Brussels, 08/07/2009 (Agence Europe) - On Tuesday 7 July, in Brussels, the European Investment Bank (EIB) signed a convention with FEMISE (Forum euro-méditérranéen des instituts de sciences économiques) to enhance their partnership formally begun in 2006. The first expression of this heightened partnership is the launching of a study on the conditions for taking the EuroMed area out of the crisis. Its conclusions will be known during the first half of 2010, the Bank states.
The southern rim crisis, the effects of which will be perceptible three years later in Europe, will have the most impact when Europe and the western economies in general begin to adjust, said Philippe de Fontaine Vive, EIB Vice-President. Helping these countries to face up to the crisis first of all and then to come out of the crisis - a theme was dealt with earlier in the day by economy and finance ministers of countries belonging to EuroMed Dialgoue - is a duty for the EU, said Jean-Louis Reiffers, President of the FEMISE Scientific Council. “They have no financial responsibility” in triggering the crisis, all the more as they “have made an effort”' to modernise their economies. “The good pupils” will be the most affected, he stressed, and there is the risk that 20 years of sustained adjustment effort by the EU will be compromised. The EIB vice-president states that “the study will firstly seek to identify the transmission channels of the crisis in the partner countries and to quantify the impact at a macro-economic level” It will comprise a “forward-looking dimension, covering the next three years”. In other words, it will prepare for the way out of the crisis.
The FEMISE, created when the Barcelona Process was launched, is a network of 80 economic research institutes from both sides of the Mediterranean, and already has an opinion on the crisis foreseeable in the Mediterranean. “Paradoxically”, says Mr Reiffers, “it is the countries that have opened up their economies that will be the most affected: Turkey first of all then Morocco followed by Egypt”. Tunisia, a country that is also open, will be less affected as, he said, it has practised a “cautious” policy without too much financial opening, thus remaining sheltered from global market upheavals. The situation will differ from one country to the next depending on the characteristics of the economy and a country's ability to face up to the impact of the crisis. Transmission channels, said Mr Reiffers, are a rising trade deficit, the fall in migrants' financial transfers, the reduction of revenue from tourism and, especially, the fall in financial reserves. This could be widespread except in Algeria whose receipts will improve as soon as the price of a barrel of oil exceeds $40.
The study to be carried out by FEMISE will be focused on scenarios for coming out of the crisis, beginning by the need for cleaning up the banks and bringing “overvalued” currencies back down to levels closer to the reality. Mr Reiffers already underlines the EU's duty to help its partners. “It is difficult to understand that the EU does not put any money into this - if it doesn't, then who will?” he said. There is the risk that “economic adjustment efforts closely linked to those of the EU and in countries almost integrated into its economic space could be compromised”.
Mr de Fontaine Vive stressed the role of the EIB and of the financial instrument FEMIP (Euro-Mediterranean facility for investment and partnership) that it manages. The Bank hopes to obtain the agreement of member states for mobilising €2 billion in reserve to safeguard the economic health of a zone that is increasingly attractive for European enterprise. This option is being studied as part of the mission for re-guidance of the Bank's external mandates entrusted to the former IMF President Michel Camdessus. (F.B./transl.jl)