Transition in the Southern Mediterranean: An Opportunity for Improved Cooperation Between the Two Shores?

Annie Cordet-Dupouy

Senior Partner. Sabaudia Consulting

“Ignoranti quem portus petat nullus ventus suus est” (There is no favourable wind for he who knows not where he is heading.) Seneca

The following thoughts on changes taking place in the Southern Mediterranean bring to mind, in some aspects, the transition of Central European countries in the early 90s. Indeed, they echo the introduction to an article which I wrote with V. Falcoz in 1998. The countries on the southern shore of the Mediterranean, itself an internal sea and trade route, have been subjected for decades to authoritarian (and in some cases dictatorial) systems, but are now in the process of a commitment to democratic models, albeit with transitional periods which are still uncertain for a number of them. With objectives which may be idealised, confused or feared, these countries have only a vague idea of the port to which they are headed; this mysteriouslyshaped port is variously described by such words as “democracy”, “dignity” or a “reformed market economy”. As for favourable winds, these countries, however nautical, struggle to find them, steering them strongly towards the expectation of assistance from all those beyond their borders who were waiting and hoping for such changes. But nobody had really foreseen these changes, these breaks, either within the southern nations or those to the north.

Is it possible to think of a break, feel it as possible, but without knowing when or how to expect it? Few economists (or sociologists) have addressed this issue. The failure to foresee the 2008 financial and economic crisis had already raised a number of questions, and Nassim N. Taieb’s book, Black Swan contributed for the first time an original analysis of the extreme difficulty, even for experts, in anticipating upheavals. Ryszard Kapuscinski, the journalist who covered countries undergoing revolution, has “recorded” and analysed a large number of them in emerging countries. In the last chapter of his book on the fall of the Shah (The Shah), he lists several countries where the political, economic and social situation has reached a pre-revolutionary stage, without knowing, however, when these revolutions will occur. What is it that will ignite the spark?

It is therefore particularly worthwhile studying the responses to the 2010 IEMed Survey, replies that were given in an environment which could be described as pre-revolutionary in the light of events in the Southern Mediterranean since the beginning of 2011. And in examining the results, either generally or specifically, practically nothing stands out as particularly remarkable, no notable departure in comparison to the results from the 2009 Survey, with in some cases even more optimistic comments. Only a handful of respondents revealed greater concerns and surprisingly, they were mostly women. Is that because of feminine intuition or higher female unemployment?

My analysis centres on the Euro-Mediterranean Partnership/Union for the Mediterranean, as observed through the Survey (of which a quantitative breakdown is shown elsewhere in this study). A few months after the start of the revolutions we now seek (i) to understand better why the experts, and other professionals surveyed, saw nothing and what factors should have alerted them and us, (ii) to identify what foreign aid the Southern Mediterranean countries need to succeed in their transition and (iii) what are the challenges for the Euro-Mediterranean Partnership and, ultimately, for the Union for the Mediterranean. Certain points that were raised will certainly merit in-depth analysis in another context, allowing lessons to be learned upon which to build a more comprehensive policy for Mediterranean cooperation.

I. A Strong Disconnect Emerges Between Popular Expectation and the Views of Politicians and Experts

Over the years, many political leaders shut their eyes to the nature of existing regimes so long as they brought stability in the struggle against Islamism. Economists and donors essentially relied on economic growth, leading to an improved standard of living, overlooking the fact that the “bad” redistribution of wealth was associated with a growth of inequality. To a large extent, the Survey responses reflect these positions, a source of the disconnect between popular expectations and the priorities of the elites.

A Lack of Attention, or Turning a Blind Eye, to Socio-Political Realities so Long as Economic Progress is Under Way (According to Statistical Measures)

The Survey, which poses, in a restrained and politically-correct way, the question of the endurance of political regimes (question B.14.B), would have benefited from being more explicit about this point to elicit a more clear-cut response. More specific questions could also have been asked on the autocracy of various regimes, increases in inequality (visible in analysing the evolution of Gini coefficients2, despite the fact that certain countries like Tunisia embellished the statistics, rendering this measure ineffective), the importance of social issues and the demographic bulge brought out by the fact that 40% or more of the population of these countries are under 20 (see Table 1 below).

Table 1: Percentage of population aged under 20

Source: World Bank 2009

Education, albeit with very mediocre quality, has made great strides in these countries, and illiteracy has fallen dramatically over the last 20 years. However, young people have no hope for the future nor any confidence in their governments and officialdom. Given this context, the only possible solution is emigration. As for the integration of women into the economy, it is among the weakest among emerging nations.

These questions, which were not clearly addressed in the Survey, were not raised or clarified during the cooperation negotiations, even if it may have been at the back of the minds of many. And if business creation has been at the centre of many cooperation programmes, modernisation and enhanced competitiveness programmes focused on one aspect, competitiveness, but they have overlooked the fact that unless competition is combined with social and employment- creating programmes, it only increases social malaise.

A positive and Stronger Assessment of Political Continuity than in 2009

According to the questionnaire responses, all people sampled for this survey, from both the South and North, thought that the existing regimes would endure, but their perception of permanence (one cannot speak of evaluation) was even stronger in 2010 than in 2009 (question B.14.B on the continuity of political regimes).

Graph 1: Degree of probability attributed to the following potential mid- to long-term hypotheses in the Mediterranean: Political regimes in MPCs will show a high degree of continuity (%)

Source: Compiled by the IEMed based on the results of the 2nd Euromed Survey

Only two or three responses (by women from the Southern Mediterranean) mention in the free-text comments that “the absence of political reforms put a brake/block on economic and social development, whatever the amount of aid received,” that “tolerance by the EU towards (non-) promotion of democracy and women’s roles and mobility will decrease,” and that “dictatorship in the South erodes progress.” It is possible that this impression of being before an impregnable social and political barrier, combined with a loss of dignity, was what provided the spark in Tunisia. It will no doubt become the subject of investigation by many academics and economists as well as sociologists and politicians. Tunisians were telling me recently “one can accept being robbed, but not being trampled underfoot.” This comment encapsulates the despair that inspired early demonstrations in Tunisia.

One may also speculate on the refusals to reply even to an “anonymous” survey on the part of respondents in the South, although the attempted internet blackouts during the uprisings show that such a fear was no doubt justified. And what about respondents in the North? Probably they underestimated the extent to which authoritarian pressure had reached unbearable limits for young people in the South, or forgot that life in those countries was not as “easygoing” or “open” as that which they might have observed looking out from the windows of their grand hotels.

The Measurement of Progress as a Basis for Producing Aid Programmes, Was Based Primarily on Certain Macroeconomic Figures and on Data Which Was Not Always Reliable

Overall GDP, progress in “Doing Business”, the volume of FDI (Foreign Direct Investments) and the total level of unemployment were regarded as the primary indicators of progress. The long-term aim of European aid programmes was “convergence” between the northern and southern economies, a convergence measured essentially with one macroeconomic indicator, per capita GDP. Some respondents were able to see that it was not sufficient. For instance, “GDP is not the sole indicator and attention to Gini coefficients and redistribution would be a better measure of progress.” Another question: “What is meant by convergence and measure of progress?” And a final one (there was very little questioning) poses the well-aimed question on the “Comparison between Morocco and Algeria on GDP and quality of life; is Algerian GDP, double Morocco’s, a good indicator?” This simple comparison clearly indicates that a definition of convergence must look beyond per capita GDP figures. The European Union, while giving no explanation, was certainly aware of this aspect in its analysis prior to the decision to grant Morocco “advanced status” in 2008, while that status was refused to Tunisia at the same time (to the fury of its government which had even announced that it had obtained the status in 2009). All the donors and economists have for many years been questioning the validity of unemployment and inflation data to reflect reality, and have attempted to correct them, with mixed success.

In light of so many putative emigrants and hordes of “harragas” attempting to enter Europe, how can one believe in the published figures and in progress on convergence?

Table 2: Unemployed population as a percentage of active population

Source: World Bank 2008

Unemployment figures (see Table 2) — based on official statistics — represent national averages, but there can be very different (and much higher) rates in certain regions (inland) or segments of the population (young graduates). Unemployment among these young people, including specifically university graduates, probably sits at around 30% and is sometimes higher in the more disadvantaged regions. However, the majority of published official statistics are hard to interpret. Even if the figures are not accurate, the dramatic rise in unemployment among young people with diploma between 2005 and 2010 appears in the official statistics of various countries. For example, in Tunisia, while the overall unemployment figures went from 12.9% to 13% between 2005 and 2010, unemployment for those with lower educational achievement fell or stabilised, while unemployment among the better educated almost doubled, going from 14% (in other words roughly within the average) to 22.9% over the same period.

The problem does not reside necessarily in the gathering of data, but in the way it is aggregated, analysed and interpreted as well as the non-publication of “unsatisfactory” data. A huge amount of work is therefore required, perhaps starting from scratch, to come up with a realistic view of the situation and a solution which will target programmes to remedy weak points.

Southern Mediterranean Countries Have Favoured Export Strategies and Attracting FDIS Geared Towards Exports

The choice of economic models and their impact on development was not addressed in the Survey, nor addressed by the respondents. All the same, it would certainly appear to contribute to the cumulative impoverishment of specific geographical areas, or of those social groups which were among the instigators of the revolutions. Without going into detail, the majority of countries, with the support of donors, have favoured export strategies, to the detriment of strategies aimed at the domestic market and regional development, thereby leaving them vulnerable to external shocks, and a breeding ground for home-grown dissatisfaction among their citizens.

Currently these countries are essentially exporters of

– Commodities (oil, gas, phosphates…)

– Subcontracted manufacturing (textile, automotive equipment, etc.)

– People (emigrants to many regions)

– Services (tourism, financial services, transport, etc.)

Up to now, such exports have been directed primarily outside the Southern Mediterranean region toward Europe and the rest of the world. This is especially true for Tunisia, which has, as a result, been more seriously affected than others by the world economic crisis. Taking all countries together, this problem is currently accentuated by price rises for basic agricultural products, which has a greater impact on the purchasing power of the less-privileged segments of the population, a class often more significant than official statistics would allow (see previous comments).

In closing, it is also worth noting that there is hardly any significant trade among the various Southern Mediterranean nations notwithstanding the Agadir Agreement.

Emigration, the Principal Source of Comments in the Survey

Questions on emigration were greatly elaborated on by respondents from both South and North. These aspects are addressed in the final questions of section B.14. and in the openended comments.

Graph 2: Degree of probability attributed to the following potential mid- to long-term hypotheses in the Mediterranean under the present level and framework of cooperation (average on a scale of 0-10, where 0 stands for low probability, and 10 for very high probability)

Source: Compiled by the IEMed based on the results of the 2nd Euromed Survey

All the open-ended comments mention the importance of the ongoing emigration phenomenon, and the problem of acceptance by European countries. It is interesting to observe that, while respondents note (even more so than in 2009) that high levels of emigration risk creating social problems and xenophobia in Europe (reply to question B.14.L), they do not believe extensively that this exodus could, in great measures, lead to political reforms.

Graph 3: Degree of probability attributed to the following potential mid- to long-term hypotheses in the Mediterranean: Increased level of legal and irregular migration will intensify social tensions and xenophobia in Europe (average on a scale of 0-10)

Source: Compiled by the IEMed based on the results of the 2nd Euromed Survey

Open-ended comments from the North were highly variable, some leaning toward a position of openness while others demanded firmer policies, as current policies were deemed ineffectual. Specific comments were made on the excessive populations in certain countries, but without relating them specifically to mass youth unemployment and emigration. One point was not really addressed either at the level of the Survey or open-ended comments, even though it is at the heart of the current revolutions, namely that of mass unemployment of young graduates and mass unemployment in the poorest regions (interior of Tunisia, South of Egypt, South of Algeria, interior of Morocco, etc.). This problem, hidden both in published statistics and at a qualitative and political level, was surely one of the sparks of the revolutions.

Graph 4: Degree of probability attributed to the following potential mid- to long-term hypotheses in the Mediterranean: Population and employment pressures in MPCS will intensify and create dramatic social tensions (%)

Source: Compiled by the IEMed based on the results of the 2nd Euromed Survey

Revolutions Instigated by Young People Who Are No Longer Afraid

Contrary to the fears which were around in political and populist circles in the North and among the intelligentsia, the revolutions were not started by Islamists, but rather have been prompted by middle-class youth with socio-cultural demands for dignity, employment, a better standard of living and the elimination of corruption, although the risk still exists that these demands might be hijacked. The “revolutions” or discontent are different from one country to the next, but they do have certain things in common:

– Young people have nothing to lose, having lost hope; humiliation and lack of future prospects are the common lot

– The internet, mobile phones and Al Jazeera TV were a major catalyst and played an information-sharing role

– There is a total absence of clear alternative solutions

The installation of new governments and new economic and social policies as well as the democratic learning process will doubtless be slow, perhaps excessively so for young people. This period of uncertainty, combined with increased insecurity (street justice returning following the throwing open of prison doors) might create a further risk of usurpation by undemocratic forces, religious extremists or the Army.

During a period of confusion, where controls are weak, illegal emigration increases, whether by the “usual suspects” who were just waiting for the opportunity, or by new candidates (for instance ex-members of the security services or the police).

We have not noted any explicit indication in the Survey or the responses (possibly because the official figures were lacking) of a more specific social malaise and youth unemployment. Just one respondent speaks of a “greater risk associated with a social deprivation and with conflicts.” The response in 2010 to question B.14.I which deals with unemployment and dramatic risks from social tensions was even slightly more optimistic than that in 2009 (see Graph B14.i above).

This broader response did not reflect any major fear in contrast to the reality on the ground.

Aid Policies From the Northern Mediterranean Countries Have Had a Limited Impact

Aid policies from the Northern Mediterranean Countries has been characterised by major support from the European Union (notably through EuropeAid and the EIB), and by specific programmes from a number of countries, in particular France, Germany and Italy. These programmes, however, have evolved over recent years and have suffered from

– a lack of consensus among donors: divergent or uncoordinated strategies for budget support, and technical assistance; as well as regional strategies which pit Eastern Europe against the Southern Mediterranean

– the economic and financial crisis, followed by budgetary and social crises: the poor from the richer countries do not want to continue paying for the rich in the poorer countries; budget restraints in the majority of Northern Mediterranean Countries reduce the level of development aid available for Southern Mediterranean Countries

– the mandate of European multilateral institutions has not been clear in relation to the South and the founding of the Union for the Mediterranean has just added to the confusion

– competition for aid from other beneficiary nations

Few significant comments were made in the surveys regarding the general aspects of aid, but numerous comments (from both North and South) referred to the targeting of aid and the weakness of its impact. For instance, “free trade and governance are important measures with a low cost; need to be accentuated”; “EMIPF and FEMISE have a certain impact”; “A drop in an ocean of needs”. Practically no mention is made of the content or objective of aid, nor did they discuss the instruments used.9 While criticism may be easy, nevertheless designing the programmes will demand a greater targeting to address the key issues for the future: good governance and the creation of employment; and perhaps new financing mechanisms will have to be established.

Southern Mediterraneans Have a Dualistic and Ambiguous Vision of the Role of European Countries

The vision in the Southern Mediterranean of the role of European countries is ambiguous. This was already noticeable at the time of the Survey responses. Those from the South indicated their need and desire for receiving more aid from the North but, at the same time, they did not want to be lectured to or treated as hostages to that aid. The comments are explicit. “The majority of aid stays in Europe.” “Cooperation should take place on an objective and egalitarian basis without obscuring its cultural and sociological dimensions.”

The Ufm as Envisaged and as it is Today

A Political Mandate That Does Not Address Policies And is of a Very Difficult Governance

This new institution, launched in 2008, took the place of the Barcelona Process and is currently structured around six “technical” initiatives. The absence of any reference to democracy and human rights in the declaration represented a backward step relative to the Barcelona Process objectives. At this stage, the organisation’s chief aims are mostly of an energy-related and environmental nature, issues that are far removed from the daily concerns of the people of Southern Mediterranean Countries. More contentious subjects such as emigration, the nature of the political regimes of Member States or the Israeli-Palestinian conflict (mentioned in many Survey responses from both the South and North) have been discarded. However, it is these points which were addressed and elaborated on by the majority of respondents, showing their relative importance.

Having “too many” countries and members (44 members) with diverging interests, economies, policies and structures means that the organisation is totally incapable of coming together on common projects, thus projecting an image of weakness. These differences also serve as a brake on consensus decision-making.

Little or No Financing, But a Theoretical Role in Mobilising Finance

The majority of respondents noted an almost total absence of results from the UfM. Rather than mobilising it, political interference has paralysed the institution; no noticeable progress has been observed in its first two years and its very existence has blocked action by other institutions wishing to launch initiatives in the (unclear) field covered by the UfM. Its mandate seems like Mission Impossible, with generous aims but without visibility, far removed from popular concerns and lacking stable financing for its operations.

Southern Mediterranean Countries Have to Cover a Lot of Ground to Achieve their Transition

It is clear that, following the “revolutions” in progress, Southern Mediterranean Countries’ priority requirements are for convergence towards the European per capita GDP and controlled emigration. Their principal needs and objectives can be summarised elliptically under three broad headings:

Conceiving a Vision of Nationhood and Policies Which Generate Confidence in the Future

– creating successful economies in the Southern Mediterranean and an image of progress It should include a future for the youth, both male and female

– making advances on the issue of transparency and democracy

– improving the quality of education (higher and in particular professional), tailored to the country’s needs; offering coaching and/or tutoring in certain activities as well as internships in Europe

– reducing income gaps for a more equitable redistribution of wealth between social classes and regions (also reviewing the tax structure and collection)

Reviewing the Economic Strategy and Mobilising the Public and Private Sectors to Set in Place Such Strategy

– creating jobs very quickly and sustainably

– creating local added value

– improving the physical spread of investment and job creation

– mobilising and drawing on their own financial resources (over-liquid banks in the recent past) for development

– creating local markets and trade among Southern Mediterranean Countries, beyond the Agadir Agreement, thereby reducing risks arising from export oriented strategies (particularly towards Europe for many countries). The rapid spread of the “revolutions” has demonstrated that different channels of exchange are not only possible, but already exist.

Initiating Inter-Mediterranean Projects and Exchange

– mobilising certain countries on issues of common concern and needing shared management

It is evident that all these actions cannot be set in motion immediately and that a detailed strategy would allow each country to arrange its priorities. These will obviously vary from country to country as a function of the social, economic and political context as well as each one’s capacity to arrange financing.

What Approach and Assistance are Possible From the Countries, Institutions and NGOs of Europe?

Many respondents clearly specify that Europe should not just be a false beacon for emigration, with fear-provoking police activities against immigrants, but should go beyond conventional aid, offering cultural exchanges, including universities and internships in businesses so as to create a stronger professional class. Aside from aid or budgetary support loans (which will be needed immediately to sustain the hard-hit economies of Tunisia and Egypt, and will be needed in other countries in due course), it will be crucial to package programmes which contribute directly or indirectly to the two prime priorities.

– governance and transparency

– job creation through various projects and financing or access to finance, projects that are practical

The aim of such a cooperation should be:

– to establish a favourable environment to build businesses, cooperatives or other social and economic bodies and to improve regional cooperation, taking into account specific local considerations. Support by Northern Mediterranean Countries could take a variety of forms, from plain organisation, to financing or technical assistance. The difference from programmes of the past should be marked by the increased and effective participation of civil society. Cooperation should not be merely a talking shop for experts and politicians.

– to improve the efficacy of those public services linked to businesses/economic activities through cooperation and twinning and lighten the regulatory burden where necessary (associated with the required reforms). These improvements might apply to taxes, duties and customs tariffs, the environment, and quality. Certain institutions, for example at the level of the environment and quality control. Certain organisations dealing with these issues could be common to two or more countries.

– to put in place coaching and tutoring for SME s and for young professionals, and for young people in general (male or female). That would allow young people to be better integrated into the economic fabric. It requires increased attention by programme originators (both in the South and North). An opening up by the North to interns from the South would give out a strong signal.

– to mobilise local financing (as mentioned earlier). Co-financing, using local savings and emigrants’ savings (or capital built up by those who have been successful) should gradually become the norm in order to even out the balance of payments and facilitate decision making. In the face of a probable decline in public financing, particularly from the Northern countries, it will be increasingly necessary to put in place financing where aid will be limited to interest subsidies or a credit risk guarantee (as already exist in certain current programmes) as well as project structuring and training where necessary. The need for greater local financing will demand the involvement of local institutions, which may need strengthening and/or restructuring. This will not only allow major projects to be financed (e.g. renewable energies, irrigation and access to water, monetisation of natural resources, infrastructure including for instance quality control labs, etc.), but also a large number of smaller projects involving young entrepreneurs and SMEs.

Finally, a communal vision arising from the current crisis could serve to launch the creation of a Southern Mediterranean market for goods, but also for services and human resources.

What Role for a “New Wave” UfM?

The UfM institution is ailing, but that does not mean that the idea of the Union for the Mediterranean should be abandoned. It is an important commitment to the longer term ambitions of the region. If the Union for the Mediterranean is synonymous with Euro-Mediterranean Partnership as stated on the European External Action Service’s website, it must take up and support “taboo” subjects such as governance and democracy, or ensure that they are integrated into the technical projects it supports. It appears to us that its role could be to project a nontechnocratic, non-political message of confidence as well as to create an image, an emotion, a vision for the future with which populations can identify. The UfM should facilitate a tangible improvement in the daily lives of the inhabitants of the Southern Mediterranean.

The obstacles encountered over the course of its two first years will not be resolved by revolutions – quite the contrary – and it is certain that the countries will continue to progress at differing speeds. It must therefore set aside for the moment any universal ambition and concentrate on a progressive model, which will result in a number of rapid and discernible short term results in the context of a long term common vision. The UfM, an innovative concept, should not replace banks and existing (or prospective) development institutions, but should rather be a centre for reflection, and ideas labs for the future, which could develop new lines of thought and projects to test with specific countries and institutions. It should not try to duplicate what existing institutions could do.

The relevance of the UfM’s priorities needs to be reassessed and reviewed. These priorities are certainly important, but it is essential to find projects that are meaningful and motivational for the Southern Mediterranean. The unemployed and the politicians — who now need to be elected democratically — do not prioritise the spending of money to clean up the Mediterranean. But, if it can be explained to them that it will enhance the quality of life and the image of their country and will attract a greater number of tourists, thus creating jobs, the message may be accepted. Communication needs to take into account the desire for development and transparency to arouse popular support and not just that of the elites. What point is there in cleaning up the water if one does not have access to it?

The revolutions in progress have thrown light on the diversity of countries and their needs and even, in the interior of several countries, the pronounced differences of clans, races and religions. Women also came out onto the street, without fear. Recognition of these patterns will imply the need to be pragmatic, not to impose projects conceived “from the centre” and, even more so, in Barcelona, but rather to put in motion projects with a limited number of partners (from both Mediterranean shores) with a shared genuine interest in their outcome. It should be remembered that the European ideal started with the ECSC (European Coal and Steel Community) established in 1951, which evolved into a European Economic Community (EEC ) of six notions set up by the Treaty of Rome in 1957. The community was progressively enlarged with new members emerging from autocratic regimes (Greece, Spain, Portugal) or other European countries persuaded of the benefits of such a joint effort. Simultaneously, specialist institutions were gradually created to support the aims contemplated in the treaties (Court of Justice, Parliament, European Investment Bank and so on).

As mentioned earlier, the UfM, as a generalist, should not be directly involved in setting up projects (which should be performed by existing or future specialised technical and financial institutions, be they public or private, from the North or South of the Mediterranean), nor in arranging and coordinating financing. On the other hand, working alongside project promoters and local representatives (both political and financial) it will be able to identify shortcomings in current mechanisms and institutions and propose novel approaches.

Finally, the UfM could perform the role of advisor and moderator to ensure a balance between the involved parties, always keeping in mind economic, but equally sociological and environmental context and outcome. It could accompany the execution of a project with a broad-brush monitoring of progress (whoever its initiators are) and help in re-examining strategies if necessary. In order for assessment to be possible, it will be essential to establish comparable data base and baselines, and this kind of project might involve several countries. All the foregoing could be discussed at yearly seminars/meetings putting in place measurable targets.

In conclusion, a broad panorama of innovative approaches is opening up across a range of countries and the institutions that assist and finance them. If it was hard to foresee these changes in the short term, they were predictable in the medium and long term. Following the revolutions and reforms in Southern Mediterranean countries, the ones in the North and the various institutions for cooperation will be forced to reflect self-critically in order to improve dialogues with the South and to build a balanced and solid cooperation with the active involvement of citizens at all levels.