ENPI Monitoring in Azerbaijan Report September 2009, Baku 1 This report is based on the ENPI evaluation studies for Azerbaijan, Armenia, Georgia, Moldova and Ukraine. It was prepared by experts from the Azerbaijan National Committee for European Integration (ANCEI): Dr. Inqilab Ahmedov, Dr. Leyla Aliyeva and Samir Isayev, with funding from the Open Society Institute’s Local Government and Public Services Reform Initiative (LGI Budapest). The authors of the report do not reflect the opinion of the Open Society Institute or the Local Government and Public Service Reform Initiative Open Society Institute (OSI) Azerbaijan National Committee Local Government and Public Services for European Integration Reform Initiative (LGI) 2 CONTENTS ABBREVIATIONS .......................................................................................................................................... 4 INTRODUCTION............................................................................................................................................ 5 1. ENP AND ENPI ...................................................................................................................................... 7 1.1. THE POLITICAL SITUATION IN AZERBAIJAN: THE CURSE OF BLACK GOLD .................................................... 7 1.2. ENPI IN BRIEF ......................................................................................................................................... 8 1.3. A NEW APPROACH TO AID: FROM TACIS TO ENPI .................................................................................. 11 1.3.1 Budget support – promoting national ownership and conditionality ................................................ 11 1.3.2. Technical Assistance ..................................................................................................................... 13 1.4. ENPI NEW MECHANISMS....................................................................................................................... 14 1.4.1. The Governance Facility: Rewarding Good Governance ................................................................ 14 1.4.2. Promoting investment through the Neighborhood Investment Facility (NIF) ................................... 14 1.5. NEW PRIORITIES: A STRATEGY FOR AZERBAIJAN .................................................................................... 15 1.5.1. The National Program ................................................................................................................... 16 1.5.2. Regional Programs: Complementing national strategies ................................................................ 18 Eastern Regional Program ................................................................................................................................... 18 Interregional Program ......................................................................................................................................... 19 1.5.3. Cross-border Cooperation ............................................................................................................. 21 2. PROGRAMMING, IMPLEMENTING, MONITORING AND EVALUATING ENPI IN AZERBAIJAN ........................................................................................................................................................................ 22 2.1. TWO LEVELS: PROGRAMMING AND OPERATIONAL ............................................................................ 22 2.2. PROGRAMMING LEVEL .................................................................................................................... 23 Strategy Paper Preparation .................................................................................................................... 24 Indicative Program Preparation ....................................................................................................................... 26 Annual Action Program Preparation ................................................................................................................ 28 Program-level Monitoring and Evaluation: An Incomplete System........................................................... 30 NSA Involvement: A Long Way to Go ...................................................................................................... 30 2.3. OPERATIONAL LEVEL: TRANSLATING POLICY INTO ACTIONS .................................................................... 30 Budget support ....................................................................................................................................... 31 Technical assistance projects .................................................................................................................. 34 3. WHAT ROLE FOR CIVIL SOCIETY? .................................................................................................... 39 3.1. PUBLIC SECTOR MANAGEMENT IN AZERBAIJAN...................................................................................... 39 3.1.1 The government decision-making mechanism .................................................................................. 39 3.1. OPPORTUNITIES FOR PARTICIPATION....................................................................................................... 40 3.1.1. Civil Society in Azerbaijan............................................................................................................. 40 3.1.2. CSO Monitoring of EU-Azerbaijan Relations ................................................................................. 41 3.1.3 Legal provisions and entry points for CSO participation ................................................................. 41 4. CONCLUSIONS AND RECOMMENDATIONS...................................................................................... 51 POLICY RECOMMENDATIONS TO THE EUROPEAN COMMISSION ....................................................................... 51 POLICY RECOMMENDATIONS TO THE GOVERNMENT OF AZERBAIJAN .............................................................. 52 POLICY RECOMMENDATIONS FOR CIVIL SOCIETY ........................................................................................... 52 APPENDIX 1: PRESIDENTIAL DECREE №388 ........................................................................................ 54 APPENDIX 2. PRESIDENTIAL INSTRUCTION ....................................................................................... 55 APPENDIX 3. WORKING GROUPS UNDER STATE COMMISSION ON EUROPEAN INTEGRATION ........................................................................................................................................................................ 57 APPENDIX 4. LIST OF INTERVIEWED PARTICIPANTS ....................................................................... 62 APPENDIX 5. LIST OF INTERVIEWEES AAP 2007 BUDGET SUPPORT TO ENERGY SECTOR (BSES) ............................................................................................................................................................ 63 3 ABBREVIATIONS AAP Annual Action Program AP Action Plan (also: ENP Action Plan or EU-Azerbaijan ENP Action Plan) CBC Cross-border Cooperation CoE Council of Europe CS Civil Society CSP Country Strategy Paper DG AİDCO EC EuropeAid Co-operation Office DG RELEX Directorate-General for External Relations EBRD European Bank for Reconstruction and Development EECCA Eastern Europe, Caucasus and Central Asia EİB European Investment Bank EIDHR European Initiative for Democracy and Human Rights ENP European Neighborhood Policy ENPI European Neighborhood and Partnership Instrument EOM EU Election Observation Missions ERDF European Regional Development Fund EU European Union GF Governance Facility İFİ International Finance Institutions MDG Millennium Development Goals MoU Memorandum of Understanding NGO Non-governmental organization NİF Neighborhood Investment Fund NİP National Indicative Program NPP Neighborhood and Partnership Program OECD Organization for Economic Cooperation and Development OECD DAC OECD Development Assistance Committee OSCE Organization for Security and Cooperation in Europe PCA Partnership and Cooperation Agreement RIP Regional Indicative Program RSP Regional Strategy Paper SME Small and medium enterprises TACIS Technical Assistance for the Commonwealth of Independent States TAIEX Technical Assistance Information Exchange Unit TAİEX Technical Assistance and Information Exchange UNDP United Nations Development Program UNECE United Nations Economic Commission for Europe WTO World Trade Organization 4 INTRODUCTION An agreement on cooperation between the EU and Azerbaijan was first signed in 1996 in the legal form of a Partnership and Cooperation Agreement that came into force in 1999. Since 1991, the EU as a whole has provided aid worth some €400 million to Azerbaijan, through the TACIS program with its national and regional components, the TACIS Exceptional Assistance Program (EXAP), the Food Security Program (FSP), rehabilitation activities in the post-war period, thematic budget support under the European Initiative on Democracy and Human Rights (EIDHR), and humanitarian assistance through ECHO. In 2003, a new era began between the European Union and Azerbaijan. By including Azerbaijan in its “neighborhood,” the EU has established new forms of cooperation. With the adoption of the European Neighborhood Policy by the European Commission that same year, National Action Plans were signed to form the