PURPOSE : to establish a European Neighbourhood Instrument for the period 2014-2020 following on from the European Neighbourhood and Partnership Instrument 2007-2013.

LEGISLATIVE ACT : Regulation (EU) no 232/2014 of the European Parliament and of the Council establishing a European Neighbourhood Instrument.

BACKGROUND : this Regulation forms part of the new Multiannual Financial Framework (MFF) 2014-2020 in the field of the Union’s external relations and cooperation with third countries. The relevant instruments are as follows:

· Financing instrument for development cooperation

· Partnership instrument for cooperation with third countries

· Instrument for Pre-accession Assistance (IPA II)

· this European Neighbourhood Instrument (ENI)

· Instrument for nuclear safety cooperation

· Instrument for Stability

· Financing instrument for the promotion of democracy and human rights worldwide

All the procedures applicable to the implementation of these financial instruments will be governed by a single Regulation, adopted at the same time.

CONTENT : the Regulation establishes a European Neighbourhood Instrument (ENI) with a view to advancing further towards an area of shared prosperity and good neighbourliness involving the Union and the partner listed in Annex I by developing a special relationship founded on cooperation, peace and security, mutual accountability and a shared commitment to the universal values of democracy, the rule of law and respect for human rights.

Human rights : the Union should promote the values of liberty, democracy, the universality and indivisibility of, and respect for, human rights and fundamental freedoms, and the principles of equality and the rule of law, on which it is founded,

Specific objectives : Union support should target in particular:

· strengthening policy cooperation;

· deep and sustainable democracy;

· achieving progressive economic integration and

· strengthening partnership through civil society.

These should be achieved through: (i) promotion of democracy; (ii) achieving progressive integration into the Union internal market and enhanced sectoral and cross-sectoral cooperation; (iii) creating conditions for the better organisation of legal migration and the fostering of well-managed mobility of people; (iv) supporting sustainable and inclusive development and reducing poverty; (v) promoting good neighbourly relations and preventing conflicts;(vi) enhancing sub-regional, regional and European Neighbourhood-wide collaboration.

Progress in these areas will be assessed on the basis of performance indicators specified in the Regulation.

Partner countries : Algeria, Armenia, Azerbaijan, Belarus, Egypt, Georgia, Israel, Jordan, Lebanon, Libya, The Republic of Moldova, Morocco, occupied Palestinian territory (oPt), Syria, Tunisia, Ukraine and Russia under cross-border cooperation, regional cooperation and cooperation on education under ERASMUS +.

Implementation and principle of differentiation : support shall be incentive-based and differentiated in form and amounts, taking into account certain elements listed in the Regulation, inter alia, reflecting the partner country's respect for democracy, absorption capacity and the potential impact of Union support and partnership with the Union, including the level of ambition for that partnership. Up to 10% of the financial envelope may be used to facilitate the implementation of the incentive-based approach. On the other hand, support may be reconsidered in the event of serious or persistent regression.

The incentive-based approach shall not apply to support to civil society , people-to-people contacts, including cooperation between local authorities, support for the improvement of human rights, or crisis-related support measures.

The incentive-based approach shall also be the subject of a regular exchange of views in the European Parliament and in the Council.

Implementation: measures will be implementation in accordance with the provisions of the horizontal Regulation on common rules and procedures for Instruments for financing external action.

Financial envelope : in accordance with the MFF, the financial envelope for the implementation of the Regulation shall be EUR 15 432 634 000 at current prices. Up to 5 % of the financial envelope shall be allocated to the cross-border cooperation programmes.

Furthermore, the promotion of the international dimension of higher education will receive an amount of EUR 1.68 billion from these financial instruments:

· the Development Cooperation Instrument

· the European Neighbourhood Instrument

· the Instrument for Pre-accession Assistance

· the Partnership Instrument.

Monitoring of progress : the progress of partner countries shall be regularly assessed, in particular by means of ENP progress reports which include trends as compared to previous years. Support may be reconsidered in the event of serious or persistent regression.

Implication of civil society : the objectives of this Regulation should be pursued with the appropriate involvement of external action partners, including civil society organisations and local authorities, in preparing, implementing and monitoring Union support, given the importance of their roles.

Coherence and donor coordination : in the implementation of this Regulation, coherence shall be ensured with all areas of the Union's external action as well as other relevant Union policies.

Programming and indicative allocation of funds : Union support under this Regulation shall be programmed through:

bilateral programmes covering Union support to one partner country; multi-country programmes which address challenges common to all or a number of partner countries; cross-border cooperation programmes addressing cooperation between one or more Member States, on the one hand, and one or more partner countries and/or the Russian Federation.

Specific measures are provides as regards the setting out the framework for cross-border cooperation.

Annexes : the Regulation includes an Annex setting out precisely the priorities for Union support under the Regulation and certain percentages as regards the allocation of funds.

Dialogue with the European Parliament : provisions have been laid down in a Commission declaration in which the Commission should inform the European Parliament of any actions carried out in the framework of the strategic dialogue.

Suspension of the assistance : a unilateral statement was made by the European Parliament on the suspension of assistance granted under the financial instruments. It states that financial instruments applicable to EU foreign policy do not contain any explicit reference to the possibility of suspending assistance in cases where a beneficiary country fails to observe the basic principles enunciated in the respective instrument. The European Parliament considers that any suspension of assistance under these instruments would modify the overall financial scheme agreed under the ordinary legislative procedure.

ENTRY INTO FORCE: 16.03.2014. The Regulation shall apply from 01.01.2014 to 31.12.2020.

DELEGATED ACTS: t he Commission may adopt delegated acts as regards the modification of the list of priorities for Union support under the Regulation (in particular following the publication of the mid-term review report which is due by 31 March 2018). The power to adopt delegated acts is conferred on the Commission for the duration of the programme. The European Parliament or the Council may object to a delegated act within a period of two months from the notification (this period may be extended by 2 months). If the European Parliament or the Council make objections, the delegated act shall not enter into force.

The European Parliament adopted by 616 votes to 50, with 12 abstentions, a legislative resolution on the proposal for a regulation of the European Parliament and of the Council on the Instrument establishing a European Neighbourhood Instrument (ENI II).

Parliament adopted its position at first reading under the ordinary legislative procedure. The amendments adopted in plenary are the result of a compromise negotiated between the European Parliament and the Council.

General objective: the objective of the ENI II should be to ensure shared prosperity and good neighbourliness involving the Union and the countries and territories listed in Annex I to this Regulation by developing a special relationship founded on cooperation, peace and security, mutual accountability and shared commitment to universal values of democracy, the rule of law and respect for human rights in accordance with the Treaty on European Union.

Union funding may also be used for the purpose of enabling Russia to participate in Cross-Border Cooperation and in regional cooperation with Union participation and in relevant multi-country programmes, including in cooperation on education, in particular student exchanges.

The Union should promote the values of democracy through dialogue and cooperation with third countries . Accordingly, funding under this Regulation should comply with these values and principles, as well as with the Union’s commitments under international law, taking into account relevant Union policies and positions.

Specific objectives: a series of new specific objectives have been added to the programme including:

fight against discrimination in all its forms; better organisation of legal migration and cross-border cooperation; combating social exclusion; promoting innovation; enhancing regional cooperation and good neighbourly relations .

Differentiation, incentive measures, performance indicators: progress made in these fields should be evaluated by means of indicators defined in the draft regulation. It is also specified that Union support provided to each partner country should be incentive-based and differentiated in form and amounts , reflecting the partner country’s commitment to and progress in respect to certain criteria such as building deep and sustainable democracy, absorption capacity for aid, capacity to cooperate with the European Union and the level of ambition in regard to the reforms under way.

The incentive-based approach shall not apply to support to civil society, people-to-people contacts, including cooperation between local authorities, support for the improvement of human rights, or crisis-related support measures. In the event of serious or persistent regression, such support may be increased.

The incentive-based approach under the future Regulation will be the subject of regular exchanges of views in the Council and in the European Parliament.

Follow-up of progress made and reconsideration of support: partner countries' progress shall be regularly assessed, notably by means of European Neighbourhood Policy progress reports which include trends as compared to previous years. Support may be reconsidered in the event of serious or persistent regression.

General framework of assistance: assistance under this Regulation should be provided in accordance with the European Neighbourhood Instrument (notably the Eastern Partnership and the Union for the Mediterranean) and also relevant European Parliament resolutions .

Impact of civil society: the objectives of this Regulation should be pursued with an appropriate involvement of external action partners, including civil society organisations, in preparing, implementing and monitoring Union support. The ENI should also support the strengthening of the capacity of civil society organisations to guarantee effective domestic accountability and local ownership, and to be full actors in the democratisation processes.

Implementation: provisions have been included to clarify the technical implementation of the ENI II in terms of its strategic planning and programming both for national and cross-border and macro-regional programmes.

Financial allocation: in accordance with the agreement on the Financial Framework, the financial allocation for the implementation of this Regulation for the period from 2014 to 2020 is set at EUR 15 432 634 000 . Up to 5% of this amount should be allocated to cross-border cooperation programmes.

Provision was made for an additional percentage of aid to encourage the incentive policy of the future regulation (in principle, an allocation of under 10% of the ENI budget for multi-country umbrella programmes to complement national financial allocations).

Part of the allocation would also be devoted to cross-border mobility.

Optimisation of resources: the Union should seek the most efficient use of available resources in order to optimise the impact of its external action. This should be achieved through coherence and complementarity between the Instruments for external action, as well as the creation of synergies between the ENI, other Instruments for external action and other policies of the Union. All programming documents should specify as far as possible the activities of other EU donors.

Delegated acts: in order to take account of changes in the enlargement policy framework or of significant developments in the beneficiary countries, the power to adopt acts in accordance with Article 290 on the Treaty of the Functioning of the European Union should be delegated to the Commission in respect of adapting and updating the thematic priorities for assistance listed in Annex II of the future Regulation . Following the publication of the Mid-term report and based upon the recommendations contained in the mid-term review report, the Commission shall adopt a delegated act amending Annex II to this Regulation by 31 March 2018 .

Annexes: the future Regulation should comprise 2 annexes:

Annex I lists the beneficiary countries of the ENI II: - Algeria, Armenia, Azerbaijan, Belarus, Egypt, Georgia, Israel, Jordan, Lebanon, Libya The Republic of Moldova, Morocco, occupied Palestinian territory (oPt), Syria, Tunisia, Ukraine. Annex II defines the priorities for Union support under this regulation including support at cross-border and multi-country levels.

It is stipulated that the financial allocations by category of programmes would be as follows:

Bilateral programming: up to 80%; Multi-country programmes: up to 35%; Cross-border cooperation: up to 5%.

It should be noted that the amended draft Regulation is accompanied by a series of joint, bilateral or unilateral statements from the EU institutions including:

a European Parliament statement on the suspension of assistance granted under the financial instruments for foreign policy, particularly in cases where a beneficiary country fails to observe the basic principles enunciated in the respective instrument and notably the principles of democracy. (It is stated that the European Parliament considers that any suspension of assistance under these instruments would modify the overall financial scheme agreed under the ordinary legislative procedure. As a co-legislator, the European Parliament is therefore entitled to fully exercise its prerogatives in that regard, if such a decision is to be taken). a Commission declaration on the use of implementing acts for the setting of the provisions for the implementation of certain rules in the European Neighbourhood Instrument and the IPA II ; a Commission declaration on the strategic dialogue with the European Parliament prior to its programming.

The Committee on Foreign Affairs adopted the report by Eduard KUKAN (EPP, SK) on the proposal for a regulation of the European Parliament and of the Council establishing a European Neighbourhood Instrument (ENI).

The committee recommended that the European Parliament’s position at first reading, following the ordinary legislative procedure, should amend the Commission proposal.

The main amendments were as follows:

General objective : the objective of the ENI II should be to ensure shared prosperity and good neighbourliness involving the Union and the countries and territories listed in Annex I to this Regulation by developing a special relationship founded on cooperation, peace and security, mutual accountability and shared commitment to universal values of democracy, the rule of law and respect for human rights in accordance with the Treaty on European Union.

Union funding may also be used for the purpose of enabling Russia to participate in Cross-Border Cooperation and in regional cooperation with Union participation and in relevant multi-country programmes, including in cooperation on education, in particular student exchanges.

The Union should promote the values of democracy through dialogue and cooperation with third countries . Accordingly, funding under this Regulation shall comply with these values and principles, as well as with the Union’s commitments under international law, taking into account relevant Union policies and positions.

Specific objectives : a series of new specific objectives have been added to the programme including:

the fight against discrimination in all its forms; the better organisation of legal migration and cross-border cooperation; the reduction of social exclusion; the promotion of innovation; the enhancement of regional cooperation and good neighbourly relations .

Differentiation, incentive measures, performance indicators : Union support provided to each partner country should be incentive-based and differentiated in form and amounts, taking into account all the elements listed below, reflecting the partner country’s commitment to and progress in building deep and sustainable democracy and absorption capacity and the potential impact of Union support.

The incentive-based approach shall not apply to support to civil society, people-to-people contacts, including cooperation between local authorities, support for the improvement of human rights, or crisis-related support measures. In the event of serious or persistent regression, such support may be increased.

The incentive-based approach under this Regulation will be the subject of regular exchanges of views in the Council and in the European Parliament.

Follow-up of progress made and reconsideration of support : partner countries' progress shall be regularly assessed, notably by means of European Neighbourhood Policy progress reports which include trends as compared to previous years. Support may be reconsidered in the event of serious or persistent regression.

General framework of assistance : assistance under this Regulation should be provided in accordance with the European Neighbourhood Instrument (notably the Eastern Partnership and the Union for the Mediterranean) and also relevant European Parliament resolutions .

Impact of civil society : the objectives of this Regulation should be pursued with an appropriate involvement of external action partners, including civil society organisations, in preparing, implementing and monitoring Union support. The ENI should also support the strengthening of the capacity of civil society organisations to guarantee effective domestic accountability and local ownership, and to be full actors in the democratisation processes.

Implementation : provisions have been included to clarify the technical implementation of the ENI II in terms of its strategic planning and programming.

Financial envelope : in accordance with the agreement on the Financial Framework, the financial envelope for the implementation of this Regulation for the period from 2014 to 2020 is set at EUR 15 432 634 000 . Up to 5% of this amount should be allocated to cross-border cooperation programmes.

It is also stated that the Union should seek the most efficient use of available resources in order to optimise the impact of its external action. This should be achieved through coherence and complementarity between Instruments for external action.

Delegated acts : in order to take account of changes in the enlargement policy framework or of significant developments in the beneficiary countries, the power to adopt acts in accordance with Article 290 on the Treaty of the Functioning of the European Union should be delegated to the Commission in respect of adapting and updating the thematic priorities for assistance listed in Annex II of the future Regulation . Following the publication of the Mid-term report and based upon the recommendations contained in the mid-term review report, the Commission shall adopt a delegated act amending Annex II to this Regulation by 31 March 2018 .

Annexes : the future Regulation should comprise of 2 annexes:

Annex I lists the beneficiary countries of the ENI II: - Algeria, Armenia, Azerbaijan, Belarus, Egypt, Georgia, Israel, Jordan, Lebanon, Libya The Republic of Moldova, Morocco, occupied Palestinian territory (oPt), Syria, Tunisia, Ukraine.

Annex II defines the priorities for Union support under this regulation including support at cross-border and multi-country levels.

It should be noted that the amended draft Regulation is accompanied by a series of joint, bilateral or unilateral statements from the EU institutions including:

a European Parliament statement on the suspension of assistance granted under the financial instruments for foreign policy, particularly in cases where a beneficiary country fails to observe the basic principles enunciated in the respective instrument and notably the principles of democracy. (It is stated that the European Parliament considers that any suspension of assistance under these instruments would modify the overall financial scheme agreed under the ordinary legislative procedure. As a co-legislator, the European Parliament is therefore entitled to fully exercise its prerogatives in that regard, if such a decision is to be taken). a Commission declaration on the use of implementing acts for the setting of the provisions for the implementation of certain rules in the European Neighbourhood Instrument and the IPA II ; a Commission declaration on the strategic dialogue with the European Parliament prior to its programming.

The Council adopted conclusions on the European Neighbourhood Policy package , taking stock of progress made regarding several political instruments in this field, such as the Eastern Partnership between the Union and its Eastern neighbours:

Armenia, Azerbaijan, Belarus, Georgia, Moldova, Ukraine, the Partnership for Democracy and Shared Prosperity and the Union for the Mediterranean with the countries of the Southern Mediterranean.

In its conclusion, the Council the Council welcomes the joint Communication of the High Representative for Foreign Affairs and Security Policy and the European Commission which reports on the substantial progress made in the delivery of the new European Neighbourhood Policy. It welcomes the good progress made in advancing the Partnership for Democracy and Shared Prosperity with the countries of the Southern Mediterranean and looks forward to the implementation of the Roadmap accompanying the joint Communication, in dialogue and cooperation with partners, also with the aim of developing synergies with the Union for the Mediterranean and other regional initiatives.

It also welcomes both the good progress made in the implementation of the Eastern Partnership.

PURPOSE: to establish a new European Neighbourhood Instrument 2014-2020 in the framework of the reform of the EU external action financial instruments and following on from the European Neighbourhood and Partnership Instrument 2007-2013.

PHILOSOPHY AND ACTION PLAN FOR EXTERNAL AID 2014-2020: what happens outside the borders of the EU can and does directly affect the prosperity and security of EU citizens. It is therefore in the interest of the EU to be actively engaged in influencing the world around us, including through the use of financial instruments. The Lisbon Treaty marks, in this regard, a new departure in the EU’s relations with the rest of the world.

The EU's engagement needs to be tailored to individual circumstances . Its partners range from development economies to the least developed countries in need of specific assistance from the EU.

In general, the overall objective for external action for the period 2014-2020 may be summarised as follows:

long-term commitment to establishing an area of stability, prosperity and democracy in its own neighbourhood; facilitating the EU's engagement with third countries on issues that are of global concern, such as climate change, environmental protection, irregular migration and regional instabilities, and allowing the EU to respond rapidly and effectively to natural and manmade disasters around the world.

A major rationalisation of the instruments took place in 2003 and has begun to deliver more effective results. The Commission does not consider that another major alteration of the legislative architecture is necessary for the next MFF period , although some improvements are being proposed and the overall investment is being stepped up.

The Commission proposes to allocate EUR 70 billion for the 2014-2020 period for external instruments broken down as follows:

Financing instrument for development cooperation Partnership instrument for cooperation with third countries Instrument for Pre-accession Assistance (IPA II) The present European Neighbourhood Instrument Instrument for nuclear safety cooperation Instrument for Stability Financing instrument for the promotion of democracy and human rights worldwide

In parallel and for the first time, the Commission proposes a single horizontal regulation establishing common rules and procedures for the implementation of the Union’s instruments for external action.

PROPOSED ACT: Regulation of the European Parliament and of the Council.

BACKGROUND: the European Neighbourhood Policy (ENP) was developed in 2004 and covers 16 partners to the East and South of the EU’s borders. Under the ENP the EU offers its neighbours a privileged

relationship, building upon a mutual commitment to values and principles such as democracy and human rights, the rule of law, good governance, market economy principles and sustainable development, including climate action. The policy also provides for political association and deeper economic integration, increased mobility and enhanced people-to-people contacts.

Arab Spring : changes to the EU’s relationship with its neighbours and developments since the ENP was set up have been analysed and assessed as part of the ENP Strategic Review. As a result, a new ENP vision has been developed as outlined in the Joint Communication of the High Representative of the EU for Foreign Affairs and Security Policy and the European Commission ’ A new response to a changing Neighbourhood ’. The new approach calls notably for greater support to partners committed to building democratic societies and undertaking reforms , in line with the “more for more” and "mutual accountability" principles, and provides the strategic policy framework for the EU relations with the neighbours.

Reform of the ENPI : although the ENPI has been widely recognized as a successful Instrument to accompany the EU’s policy towards its neighbours, the ENP policy review and other assessments, lessons learned and public consultations have all identified a number of issues to tackle in the future by adapting the Instrument to make the EU’s response even more effective, in particular:

application of the “more for more” principle; complexity and length of the programming process; scope of the Instrument; partly outdated implementation provisions and lack of coherence between the external instruments; Cross-Border Cooperation (CBC) provisions; linkages with internal instruments/policies; evolving relationship with Russia.

The future European Neighbourhood Instrument should be aligned to the new ENP vision and address the specific challenges and issues as identified above.

IMPACT ASSESSMENT: the impact assessment reviewed the following four options:

Option 0 : ‘No EU action’ . The EU stops providing financial support through a dedicated Instrument for Neighbourhood countries; Option 1 : ‘No change’ . Cooperation with the countries concerned remains strictly in the framework of the existing ENPI Regulation; Option 2 : ‘Adapting the current set-up’ . The future legislative proposal should be based on the current ENPI Regulation with a number of substantial amendments, responding to the new policy context and specific objectives. Under this Option there are a number of sub-options referring to: the differentiation principle; the programming process; scope of the Instrument and coherence between policy and assistance; Cross-Border Cooperation rules; implementation provision, notably to allow for greater flexibility; linkages with internal policies and instruments and geographic scope of the ENI. Option 3 : ‘Tabling a completely new Instrument’ with a different geographic scope and focussing on objectives broader than or different from those of the ENP.

Based on the analysis, Option 2 would have the highest potential to yield a positive impact and to adapt the current cooperation framework to the new policy context, ENP objectives and challenges identified through evaluations and lessons learned. This if therefore the preferred option .

LEGAL BASIS: Article 209(1) and Article 212(2) of the Treaty on the Functioning of the European Union (TFEU).

CONTENT: with this proposed Regulation, the Commission proposes to establish assistance to the partner countries listed below with the aim of establishing an area of prosperity and good neighbourliness at the EU’s borders.

Partner countries :

Algeria Armenia Azerbaijan Belarus Egypt Georgia Israel Jordan Lebanon Libya The Republic of Moldova Morocco occupied Palestinian territory (oPt) Syria Tunisia Ukraine as well as Russia in accordance with specific provisions.

Specific objectives of Union’s support : support under this Regulation shall promote enhanced political cooperation and progressive economic integration between the Union and the partner countries and,

in particular, the implementation of partnership and cooperation agreements, association agreements or other existing and future agreements, and jointly agreed action plans.

Union support should target in particular:

promoting human rights and fundamental freedoms, the rule of law, principles of equality, establishing deep and sustainable democracy, promoting good governance and developing a thriving civil society including social partners; achieving progressive integration into the Union internal market and enhanced sector and cross-sectoral co-operation including through legislative approximation and regulatory convergence towards Union and other relevant international standards, related institution building and investments, notably in interconnections; creating conditions for well managed mobility of people and promotion of people-to-people contacts; sustainable and inclusive development in all aspects, poverty reduction, including through private-sector development; promotion of internal economic, social and territorial cohesion, rural development, climate action and disaster resilience; promoting confidence building and other measures contributing to security and the prevention and settlement of conflicts; enhancing sub-regional, regional and Neighbourhood wide collaboration as well as Cross-Border Cooperation.

Union support may also be used in other areas when this is consistent with the overall objectives of the European Neighbourhood Policy.

The achievement of these objectives shall be measured using notably the relevant EU periodic reports on the implementation of the policy and the relevant indicators established by international organisations and other relevant bodies.

Framework strategy : the key elements of the proposal (as compared to the current set-up) and their rationale are the following:

a pply the principle of “more for more” and mutual accountability in line with the new vision of the ENP, notably through specific provisions on differentiation for financial allocations and for the programming process , as required; address the complexity and length of the programming process in order to streamline, shorten and better focus the process, especially for ENP partners that have jointly agreed with the EU strategic priorities in Action Plans or equivalent documents; streamline the scope of the Instrument , striking a balance between flexibility of the Instrument and focus on the policy objectives and key areas of cooperation; adapt the implementation provisions and improve coherence between the external instruments; improve the provisions on the Cross-Border Cooperation to facilitate effective and fast implementation of the programmes; promote closer links with EU internal instruments and policies, including by stepping up cooperation with the Commission at the programming stage and, where relevant, promote mechanisms to pool funds from internal and external headings of the EU budget; respond to the evolving relationship with Russia by amending provisions on Russia’s eligibility for ENI funding to reflect the specific status of Russia as an EU neighbour and strategic partner.

Strategic framework and indicative programming : the scope of the Instrument has been streamlined by bringing down the 29 thematic areas that feature in the current ENPI Regulation to six specific objectives. A new, simplified programming tool for most of the neighbouring countries (Single Support Framework) has been introduced. This new programming document will be shorter than the Strategy Papers

and Multiannual Indicative Programmes, will prevent duplication of information contained in the legal/political documents that underpin EU relations with its neighbours, and should help shorten the programming process, therefore reducing administrative costs.

The new article that allows funds from the ENI and the relevant internal Heading of the EU budget to be pooled with a single set of rules for measures addressing notably cross-border challenges will substantially improve efficiency and reduce the administrative costs of implementing such measures.

Simplified implementation : t o implement the new ENI Regulation, simplified and flexible procedures should lead to swifter adoption of implementing measures and swifter delivery of EU assistance, in particular in situations of crises or threats to democracy, the rule of law, human rights and fundamental freedoms, or natural or man-made disasters. Revision of the Financial Regulation, which has particularly substantial provisions on external action, will also help facilitate the participation of civil society organisations and small businesses in funding programmes. The Commission intends to implement this Regulation using the new flexible procedures provided for in the new Financial Regulation.

Furthermore additional simplification will also be achieved through the development of one horizontal framework regulation comprising all general and recurring provisions , providing for increased coherence between the external actions instruments.

Coherence and complementarity : in implementing this Regulation, coherence shall be ensured with other areas of the Union external action as well as other relevant Union policies. Other measures are provided to ensure donor coordination.

BUDGETARY IMPLICATIONS: the European Commission in its Communication of 29 June 2011 entitled “A Budget for Europe 2020” proposed allocating to the ENI EUR 18 182 300 000 (current prices) for the period 2014-2020.

DELEGATED ACTS: delegated powers to adopt acts in accordance with Article 290 of the Treaty of the Functioning of the European Union should be conferred to the Commission for adopting the specific implementing measures required for the Cross-Border Cooperation mechanisms established in Title III of this Regulation. The Commission, when preparing and drawing-up delegated acts, should further ensure a simultaneous, timely and appropriate transmission of relevant documents to the European Parliament and Council.

In order to ensure uniform conditions for the implementation of this Regulation, implementing powers should be conferred on the Commission. Taking into account the nature of those implementing acts, in particular their policy orientation nature or their financial implications, the examination procedure should in principle be used for their adoption, except for measures of a small financial scale.

PURPOSE: to establish a new European Neighbourhood Instrument 2014-2020 in the framework of the reform of the EU external action financial instruments and following on from the European Neighbourhood and Partnership Instrument 2007-2013.

PHILOSOPHY AND ACTION PLAN FOR EXTERNAL AID 2014-2020: what happens outside the borders of the EU can and does directly affect the prosperity and security of EU citizens. It is therefore in the interest of the EU to be actively engaged in influencing the world around us, including through the use of financial instruments. The Lisbon Treaty marks, in this regard, a new departure in the EU’s relations with the rest of the world.

The EU's engagement needs to be tailored to individual circumstances . Its partners range from development economies to the least developed countries in need of specific assistance from the EU.

In general, the overall objective for external action for the period 2014-2020 may be summarised as follows:

long-term commitment to establishing an area of stability, prosperity and democracy in its own neighbourhood; facilitating the EU's engagement with third countries on issues that are of global concern, such as climate change, environmental protection, irregular migration and regional instabilities, and allowing the EU to respond rapidly and effectively to natural and manmade disasters around the world.

A major rationalisation of the instruments took place in 2003 and has begun to deliver more effective results. The Commission does not consider that another major alteration of the legislative architecture is necessary for the next MFF period , although some improvements are being proposed and the overall investment is being stepped up.

The Commission proposes to allocate EUR 70 billion for the 2014-2020 period for external instruments broken down as follows:

Financing instrument for development cooperation Partnership instrument for cooperation with third countries Instrument for Pre-accession Assistance (IPA II) The present European Neighbourhood Instrument Instrument for nuclear safety cooperation Instrument for Stability Financing instrument for the promotion of democracy and human rights worldwide

In parallel and for the first time, the Commission proposes a single horizontal regulation establishing common rules and procedures for the implementation of the Union’s instruments for external action.

PROPOSED ACT: Regulation of the European Parliament and of the Council.

BACKGROUND: the European Neighbourhood Policy (ENP) was developed in 2004 and covers 16 partners to the East and South of the EU’s borders. Under the ENP the EU offers its neighbours a privileged

relationship, building upon a mutual commitment to values and principles such as democracy and human rights, the rule of law, good governance, market economy principles and sustainable development, including climate action. The policy also provides for political association and deeper economic integration, increased mobility and enhanced people-to-people contacts.

Arab Spring : changes to the EU’s relationship with its neighbours and developments since the ENP was set up have been analysed and assessed as part of the ENP Strategic Review. As a result, a new ENP vision has been developed as outlined in the Joint Communication of the High Representative of the EU for Foreign Affairs and Security Policy and the European Commission ’ A new response to a changing Neighbourhood ’. The new approach calls notably for greater support to partners committed to building democratic societies and undertaking reforms , in line with the “more for more” and "mutual accountability" principles, and provides the strategic policy framework for the EU relations with the neighbours.

Reform of the ENPI : although the ENPI has been widely recognized as a successful Instrument to accompany the EU’s policy towards its neighbours, the ENP policy review and other assessments, lessons learned and public consultations have all identified a number of issues to tackle in the future by adapting the Instrument to make the EU’s response even more effective, in particular:

application of the “more for more” principle; complexity and length of the programming process; scope of the Instrument; partly outdated implementation provisions and lack of coherence between the external instruments; Cross-Border Cooperation (CBC) provisions; linkages with internal instruments/policies; evolving relationship with Russia.

The future European Neighbourhood Instrument should be aligned to the new ENP vision and address the specific challenges and issues as identified above.

IMPACT ASSESSMENT: the impact assessment reviewed the following four options:

Option 0 : ‘No EU action’ . The EU stops providing financial support through a dedicated Instrument for Neighbourhood countries; Option 1 : ‘No change’ . Cooperation with the countries concerned remains strictly in the framework of the existing ENPI Regulation; Option 2 : ‘Adapting the current set-up’ . The future legislative proposal should be based on the current ENPI Regulation with a number of substantial amendments, responding to the new policy context and specific objectives. Under this Option there are a number of sub-options referring to: the differentiation principle; the programming process; scope of the Instrument and coherence between policy and assistance; Cross-Border Cooperation rules; implementation provision, notably to allow for greater flexibility; linkages with internal policies and instruments and geographic scope of the ENI. Option 3 : ‘Tabling a completely new Instrument’ with a different geographic scope and focussing on objectives broader than or different from those of the ENP.

Based on the analysis, Option 2 would have the highest potential to yield a positive impact and to adapt the current cooperation framework to the new policy context, ENP objectives and challenges identified through evaluations and lessons learned. This if therefore the preferred option .

LEGAL BASIS: Article 209(1) and Article 212(2) of the Treaty on the Functioning of the European Union (TFEU).

CONTENT: with this proposed Regulation, the Commission proposes to establish assistance to the partner countries listed below with the aim of establishing an area of prosperity and good neighbourliness at the EU’s borders.

Partner countries :

Algeria Armenia Azerbaijan Belarus Egypt Georgia Israel Jordan Lebanon Libya The Republic of Moldova Morocco occupied Palestinian territory (oPt) Syria Tunisia Ukraine as well as Russia in accordance with specific provisions.

Specific objectives of Union’s support : support under this Regulation shall promote enhanced political cooperation and progressive economic integration between the Union and the partner countries and,

in particular, the implementation of partnership and cooperation agreements, association agreements or other existing and future agreements, and jointly agreed action plans.

Union support should target in particular:

promoting human rights and fundamental freedoms, the rule of law, principles of equality, establishing deep and sustainable democracy, promoting good governance and developing a thriving civil society including social partners; achieving progressive integration into the Union internal market and enhanced sector and cross-sectoral co-operation including through legislative approximation and regulatory convergence towards Union and other relevant international standards, related institution building and investments, notably in interconnections; creating conditions for well managed mobility of people and promotion of people-to-people contacts; sustainable and inclusive development in all aspects, poverty reduction, including through private-sector development; promotion of internal economic, social and territorial cohesion, rural development, climate action and disaster resilience; promoting confidence building and other measures contributing to security and the prevention and settlement of conflicts; enhancing sub-regional, regional and Neighbourhood wide collaboration as well as Cross-Border Cooperation.

Union support may also be used in other areas when this is consistent with the overall objectives of the European Neighbourhood Policy.

The achievement of these objectives shall be measured using notably the relevant EU periodic reports on the implementation of the policy and the relevant indicators established by international organisations and other relevant bodies.

Framework strategy : the key elements of the proposal (as compared to the current set-up) and their rationale are the following:

a pply the principle of “more for more” and mutual accountability in line with the new vision of the ENP, notably through specific provisions on differentiation for financial allocations and for the programming process , as required; address the complexity and length of the programming process in order to streamline, shorten and better focus the process, especially for ENP partners that have jointly agreed with the EU strategic priorities in Action Plans or equivalent documents; streamline the scope of the Instrument , striking a balance between flexibility of the Instrument and focus on the policy objectives and key areas of cooperation; adapt the implementation provisions and improve coherence between the external instruments; improve the provisions on the Cross-Border Cooperation to facilitate effective and fast implementation of the programmes; promote closer links with EU internal instruments and policies, including by stepping up cooperation with the Commission at the programming stage and, where relevant, promote mechanisms to pool funds from internal and external headings of the EU budget; respond to the evolving relationship with Russia by amending provisions on Russia’s eligibility for ENI funding to reflect the specific status of Russia as an EU neighbour and strategic partner.

Strategic framework and indicative programming : the scope of the Instrument has been streamlined by bringing down the 29 thematic areas that feature in the current ENPI Regulation to six specific objectives. A new, simplified programming tool for most of the neighbouring countries (Single Support Framework) has been introduced. This new programming document will be shorter than the Strategy Papers

and Multiannual Indicative Programmes, will prevent duplication of information contained in the legal/political documents that underpin EU relations with its neighbours, and should help shorten the programming process, therefore reducing administrative costs.

The new article that allows funds from the ENI and the relevant internal Heading of the EU budget to be pooled with a single set of rules for measures addressing notably cross-border challenges will substantially improve efficiency and reduce the administrative costs of implementing such measures.

Simplified implementation : t o implement the new ENI Regulation, simplified and flexible procedures should lead to swifter adoption of implementing measures and swifter delivery of EU assistance, in particular in situations of crises or threats to democracy, the rule of law, human rights and fundamental freedoms, or natural or man-made disasters. Revision of the Financial Regulation, which has particularly substantial provisions on external action, will also help facilitate the participation of civil society organisations and small businesses in funding programmes. The Commission intends to implement this Regulation using the new flexible procedures provided for in the new Financial Regulation.

Furthermore additional simplification will also be achieved through the development of one horizontal framework regulation comprising all general and recurring provisions , providing for increased coherence between the external actions instruments.

Coherence and complementarity : in implementing this Regulation, coherence shall be ensured with other areas of the Union external action as well as other relevant Union policies. Other measures are provided to ensure donor coordination.

BUDGETARY IMPLICATIONS: the European Commission in its Communication of 29 June 2011 entitled “A Budget for Europe 2020” proposed allocating to the ENI EUR 18 182 300 000 (current prices) for the period 2014-2020.

DELEGATED ACTS: delegated powers to adopt acts in accordance with Article 290 of the Treaty of the Functioning of the European Union should be conferred to the Commission for adopting the specific implementing measures required for the Cross-Border Cooperation mechanisms established in Title III of this Regulation. The Commission, when preparing and drawing-up delegated acts, should further ensure a simultaneous, timely and appropriate transmission of relevant documents to the European Parliament and Council.

In order to ensure uniform conditions for the implementation of this Regulation, implementing powers should be conferred on the Commission. Taking into account the nature of those implementing acts, in particular their policy orientation nature or their financial implications, the examination procedure should in principle be used for their adoption, except for measures of a small financial scale.