Rethinking the European Union’s Economic Relations with the Mediterranean

in Economics/International Relations & Defence by

Starting with the Jasmine Revolution of Tunisia and spreading onto Egypt, Libya and most recently Syria, the sudden wave of upheavals in the Mediterranean have created a whole new reality across the Arab world. By showing the limits of their tolerance for the corrupt and autocratic regimes that have governed their countries for decades, the Arab peoples have made it clear that a new era of governance is due in their region. This historical moment is as crucial for the European Union as it is for the Arabs of the Mediterranean. In some aspects, it may be regarded as a wakeup call for the EU after long years of neglect for its southern neighborhood.

Rethinking the European Union’s Economic Relations with the Mediterranean: A Historical Opportunity*

The “short-sightedness, self-satisfaction and feeling of safety with the status quo” have been, in the words of Polish MEP Jacek Saryusz-Wolski, EU’s the dominant attitude towards the Mediterranean, where the “status quo” was in fact mistaken for “stability” for long years.[1] It is perhaps a result of this realization that a new and ambitious European Neighborhood Policy was recently launched by the High Representative for Foreign Affairs and Security Policy Catherine Ashton. Unable to ignore the urgent need for reconstruction in the region, EU provided €140 million of humanitarian assistance to those most in need[2], and an extra €1.24 billion (totalling nearly €7 billion) was made available for the ENP following the political developments in EU’s southern neighborhood.[3] Indeed, given the failure of the Barcelona process and the inefficiency of the later the Union for the Mediterranean (UfM), the current political climate in southern Mediterranean gives the EU a historical opportunity to rethink its economic relations with the wider region, take advantage of a great potential to ensure sustainable security, prosperity and stability within the wider region, and to fix its past mistakes in the inefficient conduction of the Euro-Mediterranean Partnership.

Brief history: Barcelona Process and Union for the Mediterranean

The Euro-Mediterranean Partnership (EMP) was initiated by the Barcelona Process in 1995 by 15 Foreign Affairs Ministers from EU member states and 14 Mediterranean counterparts. The main goal of the partnership was to gradually establish a free trade area between the EU and Mediterranean countries. Its political aims were equally sophisticated and ambitious as they sought to create “a common area of peace and stability underpinned by sustainable development, rule of law, democracy and human rights”.[4] The EMP specifically aimed at strengthening the economic relations among the Mediterranean non-EU member countries while providing them the necessary financial and technical support to promote a balanced socio-economic development besides equipping them with the tools to build capacity for further development. With the Eastern enlargement phase of the early 2000s and the introduction of the European Neighborhood Policy (ENP) in 2004, the ambitious EMP entered a period of stagnation to gradually transform into an invisible component of the ENP.

Upon the suggestion of French President Nicolas Sarkozy, the EMP was eventually re-launched in 2008 as the Union for the Medierranean (UfM). The revised UfM was this time launched by 43 EU member and Mediterranean states. The establishment of this extended partnership received substantial criticism for serving as a political tool for Sarkozy’s presidential election campaign in France, and was moreover regarded as a sign of increased competition between France and Spain over their influence in the Mediterranean region. The new goals set forth by the extended partnership seemed promising in the beginning – the establishment of the Mediterranean Business Development Initiative providing assistance for small and medium sized enterprises, a Mediterranean University for high quality research on the region, extended focus on the environment and transportation, and finally a permanent general secretariat in Barcelona initially raised hopes for a serious improvement in the cooperation between the northern and southern ends of the region. The inadequacy of the bilateral partnerships within the countries of the region and the outbreak of the global credit crisis, however, acted as catalysts for the fast demise of the ambitious goals of the UfM and made way to its perceived failure.

The reasons for the failure of the EMP and UfM could loosely be identified under two main headings – political and economic. The lack of an EU membership prospect and the absence of any clear, concrete and short-term gains for the partner countries served as the most obvious political shortcoming of the EMP. Moreover, the politicization of certain sectors within the bilateral trade agreements (namely agirculture due to the protectionist contraints posed by the EU’s Common Agricultural Policy) further watered down the potential incentives for partner countries. Lastly, the shift of EU focus to its Eastern neighborhood during the enlargement process moreover marginalized the Mediterranean from the core of EU’s priorities. The most important economic reasons, on the other hand, have been a serious lack of business interest in southern Mediterranean, and consequently, very low levels of foreign direct investment in the wider region.

Reviving Euro-Mediterranean relations: Motivations

Although the Barcelona process has so far shown to be a failure, there are enough legitimate and pragmatic reasons why the original objectives of the EMP should be revived and given more emphasis by the EU. The strategic significance of the geographical location of the Mediterranean region, rising concerns on uncontrolled migration into the EU from its southern neighborhood and escalating fears of Islamic fundamentalism in the Arab countries could be named as the main (if not the only) reasons why the future of Europe lies in a secure, prosperous and stable Mediterranean region.

Perhaps the most visible reason why the original goals of the Barcelona declaration and UfM should be revived is the EU’s growing concern for uncontrolled immigration. The issue of immigration has been continuously ranking high in priority in the European agenda within the recent years. Catalyzed by the financial crisis, tighter border controls and stricter policies against immigration have become commonplace in member states. The efficiency of such measures, however, is yet to be proven, and therefore remain under scrutiny. This perceived threat of an “immigration wave from the South” has noticeably increased following the revolutionary upheavals in Europe’s southern neighborhood – hundreds of thousands have filled up refugee camps in North Africa, and over 20,000 are estimated to have reached Italian shores. What is certain is that Europe needs to rethink its “cure” for the problem of uncontrolled immigration. Addressing the symptoms of this problem so far has not produced any smooth answers to the issue – targeting the causes, however, have the potential to generate more sustainable solutions. Creating positive incentives and practical means to ensure that potential migrants stay home could therefore be an optimal recipe for controlling immigration. Taking into account the large volume of immigrants coming into the EU from the southern Mediterranean, working towards achieving the original goals of the Barcelona declaration would prove to be useful. Europe should address this problem by shifting its focus on creating jobs in the south of the Mediterranean, and seriously liberalizing its trade regimes to foster growth through trade with the region’s countries. [5]

The geo-strategic signifiance of the southern Mediterranean and Europe’s trade security together constitute another reason why the EU should rethink and reprioritize its Mediterranean policy. As the former EU High Representative for Foreign and Security Policy Javier Solana has justly observed in a recent article with Angel Saz, the container traffic between East Asia and Europe is crucially dependent on the EU’s southern Neighborhood.[6] Solana and Saz have drawn attention to two important issues related to this container traffic. Firstly, although the container flow from East Asia uses the Mediterranean route (i.e. passing through the Suez Canal), only 28% of the transported goods enter Europe via southern European ports such as Barcelona, Genoa or Marseille. The remaining 72% of the goods are unloaded at northern European ports such as Antwerp, Rotterdam and Hamburg, following a longer route through the English Channel. Even though this option involves extra financial and environmental costs, it is nevertheless preferred over unloading at southern European ports due to the superior efficiency of the northern European ports and their more advanced transport infrastructure.  Secondly, Solana and Saz emphasize that the Suez Canal must always stay as a “safe and reliable shipping route” in order to avoid the shifting of the route to the southern end of Africa, hence generating even higher costs for trade and the environment, and excluding the Mediterranean region altogether. In brief, the security of the opeations of the Suez Canal is of great strategic importance to Europe and therefore stable political regimes in and around the Mediterranean are of paramount importance for the secure and efficient operation of the economic activity between East Asia and Europe.

Lastly, there have recently been mentions of a possible Marshall Plan for the Arab World following the rapid regime changes and political reconstruction in the Middle East and North Africa (MENA) region. The transformation across the region will surely have serious consequences for Europe, as regional peace, prosperity and stability is indeed vital for Europe’s stability in the long term. It is with this motivation that Italian Minister of Foreign Affairs Franco Frattini has recently suggested that the revolutionary countries of the Arab world share the same needs with the post-war countries of Western Europe. Although a financial aid package by the EU for the democratizing MENA countries (similar to that of the post-war Marshall Plan) may indeed seem unrealistic given the current financial burden on the EU due to the alarming condition of southern European economies, additional measures could be taken to build on the existing financial and institutional structures.[7] Indeed, what is important in this stage is not how much of its financial resources the EU can allocate to support the democratic transition in the MENA, but how it can work to prioritize the Mediterranean within the existing financial and institutional resources. The ongoing financial crisis, therefore, should not any longer be an excuse for turning a blind eye on the developments in the southern Mediterranean.

Reviving the Euro-Mediterranean relations: Immediate remedies

Having reviewed why the EU should prioritize strenghthening its economic relations with the Mediterranean, it is also necessary to acknowledge the main limiting factors that are currently acting against a stronger Euro-Mediterranean economic dialogue, and outline the most immediate remedies for recovery. The first and most debated of these is undoubtedly the issue of the persisting protectionist measures in European trade, and most notably those in the agricultural sector. As discussed earlier, perhaps the most obvious technical obstacle that has played a role in the failure of the EMP has been the current state of the EU’s Common Agricultural Policy and the resultant illiberal tendency in Euro-Mediterranean trade. Europe seriously needs to liberalize its trade regime if it is to induce any form of economic development and promote democracy in its southern neighborhood. At this critical time when the political character of the entire MENA region is going through a historical change, the EU cannot afford to continue ignoring the need to liberalize the barriers in its trade activity with the newly democratizing Mediterranean.

Secondly, the weakness of the institutional setup of the former EMP has been a very important though less visible limiting factor for the advancement of Euro-Mediterranean relations. The Barcelona process originally promoted the creation of a free trade zone in the wider Mediterranean region, which would provide the basis for enhanced cultural dialogue, promotion of stability and security in the South, and flow of financial and technical aid. When compared with other successful regional free trade agreements, the EMP stands out for not having an advanced institutional framework. The North Atlantic Free Trade Agreement (NAFTA) between the United States, Mexico and Canada, for instance, could be taken as a good institutional example for the future of the Euro-Mediterranean trade relations. In comparison with the relatively looser Association Agreements between the EU and non-EU Mediterranean states, NAFTA provied a good institutional example with its side agreements and subsidiary organizations, most notably in the areas of labor rights and environmental protection. There is little doubt that the future of the UfM and Mediterranean trade could benefit substantially from such a move towards institutional development and capacity building.

Conclusion

The history of the world shows that the Mediterranean region has been the global center of trade and economic activity for many prominent civilizations like the Romans, Egyptians, Greeks, the Spanish, and Ottomans. The current lack of a healthy and sustainable economic dialogue between the northern and southern ends of the Mediterranean Sea may continue only for a given period of time as the security and prosperity of the wider region is possible only with economic cooperation and extended social and political relations among the region’s countries. The Arab Spring has provided a historical moment for the realization of this regional cooperation, though to achieve this long term goal, EU needs to shoulder the lion’s share of responsibilities. Removing non-tariff barriers to further liberalize its trade regime, and enhancing the backbone of the EMP with a serious instiutional reform are of vital importance for the EU to fulfill this immediate duty. Bearing in mind that the security of the Mediterranean is the security of Europe, EU can no longer afford not to invest in its economic relations with the Mediterranean if it is to pursure a healthy and stable presence.

* Originally published on Turkish Policy Quarterly Vol. 10, No. 2, pp. 65-71


[1] Jacek Saryusz-Wolski, “EU must fundamentally redesign its Mediterranean policy”, EurActiv, 10 March 2011 (http://www.euractiv.com/en/print/global-europe/eu-fundamentally-redesign-mediterranean-policy-analysis-502981)

[2] Catherine Ashton, “Speech on North Africa and the Arab world in the European Parliament”, 6 July 2011, (http://www.consilium.europa.eu/uedocs/cms_data/docs/pressdata/EN/foraff/123479.pdf)

[3] “Barroso announces extra €1.2 billion for Europe’s neighbours”, ENPI Info Centre, 25 May 2011, (http://www.enpi-info.eu/main.php?id=25296&id_type=1)

[4] “Barcelona Declaration, adopted at the Euro-Mediterranean Conference”, Summaries of EU Legislation, 27-28 November 1995, (http://trade.ec.europa.eu/doclib/docs/2005/july/tradoc_124236.pdf)

[5] Peter Sutherland, “Europe’s Test in North Africa”, Project Syndicate, 27 April 2011 (http://www.project-syndicate.org/commentary/sutherland1/English)

[6] Javier Solana and Angel Paz, “The Mediterranean Reborn”, Project Syndicate, 11 July 2011 (http://www.project-syndicate.org/commentary/solana8/English)

[7] Franco Frattini, “A Marshall Plan for the Arab World”, Project Syndicate, 26 May 2011 (http://www.project-syndicate.org/commentary/frattini3/English)

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