Delegation of the European Union
to the United Nations - New York

Nicaragua and the EU

12/05/2016 - 15:25
EU relations with Country

Relations between the European Union (EU) and Nicaragua, as with other Central American countries, have evolved significantly since they started in the mid-1980s.

The EU has committed itself to Nicaragua, by working to consolidate a sustainable development model based on peace, democracy, consolidation of the rule of law and deeper regional integration at the political level.

Initially, the EU played a key role in strengthening peace processes in Central America, by promoting the inclusive spaces required to reach an early settlement of conflicts in the region at an international level. This initiative, a part of what is known as the ‘San José Dialogue’, provided the structure for a prominent political dimension in relations between the Isthmus and Europe, which remains in place today.

The next stage in the development of political relations between Nicaragua and the EU began in the 1990s and can be characterised by the boom of Development Cooperation. Over the last few decades, EU cooperation with Central America, and with Nicaragua in particular, has intensified qualitatively and has evolved in the search for more effective tools for sustainable development.

It should be emphasized that relations between the EU and Nicaragua have increasingly been developed within a Central American regional integration approach. In fact, Nicaragua has been a party to important agreements between the EU and Central American countries: the Central America Cooperation Framework Agreement (1985), the Second Cooperation Framework Agreement (1993), the Political Dialogue and Cooperation Agreement (2003) and the Association Agreement between EU and Central America (2012).

Accordingly, Nicaragua's political relations with the EU are embedded in a deep-rooted, stable system which seeks to establish common and efficient priorities in cooperation matters and to promote collective action at an international level.

The economic relations with Nicaragua are based on the EU-CA Association Agreement.

This Agreement, which covers Trade Relations, Political Dialogue and Cooperation, involves a change in the nature of the relationship between the two regions, from a reflection of traditional ‘donor-recipient’ and ‘grantor-beneficiary’ approaches to the expression of a lasting link between ‘partners’ with shared principles and values.

Nicaragua's economic relations with the EU seek to provide robust support for trade ties and promote joint action at an international level.

The EU has become one of Central America's main trading partners and is its third most important export market, after the United States and the Central American Common Market.

Although this arrangement has been increasingly successful, the maturity achieved in relations between CA and the EU has made it necessary to move to another type of link: an Association Agreement (AA) which, in trade terms, means the creation of a free trade area to open up new and better export possibilities for Central American products and to provide more favourable trade and investment conditions for European companies.

During the last decade Nicaraguan exports to the European market have recorded a steady increase in value. However, exports continue to be concentrated in a few products that take advantage of the demand of this market of more than 500 million consumers.

In trade matters, the AA means abandoning the traditional approach of cooperation and the unilateral temporary granting of benefits in favour of a lasting link between partners committed to free trade and the sustainable development of both regions.

The trade dimension of the AA came into force for Nicaragua on 1 August 2013. Since then the AA has been the legal framework of reference for trade between Nicaragua and the European Union.

Nicaragua's imports from the EU mainly consist of medicines and agrochemicals, vehicles, machinery and transport and telecommunications equipment.

The Country Strategy Paper (CSP) for Nicaragua 2014-2020, with the allocation of €204 million, seeks to reduce poverty by promoting an inclusive but productive development model that focuses on using the demographic dividend occurring in the country.

The following discusses the three priority intervention areas to which the strategy for Nicaragua allocates the resources, with €8 million for support measures:

Support to the productive sector

This priority is a cornerstone of the Nicaragua strategy 2014-2020 with consequences in terms of impact, value added and contribution to the development of the country. It aims to promote rural development by increasing sustainable production, competitiveness and resilience to climate change in micro, small and medium enterprises (MSMEs) in the agricultural and agro-industrial sectors. The amount allocated to this CSP priority is €78 million.

Effective education for employment

This priority is consistent with the financial commitments under CSP 2007-2013 and maintains the funding levels that will enable the EU to continue to support the education sector in Nicaragua. To this end, it is now intended to improve the employability of the labour force, particularly secondary school graduates. It addresses improvements in the relevance of education, equality of access and quality of secondary education and technical and vocational education in general. The amount allocated to this CSP priority is €68 million.

Adaptation to climate change

Due to its natural conditions, Nicaragua is particularly vulnerable to climate change and prone to natural disasters. Long-term environmental degradation has a major impact on people suffering from poverty. The aim of this priority is therefore to increase the population's adaptation to climate change, in particular through integrated management of water resources and relieving pressure on forests. The amount allocated to this CSP priority is €50 million.

The partnership between the EU and Latin America is based on very close historical and cultural links, extensive exchanges between their peoples and robust and growing trade and investment flows. The relationship is also built on deep foundations of shared values and aspirations: commitment to democracy, human rights and the rule of law, pursuit of social cohesion and sustainable development.

The relationship was formalized in 1999 when a biregional strategic partnership was established under which regular summits have taken place. The EU has set up an extensive partnership network and entered into other agreements with individual Latin American countries and with regional groupings. Central America is one of these regions.

EU development cooperation instruments have been a cornerstone of this relationship over the years. EU cooperation has been implemented through: 1) bilateral programmes with individual countries, 2) regional programmes, as with Central America, and 3) programmes at a continental level (Latin America).

The cooperation programme for Central America 2014-2020 is included in COMPONENT 2 of the ‘Multi-annual Indicative Regional Programme for Latin America’: Multi-annual Indicative Programme for sub-regional cooperation activities with Central America, which has an allocation of €120 million for these 7 years.

The EU, in line with the priorities identified by the Member States of the Central American Integration System (SICA), developed the indicative programme based on the 3 focal sectors to which the EU can provide the highest added value:

Support for regional economic integration, including commitments undertaken in this area when the Association Agreement was signed with Central America.

The objective of this priority is to contribute to the inclusive and sustainable development of Central America, through improved regional economic integration. Regional restrictions on competitiveness, diversification and investment in Central America need to be reduced through support for regional economic institutions. Likewise, the aim is to maximise the benefits to the Central American population and the implementation of the economic components of the EU-CA Association Agreement. The amount allocated for the fulfilment of this priority is €40 million.

Support for the regional security strategy and the rule of law

Within the framework of the Central American Security Strategy (CASS), this priority seeks to achieve a reduction in violent crimes and impunity in the region, as well as respect for human rights and the promotion of a culture of peace. This requires enhancements in the capacity of the region to limit the incidence of transnational criminal organizations and their activity and improvements in ability to provide the population with an effective and verifiable security and justice service. The amount allocated to this priority is €40 million.

Support for the regional climate change strategy and the Central American integral risk management policy

The objective of this priority, under the Regional Strategy for Climate Change, is to contribute to addressing climate change and environmental issues by supporting the adoption and application of measures for adaptation, mitigation and reduction of the risks of disasters and promoting low carbon investments. The aim is also to contribute to the application of relevant regional policies such as the Central American Policy for Integrated Risk Management (PCGIR) and the Regional Disaster Reduction Plan (PRRD). The amount allocated for the fulfilment of this priority is €35 million. 

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