instrument, the Governance Facility, the Cross Border Co-operation,
the Neighbourhood Investment Facility leverage operations, etc.).
This
funding is expected to cover a four-year period. In 2010, the funding
allocated is just about €85 million, followed by €110 million in
2011, €175 million in 2012 and finally €230 million in 2013. The funding
will be allocated to the six target countries on the basis of a
set of criteria reflecting the “needs” and the “reform performance”
of these countries.
16. The rapporteur is convinced that the quest for economic growth
in the countries concerned by the Partnership must give due consideration
to several prerequisites: stable democracy, the rule of law and
good governance. Their importance is all the more clear against
the backdrop of recurrent political turbulences and persisting unresolved
conflicts in the region (Russia-Georgia and Nagorno Karabakh conflicts,
the Transnistria problem in Moldova) and politico-economic peculiarities
(in Belarus), as well as the effects of the ongoing economic crisis.
The Partnership should seek to appease rather than stir any tensions
inside and around these countries and pursue further a "soft power"
approach.
17. One way to create conditions conducive to a closer relationship
and convergence of these countries with the rest of Europe is to
engage civil society institutions and representatives in direct
dialogue with the West, fostering "people-to-people" democracy.
From that perspective the principle of "joint ownership" of the Partnership
is certainly a positive development. It stands for a shared sense
of responsibility and seeks to ensure that partner countries have
a real say in the matter. The initiative also seeks to remedy the
fault of insufficient consultation of the six partner countries
in the elaboration of country-specific priorities under previous
schemes.
2.2. Six mini-partnerships
18. The Eastern Partnership’s bilateral framework provides
the opportunity of signing individual association agreements with
the Eastern Partnership partakers, which are to serve as foundations
for the creation of a deep and comprehensive free trade area. These
agreements offer benefits to the Eastern Partnership countries,
that were neither available to the EFTA countries in the EEA agreement
context, nor to the countries involved in accession negotiations.
They envisage an effective and accurate delimitation between partner countries
so that every country could choose to what degree and at what speed
the integration with European Union is to proceed. To further reinforce
the agreements, the Union sets out to negotiate such agreements
with each of the countries individually, and stands ready to support
the different participants beyond the Eastern Partnership framework.
2.3. Expectations in terms of economic and political
development
19. In general the European Union initiative has been
received well and has increased expectations for a new era of closer
relations with the EU among the six countries concerned by the Partnership.
However the aspirations of the six partner countries differ to a
great extent. While some countries are interested in eventually joining
the EU (Georgia, Moldova and Ukraine), others do not seem to have
that goal (Armenia, Belarus and Azerbaijan). However all six are
very eager to benefit from the financial envelope the initiative
carries, to see trade barriers lifted, visa facilitation to become
a fact and their energy security to augment thanks to enhanced co-operation
in that field.
20. As regards free movement of persons, the Partnership's vision
is even more ambitious in scope than the ENP: co-operation on the
control of immigration through the introduction of a more flexible
set of visa rules should gradually lead to the elimination of visa
requirements over the longer term. The implementation of the principle
of integration, meanwhile, should lead to the creation of a free
trade area fostering a freer flow of goods, services and capital
between the European Union and the Eastern Partnership countries.
21. People-to-people contacts are essential for achieving the
objectives of the Eastern Partnership. The European Union’s initiative
will seek to reinforce civil society via the Eastern Partnership
Civil Society Forum, which will give the floor to civil society
envoys from the participant countries, and help shape their development through
the exchange of know-how and best practice. The South Caucasus partners
expect that the initiative will lead to a greater involvement of
the EU, and in particular of its special representative, in the
resolution of the existing frozen conflicts, which would in turn
facilitate regional co-operation and development.
22. The need for consensus on the multilateral framework, under
which the Eastern Partnership proposes to work, is definitely a
speed bump on the way. Even though the Partnership tries to encourage
the multilateral co-ordination by different means, in reality this
is difficult to achieve due to the geopolitical particularities
of the region.
The six
"target" countries of the Eastern Partnership do not form a contiguous
geographical area. Three are located in eastern Europe and three
are further south-east in the southern Caucasus. These countries
differ in their history, culture, economics, politics and social
circumstances. It is also important to bear in mind that each is
currently absorbed by the process of redefining its national identity,
while also seeking allies to help it fulfil its aspirations for
growth and development.
23. Moreover, countries covered by the partnership are all facing
a series of challenges:
- a crisis
of statehood, stemming from weak governance (caused by corruption
or a concept of sovereignty that is sometimes compromised by ethnic-territorial
disputes);
- the current global economic crisis, which is sorely testing
domestic economic and financial stability and has raised the risk
of economic default, as well as the political repercussions that
might ensue;
- tensions in relations with Russia, which is seeking to
stitch its network of relations back together and safeguard its
interests in an area where it has traditionally wielded influence,
and which forms the bedrock of its Eurasian identity.
2.3.1. Ukraine
24. It appears that the Ukrainian authorities are eager
to obtain guidance from European Union countries in reforming the
country’s Constitution, judiciary and public administration. The
country would like to use the Eastern Partnership's help to improve
its international image, facilitate dealings with its neighbours
and give a new impetus to the resolution of the Transnistrian problem.
In economic terms, the creation of a comprehensive free trade area
is seen as a means to diversify the Ukrainian economy in order to
reduce vulnerability to external (trade) shocks and to reap higher
revenues through exports. Ukraine sees its co-operation with the EU
in the Eastern Partnership as a viable path towards improved co-operation
with the International Monetary Fund (IMF).
Moreover, the Eastern
Partnership and the Agreement on the Energy Community could contribute
to the real integration of Ukraine into the EU energy market, help
modernise Ukraine’s gas transit system
and stimulate the pursuit
of long-overdue reforms of the national energy system. A positive
side effect could be the depolitisation of the energy relationship
with Russia and the re-negotiation of a deal that resolved the gas
crisis of January 2009, including as regards the price for the imports
of Russian gas. Finally, Ukraine’s efforts to diversify energy supplies
and increase energy efficiency could receive a new impetus.
2.3.2. Moldova
25. Moldova
is
seeking to increase the efficiency of its democratic and administrative
institutions, give a new push to the resolution of the Transnistria
problem and accelerate the departure of the Russian armed forces from
the country. The signing of a new association agreement and the
creation of a free trade area with the European Union would stimulate
macro-economic reform, trade, foreign investment, job creation,
the domestic industrial and agrarian production and a broader modernisation
of the national economy.
The
Eastern Partnership process and the accession to the Energy Community
are expected to catalyse reform of Moldova’s energy sector, which
would help attract foreign investment in the sector, diversify energy
sources, increase electricity generation capacity,
further
develop programmes for solar, wind and geothermal power and lead to
an increased transparency in the sector for the benefit of investors,
operators, regulators and users.
2.3.3. Belarus
26. Belarus
would
like to come out of its diplomatic isolation and open a window to
western Europe. The country seeks to modernise its transport and
logistics infrastructure, to draw benefits from the trade flows between
the European Union and Asia
and
to obtain visa liberalisation. It could strongly benefit from the sharing
of experience in the field of energy sector restructuring with a
view to further diversification of the country’s energy supply and
the Eastern Partnership could help affirm the position of Belarus
as a viable partner for energy transit.
The country’s
participation in the Eastern Partnership is expected to aid the modernisation
of the economy thanks to fresh foreign investment. The funds allocated
to the country could help improve the competitiveness of Belarusian
goods versus imported goods, facilitate the diversification of exports and
sustain economic growth.
The
country wishes to attract more of EU funds and normalise its trade
regime with the EU despite its strong involvement in the customs
union with Russia and Kazakhstan, and lack of alacrity to accede
to the World Trade Organization (WTO).
2.3.4. Armenia
27. Armenia, for various reasons, does not participate
in several critical areas (energy, transport, maritime security
and environment, and fisheries) of the Black Sea Synergy. It expects
the Eastern Partnership to bring the country closer to the European
Union, to encourage a greater EU involvement in regional projects
and as regards the Nagorno-Karabakh conflict, and to support the
development of bilateral ties with Turkey. The Eastern Partnership
framework may help Armenia overcome certain structural deficiencies
of its political system. The creation of a free trade area with
EU countries would boost the country’s economy, contribute to the
diversification of economic partners and improve the investment
climate. The Eastern Partnership is also seen as a positive stimulus
for the macro-economic reform
and
in particular improvements in the energy sector through fresh foreign
investment and better access to new markets for electricity exports.
The country actively seeks new sources of funding the Eastern Partnership
can draw for its new nuclear power plant project and the modernisation
of conventional power plants.
The
eventual passage of the Nabucco pipeline through the territory of
Armenia is something the Armenian authorities are very keen to promote.
2.3.5. Azerbaijan
28. Azerbaijan has little reason to belong to the Black
Sea region and the country prefers instead to be associated with
the Caspian region. The Eastern Partnership might allow the country
to better manage its proximity to Russia and Iran. The Partnership
can help the country to assert itself as a major regional and international
energy player and obtain European Union and international community
support for ensuring the security of strategic energy infrastructure.
Improving business environment and investment climate and tackling
corruption are considerable challenges. The Azerbaijani civil society
has wide-ranging expectations from the Eastern Partnership, including
on the facilitation of visa regime with the EU. The creation of
a free trade area with the EU would stimulate diversification of
the national economy and assist steps towards a gradual transformation
of Azerbaijan into a regional hub of transportation networks.
However,
the country also needs to make more progress to join the WTO.
2.3.6. Georgia
29. Georgia views the Eastern Partnership as a means
of closer relationship with the European Union which could be instrumental
in contributing to progress in conflict resolution and confidence
building with South Ossetia and Abkhazia. The Georgian economy is
in dire need of investment. Yet governance (notably constitutional,
regional administration and judiciary domains) and economic reforms
(improving business environment and taxation system) are progressing
at an impressive speed. Already in 2006 and 2008 the World Bank
named Georgia the top reformer in the world. The Eastern Partnership
could serve as a channel for funds to deal with the aftermath of
the war with Russia and of the global financial crisis, as well
as stimulating the development of agribusiness, the financial sector,
manufacturing and tourism, advancing the diversification of energy
supplies, enhancing energy security
and helping
to assert Georgia as a reliable partner for major energy transit
projects.
2.4. The four thematic platforms
30. The Eastern Partnership combines bilateral relations
with multilateral co-operation that aims to encourage the partner
countries and the EU to exchange views on policies and issues of
common concern and build a model based on best practices. The Partnership
encompasses an area with a variable degree of democratic consolidation
and respect for human rights, and will have to deal with serious
difficulties arising from corruption and shortcomings in governance.
Vast parts of the region serve as highways for smuggling and illegal
trafficking, while the poor management of many border crossings
hampers legitimate mobility. The situation is rendered even more
difficult by the persistence of several unresolved conflicts.
31. In most of the countries in question, the economic and financial
crisis has slowed growth and the lack of transparency in the business
environment stymies the development of small and medium-sized enterprises (SMEs).
The region also faces numerous difficulties in the transport sector,
especially as regards the establishment of links between the partner
countries themselves and their connections to the axes of the Trans-European
Network (TEN). Energy security is another common concern for the
partners, whose energy networks could be better linked to those
of the EU. Energy efficiency is low and renewable energy supply
is limited.
32. The region’s countries have to deal with a series of problems
on a global, regional, cross-border and national scale. They are
hoping for closer political association and deeper economic integration
with the EU in order to develop their economies and improve national
efficiency. Accordingly, as part of the partnership process, they
will have to adapt their laws and regulations to the EU acquis, both to create a climate
of greater trust among the partners and to strengthen stability
and security throughout the region.
33. The strategy for responding to the difficulties identified
in the early phase will have to be based on four priorities. These
priorities correspond to the four thematic platforms set up by the
European Commission with the intention of laying the foundations
for open and free discussion of the main themes and the short- and medium-term
objectives of the Partnership: democracy, good governance and stability;
economic integration and convergence with EU policies; energy security;
and contacts between people.
2.4.1. Democracy, good governance and stability
34. In relation to democracy and good governance, the
assistance provided will be guided by the success of the countries
concerned in implementing international conventions on human rights
and democratic norms. On the basis of EU experience in the improved
policing of borders, this assistance will serve to introduce the integrated
management of borders in Eastern Partnership countries.
2.4.2. Economic integration and convergence with EU policies
35. In respect of economic development, assistance will
favour local development by fostering co-operation between border
regions and by helping certain regions to co-operate with European
Union regions as part of existing transnational programmes. It will
also help improve the business environment by increasing the availability
of advisory services for SMEs and facilitating their access to funding
sources. In the area of transport, EU assistance will focus on connecting
the EU's transport networks to the main trans-European axes and
on regional-level activities aimed at bringing the infrastructure
closer to EU standards.
2.4.3. Energy security
36. In the energy sector of Eastern Partnership countries,
there is much room for improvement in terms of efficiency and in
the use of renewable sources. In addition, support will be given
for the protection of the environment, land and natural resources.
2.4.4. Contacts between people: encouraging integration
with the EU and regional co-operation
37. The multilateral dimension of the Eastern Partnership
is essential for promoting integration with the EU, and the assistance
provided will be destined for activities that serve this purpose.
Co-operation in this field shall be targeted at supporting new schemes
for promoting contacts under the thematic sections (education and training;
culture; youth; information society; and research), in particular
via groups of experts, youth programmes and a civil society forum.
Finally, participation in the existing "Youth in Action" programme,
and support for cultural co-operation and intercultural dialogue
will be enhanced. At the same time, similar activities under the
Black Sea Synergy and the Northern Dimension will continue.
2.5. An external push for structural and governance
reforms
38. The history of European Union enlargement shows that
the prospect of integrating the Union is a powerful motivator. The
Eastern Partnership does not alter the generally discouraging EU
approach towards membership, but its implications make it clear
that in the long run the EU will have trouble finding reasons to keep
Eastern partners outside the club.
The
Eastern Partnership will define the degree of the EU’s engagement,
based on the partner countries' ability to meet agreed targets for
reform.
New benefits will only be offered on grounds
of progress made by the partner countries in political and economic
reform. This effectively implies that the "six" need to reform before
the EU would seriously consider their membership aspirations.
39. Patterns for co-operation between the Eastern Partnership
countries and the European Union have been tried and tested in preparing
the EU’s two-phase eastern enlargement in 2004 and 2007 and reintegrated
in the ENP. In view of this, progressive convergence with the EU
model certainly ought to be possible by the gradual but determined
alignment of the partner countries to the EU
acquis,
with the result that funds will be allocated depending on the progress
of the partner countries. Thus, a tentative roadmap for Ukraine
lists priority reform measures
in seven areas with specific
short-, medium- and long-term objectives (respectively, six months,
six to 18 months and more than 18 months) starting from April 2010.
40. As the majority of European countries struggle with economic
difficulties, EU funding becomes even more important than in times
of steady economic growth. The European Union already provides funding
to the Eastern Partnership countries through bilateral programmes
under the European Neighbourhood Policy Instrument (ENPI). In addition,
Partnership countries can apply for funds from the Governance Facility,
the Cross Border Co-operation and the Neighbourhood Investment Facility.
Following the mid-term review of current EU programmes with the
neighbourhood countries, funding will remain stable for the 2011-2013
period to reinforce political co-operation and promote economic
integration between the EU and its Eastern neighbours.
41. The European Union also exerts influence and encourages its
partner countries through other institutions and organisations.
Thus the EU’s voice in the IMF becomes a significant factor in times
of crisis, since it can yield support to IMF bailouts, as evidenced
for Ukraine and Belarus. As long as the effects of the crisis are
felt, the scope for EU conditionality in the partner countries will
grow. In other words, during the time of crisis the EU will be able
to buy more influence for the same money.
42. Five of the six members of the Partnership are fully-fledged
members of the Council of Europe, by virtue of which they are constantly
being urged to fulfil their commitment to the fundamental principles
that underpin the actions of the Council of Europe. Synergy between
the EU, Council of Europe and other institutions in monitoring and
encouraging partner steps towards the Eastern Partnership objectives
is a stepping stone towards accelerated progress with structural,
governance and economic policy reforms in the participating countries.
2.6. Anchoring stability, the rule of law, human dignity
and prosperity
43. The success of the Eastern Partnership depends on
the partner countries’ commitment to the initiative. The level of
upholding of democratic principles, human rights and liberties and
the rule of law varies in the Eastern Partnership countries. As
regards democracy with free and fair elections, strong opposition
and media enjoying freedom, only Ukraine has institutions that generally
function as they should, whereas Belarus and Azerbaijan are on the
other side of the spectrum, and Georgia, Armenia and Moldova are
in between.
44. The Eastern Partnership aims to clarify the EU’s political
and economic message to partner countries and to draw reform-oriented
countries closer to the EU, while exporting the important values
of democracy, the rule of law and the respect for human rights and
fundamental freedoms. By placing the relationship with the six countries
high on its foreign affairs agenda, the EU listens carefully to
the concerns of its partners, but also expects the same from them.
45. Systematic progress towards greater political stability, more
adequate protection of human rights, capacity building in democratic
institutions and consolidating the rule of law, anti-corruption
mechanisms, human development, socio-economic prosperity and civil
society participation is key to the success of the Partnership,
not least by facilitating a climate of trust and strengthening the
bonds between the six partnership countries themselves.
3. Multilateral and multifunctional approaches to
institutional co-operation in support of the Eastern Partnership
3.1. Involving European multilateral development banks
(EBRD, EIB, CEB, NIB)
46. Over the last year, the eastern European and South
Caucasus countries have suffered a significant economic decline
that was larger than expected and greater than in any other region
among the EBRD’s countries of operation. The GDP for the region
declined by an average of 9%, with two countries – Armenia and Ukraine
– experiencing double-digit contractions (respectively, 14.2% and
15.1%). Countries were able to avoid uncontrolled currency collapses,
systemic banking crises and large spikes of inflation, but the financial and
economic crisis revealed that economies of countries with weaker
institutions and macroeconomic policy frameworks were more vulnerable.
47. Large development challenges remain throughout the region
and will need to be addressed in the years to come. The Eastern
Partnership framework has the potential to help deepen integration
of the countries concerned with the EU, strengthen their institutions
and reduce their future economic volatility, but this requires responsible
action on both sides and the involvement of multilateral development
institutions capable of providing Eastern Partnership countries
with tangible support.
48. The multilateral platform of the Eastern Partnership comprises
international financial institutions (IFIs), the private sector
and economic and social partners. A number of flagship initiatives
and the resolute character of the work programmes under four thematic
platforms make their involvement in the Eastern Partnership quite promising.
Already, the largest multilateral investors and lenders in central
and eastern Europe – the EBRD, the European Investment Bank (EIB)
Group, and the World Bank Group – have pledged, under the Joint
IFI action plan launched in February 2009, to provide funds to support
the banking sector in the region and lending to businesses most
affected by the sprawl of the global economic crisis.
49. Looking forward, the action plan will concentrate efforts
on dealing with the legacy of the crisis: contraction in credit,
rising non-performing loans and weak bank balance sheets. The IFIs
will assist banks and the corporate sector with balance sheet restructuring
and clean up, risk mitigation, and measures to stimulate domestic
lending, particularly to SMEs. Work will be carried out to address
special needs in the region, including local currency lending and
the development of domestic capital markets, in close collaboration
with other international and European institutions and governments.
50. Representatives of the EIB and the EBRD attended the launch
of the Eastern Partnership at the Prague Summit of 7 May 2009. The
Summit Declaration invited the EIB and EBRD, together with other
IFIs, to set up a credit facility for small and medium-sized enterprises.
Accordingly,
in late 2009, the European Commission announced the allocation of
some €50 million to cover two activities – operation of business
advisory centres and support of SMEs credit lines – via the EBRD
and the EIB over the 2010-2013 period. Approximately 40% of the
funds will be dedicated exclusively to EBRD’s business advisory
services through the TAM and BAS programmes
(€5 million
per year over four years). The rest of funds (€30 million) is aimed
at supporting SMEs
via a combination of grants and
loans.
51. The EIB
supports
the EU's neighbourhood policy in eastern partner countries by financing
projects of significant EU interest, notably in the field of transport,
energy, telecommunications and environmental infrastructure. In
line with its mandate for the region over 2007-2013, the bank earmarks
€3.7 billion for Armenia, Azerbaijan, Georgia, Moldova, Ukraine
and Russia. Activities in Belarus are subject to a future approval
by the European Council. In addition, the EIB established, in December
2009, the Eastern Partners Facility (EPF) endowed with €1.5 billion.
Under this facility, the EIB can support investment projects carried
out by the subsidiaries of EU companies or by joint-ventures in
which EU companies are involved. The EIB will thus assist partner
countries with their modernisation process and will facilitate cross
border investments between the EU and its eastern neighbours. Currently
considerable financial capital is still available under the EIB mandate
and the EPF; some 20 projects are under consideration for a total
loan amount of €1.8 billion.
52. The EBRD is involved in discussions under key thematic pillars
(including democracy, economic integration and energy security)
and is ready to support three out of six flagship initiatives (including
on SME development, regional energy markets and energy efficiency,
and good environmental governance). The Neighbourhood Investment
Facility
offered
€52.5 million for EBRD projects in 2009, which makes it by far the largest
source of grant funds for EBRD. NIF grants already committed relate
to €1.5 billion of EBRD loans and will be complemented by €500 million
of co-financing by other IFIs. The grants are used for technical
assistance unrelated to any loan or in order to prepare investment
projects and for complementing loans from IFIs.
53. Additionally, the Eastern Partnership seeks to attract other
donors for co-financing. Through the establishment of funds, the
international donors can provide grants to promote development in
the Eastern Partnership countries in diverse fields. Thus the Eastern
Europe Energy Efficiency and Environment Partnership (5Es) was set
up at the initiative of the Swedish Government during its presidency
of the European Union. It will cover energy efficiency investments
in eastern European countries (initially focusing on large public
projects in Ukraine) from an envelope of €90 million.
54. Of the six countries concerned by the Eastern Partnership,
only Moldova and Georgia belong to the Council of Europe Development
Bank (CEB). The rapporteur refers to the CEB declaration during
the Moldova Partnership Forum in Brussels on 24 March 2010 and hopes
that concrete project commitments will follow in the near future.
The Assembly should encourage stronger CEB involvement – directly
and in co-operation with the EBRD, the EIB and the European Commission
– in the generation of projects that further social development
and Council of Europe values in these countries. It should also
reiterate its call on the Armenian, Azerbaijani and Ukrainian authorities
to consider joining the CEB at the earliest opportunity.
3.2. Responsibilities of European partners
55. The mainstream activities of the Partnership will
involve not only the European Union institutions but also international
organisations such as the Council of Europe, the OSCE, the OECD,
other international financial institutions, parliaments, business
leaders, local governments and a broad range of stakeholders from
sectors connected to the thematic platforms of the Partnership.
The European Commission has also proposed to encourage the participation
of civil society by establishing a parallel forum to promote contacts
between the various organisations involved (NGOs, associations,
etc.) and to facilitate dialogue between them and public sector
authorities.
56. The projected dialogue between the European Union and the
partner countries at different levels of governance, along with
an idea to convene the Euronest parliamentary assembly and a Civil
Society Forum, signals a strong emphasis on social elements and
communication. It is essential to ensure that the Eastern Partners’
opposition forces and independent NGOs have a say in this dialogue.
The
European Commission has also invited the Committee of the Regions
to establish an Eastern Europe and South Caucasus Local and Regional
Assembly, with a view to involving local and regional authorities.
57. The OSCE and Council of Europe are key actors in promoting
security, stability and territorial integrity of all states, democracy,
the rule of law, the respect for human rights and the fulfilment
of international commitments and agreements in the Greater Europe.
As all stakeholder institutions share the responsibility for the
implementation of the Partnership’s objectives, their member states
must send a coherent message in support of reform process towards
the achievement of true economic and political stability in the
Eastern Partnership countries.
58. The six Eastern Partnership states need to keep up the pace
of reforms and show commitment to the principles of international
law, fundamental values (including democracy, the rule of law and
the respect for human rights and freedoms), market economy, sustainable
development and good governance. All of the participant countries
should enhance efforts to improve their international image.
3.3. Contribution of third parties
59. The seemingly constricted budget allocated to the
Eastern Partnership by the European Commission, indicates that attracting
private investment is as important as developing multilateral partnerships
with all the interested third parties (for example the USA, Japan,
Russia, Turkey, etc.). Third countries
could
be involved in the work of thematic platforms, panels or initiatives
on a case-by-case basis and in various projects by exploiting geographical
proximity or existing economic links. The involvement of big regional
players as third parties (notably Turkey and Russia) can be a huge
stimulus to the European Partnership. For geopolitical reasons there
are obstacles to the participation of some neighbouring countries,
such as Iran, yet their participation in regional projects cannot
be excluded.
3.4. Building a pan-European economic area
60. The Eastern Partnership is focused on drawing the
participants closer to each other and to the European Union. To
this end, it is pursuing both a bilateral and a multilateral approach
which aims to create a free trade area that in the long term is
destined to become a fully-fledged economic community of neighbours.
The process should be accompanied by a gradual relaxation of visa
requirements and supportive action for socio-economic policies that
seek to reduce disparities in each of the partner countries. The
establishment of a neighbourhood economic community similar to the
European Economic Area
and
based on a system of free trade agreements would be a significant
achievement.
61. The construction of a pan-European economic area is complicated
by the fact that the Eastern Partnership countries start from quite
different economic backgrounds and that Azerbaijan and Belarus do
not yet belong to the WTO. Feasibility studies on the “free trade
areas” in most cases came to the conclusion that the partner countries
are not ready, and will not be ready in the immediate future, for
trade liberalisation with the EU.
The
Eastern Partnership countries’ economies need to build their capacity
to undertake the necessary structural reforms and adapt their regulatory
frameworks to EU standards, which entails non-negligible financial
costs, especially in the light of the current financial and real
economy problems. The political and social acceptability of these
challenges should not be underestimated.
4. What role for the Council of Europe with regard
to the Eastern Partnership?
4.1. Keeping focus on shared values, expertise and
best practice
62. The Council of Europe needs to assume a role in the
interpretation and implementation of the Eastern Partnership. The
beneficiaries of this important instrument – which seems to be the
most structured from the many aimed at building stronger relations
with eastern Europe – are, with the exception of Belarus, full members
of the Council of Europe. As such, they are already in the focus
of the Organisation’s activity programmes. However, your rapporteur
feels that it is important to restate, in this context, the importance
of the link between economic, social and political development.
There can be no lasting prosperity without continued progress in
human development and equal opportunities for all members of society.
63. In consolidating democratic institutions, streamlining state
administration and holding true to the commitments that naturally
flow from their membership of the Council of Europe, the Partnership
countries will have to persevere in a comprehensive reform process
that entails greater participation by the civil society, capacity
building of public institutions and enhanced transparency of the
decision-making process. The Council of Europe can offer assistance
for the assessment of public institutions’ performance and to provide
access to the exchange of best practices relating to issues of governance,
in particular as regards electoral laws, the regulation of the mass
media and systems of checks-and-balances.
64. Considering existing complementarities and joint activity
programmes, it is necessary to continue to seek further synergies
between the Council of Europe and the European Union
in order
to
ensure constant economic, democratic and social progress in the
countries concerned. This is particularly relevant in discussions
over the shape of the proposed EU Neighbourhood East Parliamentary
Assembly (Euronest) and the ambiguities surrounding it.
65. During his fact-finding visits to the Eastern Partnership
countries the rapporteur noted concerns about the composition of
the proposed Euronest Assembly (notably because a few eastern EU
member countries have taken the majority of seats attributed to
European Parliament members while many big western European countries
are under-represented; and because all Eastern Partnership countries,
irrespective of their size, have the same size of representation,
namely 10 members per country), the contents and methods of its
future work, as well as controversy regarding the participation
of Belarus. Some of the Eastern Partnership delegations feel that
setting up a new assembly is expensive and unnecessary, and that
the parliamentary dimension of the Eastern Partnership could be
ensured through existing parliamentary bodies (such as by giving
observer status with the European Parliament to selected parliamentarians
of the Eastern Partnership countries).
66. It is important to maintain, improve, and strengthen contacts
at all levels between EU and Council of Europe with Eastern Partnership
countries in the area of inter-parliamentary co-operation. Toward
this end, using the established mechanisms of the Parliamentary
Assembly, involving the Assembly (and through it some third parties
to the Eastern Partnership) in the work of the Euronest and possibly
setting up an Eastern Partnership "Parliamentary Troika" (of the
European Parliament, OSCE Parliamentary Assembly and the Parliamentary
Assembly of the Council of Europe) to underpin its future essence
could be important courses of action, especially in order to co-ordinate
positions in respect of Belarus.
67. The Council of Europe has powerful instruments and vast experience
which can serve the Eastern Partnership in confidence building,
early settlement of disputes and fostering the spirit of reconciliation. Enhanced
inter-institutional co-operation between the EU and the Council
of Europe to attain common goals would convey an important message
that the Eastern Partnership initiative is not directed against
any third state and that each Partnership country needs to maintain
good relations with all its neighbours. The European Union must
strike a fair balance between its efforts to promote democracy,
encourage economic modernisation and forge closer relations with
the countries in the Eastern Partnership. The Memorandum of Understanding between
the Council of Europe and the European Union is a good basis for
the two organisations’ co-operation in advancing the realisation
of the Eastern Partnership.
68. It is therefore very important for the Parliamentary Assembly
of the Council of Europe to evaluate the impact of the Partnership
on its own and the Organisation’s work and carefully follow the
implementation of the Eastern Partnership in this region of increasing
strategic significance for all of Europe.
69. Armenia, Azerbaijan, Georgia, Moldova and Ukraine take part
and benefit from the work of the Group of States against Corruption
(GRECO) and the European Commission for Democracy through Law (Venice Commission).
Armenia
and Moldova also participate in Moneyval (the Committee of Experts
on the Evaluation of Anti-Money Laundering Measures and the Financing
of Terrorism).
Belarus should be invited to
become Party to the Criminal and Civil Law Conventions on Corruption
and would thus accede to GRECO and its evaluation procedures. It
could also embrace the Convention on Laundering, Search, Seizure
and Confiscation of the Proceeds of Crime and on the Financing of
Terrorism (CETS No. 198) whose implementation is monitored through
Moneyval. We also welcome the fact that Azerbaijan, Georgia and Ukraine
are Parties to the Convention on Mutual Administrative Assistance
in Tax Matters (ETS No. 127).
4.2. Supporting pan-European economic integration:
from words to deeds and long-term commitments
70. The European Union's Eastern Partnership is widely
viewed as a better offer than the ENP, which dealt ineffectively
with the internal differences between EU’s neighbours and made prospects
of adhering to the European Union for eastern European countries
dim.
71. Although the new proposal remains predominantly bilateral,
it also builds a multilateral component on the basis of earlier
schemes. This gives it a more ambitious, flexible and efficient
appearance in comparison with other regional initiatives. Its functional
mechanism – including regular meetings on different levels, a parliamentary
assembly and a civil society forum – sets the stage for fruitful
and constructive exchange of ideas, while the envisaged association
agreements underpin serious EU intentions in the long term. The
overall design is intended to assist a steady transformation of
the Eastern neighbours into well-functioning democracies with transparent
and reliable market economies.
72. The key strength of the Partnership lies in the possibility
to offer differentiated associations with the EU, so that Eastern
Partnership countries may create relationships that match the state
of their socio-economic development, democratic maturity and political
ambitions.
73. The Eastern Partnership does not have EU membership in its
bait box. Yet with each beneficiary moving at a different speed,
we may expect a competitive race towards the regulatory alignment
with the EU
acquis, as well
as
the use of other attractive
built-in elements like the flagship initiatives and the multilateral
framework. At the same time, the EU seems willing to work to keep
the Eastern Partnership meaningful and pertinent to Armenia, Azerbaijan,
Belarus, Georgia, Moldova and Ukraine. The greatest challenge for
it will be the use of a "give-and-take" approach in a way that would
stimulate progress in development and regional integration.
74. Several problems falter the Eastern Partnership's initial
momentum: deep and wide economic crisis, persisting political instability
in the Eastern neighbourhood and some degree of resentment from
other EU partners surrounding the initiative’s ambiguity. Despite
that, the general mood is optimistic. Ultimately, the success of
the initiative will depend on the ability of the Eastern Partnership
countries’ to attain the ambitious goals established by the Prague
Declaration and to use the process for making faster progress with
domestic reforms and modernisation of governance. Country-specific
benchmarks and timetables could be established to implement the
main objectives and ensure due evaluation of progress made.
75. Political support for the Eastern Partnership needs to be
perpetuated, by both the EU and the partner countries. Regulatory
alignment with the EU must remain a central goal of the Partnership.
Finally, financial support for the Eastern Partnership should be
clarified to stimulate reforms and facilitate capacity building
in the Eastern Partnership countries, such as through their work
on the removal of trade barriers, improvement of quality standards
and business environment, and streamlining of customs procedures.
5. Conclusions and recommendations
76. With a view to assisting the European Union's Eastern
neighbours in implementing indispensable political and economic
reforms a variety of proposals have been voiced, as listed below:
- the EU should strive towards
better co-ordination and greater clarity as to the respective roles
of the various international organisations in respect of the Eastern
Partnership. This concerns the NATO, the OSCE, the EBRD, the World
Bank, the IMF and the Council of Europe;
- initiator countries of the Eastern Partnership initiative
should continue to serve as advocates of the Eastern neighbours
in the EU institutions. To that end, Poland and Sweden could pursue
consultations with other EU members in the neighbourhood of the
Eastern Partnership countries (that is to say, other members of
the Visegrad Group (the Czech Republic, Hungary and the Slovak Republic),
Baltic States, Bulgaria and Romania);
- the Eastern Partnership initiative should propagate a
unified and clear political message of EU support for democratic
and market-oriented reforms and the consolidation of partners’ statehood,
governance and territorial integrity;
- increasing the available funding for the Eastern Partnership,
the size of the European Commission’s delegations and targeted assistance
to the state authorities in the Eastern Partnership countries would signal
the importance of this policy priority for the EU. The
new European External Action Service could help to build up the
capacities of the Partnership, keep the focus of
EU member states on means and resources deployed for the Partnership
and foster ties with other countries of non-EU Europe;
- the EU’s firm commitment to conditionality should also
demonstrate that an enhanced relationship with the EU depends on
stronger commitments, on the part of the Eastern Partnership’s target
countries, to the rule of law, democracy and the protection of human
rights that are prerequisite for economic growth and prosperity;
- developing a functional synergy between the Eastern Partnership
and the Black Sea Synergy is both necessary and inevitable in the
long term. This implies the clarification of means employed and
tasks of the two schemes, as well as the establishment of a permanent
channel of communication;
- in shaping its regional energy and security policies,
the EU should enhance co-ordination between the Eastern Partnership
and its talks with the Russian Federation on the new partnership
and co-operation agreement. This would broaden the support for the
Eastern Partnership, assist confidence building and foster pragmatic
regional co-operation that gradually overcomes geopolitical rivalries;
- EU policies towards Turkey need to be taken systematically
into account in the development of the Eastern Partnership at both
macro and micro levels. Leaving Turkey aside could lead, in the
medium-term perspective, to a situation where the EU has to compete
with Turkey’s economic and political ambitions in both the Greater
Middle East and the South Caucasus;
- the Eastern Partnership has to spell out monitoring procedures
and an incentive structure that unmistakably links benchmarks with
rewards. Considering more short-term rewards instead of vague long-term
incentives like "a stake in the internal market” to offset the short-term
costs is particularly important;
- EU member states should co-ordinate more closely their
national assistance programmes towards Eastern Europe. The economic
crisis should incite the pooling of assistance in order to compensate
for any cuts in aid due to donor countries’ budget austerity;
- the EU should reinforce the action of international agencies
dealing with economic stabilisation, investment and private sector
growth across the region where the EU’s involvement has to converge
with the EBRD’s, IMF’s and the World Bank’s efforts – and not only
via the EIB;
- the EU should step up its presence in the Eastern Partnership
countries’ media to emphasise the European identity it shares with
its Eastern neighbours. It should also encourage visits of EU member states’
officials to Eastern Partnership countries, as well as contacts
and co-operation between the European Parliament and local parliaments,
the Committee of the Regions and local regional authorities. "Continuity”
should be the motto, both in monitoring the progress made by the
states participating in the initiative and in the debate within
EU institutions, so that the objectives of the Partnership are given
the appropriate visibility during the various stages of the process;
- under the thematic platform “Contacts between people”,
increasing the number of EU information points in the region would
help raise awareness about the Eastern Partnership and other European
initiatives, and foster a deeper engagement of civil society, notably
in its exercise of an oversight function over governments concerning
reforms. Academic exchange programmes (such as for student exchanges, study
visits, and training) could be used more extensively. One
of the main features identified by the Eastern Partnership countries
themselves, which is also one of the strong points of the programme,
is the importance attached to relations between people, to the understanding
and involvement of civil society as one of the players that can
give momentum to the achievement of the most ambitious goals of
the Partnership. Synergies should be sought between institutions
and citizens;
- Eastern Partnership partner countries should liaise more
amongst themselves to develop or enhance existing ties to tackle
shared challenges, which include migration management, fighting
cross-border organised crime, tackling environmental challenges,
etc. Moreover, their neighbours have faced many similar challenges,
and some have been more successful than others in tackling them.
Using their experience, such as through training projects and professional
exchanges, could enable better use of local resources of Eastern
Partnership countries in advancing national and regional development.
77. As far as the Council of Europe’s input to the realisation
of the Eastern Partnership is concerned, the rapporteur considers
that the Organisation should concentrate on promoting the different
aspects of good governance in the Eastern Partnership countries.
This concerns, in particular, confidence and institutional capacity-building
measures; greater transparency and better efficiency of the public
administration; stronger systems of checks-and-balances; clarification
of the separation between the political and economic decision-making
bodies to avoid conflicts of interests; continued progress with
curbing corruption, money laundering, shadow economy and human trafficking;
better law enforcement; gender mainstreaming; and steps towards facilitating
free movement of people, goods, services and capital throughout
Europe. It is necessary to continue leveraging the awareness of
Eastern partners about their capacity to grow and develop by implementing democratic
reforms, in order to avoid a clash between the expectations they
have in relation to this initiative as well as the enthusiasm they
showed during the rapporteur's fact-finding visits and the problems
related to timetables and bureaucratic constraints.
78. The Council of Europe’s Committee of Ministers should seriously
consider preparing a set of proposals regarding the Organisation’s
role and input in the Eastern Partnership process in order to present
these proposals to the Second Eastern Partnership Summit of Heads
of State and Government which will be held in Spring 2011. It should
also seek to involve the Council of Europe in the work of the OECD’s
Development Assistance Committee and to add the Council of Europe
to the list of international organisations eligible to receive ODA
(Official Development Assistance)
in
the form of non-earmarked voluntary contributions that could be
channelled to Council of Europe country assistance programmes, including
in favour of Armenia, Azerbaijan, Georgia, Moldova and Ukraine,
as well as Belarus whenever possible. Furthermore, it is necessary to
ensure that the Council of Europe INGO Conference contributes fully
to the work of the Civil Society Forum and other platforms of the
Eastern Partnership, where relevant, and involves a wide range of
civil society organisations from the Eastern Partnership countries.