13th - 17th November , 1998

Papers

Perspectives of the Euro-med Partnership of the Barcelona Process

Speech given by Ambassador Dr. Herbert Kröll, Austrian Presidency Euro-med Co-ordinator,

Malta, 13 November, 1998

With the easing of the conflict between East and West , European attention has increasingly been focused on the Mediterranean and on perceived security and economic risks from that area. It has been argued that the euro-med relationship needs to be deepened and strengthened to solve the common problems of that particular region. For that reason a considerable number of initiatives has been launched over the past 10 years to enhance co-operation in the Mediterranean. The earliest post-Cold War efforts were undertaken by some Mediterranean countries: The "Five plus Five" Dialogue and the CSCM (Conference for Security and Co-operation in the Mediterranean) were first discussed in 1990. In 1994 in accordance with an Egyptian proposal, co-sponsored by France, the Mediterranean Forum with 11 members was established. Since countries highly involved in the MEPP (Israel, Lebanon, Syria) are not members of the Forum it seems easier to discuss touchy subjects informally.

Other Mediterranean initiatives are the US-sponsored Middle East and North Africa (MENA) Economic Summits, which got off to a start in 1994 when the MEPP reached its peak. There is also the Arms Control and Regional Security Working Group (ACRS), the WEU Mediterranean Initiative, NATO's Med Initiative and the OSCE's Mediterranean Contact Group.

The most ambitious and best progressing Mediterranean initiative is the (European Union’s) Euro-Mediterranean Partnership launched in Barcelona in November 1995 - also known as the "Barcelona process". The initiative responds to the need, to address more directly the growing social and economic problems on the Southern fringe of the Mediterranean. It reflects the Union’s traditional perception of the interlinkage between economic development and regional stability. The EMP is to be seen as a comprehensive EU foreign policy approach towards the Mediterranean. It is clear therefore that although Russia and the US wanted to be included they are not.

The EMP reflects a desire to redress a marked imbalance in the allocation of resources between Eastern European and the Southern Mediterranean countries. As a reaction to the EU’s involvement in Eastern Europe the Southern European countries demanded the recognition of their strategic and economic interests in the south. Moreover, poor economic performance of some Med countries has gradually raised concern in the EU. With the standards of living stagnating, sometimes even declining in the Med countries in connection with the rapid growth of population concerns were raised about migration pressure at a time when unemployment in EU countries was on the increase.

Now all EU member states have become fully aware that the Mediterranean region as a single geopolitical entity is too important to be neglected. This is also the case for a country such as Austria which is not situated on the Mediterranean. Austria sees its Southern Mediterranean partners as neighbours, even more so with the entry into force of the Schengen Agreement. To the EU the whole Mediterranean area matters and there is no EU-fragmentation policy. By no means a fault-line should develop between a prosperous north and a poor south.

I think the Austrian Presidency has made it clear that Europe as a whole - not just the southern parts of Europe - stands firm behind the Euro-med Partnership. We have given a political signal in that direction. Austria is the first EU-Presidency of a „northern“ country to hold a Euro-med Ministerial Meeting in its own country. This was the Industry Ministers Conference in Klagenfurt. Germany will follow that line by holding the Barcelona III Conference during its Presidency in Stuttgart in April 1999.

On November 27 - 28, 1995 the European Union formally launched its new Mediterranean policy in Barcelona. The Barcelona Conference represented the pinnacle of a year-long effort by the EU to give the partnership with Algeria, Cyprus, Egypt, Israel, Jordan, Lebanon, Malta, Morocco, Syria, Tunisia, Turkey, and the Palestinian National Authority a solid foundation. Libya for its part has not been forgotten. Libya is an integral part of the Med, it is considered to be a natural partner in the Euro-med Partnership on the very day when UN sanctions will be lifted. On 27 October the European Parliament has given a strong recommendation for Libyan Euro-med membership .

The Barcelona Declaration was accepted by all 27 partners at a time when the MEPP gave rise to optimism. To-date the Euro-med Partnership remains the only multilateral forum to deal with the problems of the region in a comprehensive way with the participation of Arab countries and Israel. Nonetheless, there is a strong wish of all the EU-MS to keep the Barcelona Process separate from the MEPP. Although the EMP has its roots in the MEPP and the Madrid Conference, this partnership must not be allowed to depend on the ups and downs of the MEPP. This means: the Barcelona Process cannot and shall not be used as leverage in the MEPP. The Palermo Conference called the two processes complementary.

The chief aim of the Euro-Mediterranean Partnership is to promote long-term stability through economic development and liberalisation. The economic and financial chapter is the engine of the Euro-med Partnership. It offers immediate, practical benefits to both sides. Economic development is presumed to have a certain positive impact on the political, social and security level by providing more opportunities for jobs at home (thus easing migratory pressure), raising the standards of living and lowering the attractiveness of extremist ideologies. Liberal economic policies are also expected to lead to more democratic institutions in the long-run. The initiative is designed to promote an integrated economic area that fosters closer co-operation in political, social, and economic issues. The most remarkable aspect of the Euro-Mediterranean Partnership is its long-term and comprehensive approach, virtually non-existent in previous European efforts in that region.

The immediate aim of the Barcelona Process is to establish a big Euro-med FTA (Free Trade Area) before the year 2010 in order to create a common area of peace, stability, and prosperity. The Euro-med free trade area will provide for reciprocal free trade of all manufactured goods, for preferential and reciprocal access of some agricultural products, and for free trade among partner countries. The Commission expects the Euro-med zone to become the largest free trade area in the world, with 600-800 million people in well over 30 countries.

Therefore a first priority must be the negotiation of new Association Agreements with the med. Partners in order to promote the establishment of said FTA. With Tunisia, Morocco, Israel, and Jordan, Association Agreements have already been concluded. As you all know, the first Agreement to enter into force was the one with Tunisia (1March 1998). It is in this context that I would like to focus your attention on the successful Association Council with Tunisia which took place under the Austrian Presidency on 14 July 1998. As with Algeria, Egypt, Lebanon, and Syria we are still negotiating with those states. We hope to be able to at least reach an agreement with Egypt this year. With the PLO we have concluded an Interim-Agreement on behalf of the Palestinian Authority. As you know the EU had already reached Association Agreements with Turkey, Malta, and Cyprus before.

The economic partnership should be mutually beneficial. 50% of the exports of our partners find their way to the EU and 12% of the EU exports go to the med. countries. EU runs a trade surplus with all the 12 Med countries and Libya of U$12 billions. We must not forget that the 12 Med countries are a rather heterogeneous group of economies. Three countries - Cyprus, Israel and Malta - have income levels similar to those of some EU countries. They account for almost a quarter of regional GDP, but only 3% of population of more than 220 mio. Nine countries are middle or low income developing countries. It is also worth mentioning that some 30 years ago, average incomes in the non-oil producing economies of the Med region were roughly the same as those in South East Asia. Today they are less than half.

Still one year ago, the Barcelona Process was considered to be in danger or even in a crisis. Today, especially since the successful Palermo Conference, the EMP is less fragile, it is a reality which nobody wants to miss. The time of a strengthened EMP is the moment to become less paternalistic on the EU-side. We should not dominate the EMP, but move to a genuine partnership relationship and discuss and address also sensitive issues. We should not be shy to discuss terrorism, agricultural problems, migration and excessive population growth, even the debt issue. We must further develop a genuine spirit of partnership. Some partner countries believe that the EU is more interested in stemming the influx of economic migrants, terrorists as well as the shipping of drugs across the Mediterranean to Europe, than in promoting the region’s economic development. Such scepticism is unwarranted.

For the period from 1995 to 1999, the EU has allocated 4.7 bn ECU to the partners in the frame of the MEDA-Regulation. Despite the fact that the partners think that this amount is still not enough, many successful projects have already been realised thanks to the MEDA-funds.

Let me now conclude with stressing the priorities which the Austrian Presidency has laid down in order to promote the Euro-med Partnership and to help prepare for Barcelona III:

Progress in negotiation of Association Agreements

Being the core of the Euro-med Partnership there is a need for rapid progress in the negotiations of the Association Agreements. Efforts are being made to conclude the Agreement with Egypt during the Austrian Presidency. However, problems especially regarding the readmission clause and the human rights clause have to be overcome. On both issues Egypt requests to be treated not less favourably than other euro-med Partners. Negotiation rounds with Syria and Lebanon will take place during the Austrian Presidency. It remains to be seen whether negotiations can start with Algeria. Ministers in the Palermo Conference recognised that a mutually satisfactory compromise on agriculture was required for concluding the negotiations.

At various levels there seems to be a lack of information on the impact of Association Agreements on the budget, taxes, trade, employment or social cost. A clear and realistic picture is needed to avoid disappointment and frustrations about short-term cost and long-term benefits. Therefore the Austrian Presidency intends to discuss a preliminary report by FEMISE on the evaluation of the consequences of the Ass. Agreements and the implications of the creation of the Free Trade Area at the next Euro-med Committee Meeting on 25 November.

Promoting regional co-operation

If we want to achieve a meaningful Free Trade Area, we cannot concentrate only on North-South co-operation but have to strengthen South-South co-operation too. It is important to encourage Med. Partners to reinforce their mutual relations. Strengthening intra-regional trade and regional cooperation, especially in key areas such as industry, transport, energy, environment, telecommunication etc is important. The Euro-med Committee will address this issue in its November Meeting and hopefully reach a decision on General Principles and Procedures for Approval an Implementation of Regional Projects.

During the Austrian Presidency preparations are being made for the Conference on Regional Co-operation organized by Spain in Valencia in January 1999.

Encouraging private sector and private investment

Most important is the need for a greater business-involvement in the Euro-med Partnership. The Conference of Ministers of Industry has taken account of this and private sector representatives were included in delegations and were allowed to take the floor.

The Mediterranean´s record in attracting private investment is not very high. They EU cannot be blamed for this. In many cases further liberalisation, privatisation and other economic reforms are needed to attract greater private investment. The EU, however, should facilitate this process through MEDA and through the ongoing Euro-med investment initiative.

Simplifying procedures and financial co-operation

Following the proposal made by Vice-Pres. Marin in Palermo, the Presidency stresses the importance of the simplification of MEDA procedures in order to improve its functioning. A proposal by Marin is expected for November.

Giving new impetus to the Euro-med Committee for the Barcelona Process. We would very much like to see this committee fulfil its central co-ordinating role for the whole partnership. This strategic role and comprehensive responsibility of the Euro-med Committee not only results from the fact that it is the only body established by the Barcelona Declaration but also from its mandate, i.e. „to prepare the meeting of the Ministers for Foreign Affairs, take stock and evaluate the follow-up to the Barcelona-Process and all its components and update the work programme“. There are at present too many one-off initiatives which make no lasting impact and which tie in only loosely with each other and with agreed priority areas. Future initiatives should make clear the priority areas they address and should be assessed on this basis. There also needs to be a greater emphasis on the output of initiatives and on how this is measured. The Commission should also offer more detailed information on its own activities in the framework of the Euro-med process to the Euro-med Committee.

The Austrian Presidency is therefore organising a special Euro-med Brainstorming for the 15 Euro-med Co-ordinators on 29 October. It is expected to achieve better functioning of the Euro-med Committee, more substantive discussion on long-term orientation and higher visibility of the Euro-med Partnership in general.

Increasing visibility of the Euro-med Partnership

Visibility needs to be increased across all three chapters. Focusing on priorities will help: sustained effort in priority-fields will attract more interest than isolated one-off events. Wider business involvement in the Partnership - like in the Klagenfurt Conference - will be an important contributor to its visibility. There is a need to increase the visibility of the Partnership to the people of the region, particularly young people.

Preparing Barcelona III in April 1999 in Stuttgart

Senior Officials Meeting on Terrorism (November 1998)

Senior Officials Meeting on a Euro-med Charter for Peace and Stability (November 1998)

Let me finish with a word on the concern that the EU´s Eastward enlargement could weaken the Union´s role and involvement in the Southern Med States - an opinion which I do not share at all. Both these regions are neighbouring regions. Both are of big political and economic importance to the Union. The EU has to take and takes on responsibility for its neighbouring countries, since this is the very essence of its raison d´etre which is first of all a political one, to create a zone of peace and stability as big as possible. Progress with EU-enlargement towards the East will most likely bring more progress in the South too.