21 - 27 December 2000
Issue No.513
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Al-Ahram Weekly On-line 21 - 27 December 2000 Issue No.513 |
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Southern discomfort
By Ayman ZaineldineFollowing last week's European Union summit in the French Mediterranean resort city of Nice, the countries of the southern Mediterranean are fearing economic marginalisation. A decision to give larger EU member states more voting power will make majority voting more efficient and, in theory, decision-making swifter. Although this does not apply directly to foreign policy, it could have a positive impact on the way the EU handles itself on the international stage, if only by freeing the energy wasted by EU institutions in breaking gridlocks in internal matters. On the other hand, larger EU membership, coupled with the luxury to opt out of (or opt into) certain policy areas, could lead to fragmentation and incoherence. It might be overly optimistic to expect a drastic improvement of the EU's international profile just yet.
By putting itself on track to embrace virtually every European nation, the EU will undoubtedly be justified in its claim to be the true European house. This, along with a higher profile in security and defence issues, might have political and even security implications, and will have effects on other European organisations -- most significantly, NATO and the Organisation for Security and Cooperation in Europe (OSCE). This, in turn, weakens the transatlantic link -- something that will have to be watched over the coming decade.
The North African countries on the southern shores of the Mediterranean are now wondering whether the process of EU enlargement will lead to what had originally been feared at the end of the Cold War: that Europe will look eastwards at the expense of its southern flank. Large amounts of financial and organisational resources will have to be devoted to coping with enlargement -- something that will most certainly affect the southern Mediterranean. In order to prepare new applicants for membership, the EU will have to provide them with even larger amounts of financial support to modernise their economies to compete in the international market. Given the limited scope for increased budgetary revenues in the EU, financial transfers to south Mediterranean countries are bound to be affected.
In addition, new applicants, with their larger reliance on agriculture (averaging 25 per cent of GDP, compared with less than five per cent in the present EU) will need higher common agricultural policy (CAP) financial transfers. Boosting domestic economies and providing export subsidies will be drawing more EU resources than are now currently accounted for.
As for trade, enlargement will also inevitably lead to the erosion of trade preferences available to southern Mediterranean countries. Mediterranean agricultural exports will face stiffer competition from newcomers, who will enjoy unhindered access to the lucrative west European markets, compared with the limited tariff quotas granted to southern Mediterranean states. The same would apply for manufactured products, with added complications resulting from the high level of similarity among the products. This could result in a disproportionate impact on existing and potential exports from south Mediterranean nations.
Beyond financial support and trade, enlargement can have a similarly negative effect on future investment flows. A major source of foreign direct investment (FDI) targeting both the south Mediterranean and Eastern Europe are multinationals seeking cheap production locations as launching pads to the EU market. Approaching membership for eastern European nations will make them a better destination compared with south Mediterranean nations, as it will add an extra assurance to investors as to the continuity and predictability in policies and regulations.
In time, however, EU membership will ultimately increase the costs of production in these nations, whether as a consequence of their growth, or as a result of applying EU regulations, particularly in the case of environmental regulations and labour. This could make them a larger exporter of investments, as producers seek the cheaper production location they originally sought in Eastern Europe. In short, south Mediterranean nations, Egypt included, will have to work harder and act faster in taking advantage of the benefits available to them in terms of financial support, trade and courting FDI, before it is too late.
The South should also reconsider their perception of east European nations in line for EU membership, as these will be more rewarding markets in the future. They will also be participants in the EU decision-making process, giving them more weight than they possess as individual nations. Eventually, they could become sources of FDI and a link to the vast European market.
Nice is, no doubt, a landmark on the road towards broader European integration. Its implications on the geopolitics of Europe are enormous and the reverberations beyond Europe will continue to be felt, not least on the southern shores of the Mediterranean. Only time will tell how ready the southern Mediterranean countries are to face up to the challenges and to take advantage of the opportunities it presented.
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