Does ‘the economy, stupid’ still apply in North Africa?

The aftermath of the Arab Spring and the interventions of other players in the region have left the high ambitions of the 1995 Barcelona Declaration looking like a cathedral in the desert. Despite this, Europe continues to be the most important commercial partner of North African countries, and much potential remains.

% Complete

    The Barcelona Declaration of 1995 now looks like a climax of multilateralism in what the European Union (EU) now terms its ‘Southern Neighbourhood’. The Euro-Mediterranean Partnership launched back then covered the five North African countries along with Lebanon, Jordan and Israel. It aimed among other things to establish a free trade area by 2010, and to spur regional processes across the board, from security to cultural relations. Major new financial commitments girded these ambitions. But the regional environment has evidently changed in ways that none could have foreseen in the 1990s. Contrary to Francis Fukuyama’s infamous thesis of the time, history did not come to an end. Indeed, the past 20 years or so has seen an avalanche of it, not least North Africa being buffeted as it was by the Arab uprisings in 2011 and their aftermath.

    In recent years, the interventions of other players in the region have brought about a distinct turn for the worse when it comes to multilateralist approaches. Russia’s resurgence in Egypt and elsewhere is the most obvious example. Turkey has also become an influential player, for example, in Libya, though it fell out badly with Egypt after the advent of the Sisi administration there. China, in line with its wider approach to Africa, has become the region’s second largest trading partner after the EU and a major investor.

    Saudi Arabia and some Gulf countries have become much more active as well, flexing their financial and political muscle. This is sometimes for good, as in support for Egypt’s economic reforms under its IMF programme. But sometimes not, as in their penchant for military solutions, such as in Libya, where the EU would prefer the conflicts be ended through UN-led processes. At the same time, the United States, once a generally benign, if not entirely convinced, partner in encouraging regional integration has scaled back its involvement. Fighting extremism is now its main concern. These developments and more have led to the region becoming more fractured and fragile than ever before. This leaves the high ambitions of the Barcelona Declaration looking like a cathedral in the desert. And it has brought about a sea change in the EU’s view of the region. Whereas the EU once saw North Africa as largely an area of opportunity (some used to argue that it was a proto-EU in the making), the ‘southern neighbourhood’ is today regarded mainly as a place dominated by dangerous conflicts and threats.

    This may be an unfair appreciation, given that some countries in the region, especially Morocco and Tunisia, have continued to make generally peaceful progress, but one thing is certain. The mantra of the EU’s 2016 Global Strategy, that external security, especially in the Middle East and North Africa, is essential to Europe’s internal security, was pretty well received by European leaders and citizens and continues to resonate today.

    It is no surprise then that the revised European Neighbourhood Policy, while continuing support for regional programmes and organisations like the Union for the Mediterranean, focuses on security and stability as the key drivers of relations with the South. With the current preoccupation with migration flows, radicalisation and terrorism, it will also come as no surprise that the European Commission is proposing a major increase in the EU’s external aid budget in general, and funds for the southern neighbourhood in particular, for the 2020-2027 budget period. But to meet challenges like irregular migration, EU neighbourhood aid policy needs to be more effectively joined up with efforts under Cotonou. The Commission’s idea of a single instrument post-2020 might help here, though demolishing bureaucratic silos will take more than just regulations. And if the EU is to really promote stability, lessons need to be properly learned. The support given to authoritarian regimes prior to the Arab uprisings is a case in point. Turning a blind eye to the need for accountability and greater equity produced anything but stability here.

    Working with EU and member state development banks, such as the European Investment Bank, the KfW Bankenguppe and CFD, will also be important to build more effective investment partnerships with other major players in the economic sphere, especially the Gulf funds. More dialogue with Beijing on the region would also be helpful. But there is not much mileage in talking about development challenges with the United States, as it has scaled back its programmes, or with Russia, whose main interests are in areas such as arms exports.

    Aid notwithstanding, more efficient trade and investment is a better bet in the longer term. With the EU as the most important commercial partner, much potential remains. However, the record is not good. Many countries, especially those with a strong military element in government, tend towards protectionism. They have not engaged on the EU’s offer of Deep and Comprehensive Free Trade agreements (DCFTAs). But there are exceptions, such as Morocco and Tunisia.

    The best hope for concluding a DCFTA is probably in the talks with Morocco. A new fisheries agreement was also signed this year. That said, to be effective, these new initiatives will require a pragmatic solution to Morocco’s ongoing disagreement with the EU over the status of the Western Sahara in the scope of these agreements. The benefits flowing from a DCFTA, in terms of growth in trade and foreign direct investment from Europe, would make a major contribution to meeting Rabat’s economic and, not least, employment challenges. These could well inspire other countries in the region to follow suit. Evidence of real benefit could help Tunisia, for example, overcome its doubts about the process. It is worth noting that others, such as Egypt, recently signalled interest in aspects of the DCFTA, though there is little prospect of talks starting anytime soon.

    There is no panacea for solving the fundamental problems in Europe’s southern neighbourhood, and economic development in itself may not do the job. But the EU continues to be the most important international partner in this domain. With all the talk in Europe about the importance of resilience to cement stability, not least in the Global Strategy, the EU has a special role here. In any event, without accelerated economic development in North Africa, things are likely to get even worse before they get better. And when things get worse they invariably have a knock-on effect in the EU, as European governments and citizens know too well. Success stories here are badly needed.

    About the author
    James Moran is an Associate Senior Research Fellow at the Centre for European Policy Studies (CEPS).

    Read the full magazine issue

    North Africa, hope in troubled times – Volume 7, Issue 4 (Autumn 2018)
    06 November 2018
    Loading Conversation