The European Union is looking to overhaul its policy on North Africa to take account of the political changes that have swept Tunisia and Egypt and the shifting situation in Libya.

The aim is to link aid, trade, investment and other benefits more tightly to democratic reforms, with progress being rewarded with more access to funds and back-sliding leading to the withdrawal of assistance, diplomats say.

The move is an attempt to upgrade the EU's European Neighbourhood Policy in relation to North Africa, and answer critics who say past policy has involved turning a blind-eye to autocratic governments in return for political stability.

At meetings on Thursday and Friday, EU foreign ministers and leaders of the bloc's 27 countries will discuss a range of proposals put forward by the European Commission and individual member states, although they are not expected to set out any specific policy measures yet.

Most agree on the need to make better use of billions of euros of EU aid for the region, but competing economic and historic interests among member states mean there are many differences of opinion over how best to shape policy.

Here are some questions and answers looking at current EU policy and how it may change in the months ahead.

WHAT HAS HAPPENED SO FAR?
The EU launched its European Neighbourhood Policy (ENP) in 2004 with the aim of developing closer economic and political ties with 16 countries in the former Soviet bloc, North Africa and the Middle East.
In some cases, the EU has withheld incentives or even imposed sanctions on some of the 16 because of human rights abuses or other shortcomings. But it poured money into other governments that had a poor reform or rights record, for example offering 150 million euros ($208 million) a year to Egypt.

WHAT CHANGES ARE BEING PROPOSED?
The EU's foreign policy chief, Catherine Ashton, and the executive European Commission want aid money to be more closely connected to reform progress, with the amount of cash available dependent on the pace of change. Trade could also be enhanced.
Under a plan presented to EU governments this week, countries seeking aid would have to show commitment to free and fair elections before qualifying. A government that fails to meet expectations would lose cash.

There are proposals to reach trade-liberalisation agreements with individual states over the "short- to medium-term", with the ultimate aim of having a free-trade area in the long term. Ashton also wants existing programmes tackling administrative reforms to focus more on addressing transparency and combating corruption. Changes are proposed to visa policies to increase mobility of students, researchers and business people, as well as to manage remittance flows from migrants and to upgrade asylum systems in non-EU countries.
A fund could be also established to support small and medium-sized businesses and job creation and training.

OTHER MEMBER STATES' IDEAS
In a joint letter to Ashton on Thursday, German Foreign Minister Guido Westerwelle and Britain's William Hague said the ENP needed to be "better geared" to bringing about democratic reforms, strengthening the rule of law and protecting human rights. It also called for an improved investment climate.
"Based on these principles, the EU should offer those in North Africa going through transition a path towards democratic reform and deep economic integration with the European market," including, eventually, access to a free trade area and a customs union covering goods, agriculture and services.

Italy, which has close historical and economic ties with North Africa, has focused much of its attention on the threat of migration from North Africa, with tens of thousands of migrants making their way to Italian shores each year.
It also wants to promote closer trade and development, but is keen to protect its own already considerable investments in Libyan oil and gas infrastructure -- Italy gets 27 percent of its oil and 13 percent of its gas from Libya.
France's proposals largely mirror those from the European Commission, focusing on a common economic area in the long-term and closer cooperation on migration and humanitarian issues.

WHICH PARTS ARE CONTROVERSIAL?
While there is plenty of common ground among the proposals, there are differences among member states over how "conditionality" should be imposed -- that is, when exactly has a country failed to live up to expectations or met them.
Some officials have described the goal as creating a "sliding scale", with democratic developments being measured each year against specific criteria and a country moving up a notch if it has achieved certain goals. Moving up a notch would then grant that country access to more funds.

There are also likely to be tensions over EU countries trying to protect vested interests -- Italy in relation to Libya, France with Tunisia and Spain towards Morocco. Britain, Germany and others also have their own interests in the region.
While trade is an area in which the EU, the world's largest trading bloc, can do a great deal for North Africa, agreeing free-trade zones or even just more preferential trading terms is an extremely lengthy, complex and hotly contested issue.
With some EU countries competing in some markets with producers in North Africa, there is tendency to want to limit competition in some spaces, which can lead to uneven benefits for North Africa and for the EU.

Source: Reuters