Economic Ties Can Save Africa’s Arab Spring

Two years after the fall of Tunisian President Zine El Abidine Ben Ali, the economic imperative for political stability in North Africa requires some bold and fresh thinking. One idea worthy of more attention is promoting regional economic integration.

Commerce among the Maghreb countries — Morocco, Algeria, Tunisia, Libya and Mauritania — has been hovering around 3 percent to 4 percent of all the trade they conduct, making the region probably the least integrated in the world. Overcoming this failure would help to open borders and allow for greater efficiencies, economic diversification and economies of scale, drawing on each country’s relative strengths in human and natural resources.

Tunisia, for example, has a surplus of skilled and manual workers. Libya lacks skilled labor, but has Africa’s largest reserves of oil and a huge project of reconstruction to undergo. Algeria has natural gas and is trying to diversify its economy. Morocco, meanwhile, excels in agriculture.

Integrating these often complementary strengths and weaknesses is a strategic goal that should start with Tunisia and its neighbors, Libya and Algeria, before eventually encompassing all of North Africa. This can’t be achieved quickly, but might prove transformative for a critical region in transition.

National Stability

Any success would have to begin with Tunisia’s development of a stable and open economy. The coalition government led by the Islamist Ennahda party hasn’t yet demonstrated that it is up to the task of managing the transition, generating economic growth, tackling regional disparities and fighting corruption.

If Tunisia is to consolidate its democracy, then Ennahda’s leaders will have to be seen to abide by basic ground rules: reject violence; uphold the rule of law; respect the freedoms of speech, religion, association and assembly; and protect the rights of women and minorities. The largely secular opposition, meanwhile, will have to keep an open dialogue with the government in order to avoid a polarization of society that would probably lead to bloody confrontation.

Despite significant challenges, we believe Tunisia’s evolution toward democracy will continue, provided that the economy doesn’t collapse. The immediate priorities are to tackle high youth unemployment — which the International Monetary Fund estimates at 30 percent — and address decades of neglect that caused large disparities between Tunisia’s developed coast and economically depressed interior. Additional measures include accelerating market reforms, institution building, and improving labor markets, which are marked by significant rigidities and skill mismatches.

All of this is achievable. The situation is ripe for fresh, bold thinking, and the old big idea of Maghreb economic integration can help. Robust regional trade would enable North African states to deliver concrete dividends to citizens and consolidate popular support for new institutions.

Unfortunately, none of the region’s governments has yet embraced the idea, which should come as no surprise. In the 1990s, the U.S. promoted regional economic integration across the Maghreb, as a way to attract investment and expand trade. The idea faltered due to lack of interest from Morocco and Algeria, in particular, where a continued territorial dispute over the Western Sahara blocked cooperation.

Lessons Learned

To avoid repeating that failure, integration efforts should start where they have the best chance to succeed, in Tunisia and Libya, two countries whose leaders need new ideas and aren’t entrenched in the past. Private businesses are ready to take the initiative and can draw on lessons learned by similar platforms elsewhere.

The Business Advisory Council for Southeastern Europe, to name one example, has useful experience from its efforts to stimulate trade between rivals Greece and Turkey and to help reintegrate the economies of former Yugoslavia and its neighbors, after that country broke apart in the brutal wars of the 1990s. The council’s members consist of 35 investors and chief executives from in and around the target region.

It won’t be easy. The main border crossing between Tunisia and Libya has been closed in recent weeks due to protests, often violent, in a town on the Tunisian side, over lack of economic development. Still, if rivals in the Balkans could remove the political barriers that were blocking trade and investment, why shouldn’t North Africa be able to do the same?

The main task will be to engage business leaders, civil- society members and policy makers, and to educate them about what economic integration can deliver. Specific cross-border efforts should then follow in order to broaden support for economic integration beyond Tunisia, and to build up regional relationships. Broad campaigns will also be needed to bring people from all over the region together for further dialogue and relationship building. This will take years of persistent work.

The think tank Le Club de Tunis, for example, has started an initiative aimed at getting the regions on either side of the Tunisian-Algerian border to begin doing business and making contacts with each other. Meanwhile, the German Marshall Fund of the United States started a project in December to bring together nonprofit organizations from countries across the Middle East and North Africa.

As a matter of priority, private-sector business leaders need the governments to harmonize labor laws and investment codes across the region — starting with Libya and Tunisia — two steps that would allow the benefits of economic integration to begin to flow. Also important is to strengthen each country’s banking sector, to ease the requirement for cash guarantees to provide credit to traders, and to harmonize payment procedures. All of this is doable, given the political will. It’s up to the private sector to show governments the way.

More than half a century ago, the U.S. helped Europe to overcome the devastation and divisions of war, by promoting economic integration between former enemies. For North Africa, a public commitment to economic integration as a strategic goal would create a new dynamic for smart economic policy making, and over time, it would make an important contribution to regional peace and security.

Bloomberg