Since 1999, the Partnership and Cooperation Agreement (PCA) has provided the legal framework for EU-Azerbaijan bilateral relations in the areas of political dialogue, trade, investment, and economic, legislative, and cultural cooperation. A number of joint institutions were set up under the agreement:
In 2013 three agreements (a Visa Facilitation Agreement, a Readmission Agreement, and a Mobility Partnership) were concluded which will make it easier for people to travel between Azerbaijan and the EU; they will also help to manage legal and irregular migration.
With the inclusion of the countries of the South Caucasus into the European Neighbourhood Policy in 2004, the EU decided to extend its cooperation with Azerbaijan beyond the 1999 PCA. An ENP Action Planwas adopted in 2006 which focused on:
Also in 2006, the EU and Azerbaijan signed a Memorandum of Understanding in the field of energy. This was a crucial step in strengthening the EU’s energy relations with Azerbaijan, while also helping the country to reform and modernise its domestic energy sector.
In 2010, the EU and Azerbaijan began negotiations on an Association Agreement.
Growth in real GDP accelerated in 2013, with 5.4% growth year-on-year from January to September. The oil sector has fuelled Azerbaijan's expansionary growth over the past decade, benefiting from both rising oil production and prices. Other contributory factors have been high domestic demand, leading to an expansion of the services sector, and the flourishing construction sector. Projections of flat or declining oil production and prices will have significant implications for the country's growth model and generate pressure to diversify the economy and develop the non-oil sector. Reducing poverty and tackling the socio-economic gap between Baku and the rest of the country remain essential.
The main challenges for Azerbaijan's government are to consolidate democratic structures and improve respect for human rights, the rule of law, and fundamental freedoms, including in the media sector. All these issues are reflected in the ENP Action Plan, and are assessed each year in the EU's annual ENP Progress Report .
In the case of Azerbaijan, technical assistance to the Commonwealth of Independent States (TACIS) from 2002 to 2006 focused on:
The country strategy paper for 2007-2013 outlines EC financial assistance to Azerbaijan under the European Neighbourhood and Partnership Instrument (ENPI). It is accompanied by ENPI National Indicative Programmes for 2007-2010 and 2011-2013, focusing on :
From 2014, the new European Neighbourhood Instrument will replace the ENPI.
Azerbaijan also participates in a number of regional and thematic programmes funded by the ENPI, such as the European Instrument for Democracy and Human Rights.
Azerbaijan's conflict with Armenia over Nagorno-Karabakh remains the main obstacle to increasing stability and prosperity in the region. Since 2003, the EU Special Representative for the Southern Caucasus and the Crisis in Georgia has been working to :
The EU Special Representative works closely with the Co-Chairs of the OSCE Minsk Group (France, the Russian Federation and the United States) on seeking a solution to the Nagorno-Karabakh conflict.
See more details under Summary.