EU-Pakistan Relationship

Looking Beyond the Trading Partnership

Pakistan and the European Union established relations in 1962. The first bilateral cooperation came in 1976 that was followed by a formal Commercial Cooperation Agreement of 1986. However, the 2004 Cooperation Agreement paved the way for closer relations. Since the start of this cooperation, the EU has committed more than €500 million to various projects and programmes in Pakistan. Currently, there are 48 bilateral and multilateral treaties between the EU and Pakistan, of which 47 have entered into force. There are also over 86 projects currently in progress, covering a wide range of sectors. Enhancing bilateral trade and investment is also part of the EU-Pakistan 5-year Engagement Plan, from 2012. Pakistan is a major beneficiary of the trading opportunities offered by the EU Generalised Scheme of Preferences (GSP). From 1 January 2014 Pakistan benefits from generous tariff preferences under the GSP+ arrangement.

“European Union stands by Pakistan in struggle to combat violent extremists and terrorism as Pakistan has suffered from extremism more than any other country. We need to work together to combat the menace of extremism. The EU is anxious to reach out all those who believe, as Jinnah believed, that it should be possible — even in a state where one religion dominates — to give space and respect to those with different cultural traditions.”
Andris Piebalgs
Former EU Commissioner for Development

The relationship between the EU and Pakistan has grown in recent years in the fields of politics and development. Although the EU is a strong economic player, it is still considered a weak political power. The EU intends to change this perception by using its position as a development and aid donor with its main strategy to foster democracy and strengthen Pakistan’s institutions. The main areas of cooperation are development, trade, humanitarian assistance and sectoral cooperation on energy, environment, health, transport, migration and climate change. The challenge for both partners is to get to know each other and build up mutual trust as the intention is to develop a long-term relationship.

In the recent years, there has been a visible shift in European Union’s policies towards Asia, especially Pakistan as the country has acquired an important status in the EU’s policymaking. The main factors behind this development have been the presence of European troops in the International Security Assistance Force (ISAF) in Afghanistan, and terrorism in Pakistan.

The cornerstone of the EU is democracy. Thus, the basis for the agreements between the EU and Pakistan is democracy and its underpinning values: respect for human rights, good governance and the rule of law. In October 2009, the European Parliament adopted a resolution called ‘Democracy-building in External Relations’ which formally called for the coordination of EU’s external action with the promotion of democratic values, human rights and development policy instruments.

As part of its promotion of democracy, the EU involves civil society organisations and it has also linked the observation of elections to its foreign policy. Considering Pakistan’s history of frequent transitions, during which the regime has periodically changed from strong military to weak civilian governments, the EU regards civil society organisations as the best allies for stabilization and development in the long run.

The most prominent feature of the EU’s policy towards Pakistan is the link between its economic and commercial policy, and democracy and human rights. The 5-Year Engagement Plan (2007-13) was developed according to the documents drafted by Pakistan: Vision 2030, Medium-term Development Framework (MTDF) and the Poverty Reduction Strategy Paper (PRSP-I, 2004). The latest policy agenda, EU-Pakistan Multi-Annual Indicative Programme (2014-20), has varied slightly. The main documents used in the policy agenda are Vision 2025 and PRSP-II (2010). PRSP is a comprehensive country-based strategy for poverty reduction that the IMF and the World Bank require from countries considered for debt relief or before receiving aid from donors.

The outlines of the policy agenda for Pakistan are based on three sectors (indicative amounts):

1. Rural Development (€340 million)

This sector has three specific objectives: reinforcement of the performance of local government structures; improvement of rural livelihoods; and augmentation of the nutritional status of women and children in rural areas. Pakistan’s population is still basically rural, and this is where poverty is more prevalent. Its urban population, though increasing, stands at 36.8%. Agriculture thus remains important for the economy. It accounts for 25% of the GDP and employs around 40% of the labour force. Health expenditure is barely 2.5% of GDP and Pakistan still has to fight against polio, high infant mortality rates (69 per 1,000), a high maternal mortality ratio (260 deaths per 100,000 live births), malnutrition (58%) and severe food insecurity (28%).

2. Education (€210 million)

The specific objectives are to improve equitable access to education, the quality of education and the productive capacity and employability of workers. The UNDP Human Development Index (2014) shows Pakistan ranking among the lowest (146th out of 198), with one of the lowest investments in education (2.4% of GDP).

Another problem that has been identified is the lack of a skilled workforce in a still rapidly growing and young population. Pakistan’s population is considered to be above 182 million (2013), about half of which is aged below 25. Given its growth, its population might be above 231 million by 2030. This demographic pressure will continue to contribute to high unemployment and migration patterns.

3. Good Governance, Human Rights and the Rule of Law (€97 million)

The specific objectives are to reinforce the functioning of democratic institutions and electoral processes at all levels, support federalisation and decentralisation of the public administration in provinces and districts, and improve security and the rule of law. Pakistan ranks 108th out of 167 countries on the Democracy Index (The Economist Intelligence Unit, 2014) and 126th of 175 countries according on the Corruption Perception Index (Transparency International, 2014). Security is still one of the main concerns of the country at all levels.

The EU has increased its disbursement in humanitarian aid and development cooperation by €600 million per year compared with the previous plan. The EU aims to raise the level of coordination and cooperation with its member states and other donors. ‘The EU Delegation, Germany, Denmark, France, Italy, Netherlands and the United Kingdom are implementing medium to long-term cooperation programmes with Pakistan representing over 95% of all EU assistance to the country. The development and humanitarian projects cover a wide range of sectors, including: (a) peace-building and stabilisation; (b) enhancing democracy and human rights; (c) building macroeconomic stability with high economic growth that will accelerate job creation and reduce poverty; (d) ensuring the effective delivery of basic public services such as education, health, water and sanitation and social protection; and (e) supporting regional integration.

The European Community Humanitarian Office (ECHO) became operational in Pakistan in the 1990s. ECHO’s assistance is based on vulnerability criteria. In 2013, it made the second biggest contribution to the country (55 million, or 27% of total foreign aid), while it allocated 45 million in 2014, 5 million of which was aimed at assisting internally-displaced people (IDPs).

Evolution of Institutional Rapprochement

The EU’s relationship with Pakistan began in 1962, when, as the European Economic Community, it established diplomatic relations with Islamabad. Pakistan and the EU have since signed three Generation Agreements on trade. First, the EC-Pakistan Commercial Cooperation Agreement was signed in 1976. An office of the European Commission was the EU’s first institutional representation in the country. It was established in Islamabad in 1985, to be upgraded into a delegation three years later. The second (5-year) Generation Agreement was signed in 1986 and was mainly devoted to commerce, economy and development cooperation. The third agreement took longer to sign for a variety of reasons. From 1995, the EU started introducing human rights clauses in its commercial policy. The agreement was further postponed after the nuclear tests in May 1998 and the coup of October 1999.

During military rule, relations were almost frozen, except for relief aid. It was not until Pakistan backed the US-led coalition in Afghanistan after 9/11 that the EU re-started talks with the Musharraf government.

After much delay, in 2004, the Third Cooperation Agreement with Pakistan entered into force. This agreement is the current legal and political basis for the relationship. The last five-year cooperation plan broadened its remit into further areas: strategic/political; security; democracy, governance, human rights and socioeconomic development; trade and investment; energy; and sectoral cooperation. It also established an EU-Pakistan Joint Commission. Several meetings at the highest level followed this institutional rapprochement. In 2007, the first meeting was held in Islamabad; the second took place in March 2009 in Brussels and the third in Islamabad in March 2010.

Since the 2008 general elections, the EU’s main thrust has been to facilitate the transition and consolidation of democratic institutions. Two summits in 2009 and 2010 opened up a bilateral dialogue. The first EU-Pakistan summit was held on 17 June 2009 in Brussels where EU and Pakistani delegations discussed security-related issues, especially after-events in Pakistan bore witness to rising insecurity. Security cooperation with Pakistan is aimed at improving counter-terrorism capabilities and strengthening the police competence. While discussing other issues such as the deterioration of the security situation in Khyber Pakhtunkhwa and the tribal areas, as well as the requirement of regional stability with its neighbours, they also emphasised the need to achieve safe and sustainable energy supplies, given Pakistan’s acute energy provision problems.

The office of the European Commission was turned into a fully-fledged delegation with a staff of 80 when the Treaty of Lisbon came into force in December 2009. The head of the delegation, Lars-Gunnar Wigemark, is accredited as an ambassador of the EU in Pakistan. The Delegation coordinates with the embassies and ambassadors of member states representing EU’s interests and policies in Islamabad. Granting the status of ambassador to the head of the office adds to the institutionalisation of the presence of the EU in Pakistan and bears witness to the intention of establishing a long-term relationship.

The second summit was held in June 2010 in Brussels. According to the Joint Statement, the aim of the Summit was ‘to set the basis for a strategic dialogue aimed at forging a partnership for peace and development’ rooted in shared values, principles and commitments. In this context, leaders reaffirmed their determination to jointly address regional and global security issues, to promote respect for human rights, economic and trade cooperation and provision of humanitarian assistance, and to cooperate ‘to further strengthen Pakistan’s democratic government and institutions’. The EU-Pakistan 5-year Engagement Plan was adopted in 2012, after the Lisbon Treaty came into force.

Summits have since then been followed by Strategic Dialogue meetings. The first was held in Islamabad in April 2013, while the latest took place in Brussels in March 2014. On 12 December 2013 (effective from 1 January 2014), the EU granted Pakistan the much sought-after GSP+ status by an overwhelming majority. This initiative facilitated the entrance of Pakistan’s products at a zero tariff and more than 70% at a preferential rate. Therefore, the trade surplus with the EU enjoyed by Pakistan since 2010 is expected to increase in the coming years.

Weaknesses and Lessons Learnt

Although it has been emphasised that the EU-Pakistan relationship is based on shared values, there does not seem to be a clear-cut understanding; the norms and values that have made possible the construction of a supranational institution like the EU do not coincide with those of the state of Pakistan. While European countries have ceded a good part of their sovereignty to the Union’s institutions, Pakistan is more likely to defend its autonomy and its right for others not to interfere in its domestic affairs.

Summits are a means used by the EU to deal with its partners and have become an essential tool for decision-making. They helped legitimise Pakistani leaders in the eyes of their population. It was essential for them to achieve a new political alliance, given the troubled relations with the US. But misunderstandings can arise, too, from the different visions held by Europeans and Pakistanis about the nature of the meetings and suitable interlocutors.

The EU could avoid such a situation by raising its level of awareness of the situation in Pakistan through the promotion of research and dialogue between both partners’ academics and experts.

Another problem with the EU is that it is not regarded as a serious political and security actor. The focus that the EU has placed on trade and democracy, and the fact that it is virtually absent in the field of security and military support, limits its potential influence on Pakistan. Some consider that the aid and development approach is a mistaken and outdated policy.

The fall into disrepute caused by foreign interventions in Iraq (2003) and Afghanistan (2001-14) has harmed the EU’s and Pakistan’s perceptions of each other. Pakistanis consider that claims about democracy and human rights are only excuses for foreign powers to apply neo-colonialist policies. Although this may be reflected in the policies of some individual member states, it might be the EU itself that pays the price. This lack of trust can only be addressed through a dialogue between equals. Europe can bear witness to the success achieved by the acceptance of difference in its framework of common values. Pakistan needs to address its own issues with its provinces, find a path to integrate different visions of Pakistan and undertake a serious policy review. It would be wise to bear in mind Muhammad Ali Jinnah’s Constituent Assembly speech on 11 August 1947. He provided a framework for the acceptance of Pakistan’s pluralistic society (ethnic, religious, sectarian, linguistic), which should be considered a strength rather than a weakness.

Conclusion

The challenge for Europe is to achieve a comprehensible and credible policy towards Pakistan. The EU needs to be regarded as more than just a trade partner. Policy and defence remain weak areas of its foreign policy with Pakistan. Europe’s foreign policy towards Pakistan requires Islamabad to change its behaviour, but this can be regarded as interference. At the same time, Pakistan needs to understand that respect for human rights is not an empty demand on paper, but one that has to be matched with real policies.

(This is an abridged version of  “The EU-Pakistan Relationship: Looking Beyond The Trading Partnership” written by Ana Ballesteros-Peiró for Elcano Royal Institute of International and Strategic Studies)