Rhein on Energy and Climate

It has taken the “Arab Uprising” for the EU to re-discover its southern neighbours! It is most welcome for EU foreign ministers and Heads of government to have a serious discussion on how to help them starting or consolidating their transition towards democracy, the respect of basic freedoms, the rule of law and market economy. The EU has been engaged with its southern neighbours for more than 30 years, focusing attention on trade and cooperation without daring to tackle the core issues of political governance. It has opened its market for manufactured products, which has helped boost exports, but failed to create a comprehensive Euro-MED free-trade area, largely because of the regimes` unwillingness to engage with each other and the EU. The most impressive success story has been Turkey and not Egypt or Morocco!

So what should the EU do in the coming years to be more successful? And what are the limits of its policy? First, it should focus on those countries that are fully determined to undertake essential political and economic reforms, but without intervening in their affairs. With these countries it should enter into a quasi-permanent reform dialogue and make available the necessary funding. This should happen quietly, without big fuss. Effectiveness should be the name of the game. That is only possible in a bilateral framework that allows tailor-made solutions.

Second, the stillborn Union for the Mediterranean (UfM) will not be a useful vehicle. It was ill-conceived from the start and never got its act together. It lacks operational structures. It will need to appoint legitimate counterparts, and the stalemate with Israel following the Gaza war has proven to be increasingly embarrassing (the 2009 and 2010 UfM summits could not be held because of this). For all these reasons it would be best to freeze its functioning until the situation has become clearer.

Third, the EU should offer whatever technical expertise the transition governments or councils might require to re-start state institutions on a new democratic and lawful basis. In doing so it should show comprehension for the almost impossible job such interim bodies are confronted with in advancing rapidly, within the delays fixed by constitutions, e.g. for election of new heads of government or parliaments. And its support must not smack of foreign intervention. Tunisia, Egypt etc. have a lot of domestic wisdom and expertise on which to build before calling upon “European experts”.

Fourth, economically the most urgent challenges are job creation and training. But, however urgent, this issue will be solved in years not months! It is therefore necessary not to rush things. To alleviate unemployment the most urgent and effective remedy is the rapid restoration of tourism, especially in Tunisia and Egypt. This will happen automatically as security and normal living conditions will be restored. EU governments should scrap their travel warnings in return for the lifting of the emergency status and the restoration of safety. This is something that should happen in weeks not months. The EU should, of course, stand ready to help governments modernise major pieces of legislation and, at least as important, lend a hand in training judges. This will be a process extending over the next decade or even longer.

Over the long-term, the EU should use the financial vehicles already existing in the region for employment and business creation, provided their accounts are properly managed and monitored by certified accountants. The EU has had good experience with such programmes, often run jointly with the World Bank. To create jobs, the region will need massive private investment in manufacturing and services. Companies from Europe and the Gulf could play a crucial role, if they encountered a favourable business climate. However, because of an unsatisfactory business climate – corruption, non-transparent legal and administrative procedures, favouritism – European business has in the past shown too little interest in the region. Joint ventures between European and Arab companies might be an effective method of creating jobs and helping our southern neighbours to enhance competitiveness against imports from Asia.

The EU Commission should assume a role of catalyst for bringing business from both sides together and listening to their suggestions for reforms. The EIB should stand ready to assist such business cooperation with long-term loans, for which the EU should lift its guarantees by € 1 billion. But the region must also address the dire need for a qualified labour force, especially in Egypt and Morocco, which have neglected basic and vocational education and teacher training. Education should be a priority for future cooperation. To be effective, the EU should engage in a multi-annual programme for primary, vocational and teacher training that should include teaching methods and curricula. The task is gigantic. The EU should not hesitate to invest one third of the total funding available until 2013, say some € 2 billion. Here too it should call upon the World Bank to participate.

To give a boost to agricultural employment the EU should conclude the ongoing negotiations for agricultural free trade and temporarily exempt restrictions (duties and quotas) for agricultural products imported from Egypt, Morocco and Tunisia. But the effect on employment will be rather marginal. The employment issue in the region is aggravated by continued population growth. With the exception of Tunisia, no country has dared to tackle this issue. Without pressing the case, the EU should declare its willingness to fund any population programmes governments might wish to initiate. Better educated women will have fewer children and thus reduce the unsustainable demographic pressure on the labour market and the environment. Whatever boost the EU gives to the basic education of girls will therefore have a positive (though strictly long-term) impact on fertility and population increase.

Fifth, the region will need substantially more technically and scientifically trained young people. Under its “Erasmus Mundi Programme” the EU should offer up to 4000 scholarships to students from Algeria, Egypt, Jordan, Morocco and Tunisia in the next four years.

Sixth, looking forward to 2050, North Africa will become Europe’s major supplier of solar energy. The EU should immediately start investigating opportunities with those countries interested in engaging in a future solar-energy cooperation. The three Maghreb countries are the most likely candidates for such links.

Seventh, for social reasons the EU will not be able to open its floodgates to millions of poor Arabs. It must clarify this point. But it should, however, show itself more flexible when it comes to granting visas, for business people, researchers and scientists.

Eighth, EU financial assistance is presently ruled by extremely bureaucratic rules and procedures. The EU Commission must urgently review these in view of simplification . Without such a reform much of the political credit of EU financial assistance is being lost.

In conclusion, there are no political gimmicks or quick fixes for turning North Africa into democracies, fully respecting the rule of law, with functioning market economies. It will be a challenge for the next 30 years. Europe has a vital interest in a smooth transition. It will need to invest much more political and human capital in this venture. It should have learned the lesson from the uprising, which has also been a slap in the face for having indulged too long in supporting corrupt and repressive leaders.

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