Conseil De L'europeunion Européenne

Council of EuropeEuropean Union

Conseil de l'EuropeUnion européenne

European Forum Cyprus

ΕΥΡΩΠΑIΚΟΦΟΡΟΥΜΚΥΠΡΟΥ AVRUPA KIBRIS FORUMU

Peace and Security in the Eastern Mediterranean

organised

in co-operation with the Goethe-Zentrum Nicosia

Co-funded by the European Commission

Nicosia, 24-25 September 2010

Europe and the Eastern Mediterranean

Prof. Iván MARTINAssociate Researcher at the Instituto Complutense de Estudios Internacionales, (Madrid)

Outline

1. Prospects and challenges in the Mediterranean
2. The European Union and the (Eastern) Mediterranean: objectives, actions, instruments, resources
3. Conflict resolution as a prerequisite for cooperation and development or as a consequence thereof?
4. Prospects for cooperation and questions for partner countries in an interdependent Mediterranean region

The Mediterranean in 2020: Main Trends

Of course, there are many ways to look into the future, many strategic vectors to look at, many context and dynamic factors to take into consideration, different perimeters or “areas” to focus on.[1] From an economic and social point of view, however, there is hard evidence that the Mediterranean constitutes a forward-looking unit, i.e., that, in many respects, it has a common future to share. Among the many issues that could be picked to prove the case (environment in general, energy, urbanization….), four main trends in the Southern and Eastern Mediterranean countries that will determine the future of the Mediterranean, and hence of its regions, highlight the high level of interdependence across the Mediterranean, common challenges and potential synergies:

• Demographic Dynamics and Employment

Figure 1. Total Population in the Mediterranean. 1990-2020

The Arab Mediterranean Countries (AMCs, i.e. Morocco, Algeria, Tunisia, Egypt, Lebanon, Jordan, Palestine, and Syria) are, taken together, the world region with arguably the most daunting employment challenge, at least in relative terms. Official labour participation rates there are the lowest in the world (below 46% of the working age population, compared to the world average of 61.2%), reflecting the lowest female participation rate in the world (below 25% as compared to a world average of 42%). Despite this, average unemployment rates (almost 15% of the labour force) are higher than in any other region with the exception of Sub-Saharan Africa.

Demographic projections for the coming ten to fifteen years, with an expected increaseof 2.5 million a year in the working-age population (see Figure 1), make all foreseeable scenarios even bleaker. Adding together the projected needs for new jobs calculated under conservative assumptions on the basis of national statistical sources, the AMCs will need more than 1,500,000 additional jobs a year over the next 10 years (see Table 1) in order to provide employment opportunities for new labour market entrants and to keep the number of unemployed unchanged (already 7 million before the crisis). And these figures may be significantly underestimated, since they are based on the (hardly realistic) assumption that there will be constant labour participation rates. The 15 million new jobs which are needed up to 2020 would therefore mean an increase of 30% in relation to the current level of total employment in these countries, and would amount to between 1/3 and 2/3 more jobs per year than those created over the last five years in the region, a period of marked economic prosperity with average yearly growth rates of 5% for the region.

Table 1. Estimation of Yearly Job Creation Needs up to 2020*

*Assuming unchanged labour participation rates and number of unemployed.

Source: “Labour Markets Performance and Migration Flows in Arab Mediterranean Countries: Determinants and Effects,” see footnote 2.

A study commissioned by the European Commission in 2009[2] concludes that immediate action is needed, because the status quo in terms of employment risks causing not only serious social and even political instability, but also permanent damage to the development prospects of these countries.

• Water Access and Availability

Figure 2. Water availability (2007)

Always considered in relation to people’s living conditions, a glance at Figure 2, a map of the world’s fresh-water availabilities,clearly shows a common characteristic of the countries to the south and east of the Mediterranean: all of them, from Morocco to Palestine, have less than 1,000 m3 per year of available waterper inhabitant, the lowest levels in the world and well below the threshold of 1,700 m3of renewable water laid down by the United Nations Environment Programme (UNEP) as the minimum necessary to cover the basic needs of the population. Half the world’s population suffering this type of “water poverty” lives in the Mediterranean. In this situation of “water stress,” access to drinking water has already become one of the main factors of social instability and a recurrent source of conflicts in the region.[3]

The figures are eloquent: 30 million inhabitants of the Mediterranean Partner Countries have no access to drinking water, and 35 million have no access to sanitation, and the United Nations Development Programme (UNDP) is already forecasting that the Arab countries will not reach the Millennium Development Goal of “reducing to half by 2015 the percentage of persons without sustainable access to drinking water and to basic sanitation.” Besides this, the distribution of water resources between the north and the south of the Mediterranean is as unequal as the distribution of income (and inverse to the distribution of energy resources): the north has 75% of the total renewable water resources in the Mediterranean Basin, the east has 13% and the south of the Mediterranean only 10%, whereas more than 80% of the land in North Africa is desert. The demand for water in the countries to the south and east of the Mediterranean, which has grown by 60% in the past 25 years, is set to continue growing, and the scarcity of water in the south can only get worse in the coming decades, especially as a result of demographic growth (an increase is expected from the present 270 million inhabitants to 370 million by 2030) and growing urbanisation, but also as a result of the increase in agricultural production (FAO calculates that irrigated lands will grow by 38% in the south and 56% in the east of the Mediterranean by 2030), together with climate change and the desertification of part of their lands: according to estimates by Population Action International, the per capita water availabilities will remain at stable levels between 1995 and 2005 to the north of the Mediterranean, and will be reduced by 40% to the south and east.

Thus, the issue of water needs to stop being treated, as hitherto, merely as an environmental problem (which it is, of course): it is an essential factor in economic development (especially in relation to agriculture, which consumes between 70 and 85% of available fresh water, but also in relation to tourism and industry), and it is also a social issue of major importance (it should not be forgotten that access to drinking water is, above all, a human right), central to poverty-fighting strategies in the region, besides being an ever more pressing geopolitical problem. But all this should not make us forget that the issue of water is, above all, an issue of efficiency in the management of available resources: between 40 and 50% of available water is lost in leakage from the distribution systems. Here the city governments, but also local and regional authorities more generally, have an important role to play, and decentralized cooperation could take the lead.

These major challenges of employment and water availability, with a direct effect on people’s living conditions, are compounded by the challenges of food security (the AMCs have a structural deficit in basic food production) and environment deterioration.[4]

• Development finance

With the exception of oil- and gas-producing countries (in the region, mainly Algeria and Syria), Arab Mediterranean Countries still have a major shortage of resources for development. The inflow of migrant remittances was 26 billion US$ in 2007, amounting to 9.5% of the GDP in Morocco and more than 20% in Jordan or Lebanon. Foreign direct investments were 24.2 billion US$ in 2008 according to the IMF for all the Arab Mediterranean Countries, hence excluding Turkey, but much too volatile, descending to 16.2 billion US$ in 2009, and too concentrated in Egypt, which absorbs around half of the total. Aid was around 6 billion US$ a year for the AMCs. These resources do not make up for their structural trade deficits (according to IMF figures, the AMC currentaccount deficit amounted in 2009 to 16.5 billion US$, and this despite the surplus registered by Algeria as the only country in the region) and the external debt service (exceeding 20 billion US$ a year).[5] In economic terms, this means that they are indeed financing the development of the rest of the world, instead of benefitting from development finance for their own development needs.

The recent “Report on Co-Development Financing in the Mediterranean,” drafted by the “Milhaud Commission” under the mandate of President Sarkozy[6] confirms this lack of financial resources and the need for public investment as a leverage for development in the Mediterranean. This makes the contribution of EU funds to development in the Mediterranean Partner Countries critical, and focuses attention on the coming EU Financial Perspectives 2014-2020 as a possible turning point in this regard.

• Convergence

Figure 3. The income divide

As a result of the former issues (low employment rates and a deficit of development finance resources), the Mediterranean has emerged as one of the most acute economic dividing lines in the world (Figure 3), with an income gap of close to 10 which has hardly been reduced over the last fifteen years (if one excludes the statistical effect of EU enlargements in 2004 and 2007). In Purchasing Power Terms, the income gap has hardly been narrowed between the euro zone and the MPCs since 1995 (see Table 2): at this pace of convergence, Morocco would need 241 years to reach 50% of the Euro area PPP GDP per capita, and Tunisia more than 62 years, for instance.

The convergence situation is still more dramatic if we look into development gaps within the AMCs, given the important income disparities between AMC regions. A real convergence policy is arguably the most pressing rationale for enhanced co-operation across the Mediterranean, and regions have an important role to play in it.

Table 2. GDP per capita 1995-2007 (PPP constant 2005 international US$)

a) Weighted average. In parenthesis, the ratio to GDP per capita of the Euro Area.

Source: World Development Indicators Database, World Bank

Euro-Mediterranean Cooperation:

Taking Stock of the Situation

The wide range of cooperation programs between the European Union (EU) and Mediterranean Partner Countries (MPC) is the result of multiple initiatives and strategies pursued by EU institutions toward the region since 1995. The “layers” of cooperation that have been superimposed over the years include:

1) The Euro-Mediterranean Partnership (since 1995), also known as the Barcelona Process;

2) The European Neighbourdhood Policy since 2005;

3) The Union for the Mediterranean (since July 2008);

4) The Advanced Status, granted toMorocco in October 2008.

This note aims at giving an overview of the current situation including a review of the status of each of these cooperation initiatives. A comparative table presents in pages 4-5 the respective priorities of the different cooperation schemes and their main fields of action, largely superimposed. They concern the cooperation between the EU on the one hand, and Morocco, Algeria, Tunisia, Egypt, the Palestinian Authority, Israel, Jordan, Lebanon, and Syria, on the other. Libya, for the moment, has (auto) excluded itself from Euro-Mediterranean cooperation. Turkey benefits from a pre-accession strategy since 1999.

The Euro-Mediterranean Partnership

In November 1995, the Euro-Mediterranean Conference of Barcelona gathered the Ministers of Foreign Affairs of the 15 Member States of the EU at that time and of 12 MPCs (Algeria, Egypt, Israel, Jordan, Lebanon, Morocco, Syria, Tunisia, the Palestinian Authority, Turkey, which became candidate for accession in 2004, and Cyprus and Malta, new memberStates in 2004). They adopted the Barcelona Declaration[7] (a political document, not a legal instrument), which founded the Euro-Mediterranean Partnership (EMP). Its overall objective is to turn the Mediterranean into “an area of dialogue, exchange and co-operation guaranteeing peace, stability and prosperity” that “requires a strengthening of democracy and respect for human rights, sustainable and balanced economic and social development, measures to combat poverty and promotion of greater understanding between cultures, which are all essential aspects of partnership”

The EMP is a global process that includes:

- establishing a common area of peace and stability through strengthened political dialogue (Political Chapter);

- implementation of an economic and financial partnership and progressive establishment of a free trade area for 2010 (Economy Chapter);

- bringing peoples closer and developing exchanges between civil societies (Social, Cultural and Human Chapter). In 2005, a new chapter on justice and home affairs was added.

The multilateral follow-up of the EMP is performed through periodic meetings of Ministers of Foreign Affairs (approx. every 18 months) and by the “Euro-Mediterranean Committee for the Barcelona Process” of senior officials who meet, in principle, on a monthly basis. There are also sectoral ministerial meetings, in which the ministers agree on joint conclusions, with a summary of discussions, a number of general political declarations and the objectives of actions to be engaged in the respective field. These conclusions are essentially a tool for political and policy dialogue[8].

The legal instruments implementing the Euro-Mediterranean Partnership are bilateral Association Agreements (AA) between the European Union and each of the Mediterranean Partner Countries that have come into effect between 1998 (for Tunisia) and 2005 (for Algeria). Syria has not signed its AA yet. Association Agreements[9] provide for bilateral Association Councils that meet annually at ministerial level to evaluate the progress accomplished and to determine political priorities for cooperation.

The core of the EMP is the creation of a Euro-Mediterranean Free Trade Area scheduled for 2010. To this effect, AAs provide for the creation of bilateral free trade areas (FTA) for industrial products (with negotiations for the progressive liberalization of trade in agricultural products) between the EU and each MPC, with a transition period of 12 years for total customs tariffs dismantling on these products on a basis of reciprocity.

MEDA programs have provided financial support for the modernization process in MPCs and to mitigate short-term adverse effects of the FTA (€4.6 billion for the period 2000-2006 or an approximate average of €3.50 inh./year[10]).A small share of MEDA funds also finances regional programs (see EUROMED Background Note n°2).[11]In addition, the Facility for Euro-Mediterranean Investment and Partnership (FEMIP)[12] created in 2002 within the European Investment Bank grants loans to MPCs for direct support to private sector development and for infrastructure projects. Since 2004, the FEMIP has provided credit for an amount of €6.7billion to MPCs and it has a lending envelope of €7.6 billion for 2009-2013.

Since 2004, a series of new Euro-Mediterranean institutions have been created: the Euro-Mediterranean Parliamentary Assembly (2004), the Anna Lindh Foundation for the dialogue between cultures (2005) and the Euro-MediterraneanUniversity (2008). These will soon be followed by the creation of the Euro-Mediterranean Regional and Local Assembly (EMRLA). (See EUROMED Background Note n° 3.)

The Five Year Work Program[13] adopted during the Euro-Mediterranean summit of Heads of State and Government held in Barcelonain November 2005 established a series of general objectives and specific goals for each of the four chapters of Euro-Mediterranean cooperation. The absence of local and regional authorities in this Program was manifest.

Work Program for 2009

During the Marseilles Euro-Mediterranean Conference of Ministers of Foreign Affairs,[14] the ministers agreed on the principle of adopting a bi-annual Work Program during each bi-annual Summit and established the Program for 2009, with an indicative list of ministerial meetings[15]. Due to the political stalemate of the Partnership since 2008, only four ministerial meetings have been held in 2009 (water, employment, sustainable development, and economy and finances).

A new trend has emerged recently from ministerial meetings, that is, using work programs, action plans or even full-fledged Euro-Mediterranean strategies to coordinate actions designed to achieve sectoral objectives:

- In the transport sector, the Regional Transport Action Plan (RTAP) for the Mediterranean;

- In the field of energy, the Priority Action Plan for 2008-2013(approved at Cyprus, December 2007);

- A work program on tourism to be elaborated and submitted during the next ministerial conference in 2010 (decided in Fez, 2-3 April 2008);

- A process that should lead within a two-year period to a new Euro-Mediterranean Culture Strategy (Athens, 29-30 May 2008);

- A Mediterranean Maritime Strategy to be developed according to the Marseilles Declaration;

- A Framework of Actions to develop a genuine social dimension of the EMP approved by Employment Ministers (Marrakech, 8-9 November 2008);

- A long-term water strategy for the Mediterranean currently being defined (Jordan, December 2008).

The Marseilles Declaration also provides for a new field of cooperation in Urban Development, with the involvement of regional authorities to define appropriate planning.

The Union for the Mediterranean

Following a personal initiative of the President of France, Nicolas Sarkozy, and after more than nine months of intense internal debate within the EU, the Union for the Mediterranean (UfM) was launched in July 2008 during the Paris Summit with the accession of new Mediterranean partners, the gradual establishment of a new institutional structure (Co-presidency, Joint Permanent Committee, Secretariat) and the identification of six concrete regional projects. The founding documents of the UfM are the Declaration of the Summit of Euro-Mediterranean Heads of State and Government held on 13 July 2008 in Paris, the “Paris Declaration”,[16] and the Final Statement of the Conference of Euro-Mediterranean Ministers of Foreign Affairs in Marseilles[17].