Article translated from Spanish to English. Originally posted in El Nacional.
As Mediterranean countries seek to chart a way forward following the multiple crises that have disrupted their economies, accelerating regional integration becomes more critical than ever. Increased trade flows, two-way investment and mobility across northern, southern and eastern Mediterranean countries would be the main drivers of sustainable recovery. And yet, there are multiple challenges to be overcome in pursuing this agenda.
In a global competitive environment, the Mediterranean faces multiple challenges mainly related to its positioning as a region. A roadmap is needed that links long-term projects capable of ensuring economic development and operational plans that allow for efficient and timely implementation.
Currently, trade within the Mediterranean region is valued at 1.1 billion euros annually, which is barely a third of overall trade between the Mediterranean and the rest of the world. This contrasts with other prosperous regions, where the main trading partners are often their regional neighbours. With this limited endowment, currently around a third of regional trade is in energy. Overall foreign trade in these countries accounts for almost 45% of GDP. In addition to intra-regional trade, investments between Mediterranean countries amount to approximately 200.19 billion euros.
The southern and eastern Mediterranean area is the EU’s second largest trading partner. Seventy per cent of imports come from the EU, while 12 per cent of EU exports go to the 10 countries that make up this area. Of these exports, 80% come basically from five EU countries: Italy, Germany, France, Great Britain and Spain (Catalonia is the region’s leading partner in Spain, with 30% of exports).
Paradigm shifts, trend changes and the new configuration of global geopolitics today imply a reshaping of relations between the Mediterranean and Europe, long characterised by a donor-beneficiary relationship. Working on an equal footing, this will foster better cooperation leading to the strengthening of more inclusive economies and greater social welfare in both regions, and could take advantage of the digital revolution and the green, blue and pandemic lessons of the green economy to develop new approaches and open new horizons.
The crisis makes this development all the more relevant, because in the race between the US and China, the EU will only find its place in the new world order by allying with its Mediterranean partners to create a global competitive pole. But it requires shifting the centre of gravity southwards.
The dynamics of economic integration are important for the development and strength of the Mediterranean, as is the role that the region’s emerging economies must play in driving, accelerating and consolidating the process.
By joining forces, they have much to gain: big scale economies, real growth potential and a large consumer market. In ten years, the Mediterranean could gain up to 30% of GDP if it finally decides to open its borders and create a united market.
Possible integration would attract international business and the creation of tens of thousands of jobs in an area with high unemployment. It could earn each country in the region an annual increase in exports and 13% of GDP. Perhaps economic expediency could lead to an integrated market. This would have a positive impact on both sides of the Mediterranean, as the needs of this region would be transformed into opportunities for its southern European neighbours. The potential and interconnectedness between Europe and the southern and eastern Mediterranean is obvious.
It is imperative to consolidate the regional economy and strengthen its inclusion in the global economy in order to facilitate the region’s transformation. Future relations between the two shores rely, to a non-negligible degree, on the capacity of private sector companies to increase flows of investment, produced and traded goods, develop infrastructures, especially digital ones. It is a way of indirectly stimulating entrepreneurship by facilitating the process of SME creation, as well as improving governance models with greater transparency and traceability. European businesses need to see the region not as a consumer market or a source of raw materials, but also as a region that creates value.
The private sector plays a key role in the diversification and transformation of Mediterranean economies. Countries in the region should further value Mediterranean SMEs as drivers of diversification by facilitating their access to affordable funds and financial services, which will contribute to the creation of wealth and value added for sustainable and inclusive development in the region and the well-being of its population, including its youth.
The destinies of Europe and Africa are linked, and the Mediterranean is the natural space for this new axis of the future.