Panel 6J

The Mediterranean Rim Economies: Time for a Re-think

15.00 – 17.00
Chair: Mina Toksoz, Manchester Business School

The Mediterranean Rim: Looking for a Growth Engine

Mina Toksoz, Manchester Business School

The wave of global integration in the past decade mostly passed by the Mediterranean rim –leaving it fragmented with the national economies on its shores looking elsewhere for growth and widening the social and political distance between its shores. Over the past few decades, while the southern EU economies turned northwards and eastwards, the economies on southern shores of the Mediterranean looked to the rapidly growing Gulf and Asia. The social benefits of a decade of growth in the 2000s remained limited due to oligopolistic economic structures that relied on expanding public sectors and debt, hampered competition in the domestic market, fostered corruption and kept unemployment and social conflict high. These issues are echoed in the southern EU economies, where the bursting of the Euro-zone credit bonanza has left behind stagnant growth, high debt and unemployment, and revealed the hold of patronage-relations, barriers to competition in services, and lack of transparency and corruption in finance and local authorities. Economic policy needs a rethink approaching the common problems of the region as a whole. Existing trade clusters in the Mediterranean-rim need to be deepened and widened on an east-west axis as well as the north-south axis. This should be combined with investment to support logistics infrastructure in coastal growth centres. EU policy in turn should identify and reinforce potential national growth engines rather than general all-encompassing policies with dispersed impact that are mostly driven by security concerns.

New Economic Models for the Middle East and North Africa

Claire Spencer, Chatham House

In principle, regional economies in which two-thirds of the population are under 30 years of age should be dynamic and ready to embrace the technological changes already shaping the world’s new economic potential. Yet, youth unemployment in the Middle East and North Africa (MENA) is amongst the highest in the world (as in southern EU). Almost as alarming has been the lack of urgency and imaginative policymaking to address this situation. Youth-focused policies and new growth models based on integrated internal and external markets are clearly well overdue. One of the region’s overlooked positives is that the MENA region’s access to mobile phones currently stands well above the world average at 108% in 2015 – suggesting the huge scope for innovative, entrepreneurial solutions to the unemployment problem. For example, local app developers have taken matters into their own hands in places like Morocco (where mobile coverage is at 140% of world average) to develop voice-activated software for semi-literate rural communities to access local goods, services and markets.  This paper will explore how policies at international, national and local level can help create an enabling environment for the “new economic sector” by reducing the bias against SMEs in tax and support access to finance and IT to enable small informal start-ups to up-cycle into resilient businesses.

The Structural Reform Challenge in Southern EU

Charles Jenkins,

The problems of the Mediterranean rim economies need to be seen in the context of the economies on its northern shores as well as in the south. Of the major Mediterranean EU members, trade around the Mediterranean rim accounts for 25-30% of total with around half of this with the non-EU economies. Growth in the EU-Med was driven by a credit bonanza that burst after the global financial crisis leaving behind stagnant growth, high unemployment, and debt. All now face formidable structural reform agendas not dissimilar to those in the southern shores of the Med. Reforms to reduce the patronage relations by strengthening rule-of-law, reducing barriers to competition in services, increasing transparency in local authority entities and anti-corruption measures. One way of overcoming the EU southern rim competitiveness problems (vs northern EU) is for more inter-industry linkages with southern Med as had begun in the late 1980s but was interrupted.

The US Approach to the Mediterranean

Katerina Dalacoura, London School of Economics & Political Science

The paper argues that US foreign policy towards the Mediterranean is characterised by an interplay between security and geopolitics on the other hand; and political economy concerns (mainly energy) on the other. The Mediterranean lies at the intersection of three critical regions for US foreign policy: Europe, the Middle East and North Africa. The paper outlines the historical evolution of US attitudes towards the Mediterranean, from the Cold War to the post-9/11 periods, before concentrating on the contemporary situation. This has been shaped, for the US, by three events: the euro-zone crisis and its impact on Southern Europe; the 2011 Arab uprisings and the instability they have unleashed; and the refugee crisis which intensified after 2015. The chapter shows that the US outlook towards the Mediterranean under the two Obama administrations (2009-16) was shaped by, first, a shift in the global US focus away from the broader region towards Asia and, second, an attempt to achieve a more realist policy by aligning means and ends. It investigates the US policies towards the three Mediterranean sub-regions, the Eastern Mediterranean, North Africa and southern Europe. It shows that US policy towards the Mediterranean remains fragmented and that this may only change in future if vital US interests are perceived to be at stake.