Advisory letter 15: The Eastern Partnership

July 23, 2009 - nr.15
Summary
Advice request

Mr F. Korthals Altes                                                                 European Integration Department

Chairman of the Advisory Council                                               Bezuidenhoutseweg 67

on International Affairs                                                               2594 AC Den Haag

Postbus 20061

2500 EB Den Haag

 

 

 

Date                 November 2008

Our ref.             DIE-1537/08

 

 

 

Re: Update to the advisory report ‘The European Union’s Eastern Neighbours’

 

 

Dear Mr Korthals Altes,

 

In July 2005, the Advisory Council on International Affairs (AIV) published an advisory report on future EU policy with regard to its eastern neighbours after the accession of ten Central and Eastern European countries to the EU. The Dutch government had requested the report in response to the European Commission’s policy framework, adopted in May 2004, on developing relations with the EU’s new neighbours along its eastern borders.

 

Events in Georgia this summer have revived political interest in the Eastern Dimension of the European Neighbourhood Policy (ENP). This month, the Commission will present its proposals for an Eastern Partnership, which will be presented for approval by the European Council in March 2009. Various member states, including Poland, Sweden and the Czech Republic, have also put forward proposals on strengthening the EU’s ties with its eastern neighbours. In the light of these developments, the government requests the AIV to publish a concise update to its advisory report of 2005.

 

The government would particularly like answers to the following questions:

 

1.       What added value would the Eastern Partnership provide beyond the possibilities currently afforded by the European Neighbourhood Policy? How would this Partnership relate to the new forms of partnership status (partenariaat) proposed by the Dutch government in the memorandum submitted to Parliament on 14 May 2008?

2.       The government has ruled out any accession prospects for the EU’s eastern neighbours. What options (e.g. instruments) would be available within the current ENP to strengthen relations with these countries?

3.       What lessons can be learnt from the Union for the Mediterranean with regard to a possible multilateral cooperation partnership with the EU’s eastern neighbours?

4.       In using its policy instruments, should the EU distinguish between the eastern ENP countries in the Caucasus on the one hand and Ukraine, Moldova and, ultimately (depending on the development of democracy and the rule of law), Belarus on the other? To what extent would it be possible to enhance cooperation among the eastern neighbours themselves?

5.       In what way could Russia be involved in the proposed Eastern Partnership?

 

I look forward to your updated advisory report.

 

Yours sincerely,

 

[signed]

 

Maxime Verhagen

Minister of Foreign Affairs

 

Government reactions

11 President of the House of                                         Southeast and Eastern Europe  

Representatives of the States General                           and Matra Programme Department

Binnenhof 4                                                                 Bezuidenhoutseweg 67

The Hague                                                                   2594 AC The Hague

 

 

 

Date: 13 March 2009

Our ref.: DZO/OE-022/09

Re: Wider relations with eastern neighbours

 

 

Dear Madam President,

 

We are pleased to send you the government’s response to the request by the Permanent Committee on Foreign Affairs of 19 December 2008, ref. 2008ZO9029/2008D23392, on wider relations with the European Union’s eastern neighbours.

 

In essence

The EU, and the Netherlands, have significant political, strategic, economic, security and energy interests in the countries bordering the EU to the east (namely Ukraine, Belarus, Moldova, Georgia, Armenia, and Azerbaijan). Also relevant to note is that four of those countries are members of the Netherlands’ constituency in the IMF and the World Bank. That means that the Netherlands has a particular responsibility to support the transition process in those countries.

 

The EU’s pursuit of increased cooperation with its eastern neighbours through the ‘Eastern Partnership’ offers opportunities and instruments to support the transformation process in those countries and guide it in the right direction. The Netherlands and the EU have an interest in stable neighbours whose social structure and legislation increasingly converge with those of the EU. That is also in the interests of those neighbouring countries themselves.

 

The Netherlands wishes to make an active contribution to the transformation and modernisation of these countries so that the region can develop into an area of security, prosperity and freedom based on shared European values. The Netherlands takes the existing frameworks (in particular financial frameworks) and parameters, and the fact that the EU does not offer the prospect of accession, as the starting point for developing increased cooperation with the Union’s eastern neighbours. The Eastern Partnership is not a gateway to membership. Increased cooperation will, in the Dutch government’s view, always need to be differentiated country by country, according to progress made and based on conditionality. This in itself is a political process.

 

Introduction

In your letter of 19 December 2008 you asked to be informed about the government’s objectives in regard to wider relations with the EU’s eastern neighbours, in terms of policy and content (in the economics, security, energy and migration fields) as well as politically/geopoliticaly. You asked for attention to be given both to the interrelationship between the various regional cooperation fora and to EU relations with Russia.

 

As previously stated during the policy debate with your House about the European Neighbourhood Policy on 9 October 2008, the government considers the intensification of relations with the EU’s eastern neighbours to be important and therefore welcomes the Eastern Partnership initiative. We informed you of the Dutch government’s view on EU relations with Russia in the policy debate with your House on 10 April 2008. We would also refer to our letter of 13 October 2008, responding to the Advisory Council on International Affairs (AIV) report Cooperation between the European Union and Russia: a Matter of Mutual Interest. The present letter concentrates mainly on the other countries bordering the EU to the east, namely Ukraine, Belarus, Moldova, Georgia, Armenia and Azerbaijan. Although the term is not strictly correct geographically, those countries will be referred to hereinafter as the ‘eastern neighbours’ of the EU.

 

In July 2005 the Advisory Council on International Affairs (AIV), at the government’s request, issued an advisory report on future EU policy with regard to its eastern neighbours after the accession of ten Central and Eastern European countries. Events in the past year, in particular the war in Georgia, the gas crisis between Ukraine and Russia and the global economic crisis, combined with the European Union’s efforts to intensify relations with its eastern neighbours under the planned Eastern Partnership, have revived political interest in the EU’s relations with its eastern neighbours. This prompted the government to ask the AIV to publish a concise update to its 2005 advisory report. The AIV issued that report recently (a copy is appended to this letter) and it was taken into account when the government considered the issue of wider relations with the EU’s eastern neighbours. This letter also constitutes the government’s response to that updated report.

 

In the coming years the Eastern Partnership will form the framework for the development of relations between the European Union and its eastern neighbours. Compared with the framework hitherto – the European Neighbourhood Policy (ENP) – the Eastern Partnership offers closer contractual relations (including association agreements), the prospect of a deep free trade area and a multilateral framework for promotion of cooperation among the partner countries. In essence, the Eastern Partnership is not a structure but a process, which will differ according to the development of each country concerned. The Partnership is intended to give fresh impetus to the transformation process, so that the region can develop into an area of security, freedom and prosperity. This is ultimately in the interests of the EU as a whole, including the Netherlands. Many of the countries in question are still struggling with major problems as regards democratisation, good governance, the rule of law, transparency and development of a free market. As relations with the EU intensify further, such problems could give rise to a clash with the norms and values for which the EU stands.

 

We will specify in this letter what the Dutch government wishes to achieve through increased cooperation between the European Union and its eastern neighbours through the Eastern Partnership. First we will outline the context and background to the transformation process in the eastern neighbours and the EU’s role in that process, then we will discuss the Dutch government’s objectives for intensified cooperation with the eastern neighbours in a number of specific aspects and policy areas.

 

Background

The EU’s eastern neighbours have the potential to become an area of security, freedom and prosperity, thanks to their natural resources, well-educated populations, and a large, although often ageing, industrial base. For the Netherlands and for the EU as a whole, stable and prosperous neighbours represent a large and attractive market, safe and protected external EU borders, a barrier against people trafficking and illegal migration, a partner in international peace operations and in non-proliferation, and a stable and reliable energy supply. Moreover, successful transformation could have a beneficial effect on other countries in the region, such as Russia and the Central Asian Republics.

 

Great progress has been made by the eastern neighbours since 1991, with the exception of Belarus. The human rights situation has generally improved and democratic systems have been adopted, although they have not put down sustainable roots in every case. All of the countries have acceded to the OSCE and the Council of Europe (apart from Belarus), thereby assuming an obligation to respect human rights and establish a pluralistic democratic system. The fact that there are still problems in complying with that obligation does not detract from its value.

 

Economic reforms have been implemented, in many cases with support from the EU, the European Bank for Reconstruction and Development (EBRD) and the World Bank. These have laid the foundations for a functioning market economy, which has facilitated the emergence of a middle class. Partly because of such reforms, these countries have experienced strong economic growth over the past years, putting them among the strongest of the emerging markets, with annual growth figures (until recently) of between 5 and 10%.

 

The EU is playing an increasingly prominent role in the transition process: as a trading partner, investor, donor and exemplar. For most of the eastern neighbours, the EU has now become their main trading partner and investor. The transition process receives financial support and technical assistance under the European Neighbourhood Policy (ENP). As a result, the eastern neighbours are all seeking, to a greater or lesser extent, closer ties with the EU. Some, namely Moldova, Ukraine and Georgia, aim in the longer term to become EU members. Cooperation with NATO, which some members (Ukraine and Georgia) aspire to join, is also having a transformative effect.

 

The transformation process in the region is a rocky road. All the countries in question are still struggling with problems in areas such as independence of the judiciary, corruption, property law and property ownership, competition policy, institutional capacity, bureaucracy and over-regulation. In some countries we detect a return to old practices and a curtailment of fundamental freedoms (such as freedom of the media) and democratic rights. The political, economic and social heritage of the Tsarist and Soviet periods still causes the countries difficulties in this transition process.

 

The global economic crisis has now brought the rapid growth of recent years to a halt. It is not yet possible to say what long-term effects the economic crisis will have on the eastern neighbours. What is, however, clear is that they are vulnerable due to relatively weak institutions, imperfect corporate governance, a lack of transparency and an unstable financial sector and are therefore probably less able to cope with the effects of the crisis than the EU. In view of the major interests of and investments by European financial institutions and businesses in the eastern neighbours, an economic crisis in those countries could also have direct consequences for the economies in Europe. It is therefore in both their and our interests to help them cope with the effects of the economic crisis. Increased cooperation will also help to expand market access to and free trade with these countries. This could provide a counterbalance to calls for protectionist measures and protection of markets, which are quite often heard at times of crisis.

 

Other developments in the past year have also led us to reflect on our relations with the EU’s eastern neighbours. Russia’s military action in Georgia in August 2008 showed that Russia regards its closest neighbours as being located within its exclusive sphere of influence. This fact could be a threat to the security of the region. The Russia-Ukraine gas conflict at the start of the year shows the susceptibility of our energy supply to political instability in the region, while the global economic crisis, which is also causing great problems to the eastern neighbours, shows both the importance and the risks of interdependence.

 

Government’s objectives for further development of relations with the eastern neighbours

 

Importance of successful transition (rule of law, good governance and modernisation)

The Netherlands’ and the EU’s interests are served by successful transition in the eastern neighbours because we have political, economic, security and energy interests in the region. Preconditions for such transition are, first of all, the development of the rule of law and good governance. There is a risk that if the reform process stagnates the EU’s eastern neighbours will end up in a negative spiral of political instability, crime, violent conflict, corruption and economic decline. If that were to happen the Netherlands and the other EU member states would immediately feel  the effects in terms of crime (especially organised crime relating to the trafficking and smuggling of people and drugs), reduced security on our eastern borders, the loss of markets, interruptions in energy supplies and an increase in migration. The Netherlands has therefore committed itself to the modernisation of these countries. That commitment is manifested in bilateral support (the Matra programme, constituency support, support in developing the judiciary, police and criminal justice system), development assistance in a number of countries, support for activities engaged in by business (such as the support given under the Emerging Markets Cooperation Programme), the strengthening of bilateral relations, and representation of the interests of the EU’s eastern neighbours at international financial institutions (an example of the latter being cooperation within the constituency).

 

The government believes that increased cooperation between the EU and its eastern neighbours is the right way to contribute to successful transformation and modernisation. Increased cooperation will also contribute to those countries’ ability to withstand the effects of the global economic crisis, which is essential to stable economic development – both in the eastern neighbours and in the EU as a whole. More cooperation, more contact at all levels and targeted support are necessary to re-energise the reform process. It is therefore essential for the Netherlands to remain constructively engaged in shaping the Eastern Partnership, in order to steer the cooperation process and manage expectations of the Eastern Partnership on both sides. This will require intensive dialogue and a willingness to assist those countries and their peoples in areas that are of vital importance to them and us.

 

Human rights

Human rights figure prominently in Dutch foreign policy, and this obviously applies equally to policy towards the EU’s eastern neighbours. Many improvements could be made in these countries in the human rights field, especially in regard to freedom of the media, civil society and the rights of sexual minorities. In the past few years, partly in response to Dutch pressure, the issue of human rights has regularly been on the agenda at the various permanent partnership councils between the EU and its eastern neighbours. Over the coming years the Netherlands will continue to press for attention to be given to human rights in relations between the EU and its eastern neighbours – including in the context of the Eastern Partnership – and for strict application of the conditionality principle: further intensification of cooperation with the EU must depend on progress in the human rights field.

 

Where necessary, violations of human rights are raised with the authorities concerned via diplomatic channels (either bilaterally or through the EU). In particular cases the EU may also issue common statements expressing concern about human rights abuses. The OSCE Representative on Freedom of the Media also plays an important role in highlighting violations of media freedom. The Netherlands monitors the human rights situation in the countries in question by, for example, regular reports from our missions, and actively supports the deployment of available instruments and channels (bilateral or multilateral) to discuss human rights abuses with the authorities concerned.

 

The Netherlands regards the Council of Europe as ideally suited to influence and improve the human rights situation in the EU’s eastern neighbours. Human rights are one of the Council of Europe’s three core tasks and it is engaged in many activities in that field in the countries in question, excepting Belarus. It also closely monitors the human rights situation in those countries. Also within the Council of Europe’s ambit, the European Court of Human Rights is a further important safeguard for the protection of human rights in the EU’s eastern neighbours.

 

In regard to human rights, the Netherlands attaches great importance to the human dimension of the OSCE as part of the integrated approach to security. Fulfilment of many of the obligations that the OSCE has assumed, such as observation of elections, remains of great importance to the EU and the Netherlands. The Netherlands is fully behind the mandate of the ODIHR (Office for Democratic Institutions and Human Rights) at a time when the ODIHR’s independence is being disputed by an increased number of the OSCE’s participating states. As well as the ODIHR, the Netherlands also attaches great importance within the human dimension to the role of the High Commissioner on National Minorities (HCNM). The HCNM has highlighted, among other matters, the treatment of national minorities in Ukraine and the southern Caucasus.

 

The human rights situation in Belarus (and elsewhere) remains a cause for concern. The Netherlands’ view is that Belarus must take significant steps over the coming months on the matters mentioned in the conclusions of the European Council of 13 October 2008 (freedom of the press, a media law, an electoral law, human rights and democratisation) if it is to be eligible for full inclusion in the Eastern Partnership. The taking of such steps is also a necessary precondition for the removal of sanctions against Belarus.

 

Various human rights activities and human rights NGOs in the region are supported by the Dutch Human Rights Fund in countries that are not Dutch development cooperation partner countries or to which an exit strategy applies. This year new resources from this Fund will be spent on activities in Armenia and Azerbaijan. The Human Rights Fund’s spending on activities in Belarus will be increased, partly to support an independent radio station. As regards Ukraine, where no human rights activities have so far been undertaken with support from the Human Rights Fund, the government will examine how greater active support can be provided to human rights activities in the coming years. In Moldova, which is a development partner country, support is currently provided to good governance programmes via the World Bank. In view of the fact that the development relationship with Moldova will be wound down in the coming years, consideration could be given to support for human rights activities and programmes in the context of widening relations.

 

Strategic aspects

For historical reasons Russia has great political, military, economic and cultural influence in the region. The more the countries concerned align themselves with Europe, the more risk there is of a clash with the Russian aim of an exclusive ’droit de regard’ in the region. The war in Georgia in August 2008 and the gas crisis between Russia and Ukraine at the start of this year are manifestations of that risk. It is important to persuade Russia that the intensification of relations with the EU’s eastern neighbours is not directed against it or against Russian interests in the region. Nevertheless, Moscow cannot claim an exclusive sphere of influence in the region: we do not want a return to a divided Europe. In a globalising world with intertwined interests and interdependence there is no place for such power politics. 

 

It is important that the eastern neighbours themselves find a balance between going their own way and their historical relationship with Russia. However, the Netherlands considers it an immutable principle that countries must themselves be able to decide what alliances and partnerships they ultimately wish to be part of. The countries in question cannot be seen solely through the prism of their relations with Russia.

 

The EU’s eastern neighbours are also (directly or indirectly) neighbours of Russia. It goes without saying that history has left deep marks on the relations between those countries and Russia. On the one hand this leads to strained relations – the result of the political and military influence that Russia still has in the region. On the other hand there are still strong cultural and economic ties – for many countries, Russia is their main trading partner. No matter how difficult it may be, the EU’s eastern neighbours must find a balance between going their own way and their historical relationship with Russia. Europe must assist the EU’s eastern neighbours in this as much as possible and, in the words of US Vice President Biden, encourage them to ‘press the reset button’ in their relations with Russia.

 

On that point the government shares the opinion of the AIV that it would be undesirable for intensification of our relations with the eastern neighbours to adversely affect our relations with Russia. As the AIV rightly states, we must not allow the relationship with Russia to be of lesser quality or importance than that with the EU’s eastern neighbours. Nor can the involvement of Russia in the Eastern Partnership be a substitute for an autonomous EU-Russia policy, as the AIV rightly notes. The relationship with Russia is too much sui generis for that, and – put simply – too important to Europe.

 

Security aspects

 

General

One important objective of the Netherlands in regard to the eastern neighbours is to achieve peace, security and stability. That is not only an end in itself but also necessary to be able to further promote the transformation process in those countries. The Netherlands seeks to make a substantial contribution to this goal, bilaterally and in the EU, OSCE, NATO and UN. It focuses on conflict management (EU, OSCE and UN missions) and modernisation and reform of the defence sectors (EU and NATO). The goals of these organisations must also be seen in relation to one another.

 

The threat to security and stability in the EU’s eastern neighbours stems mainly from internal vulnerabilities. There is as yet a lack of solid democratic, judicial, economic and defence structures. Moreover, political, economic and defence reforms are thwarted by internal territorial conflicts, such as those in Moldova (Transdniestria) and Georgia (Abkhazia and South Ossetia). There are also external threats, as became apparent this summer when Russia invaded Georgia. A further example is the conflict between Azerbaijan and Armenia (Nagorno-Karabach).

 

The increasing involvement of, in particular, the EU, OSCE and NATO in the transformation of this region boosts stability; the Eastern Partnership fits in with that. The Netherlands believes that, in addition to developing the Eastern Partnership, the EU, OSCE and NATO, together with the US and Russia, must take steps to contribute constructively to resolving the conflicts in the region. Apart from guaranteeing external security in regard to the eastern neighbours it is also important to enhance the internal security of these countries. The Justice and Home Affairs external relations framework  (including police, justice, Customs, border surveillance and law enforcement) is of great importance in that regard.

 

CFSP/ESDP

The EU, through the Common Foreign and Security Policy (CFSP) and the European Security and Defence Policy (ESDP), is engaged in conflict management in its eastern neighbours (in particular Moldova and the Caucasus) by, for example, developing missions on the border of Moldova/Ukraine (EU Border Assistance Mission) and in Georgia (EU Monitoring Mission), in close collaboration with the UN mission in Georgia (UNOMIG). In Moldova/Ukraine the mission concentrates on border surveillance, especially in the separated region of Transdniestria, to combat smuggling. The mission in Georgia is concerned with monitoring compliance with the ceasefire agreement between Georgia and Russia. The EU has also appointed Special Representatives for Georgia, Moldova and the southern Caucasus with the aim of contributing to conflict management, thereby giving a political profile to EU involvement in the region. Where necessary and possible, the government will continue to shoulder its responsibilities and contribute to these missions.

 

The EU also undertakes various activities with Ukraine within the European Security and Defence Policy, aimed at dialogue on defence reforms and training of defence staff. Ukraine contributes as a third country to the staff of the EU Police Mission in Bosnia-Herzegovina, making it the only one of the EU’s eastern neighbours that collaborates with the EU in this way. The government will continue to encourage contributions to EU missions by the EU’s eastern neighbours. This not only enhances further cooperation with the EU and promotes mutual interests in the region but also contributes to the further development of the EU’s military and civil capabilities. The form that such contributions by the eastern neighbours take will depend on the nature of the mission and the added value of the contribution.

 

OSCE

The Dutch government attaches value to the OSCE as a forum for dialogue between all the states of Europe, including the EU’s eastern neighbours, about security, democracy and human rights in Europe. Various OSCE field operations (offices and observer missions) contribute in a practical way to the promotion of stability and to the development of democracy and the rule of law in the region. The field offices in Minsk, Baku, Yerevan and Kiev, for example, actively contribute to conflict prevention and stability in the region by their focus on respect for human rights, development of democracy and the rule of law, and good governance. In addition, an OSCE observer mission has been active in Moldova since 1993, promoting a peaceful resolution of the conflict in Transdniestria. Although the OSCE mission in Georgia closed on 31 December 2008, the OSCE is still active there with around 20 military observers and is involved in the Geneva talks. This is how the OSCE contributes to stability in the eastern neighbours. The Dutch government regards the OSCE’s presence on the ground as having great benefits and supports it both politically and operationally (by seconding Dutch staff).

 

NATO

The Netherlands also supports the further deepening of relations between NATO and Europe’s eastern neighbours. NATO has a comprehensive network of partners and, through the Partnership for Peace (PfP), is engaged in practical cooperation with several of the EU’s eastern neighbours. The PfP offers a tailored programme that aims to bring about defence reforms in the partner country in question. NATO is also involved in cooperation and dialogue with Georgia and Ukraine in the NATO-Georgia Commission (NGC) and the NATO-Ukraine Commission (NUC), where the progress of reforms in those two countries is discussed. Although the meeting of foreign ministers in December 2008 established that neither country is yet ready for a Membership Action Plan (generally regarded as the gateway to NATO membership), it was decided to step up dialogue with the NGC and NUC on the basis of Annual National Programmes (ANPs). The modalities of these ANPs are currently being worked out. Finally, many of the partner countries make a valuable contribution to NATO operations. Ukraine in particular is active in Afghanistan, Iraq, Kosovo and elsewhere.

 

Economic relations

The Netherlands recognises that, in a globalising world, the EU needs to maintain and develop good economic relations with the Union’s eastern neighbours. More investment and trade are therefore desirable. Growth in trade with the EU will mainly supplement EU production capacity; imports from the neighbouring countries are not very competitive with the EU. The gas and oil producing and transit countries are of increasing significance to the EU, and therefore to the Netherlands.

 

In regard to further economic integration the government proposes that we aim for deep and comprehensive free trade areas with the eastern partners, which can grow into an economic community in the European Neighbourhood area. The proposal to enter into a ‘deep and comprehensive FTA’ (DCFTA) is welcomed by the Netherlands, with a number of reservations. What is feasible in terms of the scope of the agreements is still being studied. The free trade areas will need to cover practically all trade, including the energy sector, and to aim for the maximum amount of liberalisation. The rate of such liberalisation will depend on the level of development of the economy of each country.

 

In the Netherlands’ opinion there is much to be gained by eliminating indirect trade barriers, such as customs controls, administrative barriers and veterinary and phytosanitary barriers. For this to happen it is not absolutely essential for the eastern partners to integrate into the internal market at this stage, or to be working towards free trade agreements.

 

Future free trade agreements must build on the criteria set by the WTO, of which most of the EU’s eastern neighbours (with the exception of Azerbaijan and Belarus) are now members. Further analysis is required of the possible adverse effects of such agreements on the relationship with Russia. In this regard, the government agrees with the AIV that economic integration with the eastern neighbours must not lead to an undesired shifting of trade flows (trade diversion) to the detriment of trading links with Russia, resulting from the fact that Russia is not yet a member of the WTO. On the other hand, economic integration with the eastern neighbours cannot continue to be dependent on Russia’s progress, or lack of it, towards accession to the WTO.

 

The current trading relations with the eastern neighbours, with the exception of Moldova, are based on the EU’s unilateral Generalised System of Preferences (GSP). That System allows those countries to pay lower customs duty on exports to the EU. As the countries in the Caucasus have ratified and implemented 27 fundamental conventions on human rights, labour rights, the environment and good governance they even enjoy the more favourable GSP+ arrangement, under which many goods are admitted to the market free of customs duty. Belarus’s preferences under the GSP have been withdrawn because the country is in breach of a fundamental ILO convention. Good governance and sustainability are central to the GSP. The Netherlands sets great store by compliance with these standards and wishes to continue to do so in its future economic relations with the EU’s eastern neighbours. The Union has granted Moldova unilateral trade preferences.

 

As regards bilateral economic relations with the countries in question, Ukraine is of particular importance to the Netherlands. It is a potentially important partner because of its size, strategic location, agricultural potential and relatively well-educated population. Until the onset of the economic crisis it was considered a growth market situated in close geographical proximity to the EU (and to the Netherlands). Moreover, the Netherlands is one of the biggest investors in Ukraine. All this offered, and possibly will offer again in time, opportunities for Dutch business, which is why both the Ministry of Economic Affairs and the Ministry of Agriculture, Nature and Food Quality have designated Ukraine one of their priority countries. On the other hand, poor-quality, non-transparent laws and regulations coupled with severe corruption create a poor investment climate and throw up barriers to Dutch business.

 

The other countries (Belarus, Moldova, Georgia, Armenia and Azerbaijan) represent relatively few opportunities for Dutch business, although a democratic Belarus could become an attractive trading partner in time. Azerbaijan’s importance is mainly in the area of energy.

 

The effects of the global economic crisis on the eastern neighbours cause the government great concern. Although the situation obviously differs from country to country, there is a decline in industrial production, exports and economic development in virtually all the countries concerned, combined with a fall in the value of local currencies which undermines the purchasing power of large sections of the population. This situation is aggravated by weak political control, inadequate administrative capacity and lack of transparency. It is becoming increasingly difficult for governments and companies in the EU’s eastern neighbours to meet their international payment obligations. Because the rapid economic growth over the past decade in those countries was largely financed by loans from European financial institutions, those institutions will be directly affected by the payment problems of their debtors in those countries. Through intensified cooperation, targeted support for the reform process, institutional strengthening and further trade liberalisation the EU can contribute to improving the resilience of the Union’s eastern neighbours in times of economic crisis. There is also an important role here for non-EU institutions, such as the IMF and EBRD.

 

Energy security

The Union’s eastern neighbours are production and transit countries for gas and oil from Russia and the Caspian region to the EU. The recent gas crisis showed how vulnerable the supply of gas from Russia via Ukraine is. The EU would like to reduce that vulnerability by, among other means, diversifying the supply routes and suppliers. Additional gas pipelines, such as Nabucco and Nord Stream, are of great significance in that regard. The Union’s eastern neighbours in the Caucasus – Azerbaijan and Georgia – are of strategic importance for the creation of a Southern Corridor. The same applies to the supply of oil from Central Asia and the Caucasus. The EU will therefore need to permanently strengthen its relations with these countries.

 

However, diversification of suppliers and supply routes will be a protracted process. The EU must be mindful of the fact that countries such as Ukraine and Moldova will remain crucial transit countries for European gas supplies for a long time to come and it is therefore of great importance for those countries to be tied more closely to the EU in regard to energy supply security and for the investment climate in those countries to improve. An important step in that regard will be the accession of Moldova and Ukraine to the Energy Community, which is currently under negotiation. The object of the Energy Community is to create an internal market in energy between the European Union and its eastern neighbours. These countries are faced with the challenge of harmonising their energy legislation with the EU’s. Further development of the Energy Community is therefore also important for the security of the EU’s energy supply.

 

At EU level, in the second Strategic Energy Review on energy supply security, attention is being drawn to development of the Eastern Partnership and the importance of energy cooperation. As regards the Eastern Partnership, consideration should therefore be given to the extent to which, in the energy field, the links that already exist in the Energy Community can be built on further.

 

Mobility, movement of persons and migration

For the EU’s eastern neighbours, the free movement of persons is an important element in their relations with the European Union. In principle, increasing mobility is a positive development, provided it can be managed and made immune to fraud. Greater mobility of businesspeople, more exchanges between students, artists, scientists and others, and more contacts at political and official level will, of course, contribute to prosperity and stability – not only in the eastern neighbours but also in the EU. Further intensification of cooperation between the European Union and its eastern neighbours can be expected to lead to an increase in the movement of persons and in mobility from those countries to the EU. The consequences of this are already visible: one-third of all third-country residents in the Union are from the Union’s eastern and southeastern neighbours. It is therefore important to steer the process effectively. That will require proper attention to be given to action to counter illegal migration, human trafficking and migrant smuggling, especially as these countries are significant not only as countries of origin but also – and in some case particularly – as transit countries.  The number of third-country immigrants from the Union’s eastern neighbours residing legally in the Netherlands is actually relatively small. In this connection the government endorses in principle the AIV’s assertion that well-thought-out measures to strengthen contacts between social groups is of major importance to the dissemination of the norms and values that apply in the EU.

 

One of the long-term aims of the Eastern Partnership is visa liberalisation, under strict conditions and on a step-by-step basis. The first step is ‘visa facilitation’, a new instrument to simplify on a case-by-case basis the issue of short-term visas to certain categories of third-country nationals. The EU has now made visa facilitation agreements with eight countries, including Russia, Ukraine and Moldova, and the European Commission has been mandated to negotiate such an agreement with Georgia. The conclusion of a visa facilitation agreement goes hand in hand with the conclusion of a return and readmission agreement, so that aliens not in the EU legally can be returned more easily. Negotiations are currently in progress with Russia and Ukraine about the implementing protocols for these agreements.

 

The Netherlands has a cautious attitude to the expansion of visa facilitation because there is as yet little experience with this new instrument. It could lead to unrealistic expectations in the countries concerned. We need to wait and see the results of implementing the return and readmission agreements which came into force at the same time. A further reason for the Dutch government’s caution is that the reduced prices of visas mean that the fees collected no longer cover the cost of handling visa applications; the government believes in the principle that the fees charged should cover the costs of visa processing. It does, however, share the AIV’s opinion that the matter cannot be narrowed down to the issue of how visa facilitation is funded. The government therefore wishes to gauge the results of existing visa facilitation agreements before new ones are concluded. In the government’s opinion, any steps in the visa liberalisation process must be based solely on the level of progress made.

 

The Eastern Partnership provides for the conclusion of ‘Mobility and Security Pacts’ between the EU and its eastern neighbours. The purpose of these agreements is to encourage the eastern neighbours to implement the necessary reforms in the justice and home affairs field, while also allowing residents of the countries concerned greater mobility to the countries of the EU. However, the government is not yet convinced of the added benefits of these ‘Mobility and Security Pacts’ compared with ‘mobility partnerships’. The latter already exist as an instrument and the government would first like to see the results of evaluation of such partnerships (see also below).

 

Cooperation between the EU and its eastern neighbours on the management of migration will be effected in practical terms through the existing instruments that are being developed as part of the EU’s ‘Global Approach to Migration’. As part of that Global Approach the EU has developed ‘mobility partnerships’ in order to manage migration. These give fuller practical effect to the cooperation between EU  member states in regard to migration from neighbouring countries, by means of an integrated approach to justice, development policy and foreign policy, based on voluntary participation by member states. A number of EU states (the Netherlands is not one of them) have now entered into a pilot mobility partnership with Moldova and discussions about such a partnership are also in progress with Georgia. The pilot mobility partnerships will be evaluated next June and, depending on the results, further mobility partnerships – which the Netherlands could join – may also be concluded with the EU’s other eastern neighbours. The Netherlands is also a participant in the Black Sea Economic Cooperation platform established by Romania, which aims to combat illegal migration, enhance border control and prevent migrant smuggling.

 

Dutch objectives in regard to this region will relate mainly to capacity building for migration management, combating of migrant smuggling and human trafficking, support for the rule of law, discussion of the visa overstayers problem, and the return of those not staying legally – preferably by concluding return and readmission agreements. The Netherlands is cautious about expanding the current mobility opportunities (labour migration). The circumstances and needs of the Dutch labour market will always be the crucial factor determining the Netherlands’ policy on migration from the EU’s eastern neighbours.

 

Bilateral relations

The Netherlands has maintained close relations with the EU’s eastern neighbours since they became independent and has always supported their transition. It has supported the development of civil society through its Matra (social transformation) programme, making the Netherlands one of the largest donors in the region. Partly in response to the above-mentioned 2005 AIV advisory report it was decided to open the Matra programme to Armenia, Georgia and Moldova from 2006 onwards. Funding has been provided for Matra projects in Ukraine and Belarus since well before then. In the case of small projects, contributions are made direct to local civil society organisations. Larger project concentrate on funding transformation-related activities that encourage long-term cooperation between Dutch and local civil society organisations. The Netherlands is also an active participant in the EU Twinning Programme, under which the EU links government organisations from an EU member state with sister organisations in a candidate member state or one of the Union’s eastern neighbours. The Netherlands’ Food and Consumer Product Safety Authority, for example, is helping to improve food quality and food safety in the fishing industry in Azerbaijan.

 

The Netherlands maintains a development cooperation relationship with some of the countries in the region, namely Moldova, Georgia and Armenia. However, in the coming years that relationship will either be phased out (in the case of Armenia) or widened (in the case of Georgia and Moldova), due to the fact that these countries have now achieved the status of middle-income countries. The Netherlands’ focus in those countries will be on the lack of progress in achieving the Millennium Development Goals and on broadening the countries’ development. This means that other types of cooperation, especially economic cooperation, will become more important, with the development relationship being gradually wound down.

 

Some of the countries in the region, namely Moldova, Ukraine, Armenia and Georgia, are members of the Dutch-led constituency in the World Bank and IMF, which means that the Dutch governor represents these countries on the Board of Governors of these important international financial institutions. This ‘constituency relationship’ gives a special dimension to bilateral relations with the countries concerned and gives our country a special responsibility, especially in times of economic crisis. There is intensive technical cooperation with the financial authorities in these countries as part of the constituency relationship. The relationship also has knock-on effects on bilateral cooperation with these countries in policy areas other than finance. The government is keen to ensure that the constituency relationship is maintained because it strengthens the Netherlands’ position in international financial institutions.

 

The Netherlands also has a good showing in the region in the economic field. Dutch business is very active in the region, especially in Ukraine, due partly to support from the Ministry of Economic Affairs and the Ministry of Agriculture, Nature and Food Quality (in the past through the Emerging Markets Cooperation Programme, for example). The Netherlands is one of the biggest trading partners and investors in the region. In the first 11 months of 2008 trade with the Union’s eastern neighbours was worth almost €4.2 billion, comprising €2.2 billion in exports and €2 billion in imports. This trade volume is expected to fall as a result of the economic crisis but in the longer term the eastern neighbours will remain an important growth market for Dutch business. However, implementation of the Emerging Markets Cooperation Programme (PSOM) in Ukraine is encountering difficulties because of capacity problems in that country. Bilateral discussions are currently under way with Ukraine about this. The old PSOM will be replaced by a new programme aimed at encouraging Dutch business investment in the region.

 

Bilateral environmental cooperation will continue. In the coming year, under the auspices of the Ministry of Housing, Spatial Planning and the Environment, an emerging markets programme of environmental contracts will be carried out which will be open to Ukraine and Georgia. The Ministry of Economic Affairs and the Ministry of Housing, Spatial Planning and the Environment are also working under the G2G programme on bilateral capacity building for governments in Georgia and Ukraine. Ukraine is an important area for the Ministry of Agriculture, Nature and Food Quality because of the good prospects that the country offers to agribusiness and because of Ukraine’s importance to biodiversity and ecosystems. The Netherlands has now been engaged in cooperation with the Russian Federation and the Ukraine on nature policy for over 15 years, as part of which related matters, such as water management and environment policy, are also discussed. The main focuses of Dutch cooperation are set out in the policy programme ‘Biodiversity works’ (2008) and are always set out in greater detail in a joint work programme agreed with the countries concerned. In addition to nature conservation, cooperation in the coming years will increasingly focus on making trade sustainable.

 

No prospect of accession

 

The issue of prospective membership

Although it is theoretically possible, given article 49 of the Treaty on European Union, that the Union’s eastern neighbours could apply for membership at any time, the government does not consider that there is any realistic prospect of EU membership for these countries at present (see also the memorandum on relations between the European Union and its neighbours of 1 July 2008, Parliamentary Paper 31 202, no. 29). The Communication by the Commission about the Eastern Partnership also does not make any statement about accession. The Eastern Partnership is not a gateway to membership. In the absence of any cause to make the prospect of accession tangible, the government does not share the AIV’s opinion that such a prospect should be specifically acknowledged. The Eastern Partnership offers an alternative to accession, while the European Neighbourhood Policy still offers very many as yet unexploited opportunities to deepen the relationship with the EU’s eastern neighbours in a meaningful way. Offering a prospect of accession would lead only to avoidable confusion and political disappointment.

 

The Netherlands supports the EU’s eastern neighbours in the economic, political and social reforms they are engaged in. Processes of this kind can be stimulated very well by institutional strengthening, trade liberalisation and technical assistance. The reform process itself has a strong positive effect, separate from a possible prospect of accession. The ENP and the Eastern Partnership offer excellent pathways and instruments to achieve these ends. The government is also encouraging the countries to align their legislation with the acquis communautaire, especially as regards the rules of the internal market. This will allow the economies of those countries to become more closely integrated with the EU economy. The Eastern Partnership also implies a task for the Union’s eastern neighbours themselves: aligning their norms, values and standards more with those of the EU will bring them closer to the EU. This is a political process in itself. Use of the various instruments of the Eastern Partnership will be differentiated by country: cooperation will only be intensified on the basis of conditionality.

 

New partnership status

The government would like to keep open the option of a new form of partnership status (partenariaat) (not to be confused with the partnership concept of the Eastern Partnership). As already stated in the letter of May 2008 (Parliamentary Paper 31202, no. 26), the government believes that the new partnership status could apply to the six eastern neighbours which, in view of their geographical location, could theoretically apply to accede to the EU but which, in reality, have no concrete prospect of membership.

 

The new form of partnership status could therefore be the outcome of the process for which the Eastern Partnership creates the framework and in the government’s opinion it could be realised within the framework of the European Neighbourhood Policy. After all, as we stated in the policy debate with your House on enlargement on 27 November 2008, the gap that initially existed between the new form of partnership status and the European Neighbourhood Policy has largely evaporated. In a sense the new partnership status could therefore be regarded as the stage at which the European Neighbourhood Policy achieves its maximum potential in relations with the neighbouring states. The government agrees with the AIV that the Eastern Partnership is not at odds with the concept of a new form of partnership status.

 

Financial frameworks

The European Union has allocated a total of over €3.2 billion from the EU budget to the Union’s eastern neighbours for the period 2007-2013. In its Communication the Commission also proposes setting aside an additional €600 million specifically for the Eastern Partnership in the period 2009-2013 (€250 million by means of redeployment within the European Neighbourhood Policy Instrument (ENPI) and €350 million in additional funds).

 

The ENPI provides for Community aid to Neighbourhood countries (both the Union’s eastern neighbours and the Mediterranean Partners). In distributing the ENPI funds the Commission applies an informal geographical criterion as well as criteria relating to prosperity, poverty, reform and population. One-third of the ENPI funds is available to the Union’s eastern neighbours and two-thirds to the Mediterranean partners. The availability of the additional funds (€600 million maximum) will change this ratio somewhat in favour of the Union’s eastern neighbours. The government has no objection to this. The Netherlands shares the AIV’s opinion that the east/south division could be looked at more closely at a suitable time in the future. The AIV suggests adoption of the new Financial Perspectives as an example of a suitable time. The government shares this view but wishes to point out that the geographical split of ENPI funds is not mandatory.

 

The government believes that geographical allocation criteria cannot stand alone and that the distribution of ENPI funds should be determined on the basis of objective criteria such as level of prosperity, size of population and UN Development Index, along with other allocation criteria set out in the ENPI Regulation – in addition, of course, to criteria relating to good governance, human rights and democratisation.

 

As regards the funding of the Eastern Partnership, the Netherlands is in favour of more funds for the eastern part of the European Neighbourhood in principle but believes that funding should be arranged via the normal budget procedures and within the existing EU budget framework (Financial Perspectives), preferably by redeployment within the ENPI budget and relevant External Policy budget categories. The government shares the AIV’s opinion that differentiation within the ENP, whether in financial or other terms, must be based on ‘conditionality’; in other words, intensification of cooperation must be made conditional on fulfilment of good governance criteria and progress in market reform – as is the case with, for example, loans from the EIB, the EBRD and, to a greater extent, the IMF. In the government’s opinion, this will enhance the outcomes of the ENP.

 

As European banks have been active in the region for many years with larger budgets than the European Union and have gained a lot of experience, the government advocates seeking synergy and cooperation with the EBRD, the European Investment Bank (EIB) and other international financial institutions. The Netherlands also takes the view that member states could step up their bilateral aid efforts in the region. There is a particular opportunity here for the new member states, which have an obligation to increase their ODA volumes in the coming years to 0.3% of their GDP by 2015. The new members states have a wealth of experience of political and economic transition processes, giving them a comparative advantage in carrying out development activities in the Union’s eastern neighbours. This would also be in line with the EU’s Code of Conduct on Complementarity and Division of Labour in Development Policy, which was agreed in 2007. 

           

Interrelationship between cooperation fora

The EU and the Union’s eastern neighbours cooperate in various fora. First is the European Neighbourhood Policy (ENP), which provides for the development of privileged bilateral relations between the European Union and its eastern and southern neighbours. The ENP has existed since 2003 and aims to bring about transformation and reform processes in these neighbouring countries, with the ultimate aim of creating a ring of prosperous and stable states around the Union.

 

In December 2008, at the request of the European Council of June 2008, the European Commission presented a Communication on the Eastern Partnership containing a proposal to strengthen relations with the six eastern neighbours,[1] as a counterpart to the Union for the Mediterranean. The government’s initial assessment of the Communication on the Eastern Partnership was sent to your House on 22 December 2008 (Parliamentary Paper 22112, no. 763). The Eastern Partnership will be launched during a summit of heads of state and government of the EU member states and eastern partners on 7 May. The government agrees with the AIV that the Union for the Mediterranean has not yet existed long enough to be able to extract meaningful lessons from it for the Eastern Partnership. The government does, however, believe that the structures for the Eastern Partnership should be as light as possible. 

 

The Eastern Partnership provides for the strengthening of bilateral relations by upgrading contractual relations, deeper economic integration, relaxation of controls on the movement of persons, increased cooperation on energy supply security, support for economic and social developments, and strengthening of regional cooperation by the establishment of a multilateral structure. As regards environmental cooperation, the Eastern Partnership offers additional benefits as a multilateral forum for cooperation on implementing multilateral agreements, including UN environment conventions relating, for example, to climate, waste, chemicals, water and air pollution, and environmental liability, to which the Netherlands and other EU member states are party. The Partnership could also provide opportunities for the involvement of NGOs, regional environmental centres and financial actors. To make the Eastern Partnership more visible a number of flagship projects will be carried out, including some in the environment field.

 

There is already cooperation at subregional level with a number of the Union’s eastern neighbours under the Black Sea Synergy and the Organisation of the Black Sea Economic Cooperation (BSEC). The Black Sea Synergy is concerned only with practical regional cooperation around the Black Sea and includes Russia and Turkey as participants, while the Eastern Partnership works towards economic integration and intensified cooperation with the EU based on conditionality. The government therefore sees no overlap or conflict between the Eastern Partnership and the Black Sea Synergy. Quite the opposite, in fact: they can only reinforce one another.

 

Conclusion

We hope that this letter answers your questions about the government’s objectives in regard to wider relations with the Union’s eastern neighbours. Because of the breadth of the subject, this letter has dealt with a large number of aspects of relations with those countries. Bringing all these aspects together and discussing them against the background of the transition process in the region and the EU’s aim of increasing cooperation with the countries concerned shows how they interrelate. In shaping the intensified cooperation with the Union’s eastern neighbours the government will be guided by the considerable political, strategic, economic, security and energy interests that the EU, and the Netherlands, have in the region, taking proper account of the established frameworks and parameters – i.e. financial frameworks and the fact that the EU cannot offer any prospect of accession to countries in the region. The government takes the view that intensification of cooperation can only take place step by step and must be based on conditionality. This in itself is a political process.

 

 

Maxime Verhagen                              Frans Timmermans

Minister of Foreign Affairs                    Minister for European Affairs

 

 

 

 

           

 

 

 



[1] Armenia, Azerbaijan, Georgia, Moldova and Ukraine. In the case of Belarus, full membership depends on how its relationship with the EU develops.

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