By Anouar Boukhars
The dream of Maghrebi integration remains as elusive as ever. It is hard to disagree with those who proclaim that the AMU is just about dead; whereas the five countries of the Maghreb recognize the tantalizing benefits of greater cooperation.
The Costs of the Non-Maghreb
The absence of regional integration has been costly to the Maghreb. (13) By some estimates, the region loses about 530 billion Dollars each year as a consequence of “trade restrictions and legislative barriers.” (14)
The lack of trade complementarity, the mirroring similarities in the structures of trade and low export diversification have also had major negative impacts on intra-Maghrebi trade, which in 2015 accounted for only 3.6% of the region’s total trade and contributed a paltry 2.05% to the countries’ combined gross domestic product (GDP). (15)
For example, the complementarity of Algerian and Libyan exports with the imports from other Maghreb countries is still very low. Morocco and Tunisia perform slightly better as they are more advanced in export diversification than their neighbors which rely heavily on products related to the hydro-carbon and mineral sector.
Nonetheless, and despite their efforts at diversification, the range of goods exported by Morocco and Tunisia (textiles industry, agri-food, electrical and mechanical industries) remains quite similar. The low trade complementarity between the two has complicated their genuine efforts to trade more with each other.
The travails of the Agadir free trade regional agreement is revealing in this regard. Since the 2004 signing of the accord between Egypt, Jordan, Morocco and Tunisia, the latter two have resorted to more tariff protection and other restrictive nontariff measures against each other’s goods than did Egypt and Jordan in their own bilateral commercial trade. (16)
This demonstrates how much their commercial policies are still shaped by competition rather than complementarity.
Certainly, the mirroring of some of their economic profiles makes it easier to remain protectionist than to seriously tackle the sources of the uncompetitiveness of some of their manufacturing and redress the lack of complementarities of their exports and imports.
To be fair, while economic relations between Morocco and Tunisia remains below potential, the extent of their under-trading has declined.
The Agadir agreement has helped facilitate trade and opened opportunities for investment even if the gains from such expansion remain small. When compared with the rest of the region though, this gradual improvement in commerce and trade casts the Moroccan and Tunisian experience in favorable light.
The trade flows between Algeria, Libya and Mauritania are negligible. Their heavy reliance on natural resources and reluctance to engage in intra-industry trade make it very difficult to improve trade share between them even if they wanted to.
Algeria, Mauritania and Libya exhibit the least outward looking stance to regional commerce. Algeria’s trade with the rest of the region remains quite weak, with its exports and imports reaching only 25.5% and 11.6% of their potential. (17)
By contrast, Morocco has improved its export potential to all Maghreb countries, except Algeria where the Kingdom’s exports have reached a mere 4.05% of their potential in 2015. Algeria’s exports to Morocco have not exceeded 13% of their potential. (18)
Morocco doesn’t want to become dependent on Algerian hydrocarbon, sulphur and ammonia, three products the Kingdom needs to turn its abundant phosphate into fertilizers. (19)
The pooling of the industrial assets of Morocco’s huge phosphate mining company (OCP) and the Algerian state-owned oil company Sonatrach could make the Maghreb a formidable powerhouse of fertilizer production, powering modern agriculture throughout the African continent and beyond while luring foreign investments and creating jobs desperately needed by the legions of unemployed educated youth in the region.
An example of this partnership is the $2.3 bln fertiliser joint-venture between Morocco (phosphate) and Gabon (gas) to create one ammonia production unit and one phosphate fertilizer in Gabon as well as two phosphoric acid production units and one phosphate fertilizer in Morocco. (20)
OCP estimates that this industrial project has the potential to cover more than 30% of the continent’s total demand for adequate and affordable fertilizers. Morocco is also helping boost fertilizer production in Nigeria as well as exploring and upgrading phosphates reserves in the country.
The Group Managing Director (GMD) of the Nigerian National Petroleum Corporation (NNPC), Dr. Maikanti Kacalla Baru, noted that the supply of Moroccan phosphate to Nigeria is breathing new life into agriculture by making fertilizers available and affordable.
“”This development has translated to the creation of about 50, 000 jobs and led to the production of about 1.3 million tons of fertiliser in the country,” Baru stated. (21)
North African Export to EU [The European Commission]
Unfortunately for the people of the Maghreb, the self-damaging and self-defeating rivalry between Algeria and Morocco has prevented the creation of similar thriving partnerships.
There seems to be little or no limit to these disruptive absurdities. In the first two months of 2018, Algeria imported “some 8,036 “semi-assembled” vehicles from the Dacia plant in Romania” while such product is readily assembled in Tangier. (22)
The same applies to agricultural commodities that Algeria massively imports from outside of the Maghreb while much of it is produced by its neighbor to the west. (23)
And then there is question of the closed border. While the African Union is frantically working towards the creation of a continental free trade area—a “glorious challenge, says African Union commission head Moussa Faki Mahamat, “which calls for the courage to believe, the courage to dare… the courage to achieve,” Morocco and Algeria are reinforcing the fences around their border.
“It is crazy that goods need to transit between these neighbors via the French port of Marseilles when they could simply cross over by land,” wrote Wadia Ait Hamza, head of Social Engagement at the World Economic Forum. (24)
Morocco regularly clamors for opening the border, doing so “sometimes in a vehement or clumsy way,” writes Akram Belkaid. (25)
Algeria claims that it wants the border open too, but as President Bouteflika once acknowledged, doing so would be benefit Morocco more than it does Algeria. It does not matter that border barriers make both countries poorer, as long as one’s rival losses exceeds one’s own. (26)
The economic toll of this ludicrousness has been prohibitively costly. “Over the decade to 2015,” writes the Economist magazine, “their two economies would each have almost have doubled in size.” Instead, Algeria’s economy expanded “only by 33% and Morocco by 37%,” (27) insufficient growth to tackle the stubbornly high number of unemployment in their countries.
Few Glimmers of Hope
The initiative behind the creation of the UME promised to be an important pathway towards laying the groundwork for moving the region towards better levels of intra-regional business cooperation.
If as initially envisioned, the major business associations could bundle their forces, they may be able to transform the landscape of trade in the Maghreb.
Most importantly, they could collectively lobby more effectively their governments for the harmonization of regulation and liberalization of markets, i.e, the adoption of a Maghrebi dimension into national agendas and policies.
Indeed, the launching of the Maghreb Initiative for Commerce and Investment (IMCI) and the Arab Maghreb Union Investment Bank (BMICE) in 2014 were rooted in the desire to develop the framework and networks necessary to start the process of dismantling barriers to the growth of intra-regional commerce and industry and connecting Maghrebi markets together.
BMICE, for example, was designed as a first concrete step towards growing Maghreb financial integration and investment linkages. So far, intra-regional FDI represent less than 1 percent of total FDI.
This paltry level has not improved over the past three decades, with the cumulative FDI flows between 1985 and 2014 amounting to $ 476.7 million, a derisory number when compared with the region’s share of global FDI flows ($ 111.8 billion during the same period). (28)
By way of comparison, Morocco’s investments in Africa exceeds that amount. Indeed, according to African Development Bank president Akinwumi Adesina, 85% of Morocco’s direct foreign investments goes to Africa, (29) making the kingdom the second largest investor and the third largest exporter in Africa.
The official launch of the BMICE in December 2015 with an initial capital of 150 million US dollars is certainly a step in the right direction.
Overtime, the BMICE, headquartered in Tunisia, hopes to improve the flow of capital and goods between Maghreb countries as well as boost investments in telecommunications, electricity, transport, and infrastructure.
Cross-border infrastructure (roads, ports, and other relevant transport services) between countries is poor. Their maritime connectivity is even worse.
Apart from Morocco, Maghrebi ports suffer from “lack of investments in modern infrastructure, land-use problems within large cities, limited hinterland accessibility, poor technical efficiency and cumbersome customs regulations.” For Tunisia, the lack of maritime trade between the countries of the Maghreb had forced it to abandon the ambitious project of large deepwater port that the deposed Ben Ali once considered constructing. (30)
Algeria, on the other hand, has recently started focusing on modernizing its port infrastructure (31) which for the longest time had “the lowest logistical performance index among Maghreb countries.” (32)
The country hopes to emulate the success of the Moroccan Tanger Med project, soon to be the busiest port on the Mediterranean, by building a new $3.3bn port and industrial zones at El Hamdania. (33)
This is a worthy investment even if observers of the Maghreb doubt that these projects will facilitate maritime connectivity between Maghrebi countries. After all, the Algerian project is designed to compete with not complement Moroccan ports.
The challenge for Algeria, and indeed, all Maghrebi countries is to diversify their economies in a way that develops their complementary sectors and overcome the shortcomings of their competing ones.
Identifying the synergies between all countries of the Maghreb and deepening their sector specialization and productivity in their base of manufacturing, services and other industrial spaces is essential to increasing intra-regional trade and ameliorating the performance of national economies.
Conclusion: The Lingering Hope
The dream of Maghrebi integration remains as elusive as ever. It is hard to disagree with those who proclaim that the AMU is just about dead.
To be fair, the project has never really been alive even if the five countries of the Maghreb recognize the tantalizing benefits of greater economic, financial and commercial cooperation.
The 800-pound gorilla problem is the contentious rivalry between Algeria and Morocco that the passage of time has only made worse.
The pragmatic impulses that led the two countries to create the AMU seem to have faded away. In the mid-1980s, President Chadli Bendjedid (1979-1992) and King Hassan II (1961-1999) accepted a Saudi diplomatic initiative to meet, negotiate and de-escalate their rising tensions.
That’s how they came up with the smart idea of not making the resolution of the Western Sahara dispute a prerequisite for regional integration.
The bet was that gradual economic rapprochement would end up resolving the dispute as well as relieving the mounting economic problems that threatened their internal stability. (34)
Today, unfortunately, promising initiatives like the one that led to the construction of the Maghreb–Europe Gas Pipeline, linking the Hassi R’Mel gas field in Algeria to the Strait of Gibraltar and the Iberian Peninsula through Morocco, are a thing of the past.
Equally frustrating is the lack of any serious international diplomatic initiative to help the Maghreb unlock its potential. There was hope that the tectonic events of the 2011 Arab revolts would bring the region to its senses.
After all, it was fear of domestic turbulence that brought Algeria and Morocco in the mid-1980’s to meet and compromise.
Until better times, countries of the Maghreb seem to have given up on the dream of regional integration. Morocco in particular is aggressively seeking new markets in Africa and coveting membership in the Economic Community of West African States (ECOWAS). [Video]
References are available in the original article.
Anouar Boukhars – Associate Professor of International Relations at McDaniel College in Westminster, Maryland.