Posted by: zanshin, 2008-07-31 05:34

Story

Club Med -- The Mediterranean economy
2008-07-12 (Saturday), Economist
The Mediterranean, north and south, is forming a single economic unit: Europe should make it a powerful one

UNDER imperial Rome, the roads in cold, wet Britannia were no straighter than those in sweltering north Africa. The same sestertius could buy a lampful of oil. Across the southern Mediterranean and northern Europe alike, Latin was the lingua franca—1,500 years before anyone had coined the term. Under the Treaty of Rome, however, the European Union has behaved as if the Med were a frontier, rather than an organising principle. As often as not, it has turned its back on the crescent that stretches from Morocco to Turkey, as a cradle of instability and terrorism. Sometimes the southern Med’s main export has seemed to be boatloads of illegal immigrants.

This weekend at a summit in Paris France’s president, Nicolas Sarkozy, wants to heal the rift. Some 40 heads of state and government from the EU and the southern and eastern Mediterranean will meet to create a new club, called the Union for the Mediterranean. Despite Mr Sarkozy’s bombast, Club Med will have a modest start: the French propose a secretariat, which they will jointly head with Egypt, and money to help finance ventures on solar energy, anti-terrorism and the inevitable cultural exchanges.

Beyond the platitudes and projects lies the germ of a brilliant idea. Something is stirring around the Med as globalisation takes root. Growth and investment have leapt. There is a new openness to trade and foreign money. The members of Club Med no longer need to glower across the table at each other. Instead, there is the prospect of the youth and vigour of the southern Mediterranean combining with a rich, ageing north. Despite the recent surge, the southern Med still takes less than 10% of all the FDI from the EU. This offers a tantalising prospect—though one reason why Club Med matters is that it is fraught with dangers.

Dido’s cement
The EU has looked south before, in an initiative called the Barcelona Process, which dates back 13 years and failed to live up to its promises. Hopes are higher today, however, because the politicians gathering in Paris are following a path that is increasingly well trodden by business (see article). FDI in the countries along the Mediterranean shore, from Morocco to Turkey, has grown six times since the turn of the century, to $59 billion in 2006—ahead of Latin America’s Mercosur ($25 billion) and not far short of China ($69 billion). At the same time, the growth in the region’s GDP is running at 4.4% a year—slow by China’s standards, admittedly, but it has been accelerating as Europe has slowed.

Although Turkey, Israel and Egypt still dominate, most of the region has shared in this prosperity. Oil and gas are partly to thank, but investment is spread among financial services, telecoms, retailing and construction. Look at the car factory Renault and Nissan are planning in Morocco. Or the new container port outside Tangiers that will soon be bigger than Long Beach, on America’s west coast. Much of the money comes from Europe, as did the €8.8 billion ($12.9 billion) France’s Lafarge invested in Egyptian cement. But Americans are making aerospace parts; Arabs are spending petrodollars on property and construction; Brazilians are investing in fertilisers and textiles; Indians in IT and pharmaceuticals.

There is strength in such diversity, and there needs to be. The resurgent Med has a lot still to overcome. With exceptions, notably Israel, the region is plagued by poor infrastructure, an ill-educated workforce and unemployment. Unlike eastern Europe, which built trading links under communism, the Med countries barely trade with each other, so they lose the benefits of specialisation. And then there is the politics. The Europeans are right to look askance at the looming crisis of succession in Egypt, beleaguered Israel, unborn Palestine, divided Lebanon, fundamentalist Islam in Morocco, bombs in Algeria, Muammar Qaddafi’s bizarre Libyan autocracy, the risk that the Turkish courts declare the ruling party unconstitutional. That unfinished list is already depressingly long.

The EU is not free of troubles either. Those who favour Turkey’s membership of the EU fear that Club Med is designed to fob it off with second-class citizenship. At first Mr Sarkozy schemed to include only the EU countries with a Mediterranean coast—a ploy to create a French-dominated counterbalance to the apparently German-dominated east. After a vicious row with Angela Merkel, Germany’s chancellor, Mr Sarkozy agreed to include the entire EU. That was right, if only because Germany pays much of the EU’s bills.

Sunday’s summit matters, because it is a step towards healing such wounds—and because it sets the tone. Will the Mediterranean union seize the moment, or will it be strangled by southern politics and European squabbles?

Mare nostrums
The first test is whether Mr Sarkozy is willing to see Club Med as more than a scheme to burnish French glory. If he wants the new union to thrive, he will have to accept that it is for everyone’s benefit, and let business do its work. This means a free-trade area that opens the EU to goods and services from the south—including the farm produce that France is making a fuss over in the world trade talks.

The second is for the EU to use its patronage to boost spending on infrastructure, promote trade in the region and clean up politics. One lesson from eastern Europe is that, with incentives, countries will start to sort themselves out. For the Mediterranean, those incentives should include access to funds and markets. The logic of enlargement is that it could even include the faint possibility of membership of the EU itself (if the union were to admit non-Europeans). But none of that will count for much unless the southern Med chooses prosperity.

The world sometimes writes off Europe as the old continent, well past the vigour of youth and doomed to gentle decline; at the same time it condemns many of the teeming economies of the southern Med as chaotic backwaters. Old and young can make a powerful combination. The creation of the Union for the Mediterranean is hardly the rebirth of imperial Rome, but it may just be the start of something exciting.

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Africa,   Algeria,   autocracy,   China,   communism,   diversity,   Economy,   Egypt,   Energy,   EU,   Europe,   Finance,   France,   GDP,   Germany,   Islam,   Israel,   Lebanon,   Mediterranean,   Mediterranean Union,   Mercosur,   Merkel,   Morocco,   Oil,   Palestine,   Politics,   Sarkozy,   Terrorism,   Turkey,  

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2007-09-02Remarks By The President At 2002 Graduation Exercise Of The United States Military Academy
2007-08-27The al-Qadhafi gamble
2007-08-27Can Morocco’s Islamists check al-Qaida?
2007-09-08Knowing the Enemy
2007-05-26Those pesky puppies of war
2007-05-27When oil and water mix
2007-05-22We're Number One! America Leads the World in War Profits
2007-05-21Why It Happened the Way It Did
2007-06-11Interview with french president Nicolas Sarkozy
2007-06-06G8: Issues and controversies
2007-06-07US missiles hit Russia where it hurts
2007-05-30The great escape
2007-06-02'High priests of globalization' in Istanbul
2007-06-16The Osama Files
2007-07-01Democratic Realism -- An American Foreign Policy for a Unipolar World
2007-07-01Why the Future May Not Belong to Islam
2007-08-08The Fallaci Code -- Letters
2007-08-05The End of Cowboy Diplomacy
2007-07-04Grand Strategy for a Divided America
2007-07-03Contesting the Threat of Terrorism
2007-07-03Our Second Biggest Mistake in the Middle East
2007-07-07The Truth about Islamic Crusades and Imperialism
2007-07-11Sarkozy refuses repentance and bets on the future in Algiers
2007-07-22Interview with Israel Shahak
2007-07-12Republic or empire: A National Intelligence Estimate on the United States
2007-07-13The New York Times Surrenders -- A monument to defeatism on the editorial page
2008-06-05Remarks By John McCain at AIPAC
2008-05-27Laptop Jihadi
2008-05-31The U.S. National Intelligence Estimate on Iran and Its Aftermath: A Roundtable of Israeli Experts
2008-04-23Is Europe Dying? -- Notes on a Crisis of Civilizational Morale
2008-04-29The Man Between War and Peace
2008-06-27Daughter of the Enlightenment
2008-06-27President Delivers "State of the Union"
2008-06-15Trans-Saharan Migration to North Africa and the EU: Historical Roots and Current Trends