Maghreb integration still in limbo
Tunis - The Arab Maghreb Union (AMU) has yet to deliver closer security cooperation, diplomatic rapprochement and free trade for a region of the approximately 100 million people united by a common historical and cultural heritage but divided by lack of political will.
According to the World Bank, from 2005 through 2015, the economies of Algeria, Morocco and Tunisia would have grown 34%, 27% and 24%, respectively, if economic integration had been in place in the Maghreb. The bank estimated that the lack of economic integration cost the region 2% annually in lost growth. Moreover, an integrated region would have attracted more foreign investment than individual markets.
In 2015, Maghreb countries did not come any closer to reaping the dividends of integration and closer political cooperation as the AMU was plagued by the rivalry between Algiers and Rabat, whose border has been closed since 1994.
An example of the region’s snail pace to integrate their economies, the AMU announced in December the launch of the Maghreb Bank for Investment and Foreign Trade. That Tunis-based bank had been planned for 25 years ago an prospects for progress in 2016 are doubtful.
Tunisia’s economy has stagnated since the ouster of former president Zine el-Abidine Ben Ali in 2011 and is not expected to enjoy decent economic growth (meaning around 4%) until 2017, according to its Central Bank forecasts. Libya’s crisis worsened Tunisia’s woes, as has slow growth in Europe, which absorbs almost 80% of Tunisian trade.
Although Libya is a market for only 5% of Tunisian exports, this represented more than 35% of Tunisian gross domestic product (GDP), on average, over 2008-13.
Exports to Libya increased nearly 24% per year from 2000-13, compared to 14.7% for total Tunisian exports. That growth in Tunisian exports to Libya has been stalled by the Libyan crisis, according to UN Economic and Social Commission for Western Asia (ESCWA).
Libya’s political instability resulted in its oil exports plunging more than 60%.
Lower oil prices halved Algeria’s hydrocarbon export revenues and, with a $47 billion annual import bill, its economic resilience is being tested. Algerian economists warn of a serious crisis, similar to the austerity of 1986 that led to the unrest that ushered in a decade of violence, if oil prices slip further.
Morocco, like Tunisia, has a more diversified economy than Algeria and Libya but it also is the most EU-dependent and suffers when growth slows in Europe.
“The Maghreb project is being put aside. The sheer weight of change leaves people and states with other urgent things to deal with now,” said a senior diplomat, who asked to not be named.
Libya’s mayhem escalated security concerns in Algeria and Morocco as well as extra tensions between the two countries. Libya’s formerly prominent, although often disruptive, role in the Maghreb and Africa has been replaced by a vacuum that is being exploited by competing Islamist militias.
“Under [Muammar] Qaddafi, Libya was taken into account by leaders in Algiers and Rabat as they pursued their strategic rivalry. Now they are fiercely face-to-face and hand-to-hand with no other state in the region able to mitigate their dustup,” a Western diplomat said.
“The worsening security situation due to jihadist activity is fuelling frenetic competition between Morocco and Algeria over who can earn first place as anti-terror ally of the US and other Western powers.”
Mohamed Chtatou, a political scientist at Rabat University, assessed the Maghreb region through its separate states: For now, the winner is undoubtedly the Moroccan monarchy as it is a symbol of stability, though it is yet to totally fulfil the promises of devolution of power made during the “Arab spring” era.
In Algeria, as oil revenues dry up, the military-backed leadership faces two hard choices: Cut subsidies at the risk of popular turmoil or keep the subsidies to preserve social peace and tap Algeria’s sovereign fund. The latter option would impede economic development in the short and, probably, long runs.
“The chances are the military will opt out for the second choice,” added Chtatou.
“Probably the only magic potion that could resuscitate Libya is the return of the Senussi monarchy but will all the sides accept this painful solution? The answer, for the time being, is ‘No’.”
Meanwhile, Algeria increased its defence budget 170% from 2002-11. Morocco’s budget increased 42% during the same period.
“Algeria and Morocco are locked in an underground fight about who will wield the most influence in Libya. Each side sees Libya as the big prize that could enhance their role in the Maghreb and weaken the other side,” a Western diplomat said.
On December 1st, Algeria hosted a gathering of the seven countries neighbouring Libya to discuss the future of the country. Morocco was not invited.
Morocco, however, is where most of the UN-sponsored negotiations between Libya’s factions have taken place and the kingdom was the site of the signing of the December 17th accord.
Nevertheless, Algeria has a stronger military, better experience with terrorism and a deeper knowledge of terrorist groups in the region and is thus poised to play a bigger role in Libya if Algiers were to intervene as part of an international coalition, wrote Yahia Zoubir of the Kedge Business School in France and Djallil Lounnas of Montreal University.
“This would permit [Algeria] to participate in the post-intervention political settlement and prevent Egypt and the Gulf Arab states from imposing their plans not only on Libya but on the region,” Zoubir and Lounnas wrote in their analysis.
One of the main causes of the perennial tension between Algeria and Morocco remains the Western Sahara, believed to be rich in oil and gas as well as other minerals and fishing wealth. For Morocco, the issue is one of “national sovereignty” and not just economics.
Since 1979, Morocco has claimed the former Spanish colony as part of its territory while Algeria backed the pro-independence Polisario Front. The conflict is far from resolved.