The European Union-Bhutan cooperation started with a development project in 1982 focusing on renewable natural resources. In 1985, diplomatic relations between the Royal Government of Bhutan and EU were established. This relationship was further cemented in 2004, when the EU and Bhutan held their first biennial consultation, covering all aspects of bilateral relations, regional and international developments, as well as discussions on subjects of mutual interest. 

The 8th Biennial consultation took place on 5 November 2019 in Paro. During the consultations, the two sides exchanged views on a wide array of topics and agreed that EU-Bhutan relations have gained political momentum with several meetings held at the highest levels in recent years. 

EU relations with Bhutan are grounded on a longstanding and robust friendship. We work together to safeguard women and children's rights, promote gender equality, good governance and democratic values, combating climate change, reducing poverty and fostering cooperation with civil society organisations. 

The EU Ambassador and Head of Delegation of the EU to India, based in New Delhi is concurrently accredited to Bhutan. Bhutan has an Embassy in Brussels, accredited to the EU and to several EU Member States. Regular visits of the EU Ambassador to Bhutan, often jointly with Ambassadors of the EU Member States, provide opportunities for in-depth discussions to further strengthen the EU-Bhutan partnership. 

In 2015, the closing year for the Millenium Development Goals, the Prime Minister of Bhutan, Mr. Tshering Tobgay, was the first ever Bhutanese Head of Government to visit Brussels. In June 2019, the newly elected Prime Minister Dr. Lotay Tshering also visited Brussels. At the invitation of the President of the then European Commission, Mr. Jean-Claude Juncker, the dignitaries participated at European Development Days (EDDs) in 2015 and 2019 respectively. 

The successful September/ October 2018 elections (third since 2008) confirmed the country's peaceful transition from absolute monarchy to democracy. During the 2018 vote, the EU steered a 'DiploWatch' mission of 11 countries in a visitors' program arranged by the Bhutanese Election Commission, witnessing the polls in 7 districts. 

Robust EU-Bhutan relations are also reflected in Parliamentary ties. In October 2017, a Parliamentary delegation led by the Bhutanese Speaker of the National Assembly visited Brussels followed by a visit of the EP to Thimphu in May 2019, led by the chair of the European Parliament Delegation for South Asia. In addition, through an EU Global Project to strengthen the capacity of Parliaments called 'Parliaments in Partnership', the Bhutanese National Assembly and the National Council of Bhutan are developing links with the EU Member State Parliaments. Parliaments currently engaged in the project with Bhutan include those from Hungary, Greece, and Denmark. 

The Kingdom of Bhutan is expected to graduate from the Least Developed Country group in a not too distant future. The EU is committed to continue its support to Bhutan during the transition and beyond the country's graduation. In this context, new and innovative tools will be developed for the financing of development activities, adopted to the evolving circumstances. 

Further, the Royal Government of Bhutan and the European Investment Bank (EIB) are working towards a possible Framework Agreement, which once ratified by the Parliament of Bhutan, would enable the EIB to provide sustainable finance for physical and social infrastructure, at the request of the Bhutanese government and relevant private sector counterparts.

EU International Partnerships

In Bhutan, the EU's Official Development Assistance has made a substantial contribution to the national development agenda, helping to meet some of the costs of the country's economic growth, expansion of its infrastructure, the advancement of local government and rural development systems and ambitious programmes to fight poverty and inequality.

Cooperation between the EU and Bhutan began in 1982. Since then EU's actions have focused on intensive support towards poverty reduction, food security and, most recently, democratisation. Since Bhutan's economy is predominantly rural, the foremost challenge has been to bring health and education, higher agricultural productivity and rural development to small, far-flung habitations, due to poor access to roads, markets and modern communications.

Bhutan is currently implementing its 12th Five Year Plan(FYP) 2019-2023. It will cover the last mile before Bhutan's graduation from the Least Developed Countries (LDC) group in 2023. The existing EU assistance includes € 42 million under the Multi-annual Indicative Programme (MIP) 2014-2020. The current EU MIP 2014-2020 was launched in Bhutan by the former European Commissioner for Development, Mr Andris Pielbalgs. Two focal sectors have been identified for support in MIP

• Sustainable Agriculture and Forestry and Climate Change.
• Local Government and Civil Society.

To support climate change and export diversification of agricultural and handicrafts related products, an additional € 9 million has been provided to the thematic and regional programs. In 2019, a top-up of € 7.3 million was confirmed for contribution to Bhutan's decentralisation efforts and improving the government's financial space to implement the 12th FYP. This would entail the establishment of a National search and rescue center and wider access to safe and drinking water. Through a technical cooperation project with the Ministry of Agriculture and Forests, the EU is providing assistance of € 4.6 million from 2016 to 2020, included as part of the previous MIP.

The EU's support to Bhutan is very successful as a result of robust political ties and excellent on the ground collaboration with the Bhutanese authorities. EU cooperation covers key aspects of Bhutan's development in alignment with the 11th and now the 12th FYP.

Key Sectors for the EU in Bhutan

• Sustainable Agriculture, Forestry and Climate Change.
• Local Government & Civil Society.
• Trade related technical assistance.
• Sustainable consumption and production (Switch Asia).
• Higher Education (ERASMUS).
• Other Areas.

Overall, the portfolio of Bhutan including the MIP, thematic and regional envelope for the period 2014-2020 is around € 72 million.

ECHO in Bhutan

The European Union's humanitarian aid department has been active in Bhutan since 2011. Up till date, it has contributed over €2 million to improve the country's disaster preparedness capacities, focusing mainly on education and health.

As part of its Disaster Preparedness and Contingency Plans for the education sector in Bhutan, the EU-funded initiatives have developed and provided training manuals, interactive teaching and learning materials on school safety to a number of schools, including those with special education needs programs and monastic institutions. This has a multiplier effect with children, parents and families being better prepared for disasters. In addition to the inclusion of disaster preparedness elements in the new term curriculum, indicators to assess how well the teachers have integrated and transferred the knowledge to students have also been incorporated.

In the health sector, EU-funded actions have contributed to strengthening the institutional capacities for mass casualty management at various healthcare facilities and bolstering emergency response within the Ministry of Health in Bhutan. In addition, a 'Health Emergency Operations Centre' has been established in the country to respond to the mass casualty incidents.

The collaborative work with the Ministry of Education and Ministry of Health in Bhutan and the ownership of projects by the Bhutanese government has yielded excellent results, which can be emulated by other institutions as well. ECHO has phased out its field activities in Bhutan since 2018.

Mobility of students: ERASMUS+programme

The EU's flagship programme for education, training, youth and sports, called Erasmus+ (2014 -2020) , allows Bhutanese students to study in Europe. The programme offers ERASMUS scholarships ( a full Master's degree or credit mobility) as well as support for capacity building of higher education institutions, in a wide variety of academic fields at different levels of study(undergraduate, Master and Staff).

So far, more than 600 student exchanges and 90 credit mobility projects between Bhutan and the EU have taken place over five years(2015-19). Under the Erasmus Mundus Joint Master Degrees (EMJMDs) scheme, 10 Bhutanese students benefited from a full scholarship in one of the best universities in the various EU Member States.

Currently, the Erasmust+ programme for the period 2021-2027 is under preparation, and again, it will offer many opportunities to Bhutanese students and higher education institutions to increase their knowledge through the different Erasmus. All fellowships are allocated on a competitive basis. The calls will be published on the Website of the EU Delegation to India or directly on the  ERASMUS +  website in the course of 2021.

Research and Innovation

Research and Innovation is high on the EU's agenda. Cooperation takes place under the EU's framework programme for research and innovation ‘Horizon 2020’ for the period 2014-2020. This programme will be succeeded by ‘Horizon Europe’ for the next period of seven years (2021-2027), which will continue to fund, amongst others, research to strengthen Europe's competitiveness, address societal challenges and green the economy. Europe's programme is open to participation from any scientists, university, research institute or SME in the world. In addition, participants from Bhutan are eligible for Horizon 2020/ Horizon Europe funding.

Cooperation on research and innovation between European and Bhutanese scientific community and innovators will certainly help in achieving objectives set in Bhutan's 12th Five Year Plan (FYP) 2019-2023 and in particular in areas in which EU-Bhutan cooperation is already taking place. Collaboration on R&I in, for example, sustainable management of natural resources or impact of climate change and promote disaster risk resilience, or carbon neutral development and greening the agriculture sector will help in achieving the targets and objectives set. Cooperation aims also at developing innovative solutions brought by startups.

The EU's R&I programme is also supporting the mobility of researchers under the Marie Sklowdowska-Curie Actions (MSCA) which is an integral part of Horizon 2020. The MSCA supports researchers in all scientific domains, promote collaboration between the academic, scientific and business communities, boost the careers of scientists at all stages and develop excellent doctoral training in Europe and beyond through international and intersectoral mobility.

The programme is open to Bhutanese researchers who want to develop their research careers in a host institution in Europe.

Under the Global Climate Change Alliance (GCCA) funding scheme, the EU assists the Government in Bhutan in planning and implementing climate change adaptation measures in sectors of agriculture, livestock and forestry.

GCCA assistance is implemented through support to the national budget with the aim of enabling the rural population (which depends almost entirely on natural resources such as food crops, livestock, fodder, wood and water for their livelihood) to adapt its economic activities to the effects of climate change. The project also enables the Royal Government of Bhutan to provide climate change resilient facilities to the rural population and helps mainstream climate change adaptation, particularly in the renewable natural resources (RNR) sector.

The EU assistance is expected to help address climate change impacts on Bhutan's population, economy and natural resources, especially the constant threat of glacial lake outburst floods (GLOF) arising from the accelerating melting of glaciers. EU support is provided with the involvement and consultation of local authorities and civil society.

Under the GCCA, € 5 million is being provided as assistance by the EU through the budget support modality. This is a part of the total assistance of € 21.5 million stated under the section Sustainable Agriculture, Forestry and Climate Change.

Good Governance and accountability are key points of convergence between the EU and Bhutan development cooperation. The EU has provided support to local government reforms in Bhutan since 2013, and in 2017 renewed the support to this sector once again. The EU's support to local authorities takes shape through the programme, 'Capacity Development for Local Government and Fiscal Decentralisation' in Bhutan, which began work in 2017.

With a duration of almost 5.5 years, the programme aims to support the following objectives:

• Improve the financial capability of the government to implement the local government reforms.
• Promote decentralisation and local government reform.
• Improve service delivery at local levels.
• Improve governance in particular at local level and more specifically public finance management.

Some of the key achievements in the Local Government (LG) sector include :

• All 225 Local Governments have undertaken: disseminating budgets and plans, and their implementation status. And using an integrated national M&E system as a system for planning, budgeting and reporting.
• 31 business initiatives commenced through green economic development.
• 50 Local Governments have been supported through the performance based grants.
• Over 1000 LG functionaries trained.
• Women representation in LG's have increased.

The support provided by the EU to this sector will improve transparency and accountability towards the citizens as well as promote green economic development creating jobs and economic opportunities. Capacity development of local governments will incorporate gender, environment, climate change and poverty alleviation schemes. Additionally, the capacity development of female LG functionaries will augment women's participation in local governance, leading to a direct and tangible impact on the lives of people, especially in remote areas.

Support to the Local Governments and fiscal decentralisation thus remains a significant component of the EU support to Bhutan. During the period of 2017-22, approximately €27.3 million will be disbursed for this sector, including EUR 4 million for the water flagship programme and € 3.3 million for the National training centre for search and rescue. In response to the needs arising due to Covid 19, €4 million was released in March 2020 to support the Local Government sector. Another release of €5.7 million is expected in the latter part of 2020.

Public Finance Management

The EU, together with Austria, supports the Royal Government of Bhutan's current reforms in the area of public finance management through a multi-donor initiative (EUR 3 million) administered by the World Bank. The project started in 2017 and the major reforms undertaken include

• Introduction of electronic payment system (ePEMS).
• Upscaling of electronic Government Procurement Systems(e-GP) and the revision of the Procurement Rules and Regulations.
• Budgets to Gewogs as Annual Grants and improving the budget documentation and reporting.

Other ongoing key PFM reforms include the implementation of the Goods and Services Tax(GST); of cash-basis International Public Sector Accounting Standards (IPSAS); moving towards an Integrated Financial Management Information System (IFMIS) and Competency Framework for Finance Personnel.

Civil Society Organisations

In Bhutan, officially recognised civil society organisations (CSOs) have only emerged since 2008. Bhutan passed the CSO Act in 2007 and there are approximately 50 CSOs currently registered with the CSO Authority.

Since 2017, EU assistance of €2.5 million, through a programme implemented by Swiss CSO Helvetas supports a CSO funding mechanism and a dialogue between CSOs and public institutions at central and local level. Under the programme, there are twenty ongoing projects that promote good governance- e.g. civic engagement, transparency, socio-economic development and women's empowerment.

A comprehensive Capacity Development Plan for civil society has also been prepared as a result of the EU's support to civil society organisations in Bhutan. This plan was developed in collaboration with the relevant stakeholders and is expected to build capacities of CSOs as active development actors, capable of contributing to Bhutan's inclusive and sustainable economic development.

An additional € 1.5 million has been allocated for 2020 in support of civil society organisations and the Parliament besides the aforementioned €2.5 million. In response to Covid-19, this assistance will also take into account the medium-term needs that are emerging as result of the pandemic.

Trade Related Support

The EU-Bhutan Trade Support project aims at economic diversification and export promotion. The project related activities support improving of the national trade and investment regulatory framework, contributing to increased exports of horticulture products (ginger, turmeric, mushrooms) and textile handicrafts ( home decor pieces, shawls, stoles). The project mainly seeks to increase incomes along the two value chains and contribute to economic growth and poverty reduction.

Project activities include trade capacity building and technical assistance, with a strong focus on training and skills development. The EU expects to reinvigorate the Brand Bhutan initiative by strengthening national skills for formulating and implementing trade and investment policies, developing integrated and market-led value chains and building supply-side capacities to export products. The project integrates crosscutting issues, particularly women and youth, gender equality and protection of the environment, into the design and implementation of the activities, in line with Bhutan's policies and priorities. The EU provides a support of €4 million as trade assistance to not only help increase and diversify Bhutanese exports but also to respond to the expected economic blows in the sector and further boost the economy. In response to Covid-19, an additional amount of  €1 million will be mobilised in order to provide further assistance to the trade sector building on the ongoing work.

Sustainable Agriculture, Forestry and Climate Change

In 2017, work in support of sustainable agriculture, forestry and climate change began for a period of 54 months with specific objectives to steer the programme:

• Provide fiscal space and improve the financial capability of the Government of Bhutan for enabling the Ministry of Agriculture and Forests to improve the Renewable Natural Resources sector policy reforms in the priority areas as defined in the 11th and 12th Five Year Plans.
• Support innovative actions undertaken by the Government of Bhutan to enhance resilience to climate change.

Some of the key achievements in the sector of Sustainable Agriculture, Forestry and Climate Change include:

• Self-sufficiency with respect to Egg and Milk production was achieved, contributing to improved nutritional outcomes of people.
• Ca 2110 hectares were afforested and reforested in 2018 and approximately 232,808 hectares of forest area was brought under sustainable management, contributing to climate change mitigation.
• Ca 5,363 km of farm roads have been built, enabling farmers to access markets.
• Ca 2996.5 km of irrigation channels were constructed or renovated, ensuring small holder farmers have access to irrigation.
• 99 Farmers Groups and Cooperatives were registered, creating 584 employment opportunities.

Support to the aforementioned sector is a pillar of the EU support to Bhutan. During the period 2017-22, approximately € 21.5 million will be disbursed in support of Sustainable Agriculture, Forestry and Climate Change. In response to the needs arising due to pandemic Covid-19, € 4.5 million was released in March 2020 to support the Sustainable Agriculture, Forestry and Climate Change sector. Another release of € 4 million is expected in the latter part of 2020.