: Economic integra- tion and institutional coopera- tion in the Euro-Mediterraneanregion are following diverging paths. Notwithstanding the
nancial and economic troubles of the euro area,prospects for European directinvestments in Mediterraneancountries and for Euro-Mediter-ranean trade
ows are favor-able. Institutional cooperation,by contrast, is disappointing due to the substantial impassein the Union for the Mediter-ranean (UfM). Today, traditionalpatterns are reversed, withprivate actors playing the keyrole in promoting Mediter-ranean economic integra- tion, while political initiativeslanguish.
Mediterranean Policy Program—Series on the Region and the Economic Crisis
Direct Investments andInstitutional Cooperation inthe Euro-Mediterranean Region
by Franco Zallio
1744 R Street NWWashington, DC 20009T 1 202 745 3950F 1 202 265 1662E firstname.lastname@example.org
Franco Zallio is senior consultant to Paralleli, and has published extensively on issues related to the economics andinternational relations of the Mediterranean and the Middle East. The views presented in this paper are the personalviews of the author and not those of the institutions he represents or The German Marshall Fund of the United States.
ANIMA Investment Network, Investissements directs étrangers et partenariats vers les pays MED en 2009, 18 Mai2010, http://www.animaweb.org/etudes.php.
Prepared in Partnership with Paralleli (Turin) June 2010
Economic integration and institutionalcooperation in the Euro-Mediterra-nean region are following divergingtrends. On the one hand, the favor-able prospects of economic integra-tion promote Euro-Mediterraneancooperation. On the other hand, thereis growing disappointment in institu-tional cooperation, in particular theUnion for the Mediterranean (UfM).Foreign Direct Investment (FDI) inMediterranean countries has becomea key factor of economic integration.Its recent performance is describedin the next section, based on theannual report on FDI in Mediterra-nean countries just published by theANIMA Observatory.
In recent yearsattention has focused on new foreigninvestors, mainly the Gulf countriesand emerging Asian countries. Today,however, attention needs to be paidto a more traditional issue: the role of European investors. In fact, since 2007they have again become the majorinvestors in the region, a position they still maintain despite the negativeeffects of the international economiccrisis.
FDI in Mediterranean Countries
The global economic crisis has trig-gered a substantial decline in FDIinﬂow into Mediterranean countries:EUR 39.1 billion in 2008 and 32.3billion in 2009. This is much lowerthan the record ﬁgures of 2006 and2007 (EUR 65.2 and 60.0 billionrespectively), but nevertheless, in 2009FDI still amounted to four times its2003 level (EUR 7.6 billion). It shouldalso be noted that in 2009 the declinein FDI towards the Mediterranean (-17percent) was lower than the averagedecline registered in emerging coun-tries (-38 percent).As Graph 1 shows, in 2009 Europe wasthe main investor in Mediterraneancountries, a position that it tempo-rarily lost at the height of the oil boomin 2006 when Gulf countries’ FDIﬂows to the Mediterranean exceededthose from Europe. Due to the sharp