ECONOMY

Summit on EU-Med trade

TUNIS – European nations have held out the prospect of more development lending for North African and Mediterranean states but urged them to trade more with each other to close a wealth gap stirring northward migration. «It’s not the intervention of loans and financing that will help us much, but the fact that countries open up to exchanges and international trade,» Belgian Finance Minister Didier Reynders told Reuters. He was speaking at a two-day meeting between finance ministers of the European Union and North African and east Mediterranean countries in Tunis which began on Sunday. Europe’s southern neighbors achieved economic growth of 4.8 percent last year, lagging the 7.2 percent expansion rate of emerging markets and developing countries as a whole. The EU has spent billions in loans and aid to nudge its southern neighbors to improve their investment climate, governance and infrastructure under the Euro-Mediterranean partnership, also known as the Barcelona Process. And many barriers to trade across the Mediterranean are falling with moves to free trade in services and agricultural products. But foreign direct investment is languishing at the bottom of the world league, with FDI into the region representing 3 percent of the global total. And economies are struggling to create enough jobs to avoid mass unemployment, prompting thousands of illegal immigrants to brave the perilous journey to Europe’s southern coasts in Spain, Malta or Italy. «We need foreign investments to create jobs and for that we need the help of the European Union,» said Oded Eran, Israel’s ambassador to the EU and a participant at the so-called Euro-Med Ecofin ministerial meeting. Questions raised Some delegates raised questions over the commitment of some countries to an initiative that has met with mixed results since it was launched at Barcelona in 1995 at the height of Arab-Israeli peacemaking. Only 16 out of 35 economy and finance ministers turned up at the meeting in Tunis. «At the political level we don’t seem to interest very strongly the ministers on either side, especially the northern ones,» said Reynders. «If we meet once a year we should really take it seriously and the political signal of having all the ministers here or not is making a difference,» Austrian Finance Minister Karl-Heinz Grasser told Reuters. Delegates in Tunis discussed future cooperation in energy investment, transport, tourism and microfinance projects and EU Economic and Monetary Affairs Commissioner Joaquin Almunia forecast a 45 percent increase in European Investment Bank (EIB) lending to Mediterranean rim states in the next six years. But the conference also highlighted differences over the broader way forward. Some are calling for the launch of a fully fledged bank to manage Mediterranean lending, replacing the EIB’s FEMIP facility, but Almunia said he thought everything the EU aims to achieve in that area can be done under the current structure. And few at the meeting were willing to bet the Barcelona goal of a Mediterranean free trade area by 2010 will be achieved. Some even played down the importance of the date. «You have to relativize these goals,» said Reynders. «If you don’t achieve them at the expected moment it isn’t too dramatic. But you must make sure you are moving in the right direction.» In contrast to the more global Barcelona Process, more may have been achieved by the EU through targeted incentives for individual countries like Tunisia, Morocco and Egypt which are keenest to press ahead with economic reforms, observers say. «The Barcelona Process was meant to generate an environment in which foreign investors were wanting to invest in the region. It didn’t do that, and that is a failure,» said George Joffe, Middle East and North Africa specialist at the University of Cambridge’s Center for International Studies.