Mediterranean Policy Program—Series on the Region and the Economic Crisis Prepared in Partnership with Paralleli Euromediterranean Institute

(Turin)

Policy Brief
July 2012
a Mediterranean Union have so far been complete failures. Europe now finds itself facing a serious risk. It may witness growing instability in a fragile area. It might damage the prospects for investment, dialogue, progress, and stability. Or it might find itself isolated and see its influence diminish to the advantage of other powers or regions, such as the Mashreq or emerging Asian tigers. There is a common theme in the speeches of government officials and high-level representatives of European institutions: Europe cannot just sit and wait. There is the fear that Tunisia might prove to be solitary star, Syria may become even more isolated, a nuclear arms race may develop, and that the democratization project that took off so unexpectedly is not destined to come to fruition yet. Such alarm bells only underline the urgent need for countries bordering the Mediterranean to integrate as closely as possible. The issue of the Euro-Mediterranean features in every working document

Summary: Europe now finds itself facing a serious risk. It may witness growing instability in the fragile Mediterranean area. It might damage the prospects for investment, dialogue, progress, and stability. Or it might find itself isolated and see its influence diminish to the advantage of other powers or regions, such as the Mashreq or emerging Asian tigers. Every euro that Europe invests in Mediterranean partners has economic and political value. It is essential that the EU makes its knowhow available to small and medium enterprises within the framework of a Euro-Mediterranean strategy.

Euro-Mediterranean Prospects and Risks
by Marco Zatterin1 boxes by Claudio Tocchi2

Hamadi Jebali, the engineer who became prime minister of the new Tunisia in mid-December, is a man with a dramatic history. He’s a politician with clear ideas, and it was not by chance that his first official visit as head of state was to Brussels. “We want to talk about development and new horizons, about trade and freedom of movement between us and Europe,” he declared after meeting EU commission chiefs. “We want a stable alliance with the Union to put an end to the so-called ‘clash of civilizations’.” His words should be taken with due political caution, but they illustrate the pressure being exerted by the southern shores of the Mediterranean on Europe. This has always been the case, but since the Arab Spring, this pressure has become more pronounced. The desire to engage in dialogue with their overseas neighbors is fundamental for the young and fragile democracies. European capitals have offered their Mare Nostrum cousins tempting promises and a little aid, but not much else. Projects aimed at establishing

1744 R Street NW Washington, DC 20009 T 1 202 683 2650 F 1 202 265 1662 E info@gmfus.org

1 Marco Zatterin is Brussels correspondent for the Italian national newspaper La Stampa, where he also worked as news editor of the economy & finance section. He is author of several essays, including “Trafalgar” (Rizzoli, 2005) and “il Gigante del Nilo” (The Giant on the Nile, Il Mulino, 2008). 2 Claudio Tocchi is a junior researcher at Paralleli Institute. He has degrees in political sciences and international relations from Florence University and the Freie Universitaet in Berlin. He also worked as a journalist in Italy, Germany, and Austria. The views expressed in this article are the authors’ own, except where attributed to other sources.

Mediterranean Policy Program—Series on the Region and the Economic Crisis

Policy Brief
BOX 1 A New Response to a Changing Neighborhood
The first strategic response from the European Union to the Arab Spring arrived on March 8, 2011, with the joint communication from Catherine Ashton EU High Commissioner for Foreign policy and Security and the European Commission. It became operative with the subsequent joint statement dated May 25: “A new response to a changing neighborhood.” This latter document outlines policy reform for the entire EU neighborhood (16 countries: Morocco, Algeria, Tunisia, Libya, Egypt, Palestine, Jordan, Israel, Syria, Lebanon, Ukraine, Belarus, Moldavia, Georgia, Armenia, and Azerbaijan), but it is essentially a recalibration of policy for the south in the wake of events in the Arab Spring. The new strategy covers four main areas of action: support for democracy, inclusive economic development, strengthening of policies for the south as much as for the east, and new mechanisms for aid. The document reiterates the desire not to create a “European model of change” to be imposed on various countries (the old one-size-fits-all approach), but rather to develop actions tailored for the specific needs of each country. The most important innovation is the introduction of “more for more” concept. The EU will provide more aid to those countries who commit to undertaking a more rapid democratization process and who show that they have achieved better results, while for those countries that have achieved worse results, or even regressed, the Union reserves the right to reconsider or even cut the amount of aid. After “strengthening” of the policy towards the east, the issue of “establishing” a new partnership with the south is tackled in point 3. The concrete actions foreseen include: • Increase in general funding (i.e. directed at both the south and the east) from the ENP, from €5.7 to 6.2 billion (+€1.45 billion from 2011 to 2013), which includes €250 million for the Facility for Euro-Mediterranean Investments and Partnership. A new role for the EBRD and EIB. For the former, an extension of its mandate is programmed in expanded operations to MENA countries; funding for the latter is increased from €5 billion to almost €6 billion.

on the Neighborhood and economic partnership that emerges from Brussels. But results have been modest. The Barcelona process has essentially reached a standstill. The Union for the Mediterranean (UfM), created in 2008, seems to be proceeding along those same lines. Despite some fundamental changes in its structure, and despite efforts, the UfM still remains a partnership encompassing the 27 member states of the EU and 16 countries bordering the Mediterranean, certainly not an autonomous Union as had been hoped. There were great expectations, but the two summits of 2009 and 2010 were both cancelled because of an inability to define the role of the Palestinian delegation. Dialogue is hiccoughing along. When the UfM does get to talking, it always revolves around the usual dilemmas, as if substance and potential were absent. That is clearly not the case. Statistics show that the countries that played a leading role in the Arab Spring are actually worse off than before, at least from the economic point of view. Growth in Egypt has dropped from 5 percent to less than 2 percent. Tunisia has reached only 1 percent. Unemployment has risen sharply due to a reduction in tourist

flows and energy trade. Public finances have generally deteriorated, and military spending continues to be the most important item in state budgets. Hand-in-hand with this, many governments reduced social welfare programs during the revolts, and bridging the gaps will entail high costs. Citizens are freer now but poorer, particularly with inflation biting once again. Additional costs linked to price hikes in energy and food will lead to an increase of 3 percent of GDP for the Arab Spring countries. Karel De Gucht, EU Commissioner for trade, estimates that in order to not end up in the trap of structural unemploy-

When the UfM does get to talking, it always revolves around the usual dilemmas, as if substance and potential were absent.

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Policy Brief
BOX 2 Economic Performance of North African Countries
Macroeconomic Data

Gross Domestic Product (in billions of US$ with price stability and percentage variation on previous year with price stability)
Country 2009 Algeria Egypt Morocco Tunisia Lebanon Jordan
137,96 188,6 90,91 43,52 34,65 23,84

GDP 2010 2011
160,78 218,47 90,8 44,28 37,12 26,45 190,71* 235,72 99,24 46,36* 39,04* 29,23*

2012
206,50* 252,46* 100,35* 46,15* 41,8* 31,45*

Percent Variation Percent Percent Percent 09/10 10/11 11/12
2.4 4.7 4.9 3.1 8.5 5.5 3.3* 5.1 3.7 3* 7* 2.3* 2.5* 1.8* 4.3* -0.8* 1.5* 2.5*

* estimates (IMF data). N.B.: variation with price stability is net of inflation.

The sharp downturn for Egypt, Lebanon, and Tunisia (negative growth in 2012) is clear while trends in other countries remain virtually unchanged.

Inflation (percentage variation on previous year) and Unemployment Rate
Country 2009 Algeria Egypt Morocco Tunisia Lebanon
* estimates (IMF data).

Inflation 2010 2011
3.9 11.7 0.99 4.44 4.48 5 4.5 11.07 0.9 3.5 4.98 4.4

2012
5.45* 9.47* 2* 5* 4.01* 4.87*

2009
10.17 9.5 9.1 13.3 N/A 12.9

Unemployment 2010 2011
9.9 8.9 9.1 13 N/A 12.5 9.9* 10.4* 9* 18.9 N/A 12.9

2012
9.7* 11.5* 8.9* 17* N/A 12.9*

5.74 16.24 0.97 3.53 1.2 -0.67

Jordan

Inflation varies widely with specific trends for each country; regarding unemployment, however, the explosion over the last two years is worth noting.

Foreign Direct Investment

From the point of view of foreign direct investment (FDI), 2011 was a year of negative trends for the Mediterranean after relative growth in 2010; in many cases, the total amount invested returns to the levels of 2009, the worst year of the financial crisis. The first nine months of 2011 saw 467 new investment projects (compared with 625 in the same period of the previous year, for a loss of 26 percent). Even the total amount of moneys invested diminishes considerably, with almost €20 billion compared with €40 billion for the whole of 2010. However, substantial differences exist among the countries of the southern Mediterranean, which might be divided into two categories: on one hand, those greatly affected by the Arab Spring (Tunisia, Egypt, Syria, Libya, Yemen) and those with direct borders (Lebanon, Jordan); and on the other hand, the countries that have emerged more or less unaffected by the political upheaval (Morocco, Algeria, Israel, Turkey). Continued next page

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Policy Brief
Continued from previous page For the first group, the situation might be said to have virtually returned to the worst levels of the crisis. Libya and Yemen (special cases due to the explosion of violence) record drops of 80 percent. The number of new investment projects in Tunisia (where the tourist sector is a major player) fell by 40 percent, although this blow has been softened by the enormous investment in the energy sector by European companies (OMV, BG, and Eni). In Egypt, there is a 50 percent drop in the number of projects, and the total flow of money approaches €2 billion – less than half the level of 2010. There are similar figures for Lebanon and Jordan, which saw their FDI reduced by approx 50 percent. The situation for the second group of countries is quite different. Algeria shows stable trends regarding both the number of projects and the flows (even if less noteworthy than in 2010) while Morocco, with a net 15 percent gain, is the real exception in the North African panorama. It confirms its status as a third pole for attracting investment in the Mediterranean area after Turkey and Israel. However, it should be noted that the number of investments has increased, but they have been more contained (added caution and due to the global financial difficulties): the effective flow of money invested fell by almost 50 percent with respect to 2010. Despite the crisis, in the first three quarters of 2011, Europeans assert their golden share of FDI in the area, being responsible for almost half of the announced investment projects — 291 (there were 385 in 2010) out of a total of 623. The United States and Canada are both stable, with 192 projects compared to 199 in 2010 (an interesting fact, since the investment projects from these countries have fallen in all other parts of the world), while they have halved the number of projects in the Gulf States (51 compared with 109), reaching the lowest number since 2005.

ment, the countries on the northern shores of the Mediterranean “need to grow by 3 percent a year for not such a brief period.” He continues, “They must open up their economies even more to interregional and international trade.” His colleague at the Commission for Industry, Antonio Tajani, supports this, adding that countries can only be shored up by the movement of investments from the more advanced economies. He recently led a very encouraging mission to Tunisia with a group of industrialists. Sadly it created some useless tension and jealously in the organization led by José Manuel Barroso. It is an opportunity not to be missed, and we are missing it. Every euro that Europe invests in Mediterranean partners has economic and political value. At the beginning of 2011, the European Bank for Reconstruction and Development, the bank founded in the 1990s to aid the democratization process in Eastern Europe, announced that funds to the tune of between €1 and 2.5 billion were available for “Spring players” without encroaching upon funds for the east, provided that “the partners draft a strategy.” The partners did no such thing. In the capitals of the northeast – in Berlin just as in Warsaw – there is considerable diffidence about strengthening the Med Club. They fear that the priorities of the European Union might be modified and that funds might be redirected away from the nearer countries of

greater economic interest. It is an anthem that is becoming intolerable. Instead of taking a global vision of the economy of democratization, the EU is divided and concentrating only on its neighbor’s backyard. This was obvious when, in 2008, newly elected to the Elysee palace and at the helm of the EU, French President Nicolas Sarkozy put the Mediterranean question at the core of his program. On July 13, of that year, seated next to Egyptian President Hosni Mubarak, he announced that he had achieved his objective of making the Union of 43. “We have long dreamt about it and now it has become a reality,” he declared. “It was a great honor to have countries from both sides of the Mediterranean, an extraordinary assembly, Arabs seated next to Israelis and it was a great occasion.” Instead it turned into a fiasco. The Germans let Sarkozy have his little toy, and when the French presidency of the EU came to an end, they abandoned him to play “godfather” to what in reality was a “Disunion for the Mediterranean.”

In the capitals of the northeast there is considerable diffidence about strengthening the Med Club.

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Policy Brief
BOX 3 Union of the Mediterranean
The Union for the Mediterranean (UfM) is an international body founded in 2008, under the enthusiastic patronage of the then president of France, Nicolas Sarkozy. It encompasses 43 member countries (the 27 member states of the EU as well as Mauritania, Morocco, Algeria, Tunisia, Egypt, Jordan, Palestine, Israel, Lebanon, Syria, Turkey, Albania, Montenegro, Bosnia-Herzegovina, Croatia, Monaco; the only Mediterranean rim country that is not a fully-fledged member is Libya, which has observer status). The rationale behind its creation was the French desire to resurrect the Barcelona Process, which had been entombed by the Israeli-Palestinian conflict and the U.S. fighting in the Middle East, and to reassume a front line role in the Mediterranean. In fulfilling its mandate, the UfM should have avoid direct involvement in international relations and peace processes, focusing instead on the development of common projects concerning six concrete initiatives: • • • • • • environmental clean-up of the Mediterranean, building of maritime and land motorways, strengthening of the civil protection, creation of a common solar plan, development of a Euromediterranean University (already inaugurated in Portorose, Slovenia), and support for small and medium enterprises.

The role of the UfM was immediately put to a severe test. Reaching stalemate after the Israeli incursion into Gaza in 20082009, the Union’s highest positions (president and vice-president) had not been renewed nor has it proceeded with further summits in the following two years. The role played by UfM during the Arab Spring was insubstantial. Deprived of real European support and enmeshed with unsavory characters who started to fall one after the other (starting with the vice president of the Union itself, Egyptian President Hosni Mubarak), the Union failed to tailor a role for itself and ended up submerged by the course of events. However, the Arab Spring was instead the event that clearly showed the UfM’s limits. “The union is stagnating. Not a single major integration project has yet been carried out, ministerial meetings have become less frequent,” commented Martin Schulz, President of the European Parliament on April 25, 2012. What the future holds for the Union is not clear. In the wake of the G8 meeting in Deauville, the EIB sealed an agreement that foresees new funding amounting to €2.3 billion for Mediterranean partners during the period 2012-2013, some of which (€500 million in the immediate term) will be allocated for UfM projects that are already prepared. The two institutions have also decided to develop a series of new projects totaling €1.2 billion along with the European Commission and other international institutions. Despite this, there are many doubts about the possibility of sustaining such a body, in which the Commission already invested more than €100 million between 2009-2011 and which in practice competes with the other European tools, without launching a radical reform. It seems probable that the recent change in leadership in France will have a crucial bearing on determining the future of the European policies in the Mediterranean and of the Union.

The institution exists and is based in Barcelona, far from the heart and real interests of Europe. The economic crisis has made it even more marginal, particularly those in the North. In the early days of the Arab Spring, there were voices calling for a new Marshall Plan for North Africa and the Middle East and appeals for an end to trade protectionism, along with a frenetic race from leaders to win visibility in the countries to ensure access to the commercial opportunities they imagined would follow. Political interests were purely national, which may be what hindered action.

No initiative was realized in a way that lived up to the expectations of the early hours. The European institutions were left holding the ball, but they made brave efforts within the limits of their narrow mandate. It was decided that the ceiling for external operations from the European Investment Bank (EIB) would be raised by €1 billion, so the total amount available over the next three years will be €6 billion. There is the goodwill to extend the operations of the EBRD toward Egypt and Tunisia as well as other countries in the Mediterranean “in

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BOX 4 Financial Instruments
The review of European neighborhood policies in the wake of the of Arab Spring sees the EU planning a substantial package of direct funding and important changes to the working methods of the credit institutes, the EIB and EBRD.

Direct Funding

May 2011. The EU increases funding by €1.2 billion over the previously planned €5.7 billion for the neighborhood policies instruments from 2011-2013. September 2011. The Commission makes a new aid package available, which includes: the Support for Partnership Reform and Inclusive Growth (SPRING) program, including €350 million in line with the “more for more” principle; €26 million for 2011 for the institution of the Civil Society Facility for the Neighbourhood, to strengthen civil society; and an additional €30 million for the Erasmus Mundus program for the academic year 2011-12 for mobility programs with Southern countries. December 2011. In their budget proposals for 2014-2020, the Commission proposes an increase of support for ENP of up to €18.1 billion (40 percent more than the previous period). EU humanitarian aid for refugees must be added to this data: €80 million from the Commission, and more than €70 million from individual countries.

European Bank for Reconstruction and Development

The European Bank for Reconstruction and Development (EBRD) is based in London and was created to encourage the development of a market economy in Eastern European countries after the fall of the Iron Curtain. With assets worth €50 billion, the EBRD has considerable financial capacity, but it is restricted to operating only in those countries included in its constitutional treaty (currently Eastern Europe). During the G8 meeting in Deauville, it was decided that the credit institute would commence operations in some Middle East and North Africa countries, subject to a modification of its constitution (first investment projects specifically concern Morocco, Tunisia, Egypt, and Jordan). The EBRD would focus action on the private sector, to the detriment of the public sector, which dominates in countries in the area. The initial budget amounts to €2.5 billion (which, along with the other private contributions, will bring the total package to around €7-8 billion), without encroaching on the sum (€9 billion) targeted at the countries in Eastern Europe. Although the modification to the treaties has not yet been concluded, the EBRD has started to make some moves in certain countries. In 2011, Tunisia and Jordan made a request to become members of the bank, and between February and April 2012, the bank initiated some technical cooperation and opened temporary offices in Rabat, Tunis, and Amman. The objective is to provide support for small and medium enterprises and activate lines of credit, favoring, above all, the agricultural and energy sectors. Such investments will only materialize when the EBRD has established that the country satisfies the objectives of political freedom and economic liberalization. Meanwhile, the EBRD has also signed a memorandum of intent with the Arab Monetary Fund (also a partner at Deauville), to strengthen cooperation with the countries in the region.

European Investment Bank

The document dated May 2011 already approved increasing the funds available to the European Investment Bank (EIB) for investment by almost €1 billion. This credit institute has capital amounting to €232 billion (2009) and it operates in 150 countries outside community borders. In the Mediterranean area, the EIB is the financial institute with the greatest provisions. (Since 2002, when it started operating in the region, the bank has deployed more than €12 billion of investment, 2.6 billion of which in 2010.) After the G8 in Deauville, the bank decided to strengthen cooperation with other actors in the area: Continued next page

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Continued from previous page With the Union for the Mediterranean, financing projects linked to the thematic areas of the UfM. Between 2009 and 2011, the EIB had already invested more than half of its finances in the area (€2.8 billion out of 5.2 billion) in projects respecting UfM priorities. The new agreement makes funds of €2.3 billion available for Mediterranean partners in the period from 2012-2013, starting with €500 million in the immediate period for projects developed within the UfM. On February 9, 2012, the EIB signed a cooperation agreement with the Islamic Development Bank (IsDB) for the Mediterranean area. Focus countries for the project will be Egypt, Jordan, Morocco, and Tunisia. Activities will include reciprocal consultation, the sharing of information, and the development of knowledge and expertise in the region, in particular for the development of publicprivate partnerships, the building of networks, and facilitating the identification, preparation and co-financing of projects. To date, cooperation between the two institutes has enabled support for approximately 24 projects worth $19 billion. Activities for 2012 could be subject to reduction due to the crisis. On February 16, 2012, Werner Hoyer, president of the institute, announced a decrease of €11 billion for the current year (from a record 61 in 2011 to 50 in 2012) in new investments.

close cooperation with the EIB,” naturally, seeing that the two institutions continue to overlap without actually cooperating. As far as aid is concerned, the EU allocated €700 million in 2010 alone. Using ENPI, the European neighborhood partners’ instrument, the aim was to put resources on the table valued at €1.24 billion in the near future. Between 2007 and 2010, €1.7 billion was paid out from the same purse, which equates to €2.6 for every inhabitant of the region. All this will prove useless unless there is a direct economic and structural connection. Whether the new democracies are able to transform their societies and take the road to sustainable development or not depends mainly on the results of their efforts. However, the role of Europe will not be unimportant. It is essential that the EU makes its know-how available to small and medium enterprises within the framework of a Euro-Mediterranean strategy. At the moment, this is somewhat lacking in focus. Premier Jebali asked Brussels to work on a common market plan to be drafted within the next 10-15 years. The sole hope is to provide economic stability for all the actors involved. A market with freedom of movement would call for acceptance from the new partners of what is called acquis communautaire, the comprehensive framework of the rules prescribed in the European treaties. This would also be a way of monitoring immigration, encouraging the creation of jobs in loco and so halting the drain of brain and brawn. A common market would mean “putting everything together except the institutions,” a concept first put forward by the Commission in 2002. It was a way to invite change

without being considered too constrained by political conditions. It should not have been the rich exploiting the poor, but the more fortunate sharing income with those who have less. It should represent the complete fulfillment of the Euro-Med. To date, it remains a dream. “It is certainly necessary that Europe climb down from its pedestal of pre-packed policies so that it can respond to the real needs as they happen on the ground,” explains Rosa Balfour, responsible for the “Europe in the World Programme” of the European Policy Centre in Brussels. Perhaps it would be necessary not to be as dogmatic as the super liberal De Gucht, who ties “the substantial success in combining economic reorganization and growth” to the “connection with international and regional markets in a way in which the old regimes did not manage or did not want to do.” Europe must be supportive of its members

A market with freedom of movement would call for acceptance from the new partners of the comprehensive framework of the rules prescribed in the European treaties.

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BOX 5 European Policies
In the months following the gear-change in European policies regarding neighboring countries, the EU not only implemented the already existing financial instruments, but also launched a reform of their policies regarding trade, cooperation with civil society, and migration.

Neighborhood Civil Society Facility

This measure is part of the package of four initiatives put forward by the Commission last May. It focuses primarily on supporting civil society, which plays an indispensable role in the development of democratization processes. With funding of €22 million between 2011 and 2013, the NCSF will focus attention on three specific fronts: • • • Strengthening the capacity of civil society through exchanges of good practice and training in order to promote national reform and increase public accountability. Strengthening non-state actors through support for regional and country projects, integrating available funds with thematic programs and instruments. Promoting an inclusive approach to reforms increasing the involvement of non-state actors in national political dialogue and the implementation of bilateral programs.

Trade and Investment

The new Deep and Comprehensive Free Trade Agreements (DCFTA) are among the new economic instruments of the Union. As the name itself indicates, these agreements should replace and improve the simpler Free Trade Agreements currently in force, going beyond the simple removal of customs tariffs and affecting all key aspects regarding trade (such as protection of investments and transparency in public tenders). EU support is based on the “more for more” approach, leading to greater economic integration with states that show greater commitment to democratic reform and individual freedom. More specifically, countries should: • • • make serious efforts to open their own markets; ensure the whole population is able to enjoy the benefits of the new treaty; and achieve appropriate levels of political, social and environmental security.

Four countries from the east (Ukraine, Moldavia, Georgia, and Armenia) and four from the south (Jordan, Egypt, Tunisia, and Morocco) are currently engaged in discussions on the new DCFTA. At the conclusion of a preliminary study phase on feasibility, the European Commission will inform the parliament about implementing the agreements. Therefore, the time frame is mid-long term. In addition to work on the DCFTA, the Union launched a €20 million aid program last August. Called SANAD, (“support” in Arabic), it is aimed at small and medium enterprises in North Africa and the Middle East. Finally, the Multilateral Investment Guarantee Agency of OCSE and the Union for the Mediterranean are working on a framework to ensure greater security for investments in the Mediterranean.

Immigration

As far as mobility is concerned, the EU intends to act on two fronts: an increase in funds to mobilize students and researchers, and the launch of a new immigration strategy. Regarding the first point, funding for the Erasmus Mundus and Tempus projects has been increased (by €30 million) to help Continued next page

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Continued from previous page with the modernization of the educational systems in the southern Mediterranean and to extend cooperation with European universities in the coming two years. Concerning new mobility strategies, after the meeting of March 12, 2012, the Council of Europe issued a document that reiterated the indications expressed by the Commission last November. The EU intends to improve cooperation with nonmember states so as to draft an immigration policy that maximizes mutual benefits. Economic needs underline how essential it is for the European Union to manage (and not interrupt) the immigrant flows: despite the crisis, it is estimated that about 1 million new workers will be required in the Union from now until 2020. The new European policy should be global and become the Global Approach to Migration and Mobility (GAMM), which will form the general framework of the EU migration policy, closely interconnected with its general foreign policy. In this case, too, the “more for more” approach will be adopted: countries achieving the best results will be rewarded with greater funding. The new projects will be targeted at immediate neighboring countries: Tunisia, Morocco, and Egypt.

and also its neighbors. If not, we will have one Greece after another. Or one Syria after another. Part of the challenge is internal, making Northern Europe understand that the Mediterranean is an investment that could go far, that Tunisia exists as well as the Ukraine. Funds should be invested on the southern front and not just in the east. It is a cultural problem of significant proportions, which was confirmed in early 2011 when the Scandinavian capitals, following the line taken by Berlin, considered the swelling migration flows a purely Italian or Maltese problem. Even today, while the Greek port of Orestiada is the much-battered door to the East, no one manages to go beyond appeals and advocating a tightening up of the rules. Helping Athens, which is facing considerable difficulties of its own, with immigration has not even been mentioned. Getting one’s own house in order is a first priority. Diplomacy will be needed in order to address the difficult issues. Syria, first of all, is a real time bomb for the Mediterranean. Secondly is the Israeli-Palestine question, which stymies every solution and has not been simplified by the revolts in the Islamic states. Then Libya, which has been forgotten by media, remains a battlefield for NATO and grows only at the interests of giant oil companies; Tripoli accuses Europe of abandoning the country. And the coup d’état in neighboring Mali could have repercussions as well. There is no “silver bullet” to solve the whole puzzle. Each country demands specific solutions. This is as true for Egypt as it is for divided Cyprus, for the role of Turkey in

the Mediterranean and for its relations with other countries, such as France. The solution is integration and development that reduces underlying deep-rooted poverty, halts immigration, and creates economic ties. The debts may be different, but the picture in the Mediterranean could be compared to Europe in 1945. Religious fervor makes the situation more complex, but a plan for well-being and dialogue can soothe many wounds. There is no other choice. Every euro committed now is worth concord and civility. It will be neither easy nor cheap. But if the Arab Spring becomes a winter — as is feared — the cost will be considerably higher.

There is no “silver bullet” to solve the whole puzzle. Each country demands specific solutions. This is as true for Egypt as it is for divided Cyprus, for the role of Turkey in the Mediterranean and for its relations with other countries, such as France.

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About the Partners

The German Marshall Fund of the United States (GMF) is a non-partisan American public policy and grantmaking institution dedicated to promoting better understanding and cooperation between North America and Europe on transatlantic and global issues. GMF does this by supporting individuals and institutions working in the transatlantic sphere, by convening leaders and members of the policy and business communities, by contributing research and analysis on transatlantic topics, and by providing exchange opportunities to foster renewed commitment to the transatlantic relationship. In addition, GMF supports a number of initiatives to strengthen democracies. Founded in 1972 through a gift from Germany as a permanent memorial to Marshall Plan assistance, GMF maintains a strong presence on both sides of the Atlantic. In addition to its headquarters in Washington, DC, GMF has seven offices in Europe: Berlin, Paris, Brussels, Belgrade, Ankara, Bucharest, and Warsaw. GMF also has smaller representations in Bratislava, Turin, and Stockholm. www.gmfus.org

Paralleli Euromediterranean Institute’s mandate is to contribute to the creation of a Euro-Mediterranean area of freedom and of economic and social development. The institute acts at the local, national, and international level with the aim of meeting the needs of the North-West region of Italy concerning its relations with the other sides of the Mediterranean Sea. The activities of the Institute fall within the process of Euro-Mediterranean partnership initiated by the European Union with the 1995 Barcelona Process and currently undergoing a major relaunch through the “Union for the Mediterranean,” since July 2008. Paralleli intends to contribute to the reinforcement of political relations, economic cooperation, cultural exchange, and human flows between the European and the South-East Mediterranean countries. Its main objective is to promote dialogue at cultural, social, and political level between the societies of the Mediterranean countries, with the aim of encouraging and improving economic relations between them, with a particular focus on the dimension of sustainability and co-development. For this reason, the institute has decided: to involve civil society in the development of Euro-Mediterranean relations; to create and to support networking in the Mediterranean area; and to increase the value of research in order to suggest truly effective policies to local, national, and international actors. www.paralleli.org

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