Geopolitical shifts in the Eastern Mediterranean. Security Policy Brief No. 43, February 2013

Three major geopolitical events are putting the stability of the Eastern Mediterranean at risk. Most of the region is in a deep monetary and economic crisis. The Arab Spring is causing turmoil in the Levant and the Maghreb. Gas and oil discoveries, if not well managed, could further destabilise the region. At the same time, Russia and Turkey are staging a comeback. In the face of these challenges, the EU approaches the Greek sovereign debt crisis nearly exclusively from a financial and economic viewpoint. This brief argues that the EU has to develop a comprehensive strategy for the region, complementing its existing multilateral regional framework with bilateral agreements in order to secure its interests in the Eastern Mediterranean.

Paving the Way for Micro-, Small- and Medium-Sized Enterprises in the Southern Mediterranean. CEPS Policy Brief No. 314, 14 January 2014

The upheavals of the Arab Spring in the southern Mediterranean led to domestic and international demands on the governments in the region to implement reforms aimed at enhancing business and investment conditions especially for micro, small- and medium-sized enterprises (MSMEs), which carry out an overwhelming majority of the region’s economic activity. A comprehensive survey among some 600 high-growth potential MSMEs in Algeria, Egypt, Morocco and Tunisia identified and ranked the key obstacles impeding their high-growth potential. This Policy Brief summarises the main results and policy recommendations that can be drawn from this survey, which has been analysed in depth by Ayadi & De Groen (2014).

The EU's Group-to-Group Dialogue with the Southern Mediterranean and ASEAN – How much have they achieved? A Comparative Analysis. EU Centre Singapore Working Paper No, 18, December 2013

Four decades of the EU's group-to-group dialogues with the Southern Mediterranean grouping of countries and with ASEAN have produced different dynamics and outcomes, despite the EU’s common strategy to use economic soft power to achieve their goals for the partnerships. Diverging conditions in the two regions created inconsistency in the EU's application of the common approach. The EU's neighbourhood security concerns forced it to relax its political stand with their Southern Mediterranean partners. For ASEAN, geographical distance dilutes the EU’s security concerns it that region and has afforded the EU to be more ideological and assertive on democracy and human rights practices. These issues have provoked disagreements in EU-ASEAN dialogues, but both sides have also tried to remain pragmatic in order to achieve some progress in the partnership. In contrast, the protracted the Arab-Israeli conflict continues to hamper the Euro-Mediterranean dialogue, resulting in little progress. Social upheavals in the Southern Mediterranean also brought their partnership to a standstill. The EU's cooperation with former authoritarian regimes like Libya and Syria have only caused damage to its credibility in the Southern Mediterranean, and future Euro-Mediterranean dialogues are likely to be affected by it.

Macroeconomic and Financial Crisis Management in the Southern and Eastern Mediterranean: Diagnosis and Prospects. CEPS Paperbacks. December 2013

The global financial crisis, which started in the summer of 2007 and deepened in the aftermath of the Lehman failure in September 2008, has led to a virtual collapse in economic activity and increased financial volatility worldwide. For the developing countries, the main channel of transmission has been a drop in external transactions, such as trade, financial and capital flows, and remittances. The emerging economies in the southern and eastern Mediterranean have also faced declining economic activity, although there seems to be considerable variation in the relative magnitude and timing. Most of these economies have shown a delayed but more lasting response to the crisis, driven mostly by their close trade and investment ties with the EU and the Gulf Cooperation Council (GCC) countries. This book explores the fiscal, monetary and financial effects of the crisis in the region and provides an in-depth analysis of the fiscal, monetary and banking policies in the post-crisis era, the viability of their exit strategies and the future of reforms in the region. These analyses not only provide a comprehensive comparison between the countries but also provide a solid basis for assessing future economic and financial developments and reforms in the region.

State (un)Sustainability in the Southern Mediterranean and Scenarios to 2030: The EU’s Response. MEDPRO Policy Paper No. 1/August 2011(updated April 2012)

This research project is the product of a conviction, corroborated by the events that have overwhelmed the Arab world since December 2010, that sustainability is essential to any understanding of Mediterranean politics. Sustainability has too often been confused with stability in policy debates in the region and in the West. Not only are these two concepts distinct, with sustainability being broader and deeper than stability, but stability, as interpreted with regard to the regimes in the region, has often run counter to the very conditions that underpin state sustainability. Believing and thus pursuing regime stability has ultimately acted to the detriment of a more organic understanding of state sustainability.

Perspectives in Resource Management and Climate Change Adaptation in the Southern and Eastern Mediterranean. MEDPRO Policy Paper No. 6, March 2013

This policy paper focuses on the sustainable management of some key natural resources in southern and eastern Mediterranean countries (SEMCs) under climate change and anthropogenic pressures. In a business-as-usual and even more so in a failed cooperation scenario, water resources, ecosystems and biodiversity in the region are under stress, with negative consequences for agriculture, food security, tourism and development. However, proper adaptation strategies are shown to be effective in reconciling resource conservation with GDP, trade and population growth. These need be implemented in different ways: technological, institutional, behavioural; and at different levels: regional, national and international. There is ample room for fruitful cooperation between the EU and SEMCs in this area, which can take the form of EU direct financial and technical support when resources in SEMCs are scarce, and of multilateral and bilateral cooperation programmes to improve resource efficiency. The EU could also take on the role of coordinating these different bilateral actions and, at the same time, support SEMCs to establish a structured programme focused on the communication and dissemination of emerging best practices.

Scenarios Assessment and Transitions towards a Sustainable Euro-Mediterranean in 2030. MEDPRO Policy Paper No. 9, July 2013

In the aftermath of the 2011 Arab uprisings in the southern and eastern Mediterranean, the region has reached a turning point in its history, presenting as many opportunities as challenges. The European Union itself is facing challenging conditions following the financial and economic crises that have hit its periphery. This MEDPRO Policy Paper examines and assesses various possible scenarios that could play out in EU-Mediterranean relations over the next two decades and offers recommendations towards long-term sustainable socio-economic development in the region.

Population Scenarios for South Mediterranean Countries 2010-2050. MEDPRO Report No. 2, August 2012

The European Neighbourhood Policy (ENP) and its follow-up, the Union for the Mediterranean (UfM), were created in 2004 and 2008 to strengthen the prosperity, stability and security of all countries and avoid the emergence of new dividing lines between the EU and 16 neighbouring countries, including south Mediterranean countries (SMCs). Demographic factors in both EU and neighbouring countries will influence this goal. This report describes four population growth scenarios for SMCs, obtained using the MEDPRO economic-political development framework on how indicators of fertility, mortality and international migration might change if people in SMCs were to live in different macroeconomic and political contexts. Qualitative scenarios were then operationalized leading to four different quantitative scenarios using assumptions about possible trends in indicators of fertility, mortality and international migration. The paper concludes by reflecting on the results in light of recent political developments in the region.

Benchmarking the Financial Sector in the Southern and Eastern Mediterranean Countries and Projecting 2030 Financial Sector Scenarios. MEDPRO Technical Report No. 31/March 2013

This paper aims at devising scenarios for the development of the financial system in the southern and eastern Mediterranean countries (SEMCs), for the 2030 horizon. The results of our simulations indicate that bank credit to the private sector, meta-efficiency and stock market turnover could reach at best 108%, 78% and 121%, respectively, if the SEMCs adopt the best practices in Europe. These scenarios are much higher than those of the present levels in the region but still lower than the best performers in Europe. More specifically, we find that improving the quality of institutions, increasing per capita GDP, opening further capital account and lowering inflation are needed to enable the financial system in the region to converge with those of Europe.

The Relationship between Energy and Socio-Economic Development in the Southern and Eastern Mediterranean. MEDPRO Technical Report No. 27/February 2013

This report aims to identify, explain and detail the links and interactions in southern and eastern Mediterranean countries (SEMCs) between energy supply and demand and socio-economic development, as well as the potential role of energy supply and demand policies on both. Another related aim is to identify and analyse, in a quantitative and qualitative way, the changing role of energy (both demand and supply) in southern Mediterranean economies, focusing on its positive and negative impact on socio-economic development. This report investigates in particular: o The most important channels through which resource wealth can contribute to or hamper economic and social development in the analysed region; o Mechanisms and channels of relations between energy supply and demand policies and economic and social development. The burdens of energy subsidies and ‘oil syndrome’ are of particular relevance for the region. An integrated socio-economic development and energy policy scenario approach showing the potential benefits and synergies within countries and the region is developed in the final part of the report.

Economic and climate change pressures on biodiversity in southern Mediterranean coastal areas. MEDPRO Technical Report No. 24/February 2013

This paper establishes and measures key biodiversity and ecosystem health indicators and the number of world heritage sites in coastal areas at global level. It then estimates – econometrically – the indicators’ influence on the provision of tourism values through the marine ecosystem function as a harbour of biodiversity, and as a provider of amenity values and marine cultural identity. The report then focuses on the MEDPRO region, providing some estimates of the potential impact of climate change on these services for a given temperature increase scenario. Finally, the effect on ecosystemrelated tourism is computed for the four MEDPRO social economic scenarios. The analysis is enriched by some quantification of the potential costs of adaptation.

Female Labour Force Participation and Economic Development in Southern Mediterranean Countries: What scenarios for 2030? MEDPRO Technical Report No. 19/December 2012

This paper investigates the relationship between female labour force participation rates and economic growth in southern Mediterranean countries. A two-step methodology involving econometric estimations and the use of a general equilibrium model was used for this purpose. The econometric estimations suggest that there is a U-shaped relationship between economic growth and female labour force participation rates and they indicate the presence of region-specific barriers impeding women's entry into the labour force in southern Mediterranean countries. The econometric results were fed into a general equilibrium model, the GEM-E3-MEDPRO, which was used to simulate two alternative assumptions on developments in female labour participation rates in the region up to 2030. The first of these simulated changes in female labour force participation rates arising from income level trends projected for the period 2015–2030 in southern Mediterranean countries. The second assumed the lowering of region-specific barriers which deter female labour force participation. The results of these simulations suggest that lower female labour force participation rates may lead to marginally lower economic growth in the region, while the removal of region-specific barriers to female labour force participation may encourage economic growth. This has important policy implications, suggesting that policies intended to remove such barriers could help to promote the growth of the region's economies.

Outlook for Oil and Gas in Southern and Eastern Mediterranean Countries. MEDPRO Technical Report No. 18/October 2012

The aim of this report is to elaborate the MEDPRO Energy Reference Scenario for oil and gas supply and demand up to 2030 for southern and eastern Mediterranean countries. The report gives an assessment of • oil and gas reserves by country; • oil and gas production, domestic demand and export scenarios by country; and • the existing and planned infrastructure for oil and gas exports. Finally, the report presents some insights on the future role of the Mediterranean as an oil and gas transit region.

Measuring Returns to Education and Human Capital in the Southern Mediterranean. MEDPRO Technical Report No. 17/September 2012

Measuring human capital has been a significant challenge for economists because the main variable of interest is intangible and not directly observable. In the Middle Eastern and Northern African region the task is further complicated by the general scarcity of comparable and reliable data. This study overcomes these challenges by relying on a unique international survey that covers most of the region and by deriving a market-based measure that uses returns to education and various labour market factors as guidance. The results show that private returns to schooling are relatively low in most southern Mediterranean countries (SMC). Israel and Turkey are clear outliers, surpassing even the EU-MED averages. In Algeria and Jordan, the returns are almost flat, implying that earnings do not respond significantly to education levels. Despite high attainment levels, Greece, Spain and Portugal also perform badly; only marginally surpassing some of the bottom-ranked SMC, providing evidence of problems in absorption capacity. The baseline scenarios for 2030 show substantial sensitivity to current estimates on returns to education. In particular, improving attainment levels can produce measurable gains in the future only when the returns to education are already high. Such is the case for Egypt, Morocco and Turkey, which substantially improve their human capital stocks under the baseline scenarios, surpassing several EU-MED countries with little or no room for improvement.

EU Migration Policy in the wake of the Arab Spring. What prospects for EU-Southern Mediterranean Relations? MEDPRO Technical Report No. 15/August 2012

The outbreak of the Arab Spring and the unrest, revolution and war that followed during the course of 2011 have forced the EU to acknowledge the need to radically re-think its policy approach towards the Southern Mediterranean, including in the domain of migration. Migration and mobility now feature as key components of High Representative Catherine Ashton’s new framework for cooperation with the region (Partnership for Democracy and Shared Prosperity), while the EU has declared its intention to strengthen its external migration policy by setting up “mutually beneficial” partnerships with third countries – so-called ‘Dialogues for Migration, Mobility and Security’ – now placed at the centre of the EU’s renewed Global Approach to Migration and Mobility (GAMM). However, the success of this approach and its potential to establish genuine cooperative partnerships that will support smooth economic and political transformation in North Africa hinge on the working arrangements and institutional configurations shaping the renewed GAMM at EU level which has long been marked by internal fragmentation, a lack of transparency and a predominance of home affairs and security actors. This paper investigates the development of the Dialogues for Migration, Mobility and Security with the Southern Mediterranean in a post-Lisbon Treaty institutional setting. It asks to what extent has the application of the Lisbon Treaty and the creation of an “EU Foreign Minister” in High Representative Ashton, supported by a European External Action Service (EEAS), remedied or re-invigorated the ideological and institutional struggles around the implementation of the Global Approach? Who are the principal agents shaping and driving the Dialogues for Migration, Mobility and Security? Who goes abroad to speak on the behalf of the EU in these Dialogues and what impact does this have on the effectiveness, legitimacy and accountability of the Dialogues under the renewed GAMM as well as the wider prospects for the Southern Mediterranean?