EU-Azerbaijan Ties: Supporting Governance, Institutions and Competitiveness

Written by | Tuesday, September 20th, 2016

The European Union has announced a new package of financial assistance to Azerbaijan aimed at helping the country’s effort to diversify its economy, focusing on financial, economic and judicial governance in Azerbaijan. The €13.5 million aid package called “Technical Cooperation Facility“ focuses on enhancing the competitiveness and export performance of small and medium sized (SMEs) businesses by providing assistance to key government institutions, while boosting the country’s non-oil GDP growth and job creation.

The program is also designed to improve the governance and institutions, including operational, regulatory and business environment. Through this program, Brussels is also hoping to further develop skills and support entrepreneurship, including by improving access to financing. Moreover, the EU wants to use this new tranche of funding as an opportunity to improve Azerbaijan’s efficiency of public spending and revenue collection and thus bring the country’s practices closer to the EU standards. The program also reinforces the willingness of both sides to cooperate in numerous areas and underpins the upcoming talks on a new bilateral agreement.

Azerbaijan’s economy has been growing steadily over last 10 years, making giant leaps in poverty alleviation. However, the country is still struggling to narrow the disparities between the oil-rich hubs and the rest of the country and between the urban and rural areas. Economic convergence and the diversification of the economy are therefore among the government’s priorities. This new funding is a part of the European Neighborhood Instrument (ENI), the EU’s main financial and cooperation tool, through which financial assistance is channeled to the European Neighborhood Policy (ENP) countries, including Azerbaijan.

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