Special Event – How urgent it is for Europe to play an active role in the stability and prosperity of the Mediterranean region?

Speakers: Ridolfi Roberto, Denis Bruno, Baba-Aissa Adel, de Fontaine Vive Philippe, Kitti Cleopatra, Saidi Nasser, Spyropoulos Nick
Moderator: Davis Jacki

On Wednesday the 13th of January in Brussels, PubAffairs Bruxelles hosted a debate on how urgent it is for Europe to play an active role in the stability and prosperity of the Mediterranean region. The debate was moderated by Jacki Davis, journalist and moderator, while the discussants were Mr Roberto Ridolfi, Director for Sustainable Growth and Development, European Commission, DG DEVCO, Mr Bruno Denis, Head of Division, Public Sector/South, Neighbouring Countries Department, European Investment Bank, Mr Adel Baba-Aissa, Managing Director of Renewable Energy Partner and Mr Philippe de Fontaine ViveEuropean Investment Bank Honorary Vice-President.

Before the debate started, Mrs Cleopatra Kitti, Chair of LITUS and founder of the Mediterranean Growth Initiative (MGI) and Dr Nasser Saidi, President, of Nasser Saidi and Associates, gave an introductory and a preface speech, while Mr Nick Spyropoulos, Director, Alma Economics, presented the key findings of the Mediterranean Growth Initiative (MGI) Report.


About the debate

Mrs Cleopatra Kitty began her introductory speech by outlining the main features of the Mediterranean Growth Initiative (MGI) which was created in order to re-energize both the thinking and the doing about the Mediterranean region. She highlighted how the MGI Report is a result of this approach which aims at engaging with investors, capital markets, the private sector, regulators as well as European citizens in order to develop awarness of the range of opportunities already offered by Mediterranean countries.

Dr Saidi started his preface speech by stating that there is a need to rethink the strategic importance of the Mediterranean for Europe as current events are demonstrating. He stated that the perception of the countries which surround the Mediterranean basin, which extends from the Western Balkans towards the Middle East and the Maghreb and includes the Southern part of the European Union, is often misled or limited to the Barcelona Process and/or to oil and gas resources, whereas, it should be worth considering a more comprehensive approach to this geographical area. In this regard, Dr Saidi noted that, although Europe is already engaged in the Mediterranen basin, a large part of investors’ resources are dedicated to oil and gas industries, notably capital intensive and with limited spill-over effects on job creation. Dr Saidi continued by emphasising that the demographic trends of several Mediterranean countries offer the opportunity to initiate a process of inclusive growth, if combined with an appropriate strategy. For these reasons, the Mediterranean Growth Initiative (MGI) report aimed at providing guidance by data and indicators for both policymakers and the private sector in order to start addressing these issues. According to Dr Saidi, the report clearly demostrates that there is a large spectrum of investment opportunities. He also regarded infrastructure as an important enabler and a determining factor  in attracting investors, however, he emphasised that  policy makers should avoid considering the lack of infrastructure as the main obstacle to development. As a result, several more enablers, as well as an attempt to reconstruct countries that have been impacted by the Middle East ‘s recent turmoil are, in his opinion, necessary. By referring to the Sykes-Picot agreement, Dr Saidi expressed the hope that EU countries have learned from the past and will start addressing the questions emerging from the area by focusing on the need for a sustainable and mutually beneficial economic development paradigm as, in his view, the Mediterranean basin is not only Europe’s neighbouring region, but also a potential strategic partner.

Mr Spyropoulos started his intervention by remarking that the Mediterranean Growth Initiative Report utilises the most recent data available and provides for an in-depth analysis which tracks and benchmarks the performances in several pivotal strands of the political, economical and societal dynamics of the Mediterranean region, such as education, migration and governance. It also highlights the potential of some strategic domains, such as transport, energy and private sector development. Mr Spyropoulos emphasised that the aim of the report is to offer a clear picture of the state of play and the economic potentials of the area, while giving a forward-looking perspective for the future. He then stated that it must be taken into account that there is an important distinction between the rich countries in the European South and the poorer countries in North-Africa and the Levant. However, he also underlined that one of the key findings of the report is that the growth potential in poorer countries is higher. Mr Spyropoulos continued by touching upon the question of governance and intra-Med cooperation by remarking that, contrary to historical trends, the report found a substantial lack of interconnection and political cooperation. He then stated that several countries, especially but not exclusively, North-African, are making valuable progress with regard to the educational system,  a primary condition for liberating the untapped potential of the area. Mr Spyropoulos concluded his intervention by affirming that another non-negligeable finding is that population ageing trends in EU countries can be compensated for by the demographic gains of Mediterranean countries.

In the first part of the debate, Jacki Davis introduced the speakers and the theme of the debate by referring to Dr Saidi’s speech and to the fact that EU investments in the Mediterranean region are urgent for both the Mediterranean region and Europe. She then gave the floor to the discussants by asking their opinion on the current role of Europe in fostering prosperity and stability in the Mediterranean region and the initiatives undertaken so far.

Mr Ridolfi answered the question by stating that the EU is already taking some valuable initiatives. He added that, there is also a good chance that this trend will see an acceleration in the very near future. He continued by referring to the migration crisis as the tip of the iceberg of the phenomena occurring in the Mediterranean region and beyond. According to Mr Ridolfi, both the EU and national governments have not achieved all results to foster economic and societal growth. Mr Ridolfi then referred to the Juncker investment plan to leverage public and private investments in the EU as an example of action which can be used to create multiplier effects. He also added as an example that already in 2007 the EIB and the European Commission launched the GEEREF fund with the aim of fostering energy efficiency and renewables in partner countries and that each euro  paid by tax payers for the GEEREF fund is now delivering 32 euros of investments. Mr Denis clarified that speed of implementation is a key factor, nevertheless he also noted that it is crucial to choose the most appropriate initiatives. He continued by stating that if we look at the quality of European investments in the region over time, there have been improvements. Mr Denis also agreed with the analysis of Mr Ridolfi and stressed that by enlarging the range of partners and by taking into account market and risk approaches, the EU has been and will be able to expand its reach. Finally, Mr Denis pointed out that a lack of clear communication about the EU priorities towards the region may also constitute an obstacle to these processes. Mr Baba-Aissa was convinced that the EU still has a big role to play, however he stated that there is still room for improvement. In his opinion, the EU can improve the quality of its actions at three levels: firstly, by fostering and helping startups and entrepreneurship, as the private sector is currently too constrained in the Med region, since it has the greatest potential to tackle youth unemployment, a central societal issue within the region; secondly, by helping SMEs which, according to the speaker, are the real job creators and, again, in order to tackle the question of employment; thirdly, by helping the big corporates and “national champions” that reached a plateau in their market to expand regionally within the Mediterranean and internationally towards the EU. Mr de Fontaine Vive stated that the Mediterranean Growth Initiative report provides for an alternative approach to the issues at stake by giving a global perspective of the Mediterranean. In his view, by considering exclusively the individual Mediterranean countries, although some of them are of  respectable size, investors tend to consider them as narrow markets. Whereas, by taking into consideration the region as a whole as per the Report’s approach, the perception of the scope of the opportunities is immediately evident. Mr Fontaine Vive also agreed with the analysis of Mr Ridolfi on the Juncker plan as a way to create growth and jobs both within and outside the EU. In support of this opinion, he referred to a cooperation project between Spain and Morocco. Dr Saidi pointed out the fact that the Report provides, for the first time, publicly available information for both public institutions and investors. Dr Saidi continued by touching upon the Barcelona Process and the lessons learned by this experience. The speaker firstly recalled the importance of fostering integration within the Mediterranean region in order to establish intra and extra Mediterranean trade and enable SMEs to be created and grow. In order to achieve these aims, Dr Saidi stressed the importance  of reassessing not only the economic aspects of this process, but also the policies and the governance behind it, for example, by fighting corruption, nepotism and by establishing an effective rule of law. In this respect, Dr Saidi stated that the EU has a similar role to that of  Europe with regard to Central Eastern and Southern Eastern European Countries. Dr Saidi advocated for the creation of a forum such as the Central European Initiative in order to bring together leaders and foster a high-level political dialogue in order to “de-risk” the region from the dangers of political instability and to attract private investors. Finally, by highlighting the need for the EU to attract capital, the speaker underlined the importance of enhancing the dialogue between Europe and the Gulf countries in order to foster growth both within the Mediterranean and within the EU.

A second point of discussion focused on the lessons that can be learned from the past about the politics, economics and the processes for the achievement of stability and prosperity of  the Mediterranean region.

Mr Ridolfi underlined that regional integration is by far the best selling value of the EU and that a similar model should be applied in the Mediterranean. He continued by agreeing with Dr Saidi on the importance of de-risking both the political and economic landscape of Med countries as a means  of enhancing the private sector financing. On the same note, Mr Ridolfi pointed out that by 2050 the African population will have increased to 2 billion people. As a result the huge potential consumer demand in Africa could offer an enormous opportunity for development in Mediterranean  countries. On the EU side, in Mr Ridolfi’s view, another complementarity already discussed in the debate is the EU demographical challenge. The speaker further advocated for a comprehensive approach to development as the dynamics of neighbouring and non-neighbouring blocs have to be considered as links of the same chain. Finally, Mr Ridolfi acknowledged that the blending of grants and loans has to happen in a deeper, broader and smarter way while taking into account that governance and national governments ownership is also an essential aspect. Mr Baba-Aissa stated that in non-EU Mediterranean countries, especially in the Maghreb region, there is a positive feeling towards the EU whereas this is not necessarily the case between neighbours. According to Mr Baba-Aissa, the question of perception is of high importance as the lack of integration is a barrier to growth. On the other hand, the speaker pointed out the example of gas pipelines  going  towards Morocco and Tunisia from Algeria as a positive example of cooperation. Mr Baba-Aissa concluded that the EU can play an important role by setting the tone of the relationship both by indicating the opportunities which Europe can offer and inviting  the Mediterranean countries to cooperate with each other. Mr de Fontaine Vive highlighted leveraging and the use of taxpayer’s money as multipliers rather than subsidisers as a pivotal factor of growth in Europe which can be exported in the Mediterranean. In this regard, he acknowledged that the newly conceived blending mechanisms offers a series of examples on how Europe Vive can help the region while taking care of its legitimate interests at the same time. Mr de Fontaine Vive finally pointed out the importance of the development of the agricultural sector in the Mediterranean also for its labour intensity features while underlining that many of these countries are paradoxically EU importers. Mr Denis commented on two main points of discussion. First of all, he recalled the importance of the physical environment as a key enabling factor to create prosperity by requiring investments in areas such as transport infrastructures, city planning and water management. In this regard, he highlighted that the EIB is currently focusing on these domains in order to facilitate this investment process. With regard to the interrelations between private sector and education, Mr Denis identified the insufficient level of higher secondary education degrees in science and technical domains as an impediment for the flourishing of the private sector and, as a result, for initiation of a successful intra-Med trade. Dr Saidi stated that a set of initiatives is urgently needed, first of all at a domestic level, as in his opinion it would be difficult to initiate an effective development process if Mediterranean countries do not identify internally the investment priorities. In this context, he stated that the blending process can foster investments. Whereas, with regard to the public sector, in his opinion, it is crucial to provide for supporting actions in order to build infrastructures. Dr Saidi continued by stating that the level of tariff and non tariff barriers is still too high in order to create a valuable intra-Med trade and added that paradoxically Mediterranean countries have often agreed with the EU that which  they have neglected to agree with each other. For these reason, Dr Saidi concluded by stating that there is  not only a need for a deeper and comprehensive free-trade agreement between EU and non-EU Mediterranean countries, but Europe should also play a role of trade facilitator among Mediterranean countries.

The final part of the debate and the Q&A session also covered the following issues: how priority sectors for investments can be determined; energy infrastructures as enablers to development; gas plant efficiency, renewable energy production, the question of agricultural products export to the EU, the importance of local projects to stimulate urban  development, the role of Israel in the Mediterranean, the relevance of the Juncker plan for the Mediterranean, SMEs development and finance access, SMEs development in the informal economies, the EU as an honest broker negotiator in the Mediterranean.

Do you want to go further into the issues discussed in our debate? Check our list of selected sources which we have provided for you 

Mediterranean Growth Initiative (MGI) Report – Litus Advisory

Southern Neighbourhood – European Commission – DG NEAR

Building partnerships for change in developing countries – European Commission –  DG DEVCO

Euro-Mediterranean partnership – European Commission – DG TRADE

Barcelona Process – European External Action Service (EEAS)

Investment Security in the Mediterranean – Organisation for Economic Cooperation and Development (OECD)

SME Policy Index 2014: The Mediterranean Middle East and North Africa – Organisation for Economic  Cooperation and Development (OECD)

Global Monitoring Report, Development Goals in an Era of Demographic Change – World Bank