Brussels, 06/03/2012 (Agence Europe) - The economic situation on the southern rim of the Mediterranean is not “alarming” but rather, “uncertain”. This is the opinion of Jean-Louis Reiffers, the director of Femise, a network of 94 economic forecasting institutes focusing on the region and which employs around 300 economists in its studies. He locates the current difficulties in tourism and direct investment. He explains that “the lifelessness of European growth and the lack of external demand are unable to pull the economies of the South forward”. Prospects would be much better if the political and social situation were to stabilise, thanks to European support, such as that previously provided to Eastern Europe, Reiffers explains.
He also refers to the Femise annual report, which points out that “up until last year, Mediterranean partner countries were considered as relatively good economic performers, despite the effects of the financial crisis of 2008”. Until then, the region could boast of remarkable economic growth of 5.2% in 2008 (4.7% over the period 2000-2007, as opposed to 3.9% in 1995-2007 but which suffered a fall to 3.1% in 2009, rebounding in 2010 to 4.9%). “This can be explained by the low level of financial integration of the region and a high concentration of Mediterranean exports” in a limited number of products (oil, materials and light industry). Economic opening up and the range of reforms undertaken have enabled “dynamic growth to be maintained, which is above the world average”. This impetus was, nevertheless, confounded by the “revolutions” that have occurred in the region.
The current “depression” is therefore exclusively political, “after any process of democratic change, there is an initial 'J-curve' effect” (Ed: deterioration, followed by recovery). According to Reiffers this means that “operators' forecasts” are downbeat and “the ruling elites are often discredited by their links with the former ruling classes, whilst the new elites have not yet been recognised or are not yet fully in the driving seat”. This results in lower growth, high unemployment and pressure on public budgets. These same phenomena were observed “very clearly during the transition of the Eastern European countries and it took five or six years for these pressures to ease off”, he explains. It was possible thanks to “considerable aid provided by countries and international institutions, something which appears more risky today”.
Reiffers is not, however, pessimistic. He explains that there is a positive point in “the progress made through macro-economic regulation: budget deficits, although increasing rapidly, are still at acceptable levels, external debt rates are enviously low compared to those of European countries and although inflation is clearly higher than in the EU, it is still under control”. He asserts that “recovery will be through a project that is able to provide confidence again”.
Another positive factor involves the relaunch of regional integration: “Due to the crisis in the North, Mediterranean countries (Ed: on the eastern rim) appear to be relaunching the Union of the Arab Maghreb”, which Reiffers considers “a very good thing, if we are able to go beyond questions linked to security, because this will enhance each country's negotiating capacity and allow for a much broader market of economies of scale for high performing companies, which will promote circulatory migration”.
What should be done in the existing conditions? “The first recommendation is not to break the macro-economic balances that have been fought for over the past 30 years by excessively increasing public spending to maintain calm.” Nonetheless, “creating hundreds of thousands of jobs in the public sector for young people is obviously a solution that does not go in this direction”. These countries have a slim margin of manoeuvre in the face of developing “imperative necessities”. EU aid is “therefore indispensable”.
The second thing that should be done is “to define a clear horizon underpinned by five major questions: democracy as a value and not only as a procedure, together with the development of genuine participation and a high level agency for controlling calls for tender, food safety, rural development, jobs for graduates, regionalisation speeded up through decentralisation and/or de-concentration right up to the level of the local authorities. Obviously, a real vision is required, as well as international support, particularly European, and taking ownership of this vision by society”, explains the head of the Femise. (FB/transl.fl)