The European Commission today adopted a Communication setting out a new framework for relations over the coming decade with Russia, the Western NIS and the Southern Mediterranean - countries who do not currently have a perspective of membership but who will soon find themselves sharing a border with the Union. As the Copenhagen European Council confirmed, enlargement is an opportunity to promote stability and prosperity beyond the new borders of the Union. The Communication proposes that, over the coming decade, the EU should therefore aim to work in partnership to develop a zone of prosperity and a friendly neighbourhood a 'ring of friends' - with whom the EU enjoys close, peaceful and co-operative relations. It suggests that, in return for concrete progress demonstrating shared values and effective implementation of political, economic and institutional reforms, all the neighbouring countries should be offered the prospect of a stake in the EU's internal market. This should be accompanied by further integration and liberalisation to promote the free movement of persons, goods, services and capital (four freedoms). President Prodi said "With globalisation and the creation of a trans-national civil society, the Union's external relations can no longer be distinguished from its internal development, particularly when it comes to our neighbourhood. Instead of trying to establish new dividing lines, deeper integration between the EU and the ring of friends will accelerate our mutual political, economic and cultural dynamism." Commissioner Patten noted "Over the past decade, the Union's most successful foreign policy instrument has undeniably been the promise of EU membership. This is not sustainable. For the coming decade, we need to find new ways to export the stability, security and prosperity we have created within the enlarged EU. We should begin by agreeing on a clearer vision for relations with our neighbours."

The Communication, put forward by President Prodi and Commissioner for External Relations Chris Patten, suggests that the European Union and the neighbouring countries are already mutually dependent when it comes to achieving stability, security and sustainable development within our respective borders. It proposes that the Union set out an ambitious vision for where relations with the Eastern and Southern neighbours should be heading over the coming decade.

The Communication notes, at the same time, that differences between the Eastern and Southern neighbours both in terms of progress already made in reform and their differing hopes and aspirations when it comes to EU membership should lie at the heart of a new neighbourhood policy. It therefore proposes that further measures to enhance integration and liberalisation should be implemented gradually and progressively, responding to positive action on the part of the neighbouring countries.

These measures are:

• Extension of the Internal Market and Regulatory Structures
• Preferential Trading relations and Market Opening
• Perspectives for Lawful Migration and Movement of Persons
• Intensified Co-operation to Prevent and Combat Common Security Threats
• Greater EU Political Involvement in Conflict Prevention and Crisis Management
• Greater Efforts to Promote Human Rights, Further Cultural Co-operation and Enhance Mutual Understanding:
• Integration into Transport, Energy and Telecommunications Networks and the European Research Area
• New Instruments for Investment Promotion and Protection 
• Support for Integration into the Global Trading System
• Enhanced Assistance, Better Tailored to Needs
• New Sources of Finance

This New Neighbourhood Policy would be taken forward via country and/or regional strategic Action Plans developed by the Commission in partnership with the neighbouring countries. Action Plans would include political and economic benchmarks by which to judge progress. The Communication suggests that, once agreed, these Action Plans could supersede common strategies to become the Union's main policy document for relations with the neighbouring countries over the medium term.

When it comes to reflecting integration and liberalisation in contractual relations, the Communication also opens the prospect of new Neighbourhood Agreements, supplementing, where needed, the existing Partnership and Co-operation Agreements and Association Agreements.

The European Council in Copenhagen on 12 and 13 December welcomed the Commission's intention to develop proposals for enhancing the Union's relations with Russia, Ukraine, Moldova, Belarus and the Southern Mediterranean countries (Algeria, Egypt, Israel, Jordan, Lebanon, Libya, Morocco, Palestinian Authority, Syria and Tunisia). The Council suggested this should be based on a long-term approach promoting democratic and economic reforms, sustainable development and trade.

Background

The Barcelona Partnership

The Euro-Mediterranean Partnership, agreed by the Foreign Ministers of the EU and the twelve Mediterranean partners(1) at Barcelona in November 1995, is founded on the mutual recognition of the value of developing a comprehensive policy of close association in a large number of sectors of common interest resulting form the proximity of the two regions. The objectives of the Partnership have been confirmed at all the various Foreign Ministers meetings held since Barcelona, even if the rate of progress in achieving them has been slower than originally hoped.

The Barcelona Process was endorsed by the Common Strategy for the Mediterranean Region adopted by the European Council in Santa Maria da Feira in June 2000. The most recent Euro-Mediterranean Foreign Ministers' Meeting took place in Valencia on 22-23 April 2002 and agreed on an Action Plan for the development of the partnership.

The objectives of the Barcelona Declaration are to

• create a zone of peace and stability based on shared fundamental values, particularly respect for human rights and democracy;
• build a region of shared prosperity through the gradual establishment of a free trade area between the EU and the partners on the one hand, and among the partners themselves on the other by the target date of 2010; this process is accompanied by substantial financial assistance from the EU (principally the MEDA programme) and through European Investment Bank loans to promote economic transition and to help the partners meet the social and economic challenges implied by these changes;
• contribute to better understanding among the peoples of the region and to support an active civil society.

Co-operation in the field of justice and home affairs, particularly the fight against organised crime and terrorism, as well as dealing with the issues related to migration, is mentioned briefly in the Barcelona Declaration and has acquired greater importance over the years since 1995 as the EU has extended its acquis in this area.

The partnership is implemented bilaterally through the Association Agreements negotiated between the EU and the partners, and multilaterally through regional bodies, notably the Euro-Mediterranean Committee and the regular Senior Officials' Meetings on the Political and Security Dialogue. The Association Agreements establish, over a transitional period, free trade in industrial goods and progressive liberalisation of agricultural trade and a 'rendezvous' to open negotiations on liberalisation of trade in services; they also contain provisions for cooperation in political, economic, social and cultural matters, justice and home affairs and a 'suspension' clause which allows either party to suspend the agreement if an essential element of the Association Agreement (notably respect for human rights and democracy) is breached.

As far as financial assistance from MEDA is concerned eight of the partners (Algeria, Egypt, Jordan, Lebanon, Morocco, Palestinian Authority, Syria and Tunisia) are covered by National Indicative Programmes, which account for the bulk of MEDA assistance (up to 90%). The remainder is the subject of the Regional Indicative Programme, which finances multilateral activities for which all twelve Mediterranean Partners are eligible. The Mediterranean partners have also benefited from assistance from the European Initiative for Democracy and Human Rights (EIDHR). The European Investment Bank provides loans on its own resources to all Mediterranean partners principally for investment in infrastructure but also for environmental projects, for which an interest rate subsidy is provided. These resources have been supplemented through the creation of the Facility for Euro-Mediterranean Investment and Partnership (FEMIP) launched in October 2002, primarily intended to increase the support available for the private sector. A decision is due to be taken by the Council in October 2003 on whether to convert the Facility into an EIB subsidiary Euro-Mediterranean Bank.

Libya is not a Mediterranean partner but currently has observer status at certain meetings and could become a full member if it accepted all aspects of the Barcelona Partnership as currently constituted.

The Commission has delegations in all countries of the Partnership and a representative office in the Palestinian territories. It has no representation in Libya.

Relations with Russia, Ukraine, Moldova and Belarus

From 1992, the 1989 Agreement on Trade and Cooperation (TCA) which the European Community had concluded with the USSR was applied to govern relations with each of the Newly Independent States. The TCA provided inter alia for Most Favoured Nation (MFN) treatment for trade and the possibility to hold joint committees. For Russia, Ukraine and Moldova, the TCA was superseded by the entry into force of the Partnership & Cooperation Agreements (PCAs) in 1997 and 1998. A PCA with Belarus was signed in 1995, but was neither fully ratified nor concluded.

The Partnership and Cooperation Agreements are comprehensive, covering political dialogue, trade in goods and services, economic environmental, scientific and cultural matters. Cooperation in justice and home affairs is also covered, specifically the prevention of illegal activities and to cooperation against drug trafficking and money laundering.

While the PCAs are evolutionary, foreseeing the development of trade and trade-related provisions from the MFN treatment currently applied towards establishment of a bilateral free trade area, they do not establish further trade concessions beyond those the EU accords to its WTO partners. In return, the partner countries agree to apply MFN or national treatment terms, whichever is most favourable.

The PCAs include a 'suspension' clause, which allows either party to suspend the agreement if the essential elements of partnership (respect for democratic principles and human rights) are breached. PCAs are valid for 10 years with tacit annual renewal thereafter. The operation of PCA dispute settlement provisions is currently being improved, in the case of both Russia and Ukraine.

Implementation of the agreements is overseen by a Ministerial Cooperation Council, a senior official level Cooperation Committee and a Parliamentary Cooperation Committee, in which the relevant European Parliament delegation represents the EU. In addition, the EU holds Summits with Russia (biannual) and Ukraine (annual).

In 1999 and 2000, the Council adopted common strategies on Russia and Ukraine, which update the list of desired cooperation activities with the aim of focussing bilateral relations on implementing strategic priorities.

Separately, the EC has concluded textile agreements with all four countries, a steel agreement with Russia, as well as agreements on nuclear safety research and thermonuclear fusion with Ukraine. With Russia, the EC is currently renegotiating an agreement on science and technology cooperation and is negotiating agreements for nuclear clean up in north-west Russia, readmission and fisheries cooperation.

The principal financial assistance foreseen in the PCAs is that provided under the Tacis regulation. Beyond Tacis, the EU has provided further assistance to Moldova through the Food Security Programme (FSP). Russia and Moldova have benefited from humanitarian programmes administered by ECHO. Moldova and Ukraine have received macro-economic assistance. Russia received special programmes of food aid in 1992 and between 1998 and 2000. In 2001, the European Investment Bank was granted a mandate to lend up to a ceiling of €100 million for environmental projects in north-west Russia. All four countries have benefited from assistance from the European Initiative for Democracy and Human Rights (EIDHR).