Political and economic equilibriums in the Mediterranean: increase trade relations with China

  • 5 November 2012

In the last ten years, there was a new phenomenon in political and economic equilibriums all over the world: the intensification of the relations between China and the southern Mediterranean Countries.

Chinese investments in Africa become enormous, both for quality and quantity, and there are also addressed to African banking institutions.

Obviously, the most important Chinese interest is about the natural resources potential in African Countries. Specially, the huge and growing of the energy demand led China to give priority to economic relations with the countries in the area are the largest producers of oil and gas.

In addition to hydrocarbons, China needs many other natural resources: for example phosphates and other extracted minerals. Based on this need, Chinese trade relations with Morocco, third largest producer and holder of the world’s largest reserves of phosphates, are initiated and developed.

It is possible to identify various factors that could modify, in the near future, the trend and the increase of economic relations between China and Southern Mediterranean Countries.

Firstly, the bad economic situation of European Countries could lead Southern Mediterranean Countries to diversify their international relations at the detriment of Europe and in favor of high-growth economies such as China.

Secondly, the rapid technological development could also allow China to extend the range of exports and investment in Southern Mediterranean Countries.

Thirdly, an economic sector not yet developed, but that could play an important role in the future, is the tourism. If the flow of Chinese tourists will increase, also Southern Mediterranean Countries could have benefits.

Finally, the “Chinese Diaspora” all over the world, will be a strong support for the development of economic relations in the next years.

However, the Chinese companies policy about the factory moved to Africa could work against the development of economic relations in the next years. In fact, Chinese companies in Africa use, quite only, staff of the mother country. And also career advancement is for Chinese employees only.

The motivation behind this choice is probably to encourage Chinese workers to work abroad for a long period of time. This gave also the possibility for the migrant’s families to benefit from migrant workers money remittances, increasing spending capability.

Morocco aims to achieve macroeconomic balance and cooperation with the United Arab Emirates

  • 1 November 2012

The Moroccan government has identified as a priority the restoration of a progressive budget balance, conscious that the achievement of economic goals depends on the preservation of macroeconomic balances.

Rabat will apply some strategies that, according to figures released by the press Map, consisting in the increasing of the costs efficiency, the enhance income and the use of different financing forms, such as partnership between public and private.

In order to rationalize the costs, the first expenditure to reduce is the compensation cost, which must be resized to a sustainable level. Secondly, unproductive expenses must be completely eliminated, and also the resources devoted to public administration should be reviewed.

The improvement of the revenue should be done through the mobilization of tax resources (also the customs fees), the partnership between public and private, the value of active management of the State’s property portfolio and a new policy of dividend distribution of public enterprises.

Moreover, Morocco needs to attract more foreign direct investments. This requires improving the investment security and increasing the competitiveness of productive factors. In this field it’s important to underscore the relations between Morocco and the United Arab Emirates. This has a recently remarkable evolution.

Thanks to the willingness of the two Heads of State, in fact, the relations between two countries have been consolidated and developed, being able to start bilateral cooperation in various fields.
The economic partnership between Morocco and the United Arab Emirates therefore appears promising. Proof of this is the current volume of trade and increased investment from the United Arab Emirates and direct in Morocco. These data are compatible with the particular Emirate interest for the strategic position and for the economic and political stability in Morocco.

Analysts of the newspaper of the Emirates Al Bayane argue that, after the accession to the throne of King Mohammed VI, Morocco recorded considerable progress, particularly in political, economic and development fields.

The process of reforms undertaken by the Kingdom under the leadership of Mohammed VI, such as the adoption of the new Family Code, the consecration of human rights and the creation of the Royal Institute of the Amazigh culture, would have enabled the Country to open its society to the world and to explore the promising prospects for development and investment.

North Africa and the Middle East: economic rights of women are still incomplete

  • 29 October 2012

A study on the Economic Rights of Women in Egypt, Jordan, Libya, Morocco and Tunisia was presented in Rome, during the visit of seven Libyan entrepreneurs organized by the Association “Pari o Dispare” with the support of Italian Minister of Foreign Countries and of the Eni.

The study showed alarming statistics. Based on data from OECD, World Bank, UNHCR and ILO, in the Middle East and North Africa, only the 22% of the female population is employed. The percentage rises slightly, to 27% if we refer to the averages of data on women employment in Egypt, Jordan, Libya, Morocco and Tunisia.

These represent the lower levels found in the world, while the apex of female employment (70%) is record in the Far East and the Pacific. The 64% of European women are employed, as many as those in sub-Saharan Africa (also taking into account those employed in agriculture).
In order to increase the GDP of the Development Countries, the increase in female employment and entrepreneurship is considered one of the possible solutions. According to this, for example, the Egyptian GDP in 2020 would increase by 34% if the number of women and men employed will be equal.

The Egyptian, Jordan, Libyan, Moroccan and Tunisian constitutions guarantee economic rights to both sexes, nevertheless there are limits imposed by religion and families traditions.

It is important to remember that, although with some reservations, all of these five Countries signed the United Nations Convention Eliminating All Forms of Discrimination Against Women (CEDAW).

Women of these countries, despite everything, have lots of difficulty in conducting entrepreneurial work, because of the difficulty in traveling (in Egypt and Jordan a woman can get the passport only after and explicit declaration of her husband) and the general because of the lack of autonomy and independence (according to Islamic law a woman must obey her husband).

In addition, some economic rights are currently not yet required by these countries legislations: for example, equal salary is not formally guaranteed in Tunisia, the prohibition of sex discrimination is not guaranteed in Egypt and Jordan, sexual harassment in the workplace are not considered a criminal offense in four of the five countries studied (the only exception is Morocco) and lastly the option to start legal action is still lacking in Egypt and Jordan.

The European Commission announces new initiatives to boost private investment in the Neighbourhood

  • 27 October 2012

Two new initiatives to boost private investment in the Neighbourhood region were presented in Brussels at the Strategic Board meeting of the Neighbourhood Investment Facility (NIF, that consists of the European External Action Service, the European Commission and Member States. Neighbourhood Partner Countries and European Public Finance Institutions attend as observers.)

The first initiative is about the Investment Security in the Mediterranean Region (ISMED) Support Programme will be implemented together with the Organisation of Economic Co-Operation and Development (OECD) and aims to enhance investment security in the Mediterranean region. The programme will carry out assessments to evaluate the level of investment protection provided by the local authorities, identify gaps and make recommendations to address them. €1.5 million are foreseen for this programme.

Secondly, the ISMED Risk and Cost Sharing Toolkit of the NIF will provide targeted measures like support to risk-sharing mechanisms (making funds available to help private investors by reducing their exposure to risk) and guarantee schemes addressing risk as a major obstacle for private investments. A sizeable part of the €220 million EU grants expected to be available to the Neighbourhood Investment facility until the end of 2013 will serve to underpin this important initiative.

This could leverage resources from European Public Finance Institutions and private investors of at least €2 billion for different infrastructure projects in the Neighbourhood region.

Financing and implementing large infrastructure projects requires considerable financial resources. The NIF is aimed at creating a ‘partnership’, pooling together grant resources from the EU Budget and the EU Member States and using them to leverage loans from European Finance Institutions as well as own contributions from the ENP partner countries. Accordingly, to receive a grant contribution from the NIF, a project must be financed by an eligible European Finance Institution.

Since it was set up in 2008 the Facility has made available almost €600 million for important investment projects in EU Partner Countries. Blended with loans from European public finance institutions of about €8 billion, this strategic use of EU grants has unlocked a total project financing of at least €18 billion for EU development objectives. Until today most of the support from the NIF was made to public investments.

EU Commissioner for Enlargement and European Neighbourhood Policy, Štefan Füle, said: “I welcome the ISMED Support Programme as a concrete example of our good cooperation with the OECD and I am very glad that today we are launching a new toolkit under the Neighbourhood Investment Facility to support private investments in the entire Neighbourhood region. These innovative tools are designed to help our partner countries to attract much needed investments from the private sector for large infrastructure projects more effectively. This should have a positive impact on growth, jobs and the daily life of people in the region”.

Officially launched in May 2008, the Neighbourhood Investment Facility (NIF) is an innovative financial instrument of the European Neighbourhood Policy (ENP), whose primary objective is to finance with a mix of grants and loans key infrastructure projects in the transport, energy, social and environment sectors, as well as to support private sector development (in particular SMEs) in the Neighbourhood Region.

Political and economic arrangements between Egypt and Turkey are consolidating

  • 11 October 2012

Egyptian President Mohamed Morsi visited Turkey, at the beginning of October, on the occasion of the Congress of the Justice and Development Party (AKP), which is currently the head of the Turkish Republic.

This short trip was very useful for the Egyptians. The President Morsi, in fact, signed an agreement on economic cooperation with the Turkish Prime Minister, Islamic and nationalist, Recep Tayyip Erdogan. This grant provided a loan of two billion dollars to Egypt. In addition, the relationship between the AKP and the Muslim Brotherhood has been strengthened.

There are many similarities between these two parties: both are the expression of Sunni Islam and both enjoy a large popular support. However, the choices made by AKP and by Muslim Brotherhood, once in government, are very different.

After the fall of Hosni Mubarak, in February 2011, the relations between the Muslims Brotherhood and Erdogan’s party, and therefore those two countries, have been strengthened.

In fact on March of the same year, Turkish President Abdullah Gül, become the first head of state to meet in Cairo the leaders of the main parties and the youth of Tahrir Square.

In addiction the Turkish Foreign Minister Ahmet Davutoglu traveled to Egypt several times, and there are rumors about the economic support of the Muslim Brotherhood campaign, by the AKP.

This last two years Egypt and Turkey are more closed, also because the rupture of relations between Turkey and Israel.

Turkey, in fact, was the first Muslim Country to recognize Israel in 1949. Also, during these 50 years, the relations between the two countries are complicated. Turkey was influenced by the relations with the Arab countries of the Middle East.

Regarding the relationship with Turkey, Israel use in the ‘50s the “peripheral strategy”, namely an alliance with other non-Arab        Countries in the region (such as Iran) and support for minorities in Arab Countries (such as the Maronite Christians in Lebanon and the Kurds in Iraq).

The secret agreement signed between Israel and Turkey in 1958 is the lowest point of relations between Egypt and Turkey. Things begin to improve until the second half of the ‘60s, when Turkey began a rapprochement with the Arab and Muslim.

The final rupture of relations between Israel and Turkey was caused by the Israeli attack on Turkish ship Mavi Marmara, part of a flotilla in May 2010 that wanted to stop the blockade of Gaza (which Israel imposed for a period of six years).

The rapprochement between Egypt and Turkey become a reality since Justice and Development Party come to power in Ankara, in 2002, and since the new Turkish foreign policy, called the “neo-Ottomanism”, is adopted. The neo-Ottomanism is the intent to defend Turkish national interests, and protect those of other Muslim peoples of the region, in spite of the interests of non-Muslims.

The connection between Egypt and Turkey grow also in the economic field: in January of 2011 was created to promote the end of economic cooperation in the Middle East, an area of ​​free trade, which includes the two Countries, Jordan, Syria and Lebanon. Also a bilateral agreement is signed in the field of transport (which would transform Egypt into a hub for Turkish goods that travelling to Africa and to the Gulf Countries).

Finally, the Egyptian president proposed, on the occasion of his visit to Ankara, to delete entry visas between the two Countries and invited Turkish businessmen to invest safely in Egypt.