The southern neighbors need help, not words
 
Philip Bowring IHT
Monday, April 22, 2002
GENEVA The dire situation in the Middle East will draw attention to the long scheduled meeting in Valencia this Monday and Tuesday of foreign ministers of the European Union and 12 southern Mediterranean governments. But otherwise, Europe still mostly ignores its southern neighbors.
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The European preference is to concentrate on eastward expansion, rather than on a more constructive relationship with the nearby non-Europeans.
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Japan and its neighbors have profited immensely from transfers of capital and technology which helped East Asia integrate into the global economy. Likewise, the North American Free Trade Agreement has transformed Mexico's economy and its political relationship with the United States, and alleviated frictions over illegal migration. The EU's relations with the southern Mediterranean have been characterized by agreements on paper but very little investment or trade. The Valencia meeting is part of a process which began in Barcelona in 1995. Despite preferential access to the EU market for many manufactures, there has been minimal trans-Mediterranean investment. The southern neighbors' share of EU as well as world trade has been falling. The failure of closer cooperation is particularly stark at a time when illegal immigration is such a hot issue in Europe. The EU's rapidly aging population will continue to create demand for foreign labor, legal or not, while the high birthrates on the poor southern shores ensure that hundreds of thousands will take big risks to improve their lot.
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The weakness of links to Europe has been a major factor in the slow economic growth of the southern countries. As a result, birthrates have fallen slowly and remain high by Southeast Asian and Mexican standards.
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Much fault lies with the southern countries' suspicion of foreign ownership and open trade, for a mix of ideological, historical and short-term political reasons. However, the urgency today and the outlook for tomorrow demand that EU countries make a far greater effort to bring the region into their orbit.
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The southern littoral countries, excluding Turkey and Israel, have a population of almost 150 million. Land and water shortages suggest that there should be an emphasis on the labor-intensive export industries that have proved so successful in sparking broader development in Southeast Asia, China and Mexico. But exports remain dominated by commodities (mostly oil and gas) and tourism.
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The region lacks the entrepreneurial class constituted by overseas Chinese in Southeast Asia. Levantine equivalents suffered expulsion or nationalization in the post-1950 wave of socialism and nationalism. Despite some privatization, littoral economies mostly have large, protected state sectors, and employment-creating bureaucracies.
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As in Latin America, domestic policies have caused capital flight. Control on foreign exchange is still widespread, as is dependence on trade taxation for government revenue.
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Nor has the region been successful in attracting capital and talent from expatriate Arab communities in Europe, the Gulf and North America.
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But these negatives run counter to historical experience. The southern Mediterranean region is a natural trading area with populations close to the sea and with easy access to Europe. Rapid progress is possible. Policy changes and European capital could put populations to work and kick-start trade-led modernization, as in China.
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The region has also probably suffered from the opening up of Eastern Europe, where wages are low and skills relatively high. However, that "new frontier" has a relatively small and old population.
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The non-Europeans also suffer from historic European and Christian prejudices against Islamic countries, now enhanced by Sept. 11. In Europe's domestic as well as external interest, those must be overcome.
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Although the southern Mediterranean has itself largely to blame for failing to capitalize on two decades of growth in global trade and capital flows, the EU must draw this region into its orbit for the sake of the economic and social stability on both shores. That will require political will backed by much money and acceptance of more agricultural imports. International Herald Tribune
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