ArDO: Yes we want Lebanon to be the Switzerland of the East and Beirut the Paris of the East


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Political Background

In June 2000, President Hafez al-Assad died and was succeeded by his son, Dr. Bashar Al-Assad. Dr. Bashar has since consolidated his position while at the same time cautiously pursuing an agenda for economic reform, which includes closer ties with Europe.

The background to this shift in orientation towards Europe lies in the progressive deterioration of Syria’s strategic situation in the region, which stems, in particular, from the demise of the Soviet Union in the early 1990's. This development has continued in military terms, with the defence co-operation between Turkey and Israel and the deteriorating Israeli-Arab conflict, and the occupation of Iraq by the US-led coalition forces as the latest significant developments. Meanwhile, Bashar Al-Assad has tried to counter this by improving Syria's political and economic relations with most of its neighbours, including Turkey and, until recently, Saddam Hussein's Iraq. He has also maintained good relations with the Gulf States and Iran as well as Syria's military presence in Lebanon.

In the conflict with Israel, the young President has continued Hafez Al-Assad’s line, linking any peace deal to a global resolution of the Arab-Israeli conflict, i.e. to the Palestinian issue, and to a return of all of the occupied Golan to Syria according to international law. Syria has expressed its support for the Saudi peace initiative, which was adopted by the Arab League Summit in Beirut in March 2002. In the aftermath of the Iraq war, Syria has been under strong pressure to end its support for rejectionist Palestinian groups, and has taken some measures to end their activities in the country (by closing their offices).

Syria is a member of the UN Security Council for the period 2002-2003, and has played a role representing the Arab countries. On Iraq, Syria voted in favour of UN Security Council Resolution 1441 and, together with the Arab League, worked to persuade Iraq to co-operate fully with the UN weapons inspections. Damascus strongly opposed the invasion of Iraq, and as Baghdad fell, was accused of harbouring leaders of the Iraqi regime as well as Iraqi weapons of mass destruction. The border to Syria has since been closed off by the Syrians as well as US-led coalition forces.

The human rights situation in Syria has not developed as positively as was hoped when Bashar Al-Assad took over in 2000. In the first six months of his Presidency, a number of civil society organisations started to hold meetings to discuss Syria's political future, but the authorities put an end to these activities in early 2001. The EU has protested against the arrests and convictions of a number of leading opposition figures that followed.

See also:

·         EU Declaration  on the release of Riad Al Turk in Syria 21/11/02

·         EU Declaration on Human Rights in Syria 08/08/02

Barcelona Process

The development of closer relations with the EU has been a rather slow process, mainly due to the difficulties that the Syrian side has seen in engaging in the reforms necessary in the context of the Barcelona Process. While Syria participated in this process from the start, at the Barcelona Conference in 1995 and in the Barcelona Declaration, the Framework Convention that is needed in order to start implementing co-operation under the MEDA programme was only signed in 2000. Negotiations for an Association Agreement, the second main pillar of the EU-Mediterranean partnership, started in 1997, but little progress was made in the first four years. In December 2001, a government reshuffle took place, as President Bashar Al-Assad put in reform-minded ministers at most technical and sectoral ministries. Since then, progress in the negotiations and in related reforms has been given a higher priority.

More about:

·         The Euro-Mediterranean Partnership - Barcelona declaration


In the last three years, the Syrian economy has benefited from a number of positive developments. The rise in oil prices, and a rebound in agricultural output after the widespread drought in 1999 led to growth rates of 2.5% in 2000, 3.5% in 2001, and 3.3% in 2002. Syrian trade with Iraq also flourished in the last years before the fall of the Saddam regime. These factors will now vanish and it will be difficult to maintain growth rates at the same level. In fact, growth rates would need to be sustained at significantly higher levels (between 5% and 7%) to lift standards of living and to provide jobs for a new generation entering the labour market. The population growth rate has fallen over the past few years, but still stood at 2.5% in 2001.

Syria has recently started a cautious and gradual opening of its centrally-planned economy to market-oriented reforms. Structural measures aimed at economic reform have been announced in support of the private sector in order to create a legislative and regulatory environment more favourable to investments. The most important are the revision of Law No.10 (1991) allowing better terms for foreign investment, the new banking law, which will allow the establishment of private banks with some foreign ownership, and the simplification of the exchange rate mechanisms.

Negotiations for an Association Agreement

Syria formally confirmed its intention to start negotiations on an Association Agreement with the EU in October 1997. While Association Agreements with all other Mediterranean partner countries have now been signed, negotiations with Damascus continue. The latest round of talks took place in Damascus in March 2003. Negotiations have now entered a phase of concrete agreement on the text of the different chapters (Political dialogue, Justice/Home Affairs, Economic co-operation) and the first offers on dismantling customs tariffs are being discussed, along with texts on provisions regulating trade, investments and market regulation.

In October 2001, Syria also formally applied for membership of the World Trade Organisation. Although the accession process in Geneva currently seems to be blocked, Syria’s application to join the world trade body should facilitate the Association Agreement negotiations as the same economic reforms are largely needed both for WTO accession and for the Association Agreement with the EU.

EU-Syria Trade Relations

Syrian exports increased substantially from 1999 to 2001, mainly due to the rise in oil prices. The current account balance was positive at $ 201 million and petroleum products accounted for almost two thirds of exports in 2001 (63 %). The export performance of other sectors is relatively weak (mainly concentrated on textiles and agriculture), but exports of textiles have increased recently. Imports consist mainly of industrial products (notably equipment) and agri-food products.

Apart from Algeria, Syria is the only Mediterranean partner that regularly records a trade surplus with the EU: in 2002, it stood at close to 100%. The EU accounts for 27% of Syrian imports and 60% of Syrian exports (2002). The principal EU exports to Syria are machinery, transport equipment and chemical products. The principal EU imports are energy products, (the EU buys 62% of all Syrian oil products), textiles and clothing, and agricultural products.

Syrian cotton yarn exports to the EU increased tenfold from 1 % in 1997 to over 30 000 tonnes or 10% of total EU cotton yarn imports in 2000. As a result of this dramatic increase, the EU introduced a surveillance regime in 2001. Exports have since stabilised at this level. The surveillance regime has been prolonged until May 2004.

More about:

·         EU Bilateral trade relations

EU-Syrian Co-operation

Co-operation between the EU and Syria dates back to 1977, with the signature of the Co-operation Agreement. This provides for free access to EU markets for Syrian industrial products. It has also provided the framework for assistance to Syria through the Financial Protocols over 20 years. A number of important programmes were launched under the Protocols, most of which were "classical" co-operation projects for the provision of basic infrastructure and services. Other Protocol projects marked the start of EU co-operation in the field of economic reform. In particular, the Syrian European Business Centre has been successfully providing Syria with efficient services for private companies since 1996. This project was prolonged in 2000 for another four years and more recently, it was agreed to continue the activities of the Business Centre beyond 2004 as part of an Industrial Modernisation Programme.

As mentioned above, Syria was late in accepting the terms of co-operation under the MEDA regulation, launched after the start of the Barcelona Process in 1995, and only signed a Framework Agreement in 2000. Since then, however, some reform-oriented projects focusing on economic and administrative reform in both the private and public sector, have been launched.

In December 2001, the Commission adopted the Syria Country Strategy Paper for 2002-2006. The CSP, together with a National Indicative Programme, which covers the period 2002-2004, were approved by the Syrian authorities in May 2002.

The programme concentrates on supporting economic reform in Syria through: institution building, industrial modernisation, human resources development, and trade enhancement. The indicative envelope for these three years is 93 million euro.

The sequence of introducing the elements that make up the National Indicative Programme were recently modified. In early 2002, the Health Sector Support Programme ($30 million), originally programmed for 2001, was launched. It aims to modernise and rationalise the health care system. It also aims to offset the short-term impact of economic reform on disadvantaged groups in poor urban and rural areas. The allocation of € 4 million for the Tempus Programme (co-operation in higher education), to be effective from the third quarter of 2003, was also made in 2002. During 2003, the pilot phase of the Industrial Modernisation Programme (€ 6m) will be launched. The remaining four programmes (Modernisation of Municipality Administration, Vocational Education and Training, Banking Sector, and Modernisation of the Ministry of Finance) will all be launched in 2004.

More about:

·         The EU's relations with Syria- Country Strategy Paper 2002-2006

Basic Data

Official Name Syrian Arab Republic
Head of State Dr.Bashar al-Assad
Prime Minister Mohammed Mustafa Miro
Minister of Foreign Affairs Faruk as-Shara’
Next Presidential Elections 2007
Population (2002) 18.6 million
Population growth 2.7 %
Human Development Index (2003) 110 (out of 175 countries)
Basic Economic data


GDP (2002) 21 billion $
GDP growth (2002) 3.3 %
GDP/capita (2001) 1220 $
Inflation (2002) 1 %
Unemployment 11 –20 % (estimate)
Current Account Balance (2002) 4.5 % of GDP
Syrian Exports to EU (2002) € 4033 million (60 % of total exports)
Syrian imports from EU (2002) € 2090 million (27 % of total imports)
Oil as % of Syrian Exports 72 %
Total external debt $ 21.9 billion
Debt service/GDP 4.4 %
Total EC assistance per year € 28.8 million
Total EU assistance in 2003 € 65.89 million

Sources: EIU, Eurostat, EC Delegation   







Latest update: March 2004

Latest news:
Latest newsEU Statement at EU-Lebanon Co-operation Council 24 February 2004 02/04/04
Latest newsThe Euro-Mediterranean Partnership - Commission releases EUR 28 million of risk capital facility for Mediterranean countries 23/02/04

Recent developments

Almost one year after entry into force of the EU-Lebanon Interim Agreement, Lebanese and the EU ministers came together in Brussels on 24 February 2004 for the 3rd Co-operation Council, under the chairmanship of the Irish Presidency. It was the first such meeting since the signature of the Association Agreement on 17 June 2002. Lebanon’s economy and trade minister Marwan Hamadeh set the seal on stepping up the bilateral relationship by reaffirming in the presence of the Irish and Netherlands foreign ministers and External Relations Commissioner Patten his country’s full commitment to the Interim Agreement, to the Barcelona Process, to deepening Lebanon’s integration with the EU, and to advancing on promised Paris II economic reforms. The Presidency reassured Lebanon in its EU Statement delivered at the meeting that enlargement to 25 members would have no negative consequences for its partner, that it opened new markets for Lebanon, and that Lebanon was to be brought into the European Neighbourhood Policy during 2004, as the Association Agreement neared full ratification. Previous Co-operation Council meetings had been held in 1980 and 1995.

The entry into force of the EU-Lebanon Interim Agreement on trade and commercial issues on 1 March 2003 formally triggered the start of the 12 year transition period to free trade, one of the fundamental planks to the Euro-Mediterranean Partnership. Ratification of the EU-Lebanon Association Agreement is proceeding steadily. First to vote on the treaty was the Lebanese Parliament on 2 December 2002. The European Parliament followed suite on 15 January 2003 with a vote in favour of the Agreement. It also passed an accompanying Resolution on political relations between the Union and Lebanon. To date, five Member States have ratified the Association Agreement.

The signing of the two agreements, as well as the exchange of letters on co-operation in counter-terrorism, marks a significant advance in relations between the EU and Lebanon. Chris Patten, Commissioner for External Relations, visited Lebanon in February 2003 for discussions on the Middle East situation and Iraq, as well as practical aspects of applying the Association Agreement, economic reforms in Lebanon following the Paris II donor conference, Palestinian refugees, and the situation prevailing along the southern border with Israel.

The first formal contacts on implementation issues of the Agreement took place on 24-25 November 2003 during the 2nd Economic Dialogue between the Commission and Lebanon’s Minister Hamadeh.

The signature of the accord with Lebanon means that with eight of the nine non-candidate members of the Euro-Mediterranean Partnership now linked to the Union by an Association Agreement, the objectives set out in the 1995 Barcelona Conference are almost achieved. The two parties opted for a rapid start to the 12 year transition period leading to free trade. With the entry into force of the Interim Agreement in March 2003 the concessions on trade in Lebanese agricultural and processed agricultural exports immediate effect. Tariff reductions on EU exports to Lebanon will begin in March 2008.

In response to enlargement in May 2004, the European Commission adopted the “Wider Europe – Neighbourhood: A New Framework for Relations with our Eastern and Southern Neighbours” Communication of 11 March 2003 (European Neighbourhood Policy), setting out a new framework for relations with the Southern Mediterranean, Russia and the Western Newly Independent States (NIS) – countries who do not currently have a perspective of membership but who will soon find themselves sharing a border with the Union.

The Communication proposes that, over the coming decade, the EU should aim to work in partnership to develop a zone of prosperity and a friendly neighbourhood – a ‘ring of friends’ - with whom the EU enjoys close, peaceful and co-operative relations. The objectives for the future new Neighbourhood Instrument include inter alia: promoting sustainable economic and social development in the border area; working together to address common challenges, in fields such as environment, public health, and the prevention of and fight against organised crime; ensuring efficient and secure borders and promoting local, “people-to-people” type actions.

While offering the same opportunities and requiring the same standards from each of the neighbouring countries, the approach applied for each partner country will be both different and progressive. Prime Minister Hariri signalled in a letter to President Prodi his encouragement and firm support for participation in the European Neighbourhood initiative.

Political Situation

Prime Minister Rafik Hariri, who won convincingly in the September 2000 parliamentary elections and headed a government with economic reform a high priority, emerged from a government reshuffle in April 2003 with a new council of ministers, faced with the continued challenge of revitalising the economy and reducing the crippling public debt. The economic reform agenda has been affected by the weakness of political consensus on issues of deregulation, privatisation and tax reform. The successful outcome of the Paris II donor conference in November 2002, aimed at restructuring the public debt at lower interest rates, resulted in €4.4 billion in loan, loan guarantee and grant pledges. This provided an initial boost to Lebanon’s economic prospects, and significantly lowered domestic interest rates and loan maturity. Domestic banks responded with their own contribution to easing the debt burden, which by December 2003 had reached some €26 billion.

Confessionalism is central to Lebanon’s political system, with a careful balance maintained between the 18 different sectarian groups in government, parliament and in the civil administration. The 1989 Ta’if Accord ending the 15 year civil war calls for a Christian president, Sunni prime minister, and Shia speaker of the parliament. It sets equal numbers of Christians and Muslims in the 128 seat assembly, though Muslims are now thought to number 55% of the total estimated population of four millions. Parliamentary elections since the end of the civil war (1992, 1996, 2000, the next in 2005) have been relatively free of violence and intimidation, and have helped in the process of restoration of Lebanon’s democratic foundation. The domestic political agenda will be driven by the run-up to presidential elections in late 2004.

Internal politics are strongly influenced by Syria, including choice of electoral candidates. Lebanon maintains a close relationship with Damascus, and the Syrian leadership is consulted on all major issues. The 1989 Ta’if Accord provided for Syrian troop withdrawal, but this has yet to be completed.

A milestone in Lebanon’s recovery after the civil war was the withdrawal of Israeli forces from South Lebanon in May 2000, the surrender of the Israeli-backed South Lebanon Army, and the UN’s ruling that UN SC Resolution 425 had been implemented. Lebanon rejects the UN’s demarcation line as the international frontier with Israel. The reintegration of the former occupied zone is slowly under way, with state services gradually returning after an absence of nearly 20 years. The government received regular EU and international appeals to deploy its army to the border. UNIFIL peace-monitoring troops have been reduced in numbers, from its peak of 5,800 in 2000 to 2,000 at January 2004.

Lebanon’s international outlook is coloured by the tense relationship with Israel and the absence of peace in the Middle East. The Shia Muslim militant group Hizbullah is engaged in a simmering conflict with Israel along the border area, concentrated mainly at the Israeli-occupied Shebaa farms, which cover 25 square kilometres of the Golan foothills. While Lebanon argues that the farms are in Lebanese territory, the UN regards the land as Syrian. Hizbullah won ten parliamentary seats in the 2000 elections.

An already fragile situation in South Lebanon became exposed to a new dispute with Israel, over water. The inauguration of the Wazzani Springs pump station on the Hasbani river a few kilometres from the frontier in October 2002 provoked strong Israeli objections, and led to mediation efforts from the EU, US and UN. The Commission conducted a technical study of water resources in the Hasbani river basin as a contribution to an eventual mediation, but there has not yet been any concrete move to resolve water-sharing issues between the two countries.

A priority issue in Lebanon is the resettlement of 387,000 UNRWA-registered Palestinian refugees, most of whom fled to Lebanon as a result of the 1948 Arab-Israel war. Half of Palestinian refugees are housed in twelve camps with poor living conditions and are barred from most forms of employment and economic activity. The EU called on Lebanon at the February 2004 Co-operation Council to help improve the humanitarian conditions facing the refugees. UNWRA runs schools, medical care and shelter rehabilitation in the camps. The EU position is that pending political settlement to the Palestinian-Israeli conflict, in which the future of the refugees has always been a key issue, Palestinian refugees have the right of return under international law.

Lebanon has signed up to several international agreements on human and civil rights. It acceded in 1997 to the International Covenant on the rights of women, but has refrained from signing the Agreement against torture. Lebanon’s diverse population has generally enjoyed a tradition of tolerance, press freedom and individual rights. Criticism of Syria’s influence in Lebanon has become more pronounced, leading to a crackdown during 2002 against opposition media. Recent human rights issues of concern to the EU have been the arrest of anti-Syrian demonstrators in Beirut in August 2001, the execution of three convicted persons in January 2004 (despite personal appeals from the Irish Presidency and President Prodi), and lengthy prison sentences on journalists. In the second half of 2002, closure of an independent television station, MTV was the subject of an EU démarche in Beirut. The European Parliament drew attention to the situation regarding human rights and democracy in the Resolution adopted on 16 January 2003.

EU Responses to:

·  South Lebanon

The EU welcomed the withdrawal of Israeli forces from South Lebanon in May 2002 and the subsequent UN’s ruling that UN Security Council Resolution 425 had been implemented. Since then, the EU has regularly called upon the Lebanese authorities to assume full responsibility for the security of south Lebanon, up to the border. It has also called on all parties to the dispute to refrain from acts which lead to violence and especially to civilian and military casualties. The EU welcomed the German-brokered exchange of prisoners between Israel and Hizbullah in January 2004.

In order to help diffuse the water dispute between Lebanon and Israel, the European Commission carried out a technical hydrological study of the Hasbani River basin during 2003 in order to assess the arguments concerning planned use for water extracted from the Hasbani river. The EU’s Special Representative for the Middle East has raised the matter in the region.

·  Palestinian Refugees

The EU has urged Lebanon to assist in improving the humanitarian conditions of the refugees in the camps, while affirming its support for the principle of right of return. The Lebanese authorities reacted vocally to the European Parliament resolution of October 2003 calling on Arab countries to consider as a possibility the integration of the refugees. The EU’s position endorses UN Security Council Resolution 194 on right of return, pending an agreed, fair and just political settlement of the Arab-Israel dispute. It also recognises the particular difficulties faced by Lebanon in hosting the refugees.

Pending a political solution to the Israeli-Palestinian conflict, the Commission implements humanitarian and relief programmes with Non-Governmental Organisations and UNRWA to improve the economic, social and sanitary conditions of the Palestinian refugees in the camps in Lebanon, and throughout the region.

·  Human Rights violations

Human Rights and fundamental freedoms form an integral and essential part of the framework governing relations between the European Union and its Mediterranean partners, both within the regional context of the Barcelona process/Euro-Mediterranean partnership, and through the bilateral Association Agreements concluded or under negotiation with all the Mediterranean partner countries.

With this in mind, the European Initiative for Democracy and Human Rights (EIDHR) was established in 2001, following the MEDA Democracy Programme. These programmes mainly focus on supporting measures that promote democracy, the rule of law, civil and socio-economic rights and the protection of vulnerable individuals. Co-operation between the European Union and Lebanon in this field stresses the importance of the role of women in the political, economic and social context. A Commission team visited Lebanon in March 2004 to discuss preparations for a dialogue on human rights issues leading to an agreed joint action plan to be supported by the EU.

For a list of projects, please visit the website of the European Commission delegation in Lebanon:


·  Terrorism

A list of terror organisations was issued by the EU in December 2001 as part of measures taken by the Council in combating terrorism, supplementing restrictive measures against individuals and organisations set out in UN SC Resolution 1373. The EU list includes several individuals of Lebanese origin, but makes no reference to Hizbullah. The Lebanese Government has proclaimed its readiness to work with the EU in fighting terrorism, in line with its commitments under the exchange of letters with the EU on co-operation on counter-terrorism. Lebanon nonetheless underlines the legitimacy of resistance to foreign occupation.

Economic situation

Faced with its worst economic crisis since the end of the civil war in 1990, the government embarked on a number of reforms to help cope with the large budget deficit and a crippling public debt (€33 billion, or 180% of GDP at end 2003 compared to 152% in 2001). Some 52% of the debt is held in local currency. Tax reforms included the introduction of VAT in January 2002, which has been judged a success, surpassing expectations on revenue and implementation. Lebanon’s economic reform measures to deal with the crisis convinced the Paris II donors to provide substantial political and financial backing, mainly from Arab countries, France, Italy and Belgium. The reforms included fiscal measures to bring the budget deficit down to 8.4% of GDP in 2003 (15.6% in 2002), privatisation of telecommunications, electricity and other state assets (expected to yield €5 billion by end 2004), and improved debt management to reduce debt service, which presently account for 80% of state revenue. The European Commission urged Lebanon to proceed further with its reforms, and to seek IMF backing for its programmes. The Lebanese delegation at the second Economic Dialogue in Brussels on 24 November 2003 outlined some of the difficulties leading to delay in the Paris II measures, mainly in privatisation, and confirmed that around 80% of pledges had been received.

There has also been slippage on fiscal targets. The budget deficit was 38% of expenditure for the first nine months of 2003, compared to 40% the year before, but above the 2003 target, which had assumed revenue earnings from privatisation. Faced with uncertainty over the future of privatisation policy, the Treasury presented two sets of figures on spending and revenue in its 2004 budget, one with privatisation, and one without. Debt servicing alone, at €2.6 billion in 2004, will account for 44% of the budget. The budget deficit agreed for 2004 is set at 32% of spending, compared to the 25% promised at Paris II.

The 2003 Iraq war brought mixed results for Lebanon. There have been promising signs of re-established trading ties with Baghdad; and Arab tourism and construction which temporarily eased back during the war, soon resumed steady growth. Foreign reserves rose 79% to €12 billion in October 2003.

EU-Lebanon trade relations

Since 1 March 2003, trade arrangements between the EU and Lebanon are governed by the Interim Agreement. As a result of the Agreement, most Lebanese products have duty free access to EU markets with duty free quotas applied to a limited number of agricultural products. In 2015, all Lebanese tariffs on EU industrial goods will be removed. The balance of trade is heavily in favour of the EU, Lebanon’s main trading partner. Lebanon ranks number 44 as an EU export destination and number 109 for EU’s imports.

In 2002, the EU was the leading source of imports in Lebanon, with 43,5 % of Lebanese imports purchased from EU Member States, particularly from Italy, Germany and France. Furthermore, the EU was Lebanon’s second importer after Arab states. Exports and imports between Lebanon and the EU have gradually decreased: a reduction of 10% in the share of exports and 6% in the share of imports since 1996. This trend has continued during the first quarter of 2003.

Figure 1: Lebanon’s foreign trade from 1996 to 2002

 (Source: Ministry of Economy and Trade)

Graph of Lebanese Foreign Trade

It is too soon to analyse the effects of tariff dismantlement in the Interim Agreement on Lebanese exports to the European Community and the possible changes to bilateral trade.

Lebanon also agreed bilateral trade accords with several Euro-Mediterranean partners, in line with the Barcelona Declaration objectives to expand South-South trade, and in February 2004 confirmed its intention to join the Agadir free trade group (founder members Jordan, Egypt, Tunisia and Morocco).

·         further details on EU-Lebanon trade relations

Technical and Financial Co-operation

European Commission approves new €50 million aid package for 2005-2006

The European Commission agreed on 2 April 2004 to a new package of financial assistance in the form of €50 million in grants for Lebanon covering the years 2005 and 2006, provided from the MEDA fund for technical co-operation with Euro-Mediterranean partners. Priorities established in consultation with the Lebanese authorities in the new National Indicative Programme are to be:

·  Support for implementation of the Association Agreement and for European Neighbourhood Policy initiatives, rule of law, judicial co-operation, justice and home affairs issues and human rights and democracy

·  Support for the knowledge economy, in the areas of vocational training, a continuation of the Tempus programme for higher education, particularly between Lebanese and EU universities, and for scientific co-operation, permitting Lebanese researchers to access EU research programmes

·  Strengthening the competitiveness of the private sector, including export promotion, agricultural exports, and business support schemes

·  Water reform and environment, to encourage reforms in water sector administration, and in the provision of waste and water treatment at municipal level.



(in € Million)



European Neighbourhood Policy /support to Association Agreement


Support for Knowledge Economy


Strengthening competitiveness of private sector


Water reform and environment  





A separate allocation has been made to tackle the problem of poverty and poor social and living conditions faced by Palestinian refugees in Lebanon, and elsewhere in the region.

The Country Strategy Paper 2002-2006 adopted by the EU for Lebanon in December 2001 sets out EU perspectives for its objectives, policy response and the strategic framework for co-operation with Lebanon.

Since 1978 Lebanon has benefited from some €1,800 million in combined EU assistance: €533 million in EIB loans, €332 million in EC grants (from the four Protocols, MEDA I, and other budget lines), and more than €900 million from Member States (mainly, Italy 50%, France 32%, Germany 14%).

Technical and financial cooperation with Lebanon is, since 1995, governed by the MEDA programme (, the principal financial instrument of the EU for the implementation of the Euro-Mediterranean Partnership. The programme may apply to States, their local and regional authorities as well as their civil society. It has both a bilateral and regional dimension.

Bilateral cooperation is based on the Euro-Med Association Agreement, accompanied by a substantial EU financial support for economic transition in Lebanon and for the social and economic consequences of this reform process.

The general aim of the regional co-operation aspect is to promote closer integration between (see also: the 27 partners, the 15 and the 12, but also between the 12 themselves. Regional MEDA programmes complement and reinforce bilateral programmes and cover all three baskets of the Barcelona Process.

Under the 1995-2000 MEDA I Programme, Lebanon received grant commitments totalling €166 million. In addition, Lebanon has received some €80 million in grants as humanitarian assistance, for rehabilitation actions, co-financing with NGOs, combating illicit drugs, gender issues, and for environment actions.

EU-funded projects provided within MEDA I are: Rehabilitation of the Public Administration (€38 million), Investment Planning Programme (€21 million, plus €4 million from the Protocols), the Industrial Modernisation Programme (€11 million), the Structural Adjustment Facility (€50 million), €25 million for the creation of a Social and Economic Development Fund, and €21 million interest subsidy grant for an EIB loan for an urban wastewater programme. The second tranche of the Structural adjustment facility (€50 million) is to be paid in the first quarter of 2003 following a review of compliance on the grant’s conditions.

The MEDA II Programme continues the focus on economic reforms, principally in supporting the implementation of the Association Agreement, on social and poverty alleviation issues, environmental protection, human rights and civil society, and human resource development. A Memorandum on the National Indicative Programme (NIP) 2002-2004 was signed by the European Commission and Lebanon on 4 March 2002 for a €80 million package of support for trade reforms/implementation of the Association Agreement; for social and rural integrated rural development, targeted principally at farmers and small scale agro-industry; for environmental programmes, and for higher education (Tempus). Minor modifications to the NIP are proposed for 2003. These are set out below:

National Indicative Programme 2002 2003 2004
Support for implementation of Association Agreement / Trade Reform:
- Implementation of the Association Agreement
- Support for standards and certification
- Support to private sector SMEs
- Promotion of human rights & civil society
€12 mill €15 mill
€17 mill
€ 1 mill
Integrated Rural Development Programme   € 10 mill  
Tempus Higher Education Programme    € 3 mill  
Environmental Protection Programme (including EIB interest subsidy)     €22 mill
TOTAL €80 million €12 mill €46 mill €22 mill

2003 provided the bulk of MEDA assistance, with five new programmes agreed by the EU for Lebanon (see table above). 

Full details are provided in MEDA funding in Lebanon.

The Euro-Med Association Agreement

Signed on 17 June 2002, the Association Agreement has been ratified by the Lebanese and European Parliaments. Ratification by Member States is under way. Until this is completed, the trade and trade-related components of the Association Agreement are put into effect by the Interim Agreement, which entered into force on 1 March 2003, marking the start of the 12 year transition to free trade.

The Euro-Med Association Agreement is a key component of the Euro-Mediterranean Partnership ( – the EU’s proximity policy towards the Mediterranean region, launched at the 1995 Barcelona Conference between the European Union and it’s 12 Mediterranean Partners: Lebanon, Morocco, Algeria, Tunisia, Egypt, Israel, Jordan, the Palestinian Authority, Syria; Turkey, Cyprus and Malta. Libya currently has observer status at certain meetings.

Main principles of the Barcelona Declaration

·  Establish a common Euro-Mediterranean area of peace and stability based on fundamental principles including respect for human rights and democracy (political and security partnership).

·  Create an area of shared prosperity through the progressive establishment of a free-trade area between the EU and its Partners and among the Mediterranean Partners themselves (economic and financial partnership).

·  Develop human resources; promote understanding between cultures and rapprochement of the peoples in the Euro-Mediterranean region as well as to develop free and flourishing civil societies (social, cultural and human partnership).

What the Association Agreement contains

  • Political dialogue, human rights. The Agreement formalises political contacts between Lebanon and the Union at all levels, from officials to government ministers. It binds Lebanon to respect for the principles of human rights and democracy.

·         Agriculture. For Lebanon, it offers important concessions in agricultural exports to the EU. The Union has adopted a liberal trade approach towards Lebanon on agricultural goods. It agreed to full liberalisation (no duty, no quota) for all Lebanese agricultural products, with a list of exceptions covering sensitive areas of EU domestic agriculture. This list (for the main part: olives, olive oil, table grapes, wine, potatoes, pears, apples, garlic, tomatoes) sets out individual zero duty tariff quotas for each product group, with an annual increase. These concessions will be applied as soon as the Agreement comes into force. For the EU, Lebanon has granted a range of reciprocal concessions in the form of tariff reductions. These are particularly important where high tariffs (generally, from 35% to 70%) are currently applied. The EU will thus gain from lower duties on such items as meat, milk, eggs, cheese, potatoes, tomatoes, garlic, various vegetables and fruits, and quality wine. The tariff reductions will take place five years after entry into force of the Agreement. The situation will be reviewed five years after entry into force of the Agreement.

·         Processed agricultural products. Each side is to make significant reductions in duties. EU is to remove duties completely and immediately, on entry into force of the Agreement, on a wide range of food and other processed farm products from Lebanon. It has maintained the agricultural element only on a restricted list of goods (including buttermilk, cream yoghurt, sweet corn, margarine, fructose, some malt, flour and cocoa products; pasta; tapioca; ice cream, certain alcohols). Lebanon is to remove duties completely on some 120 product groups from EU, and to make 30% tariff cuts to some 100 product groups (such as yoghurt, margarine, chewing gum, sweets, cocoa, chocolate, biscuits, sweet corn, certain potato products, ice cream, mineral water, beer). Tariffs on most EU cheeses are to be reduced to 20%. These tariff reductions are to be phased gradually, from year six to year 12 of the transition period, after entry into force of the Agreement (as for industrial products).

·         Free trade in industrial products. While EU markets have been duty and quota free to Lebanese industrial products since the 1978 Co-operation Agreement, the new Agreement will see a gradual reduction in Lebanese tariffs on EU industrial products, over a twelve year period, beginning immediately on entry into force of the Agreement, with a five year standstill. Thus, tariffs will be reduced from years six to twelve, when they will all be zero. At this point, free trade will exist in industrial products.

·         Trade legislation. The Agreement contains commitments on the adoption of modern international-standard economic legislation on competition (five years after entry into force), intellectual property protection, on anti-dumping and anti-subsidy, and on public procurement. It requires the two sides to begin discussions on improved market access arrangements for services one year after entry into force.

·         Rules of origin and regional cumulation. The Agreement makes it possible for Lebanon’s trade partners to share production and to market jointly-produced goods in the EU while maintaining preferential access, according to specific rules agreed by the two sides. The Agreement grants Lebanon exemption from these rules for eleven products.

·         Economic and sector co-operation. The EU undertakes to assist Lebanon in various forms of co-operation to implement the Agreement, and to offset the short-term effects of economic restructuring. This may involve modernising the customs authority, competition legislation, trade enhancement, strengthening the trade administration needed to implement the Agreement, and to prepare for WTO accession, for improvement to intellectual property agencies, and capacity-building in the area of standards and norms.

·         The Agreement contains commitments on judicial co-operation and respect for the rule of law, and requires parties to respect international rules on money laundering, on combating organised crime and illicit drugs, and on migration and re-admission issues (for Lebanese and third country nationals). The Agreement does not include co-operation on counter-terrorism. This subject is covered by a separate exchange of letters between Lebanon and the EU, which makes reference to the context of the Agreement, and which enters into force at the same time as the Agreement.

Basic Data

Official title Republic of Lebanon
Population 4.0 million (estimate)
Surface 10,452 km2
Unemployment 8.5% (1997)
GDP annual growth 2% in 2002, est. 2% in 2003
Currency 1800 Leb. pounds = one euro
Foreign reserves €12.4 billion (11/2003)
Trade deficit € 4589 million (2003)
GDP per capita €5,000 (est. 2002)
Head of State President Emile LAHOUD
Head of Government Prime Minister Rafik HARIRI

See also:

·         Co-operation Agreement between the European Economic Community and the Lebanese Republic
    (Official journal n° L 267 of 27/09/1978)

·         European Commission delegation in Lebanon


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