The EU is surrounded by an 'arc of instability' that stretches from Belarus, Ukraine and Moldova across to the Caucasus, through the Western Balkans, and into an explosive Middle East. However, the EU's most effective tool for spreading stability and prosperity - namely enlargement - will be more difficult to deploy in the future: because of public opposition to further accessions; because most of the EU's neighbours are too far from fulfilling the membership criteria; and because some neighbours cannot join because they are geographically outside Europe. The EU needs an alternative tool to promote reform and modernisation in the regions that surround it. If the EU turned its back on the neighbourhood, these countries could become sources of political turmoil, illegal immigration, terrorism and networks that smuggle people, arms and drugs.

That is why the EU launched the European Neighbourhood Policy (ENP) in 2004, as a means to forge closer relations with non-candidate countries. At the heart of the ENP are bilateral 'action plans' under which the EU promises trade, aid, political contacts and participation in EU programmes, in return for precise commitments on economic and political reform. Each action plan is different, tailored to the needs of the country concerned. Ten plans have already been completed (Armenia, Azerbaijan, Georgia, Israel, Jordan, Moldova, Morocco, the Palestinian Authority, Tunisia and Ukraine) and three are in under negotiation (Algeria, Egypt and Lebanon). Belarus, Libya and Syria could join the ENP if they embraced political reform.

The ENP has had some positive impact in Ukraine and Morocco, but overall it has not fulfilled its potential. EU officials and member-state governments agree that the Union needs to offer a more interesting package if it wants neighbouring countries to embrace painful reforms.

The European Commission improved the offer to neighbouring states in 2007, when it unveiled new proposals to enhance the ENP. The neighbouring states will receive more scholarships, more sensible visa policies, and the possibility of deeper economic integration. This will go some way toward making the ENP successful. The CER made some additional proposals on how to improve incentives to neighbouring countries do this in the pamphlet 'Europe's blurred boundaries: Rethinking enlargement and neighbourhood policy', published in October 2006.