Promoting Regional Integration and Cooperation in the EU’s Southern Neighbourhood and Beyond

Promoting regional integration and cooperation in its external action is imprinted in the very DNA of the European Union (EU). The 2021 Organisation for Economic Co-operation and Development (OECD) first Progress Report on “Regional Integration in the Union for the Mediterranean”^[1] put forward, among its key takeaways, that: “albeit modestly, the integration within the group has accelerated since the start of the Barcelona Process.” The “biggest progress in regional trade in goods” being observed among the “UfM sub-regions of the southern shore and the Western Balkans.” This is certainly good news but, first of all, a “considerable untapped potential” still “exists for trade expansion between non-EU UfM countries, and also among specific sub-groups – notably the Western Balkans with Israel and Levant countries, and Israel with Levant and North African countries.” Second, it is also important to recall that this Report was commissioned by the UfM^[2] and thus encompassed its members.^[3] Third, referring to the Southern Neighbourhood countries only, the 2021 Joint Communication on a new Agenda for the Mediterranean stated that: “the region has one of the lowest levels of regional economic integration in the world.”^[4]There are obviously different ways to look at the region and the question of whether, or not, to integrate (potential) Mediterranean candidates and/or all MENA or Arab countries is key in this respect.

What is clear is that Euro-Mediterranean regional integration has not yet been achieved at the legal level. The 1995 Barcelona Declaration aimed to create bilateral free trade agreements (FTAs) through the implementation of Euro-Mediterranean Association Agreements (EMAAs) and to gradually establish a vast overarching Euromed FTA, having set “2010 as the target date.”^[5] However, in 2022, two EMAAs have not been negotiated (Libya) or signed (Syria) and a number of FTAs among the EU’s partners have not been negotiated or concluded. Moreover, the EMAAs envisaged only limited economic integration, so-called “shallow integration,” as the liberalization process concentrated on manufactured products but without excluding trade in agricultural products – to be “progressively liberalized through reciprocal preferential access” – and trade in services “including right of establishment” to also be “progressively liberalized.” This was necessary in order to have an FTA compatible with the multilateral rules. However, it is clear that compared to FTAs concluded more recently, especially the Association Agreements including Deep and Comprehensive Free Trade Agreements (AA-DCFTAs) concluded with Moldova, Georgia and Ukraine, these old EMAAs are outdated. The one with Tunisia was signed 27 years ago!

At the level of regional cooperation, in the framework of the European Neighbourhood Policy (ENP), the European Neighbourhood and Partnership Instrument^[6] (ENPI) implemented two regional cooperation tracks (for the South and the East) as of 2007; a new “interregional” cooperation to become “European Neighbourhood-wide”^[7]; and a Cross-Border Cooperation (CBC) programme, drawing on funds from both the external and internal headings of the EU budget.^[8]

The question is: how and to what extent will the Neighbourhood, Development and International Cooperation Instrument (NDICI) adopted in 2021^[9] support regional integration and cooperation?

Is Euro-Mediterranean Regional Cooperation and Integration among the EU’s Priorities?

Euro-Mediterranean regional cooperation, especially its South-South dimension, has been quite modest so far, not necessarily in terms of its objectives or structures, but as regards its financial means and achievements.^[10] In the framework of the ENP, the ENPI (2007-13) gave birth to the regional South programme, which was mainly, during its first phase (2007-10), a continuation of the MEDA programme, as revised in 2005. It was then, from 2011 on, absorbed by the ENP. The “Neighbourhood-wide” programme was not easy to implement during its first phase, as it was mainly demand-driven and aimed at providing technical assistance, a novelty for many partners, whereas the CBC procedures had to be revised under the European Neighbourhood Instrument (ENI, 2014-20).^[11]

Of course, the creation in 2008 of the Union for the Mediterranean (UfM) was a landmark at this level, as it focused mainly on promoting a series of regional cooperation projects and labelling (but not funding) new ones.^[12]In 2017, the UfM Roadmap for Action “The Union for the Mediterranean: an action-driven organization with a common ambition”^[13]confirmed that the UfM’s “regional dialogue platforms”dimension had also progressively developed.^[14]

In February 2021, the European Commission and the High Representative proposed to achieve a “new, ambitious and innovative Agenda for the Mediterranean,” in the framework of the ENP.^[15] Five “key policy areas” were identified in this regard: 1) Human development, good governance and the rule of law; 2) Strengthen resilience, build prosperity and seize the digital transition; 3) Peace and security; 4) Migration and mobility; 5) Green transition: climate resilience, energy, and environment.^[16] So, at first sight, it looks like regional cooperation and integration is not a key priority. In fact, this dimension has not been forgotten in the Joint Communication, which stresses, at the very end, that “efforts will continue to enhance regional, sub-regional and inter-regional cooperation.”^[17]

If it is acknowledged that the “role of the Union for the Mediterranean remains indispensable” as a “focal point,” in addition, “sub-regional cooperation” is to be “adapted to the specificities of the different sub-regions of the Mediterranean and beyond.” What is innovative here is the “beyond the Mediterranean” dimension. The “effective approaches” will “require broader co-operation with neighbouring countries and regions.” Therefore, the “inter-regional dimension” is “important.” This “inter-regional cooperation” dimension is in fact addressing the issue of “neighbours of the EU’s neighbours” or the “EU’s broader neighbourhood.”^[18] Six main elements are put forward:

i) “cooperation between North and sub-Saharan Africa, also as triangular cooperation with the EU”^[19];

ii) “inter-regional cooperation with the Gulf and Red Sea regions”;

iii) “sub-regional and inter-regional cooperation, notably with African partners”;

iv) cooperation with “regional actors and organizations” (League of Arab States, African Union and “relevant sub regional groupings”);

v) “pragmatic initiatives based on variable geometry” to “support those willing to advance further in the cooperation on common Mediterranean goods”;

vi)“further regional, sub-regional or trilateral cooperation and joint initiatives between partner countries across the board, including in light of the recent normalization of relations between Israel and a number of Arab countries.”^[20]

At operational level, the Mediterranean Agenda is supported by an Economic and Investment Plan (EIP) for the southern neighbours that includes a series of preliminary flagship investments and projects.^[21] The EIP should help partners in their “recovery efforts, contribute to increase competitiveness and support sustainable and inclusive growth.”^[22] The flagships proposed are to be financed notably by the NDICI. They should absorb an important share of the financial allocation for the “Southern Neighbourhood,” for which specific objectives and priorities have been enshrined in article 18 of the NDICI. There are in fact seven specific objectives, which include: “(d) enhance regional and cross-border cooperation, in particular in the framework of the Eastern Partnership, the Union for the Mediterranean, European Neighbourhood-wide collaboration as well as Black Sea regional cooperation, Arctic cooperation, the Northern Dimension, including in the areas of energy and security.” Article 21 also refers to “trans-regional” cooperation.

The annex of the Commission’s delegated Regulation 2021/1530 of July 2021^[23]also contains a specific point for the Southern Neighbourhood: (6) on “Enhancing regional, sub-regional and interregional cooperation.” It includes the following items: “(a) Supporting the Union for the Mediterranean; (b) Increasing cooperation with international, regional and sub-regional actors and organizations; (c) Increasing cooperation between North and sub-Saharan Africa in selected areas.” In other words, the five priority areas of the Mediterranean Agenda have been fine-tuned and developed at operational level,^[24] and a sixth one added, precisely on our theme.

The first conclusion is that the traditional “regional,” “Neighbourhood-wide” and “cross-border cooperation” tracks have been maintained. Second, there is an emphasis on the ‘‘sub-regional” dimension. Third, new forms of “interregional” and “trans-regional” cooperation have been introduced.^[25] Last but not least, the war in Ukraine will continue to affect the functioning of these forms of cooperation and not only at the level of the Eastern Partnership, the Black Sea or the Northern Dimension, as candidate countries to EU Membership benefit from the Instrument for Pre-Accession Assistance (IPA II), not the NDICI.

At the level of regional integration, a 2020 report from the World Bank concluded that the “low levels of integration among MENA countries are due in part to insufficient reforms of the legal frameworks for investments and lack of convergence of regulations on non-tariff measures (NTMs).”^[26] This evaluation is shared by the abovementioned OECD report on the UfM, which stressed that the “three most common types of NTM-related obstacles” are “conformity assessment, export-related measures (e.g. prohibition of exports of certain products due to internal shortages; sanitary inspections” etc.) and rules of origin. It considers that their negative impact can be “minimized by promoting the harmonization of rules and making them more transparent and easier to understand.”^[27]

It is thus no surprise that, in the Mediterranean Agenda, for “connected economies,” there is a proposal to “prioritize the reduction” of NTMs, focusing on:

– the “full implementation and compliance with existing multilateral, regional and bilateral agreements” avoiding the “resurgence of protectionism and trade restrictions”;

– the launching of “dialogues to identify partners’ interest in modernizing their trade and investment relations with the EU, in areas including investment facilitation, sustainable development, services, and, when relevant, agriculture.”^[28]

In terms of political priorities, an element to be underlined is the necessity to address a potential “resurgence of protectionism and trade restrictions” that could put an end to an era that started in 1994, with the conclusion of the Uruguay Round trade negotiations.

At the operational level, the specific objectives for the Neighbourhood in the NDICI include two important elements. The first one is the support of the “implementation of association agreements or other existing and future agreements.” This is of importance for capacity building. The second objective is to continue to promote the “progressive integration” into the EU’s internal market, but also “enhanced sectoral and cross-sectoral cooperation, including through legislative approximation and regulatory convergence towards Union and other relevant international norms and standards, and improved market access, including through deep and comprehensive free trade areas.”^[29] So the ENP objective of a “stake in the internal market” is maintained, together with the Association Agreements, including Deep and Comprehensive Free Trade Agreements (AA-DCFTAs), but a new emphasis is placed on (cross-)sectoral cooperation to achieve these long-term objectives.

The Instruments and Financial Means Available to Support Euro-Mediterranean Regional Cooperation and Integration

The NDICI covers “country” and “multi-country” indicative programmes, as well as “regional” indicative programmes and “trans-regional” indicative programmes. Under the NDICI, “trans-regional” means “a multi-country indicative programme covering more than one third country from different geographic areas.” The four different “geographic areas” are: (a) the “Neighbourhood”; (b) “sub-Saharan Africa”; (c) Asia and the Pacific and (d) “the Americas and the Caribbean.”^[30] In other words, the implementation of (trans-)regional cooperation should be facilitated, as the NDCI covers all these regions and provides them with dedicated instruments.

As far as the articulation between the NDICI and the UfM and sub-regional frameworks are concerned, it is important to refer to article 21 of the NDICI, which states that multi-country indicative programmes “shall address challenges common to all or a number of partner countries.” For the Mediterranean, the priorities to be taken into consideration are those of the “reviewed” ENP, the “work carried out in the context of” the UfM, and “regional, trans-regional and sub-regional cooperation primarily between two or more partner countries.” So, it is clearly the variable geometry and pragmatic approach, followed by the UfM, that is put forward.

Finally, it is important to mention the “cross-border cooperation” component that covers:

i) Cooperation “between one or more Member States, and one or more third countries and territories along the external adjacent land and maritime borders of the Union”;

ii) “Transnational cooperation over larger transnational territories or around sea basins and interregional cooperation”;

iii) Cooperation on “specific provisions for the European territorial cooperation goal (Interreg) supported by the European Regional Development Fund” (ERDF) and “external financing instruments (the ‘Interreg Regulation’).”^[31] The reference to the “Interreg Regulation” is of importance as it means a progressive export of elements from the EU’s Cohesion policy.^[32]

Financial allocations are key indicators to identify priorities. Article 6 of the NDICI indicates that the total budget for 2021-27 is 79.463 billion euros. For geographic programmes,^[33] out of a total of 60.388 billion euros, at least 19 billion euros have been earmarked for the Neighbourhood as a whole. This is to be compared to the 11.181 billion Euros of the ENPI, and 15.432 billion euros of the ENI. Also, if the usual informal balance is maintained (1/3 for the East, 2/3 for the South), the increase of the financial envelope is limited, especially given the current geopolitical context. The second point is that the proportion of the envelope devoted to multi-country programmes remains to be seen. Some indicators can be identified. For instance, at the level of the CBC: “up to 5 % of the financial envelope for the Neighbourhood area shall be indicatively allocated to support those programmes.”^[34] Also, beyond the geographic programme, which will absorb 75% of the total envelope,^[35] the regional dimension also appears under the “thematic programmes” at the level of “Peace, Stability and Conflict Prevention”^[36] in the framework of “(ii) assistance in addressing global and trans-regional threats and emerging threats.” Also to be taken into consideration is the fact that “10 % of the financial envelope” should be dedicated to “actions supporting management and governance of migration and forced displacement.”^[37]

As far as instruments for promoting regional integration are concerned, the EU is looking for new options, thus the proposal to take “advantage of opportunities at the sub-regional, regional and continental levels” to “contribute to economic diversification and deepen integration.” It is also proposed to explore “synergies with sub-Saharan Africa” in the “context of the African Continental Free Trade Area (AfCFTA) and the creation of a Single African Air Transport Market (SAATM), with a view to facilitating the emergence of targeted continental value chains and supporting sustainable investment.”^[38] The latter is an illustration of the sectoral approach. If the AA-DCFTA negotiations, “underway with Morocco and Tunisia,” are mentioned, it is clearly another option on the table: the progressive modernization of the existing agreements, via sectoral agreements, notably at pan-African level.

It is also remarkable that the Joint Communication does not refer to pan-Arab economic integration.^[39]Of course, the current fragmentation and growing disputes do not help. This dimension is taken into consideration by experts in terms of the (un-)achievements related to the horizontal FTAs. There is an untapped potential as put forward in the OECD Progress Report, notably for the pan-Arab FTA.^[40]Even if pan-Arab economic integration is not easily achieved at the political level, it can still be considered as a business opportunity to be promoted.

Preliminary Multi-Country and Regional Flagship Projects, New Opportunities and Untapped Potential

It is not possible here to detail all the “multi-country” and “regional” flagships proposed in the Economic and Investment Plan” for the Southern Neighbourhood, but a brief analysis reveals that the flagship projects “address challenges and opportunities” at the national, local, multi-country and (trans/inter-)regional levels.^[41] Ten thematic flagships have been identified^[42] to regroup “multi-country” and “regional” initiatives or more concrete projects.^[43]Six multi-country and six regional initiatives have been proposed.^[44]It is clearly a work in progress, but new topics (like vaccines) and approaches are certainly emerging. For instance, there are a few proper trans/interregional cooperation initiatives proposed under the “regional” heading. Under the “interconnected economies” flagship, for example, it is proposed to develop “logistics hubs in strategic trade and sustainable and safe transport routes that would allow for integration with other regions, including the Middle East and sub-Saharan Africa.”^[45]

At the level of regional integration, according to a study commissioned by the European Commission, the bilateral Euro-Mediterranean FTAs, “played a significant role in fostering Euro-Med trade, and they remain relevant for trade in goods.” However, issues affect the “performance” of these bilateral FTAs and “additional efforts are needed to enhance their relevance for current trade challenges,” notably NTMs. There is also the need to reinforce the “implementation” of the FTAs, to review their “coverage” while “enhancing sustainable development and regulatory cooperation.” These issues are key to “bringing the expected benefits of the Euro-Med FTAs to both sides.”^[46] Of course, in terms of coverage, services are of fundamental importance among these untapped EMAA potentialities. The OECD Progress Report stressed that the region “lacks ambitious regulation on services trade, with the exception of the EU association agreements with the Western Balkan countries.”^[47]

In terms of South-South cooperation beyond the Mediterranean, the “end to the rift within the GCC in 2021 has facilitated the resumption and expansion of EU-GCC cooperation.” A joint communication in May 2022 took stock of this new context, creating “a strategic partnership with the Gulf.”^[48]This is very much linked to the “implementation of the European REPowerEU strategy and the complementing EU External Energy Strategy,”^[49] including an increase of “Liquefied Natural Gas (LNG) supplies.”^[50]

A number of interesting proposals referring to the Mediterranean are mentioned in the new Strategic Partnership, such as:

i)“explore cooperation with Gulf countries, including in relation to the ongoing discussions on a future Trans-Mediterranean Transport Network in the Southern Neighbourhood, aiming to promote stronger connections with adjacent strategic corridors in sub-Saharan Africa and Central Asia”^[51];

ii) “explore opportunities for production and trade to enable the undistorted imports of renewable hydrogen in particular, building upon existing projects, notably in the Eastern and Southern Mediterranean region” and opportunities will be “pursued for triangular cooperation on clean and just energy transition, in particular with Africa, Asia and the broader Middle East. The EU will promote regional energy integration and cooperation”^[52];

-“explore further cooperation on reducing emission levels from maritime transport” (…) “given the volume of shipping from the Gulf across the Arabian Sea to the Mediterranean”^[53];

-“promote cross-regional cooperation, notably with the Southern Neighbourhood region, and engage with other regional organizations such as the League of Arab States, the Union for the Mediterranean and the Organization of Islamic Cooperation”.^[54]

As illustrated above, the thematic dimension of the ENP, i.e. mainly sectoral cooperation related to interregional infrastructures, should be developed in the EU’s broader neighbourhood. This also implies supporting “regulatory convergence” in fields like telecommunications and in “all transport areas, in coherence with the 2021-2027 regional transport action plan through Euro-Mediterranean transport projects.”^[55] Also, one of the objectives is to support the “region’s integration into the AfCFTA in order to stimulate the creation of targeted continental value chains.” The dragon in the room is of course China and its maritime silk road.

Conclusion

The analysis of the Mediterranean Agenda revealed that regional cooperation and integration is not referred to along its five key policy areas, but still mentioned at the very end of the document. At the operational level, the NDICI added a sixth priority to tackle the issue, but focuses on the “Southern Neighbourhood” with a new emphasis on the “neighbours of the neighbours,” especially Africa. A number of interesting novelties and opportunities are put forward for regional integration and cooperation.

Also of importance is the new EU-GCC strategic partnership and the fact that “the EU will seek to encourage and build upon the recent establishment of diplomatic relations between Israel and a number of Arab countries,” could well be perceived as being revolutionary.^[56] What will emerge from the implementation of this approach remains to be seen. In its opinion on the new Agenda for the Mediterranean, the European Economic and Social Committee put forward the importance of “improving regional, sub-regional and inter-regional cooperation” and “promoting pragmatic multi-level governance through initiatives based on variable geometry and triangulation, which also help promote cooperation with the entire African continent and the Gulf and Red Sea regions.”^[57] Today, the end of the GCC rift offers new opportunities.

What is missing in the Mediterranean Agenda is a specific flagship devoted to “regional cooperation and integration” that could support an inclusive and structured dialogue to identify opportunities and reinforce capacity building in the Mediterranean. The need for an enhanced regional cooperation and integration agenda was obvious before the war in Ukraine, due to the increasing fragmentation among the EU’s partners. Russia’s invasion of Ukraine could spark food riots and increase the current polarization. Regional cooperation and integration are therefore of fundamental importance. The NDICI can provide the tools, but this is mainly a matter of political will, thus the importance of reinforcing “multi-level governance” and “regional ownership” of the Mediterranean Agenda.