Mediterranean and Middle East - Elcano Royal Institute empty_context Copyright (c), 2002-2018 Fundación Real Instituto Elcano Lotus Web Content Management <![CDATA[ From the depths to the surface: conflict drivers in the MENA region ]]> http://www.realinstitutoelcano.org/wps/portal/rielcano_en/?WCM_GLOBAL_CONTEXT=/elcano/elcano_in/zonas_in/ari68-2019-hiltermannrodriguezschaap-from-depths-surface-conflict-drivers-mena-region 2019-06-12T05:19:06Z

Failing to acknowledge the 2011 Arab uprisings as a breaking point announcing the need for a regime overhaul in the region, and therefore a long overdue revision of Western policy, would be a mistake with serious adverse consequences. 

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Spanish version: De las profundidades a la superficie: catalizadores de conflicto en Oriente Medio y el Magreb.

Theme

Failing to acknowledge the 2011 Arab uprisings as a breaking point announcing the need for a regime overhaul in the region, and therefore a long overdue revision of Western policy, would be a mistake with serious adverse consequences. The 2011 uprisings’ strong aftershocks still have the potential to undermine not just individual states but the entire Arab state system.

Summary

Dramatic changes in the Middle East and North Africa (MENA) after 2011 dictate the need for external actors to forge a new policy approach to address the region’s long-term challenges. In tackling the region’s increasingly intersecting and conflicting politics, aggravated by external interventions, international policy makers should keep their eyes on both old and new conflict drivers, or risk fighting symptoms rather than causes, and thus potentially do more harm.

Analysis

On the periphery of the Middle East and North Africa (MENA), in Algeria and in the Sudan, popular uprisings toppled two of the region’s longest-ruling leaders in April 2019, opening a new chapter in calls for better governance. In constituting a rejection of the status quo, they carry a similarity with the 2011 Arab revolts.1 In Algeria, the prospect of a fifth term for President Abdelaziz Bouteflika created a sense of national humiliation and pushed citizens to take to the streets. In their view, the 82-year-old and ailing President could not possibly lead reform, and many Algerians saw their country’s potential wasted by interest groups around him.2 In the Sudan, a cut to a government subsidy that trebled the price of bread sparked protests against the 76-year-old President Omar al-Bashir, who had ruled the country for almost 30 years. Protests are of course about much more than bread, with anger centred more generally on a police state’s governance failures.3 Today, the outcomes of the political transitions in the two countries remains unclear.

Continued popular activism throughout the region is proof of a people’s enduring aspiration for an end to corruption and for better governance. However, eight years after citizens across the Arab world took to the streets voicing a widespread sense of social injustice, authoritarianism has begun to re-establish itself with a vengeance, bankrolled by Saudi and Emirati cheque-book diplomacy. The regimes that survived the challenge to their rule, instead of re-imagining and reforming themselves to head off further popular protests, are mostly reinforcing the fragile governance structures that have long fed the grievances that prompted the Arab uprisings, including by channelling scarce resources into strengthening their repressive capabilities. Meanwhile, events in the region continue to create new security concerns for external actors.

Although rightly concerned by developments in the region and fearing the impact in the form of refugees/migrants and jihadism, outside actors are generally not helping. Whereas at the start of the 2011 Arab uprisings Western actors had voiced support for the aspirations of the people in the squares, today short-term priorities are producing securitised policies, which dominate their relations with MENA states. Longer-term drivers of conflict, although recognised rhetorically as part of policy, remain on the backburner of policy makers’ agendas.

Today, after all that the region’s people have suffered and lost, mass protests in Algeria and the Sudan seem unlikely to trigger a domino effect similar to that initiated by Tunisia almost a decade ago. Yet they should serve as a clear reminder that unaddressed grievances will spawn popular rebellion sooner or later. Failing to acknowledge the 2011 Arab uprisings as a breaking point announcing the need for a regime overhaul in the region, and therefore a long overdue revision of Western policy, would be a mistake with serious adverse consequences.

Old and new drivers of MENA conflicts

Throughout history, the region has suffered repeated upheavals that either advanced or challenged it, and each of these ‘earthquakes’ has set off its own set of conflicts. At least five separate ‘conflict clusters’ have emerged from the trauma of WWI, the dismemberment of the Ottoman Empire and the onset of colonial rule, as Arab societies are still seeking to overcome the grievances of their founding:4

  • Cluster I: internal conflicts deriving from the creation of the region’s disjointed governing structures (I-A), and challenges to its borders (I-B). Examples of I-A: various military coups (Egypt, Iraq, Syria, Yemen and Tunisia); and of I-B: Kurdish insurgencies against their respective central states, and the transnational ambitions of jihadist movements.
  • Cluster II: Israeli-Arab wars and Palestinian uprisings deriving from the 1948 creation of the state of Israel. Examples: in 1967, 1973, 1982, 1988 and on.
  • Cluster III: conflicts stemming from Iran’s outward projection in the aftermath of the 1979 Islamic Revolution, and efforts to curb it. Examples: the 1980-88 Iran-Iraq war and Israel-Hezbollah wars in 1993, 1996 and 2006.
  • Cluster IV: fighting associated with Sunni radicalisation, which was triggered by the Arab states’ defeat in the 1967 war and the 1979 siege of Mecca. Examples: jihadists vs Soviets in Afghanistan, efforts to suppress the Muslim Brotherhood, the 9/11 and other jihadist attacks.
  • Cluster V: civil wars triggered by state collapse in the wake of the 2011 Arab uprisings. Examples: Libya, Yemen and Syria. Other states may still be standing but are both highly repressive and internally fragile. Examples: Egypt, Algeria, Tunisia, Lebanon, Jordan and possibly also Saudi Arabia.

The Arab uprisings have left the region in disarray and more deeply polarised. Power vacuums resulting from collapsing states, in the absence of regional unity, functioning conflict-resolution mechanisms or a global arbiter, have empowered ambitious non-state actors and invited interventions by regional actors who fear negative implications to their vested interests. External actors compound this situation through interference, often destructive, that invariably is driven by self-interest, even if well-intentioned.

The 2011 uprisings’ strong aftershocks still have the potential to undermine not just individual states but the entire Arab state system. They largely removed previously influential Arab states (Egypt, Iraq and Syria) as significant actors, compelling the Gulf states to step into the breach and launch new interventions across the region.5 Yet, ill-equipped to tackle the region’s challenges, these actors are failing to impose even the outlines of a new order, and instead contribute to the chaos.

Unprecedented levels of intersecting conflict in the MENA region pose difficult challenges to international policymakers. As pre-existing conflict ‘clusters’ intersect, original conflict drivers are obscured by new grievances and objectives. This makes individual conflicts harder to analyse and address and heightens the risk that external assistance has adverse unintended consequences. Syria is in the unique position of seeing all five conflict clusters intersect.6

Tackling the region’s new complexity will require a new approach. Outside actors should identify, acknowledge and accommodate both new but also old conflict drivers, and understand how positive impact in one arena could cause adverse effects in another. They should be wary of unintentionally strengthening local non-state actors pursuing sub-state or transnational agendas, or regional states pursuing sub-state agendas in neighbours in an attempt to keep them weak and to counter adversaries.

The Arab uprisings and their aftermath

To many, the uprisings signalled the need for a change of course in policy towards the MENA region, where a Western ‘stability paradigm’ had long supported inherently fragile authoritarian regimes,7 and where overly securitised policies were overlooking and aggravating deeper drivers of conflict. For a short moment, such a policy shift seemed to be taking place.

In February 2011, at the yearly Munich Security Conference, the US Secretary of State Hillary Clinton noted that security and ‘the need for democratic development’ had never so clearly converged in the Middle East. Clinton said that the status quo was ‘simply not sustainable’ and that ‘leaders in the region may be able to hold back the tide for a while, but not for long’. To ‘help our partners take systematic steps to usher in a better future where people’s voices are heard, their rights respected, and their aspirations met’ was no longer simply a matter of idealism but a strategic necessity.8

However, this reprioritisation did not take place. The economic and financial crisis of 2008-09, combined with the legacy of interventions in Iraq and Afghanistan, accelerated the decline of Western primacy in the MENA region. In a more multipolar world, a multiplicity of players made common solutions and political settlements more elusive. Thus, in those instances and fields where Western actors aimed to support the region’s people, competing agendas were at play, resulting in an incoherent response to the uprisings. Expressing support for protesters in Egypt and intervening directly in Libya, Western powers failed to act in Bahrain, not wanting to confront their Gulf allies. Then, in acknowledgement of their limited ability to impose order on the region, they did not intervene in Syria either.

Soon, a counterrevolution led by Saudi Arabia began to reverse the changes set in motion by the uprisings. It helped reinstate the Egyptian military regime; kept monarchies in Jordan, Morocco and Bahrain afloat with large amounts of aid; and funded militias elsewhere. The region’s activists failed to unite around a common vision and to drive out status quo powers that violently resisted change. As regional and non-state armed actors jumped into the power vacuums created by collapsing states, Western actors that initially voiced their support for the aspirations of the region’s citizens began to shift towards more reactive, heavily securitised, approaches. In many cases these realigned them with the ‘same-old’ state forces seeking ‘stability’ and restoration of expired social contracts.

Thus, while the uprisings initially raised hopes of profound social change, they brought disillusion instead, as change proved cosmetic or turned into worse. In the aftermath of the uprisings, instead of re-imagining themselves, the states that remained standing resisted reform and reinforced their repressive apparatus.

Yet, protests in the Sudan and Algeria are the most recent reminder that a deeply felt sense of social injustice persists. Elsewhere, protests expressing frustration with dysfunctional systems of governance have continued sporadically, including in Jordan, Iraq and Tunisia.9 Protests occurred before 2011 as well, which underlines the continuum of unaddressed grievances.

Towards a more positive engagement with the MENA region

Addressing MENA’s persistent governance crisis will not be easy. External actors wishing to support positive change face a region in desperate need of reform yet governed by elites with an existential interest to counteract change whose outcome they cannot control. In almost every MENA country today, the political, economic and social challenges present before the uprisings have worsened, and the political and economic environment post-Arab uprisings is even less conducive to reform.

While some Arab states are making expensive public-relations efforts to attract foreign investment, genuine reform will depend on more inclusive political and economic governance, which utilises the region’s human potential to the fullest. Resource-rich Arab states are in a race against time as they rely on elusive economic growth to redistribute wealth and pre-empt dissent. But for the resource-poor, a more inclusive growth process will be the only viable way forward, lest they face collapse.

In the face of these challenges, Western powers might be tempted to see the re-emergence of ‘the enemy that we know’ as a welcome return of some sort of stability. After all, the dysfunctional but familiar (dis-) order that emerged out of the collapse of the Ottoman Empire had long underwritten at least relative stability. Without the trigger of the popular uprising in Tunisia, the prevailing conditions could perhaps have endured for a while longer: the way in which reform-resisting regimes in the region muddle through today serves as evidence.

Indeed, although the region-wide uprisings ‘demonstrated the short-sightedness of the ‘stability paradigm’ –the model of Arab governments doing the West’s bidding in return for the West overlooking the suppression of dissent– that had animated US and European policy for a half-century’,10 energy, restricting migration and terrorism continue to top Western policy agendas.

However, failing to see the Arab uprisings as a breaking point warning of the need for a new approach would be a mistake. Just because the region’s collapse is not complete does not mean the remnants will be able to survive for long.

Thus, the question facing external actors today is whether it is in their interest to maintain the current order or to enable its transformation. To the extent that the uprisings represented a final rupture of the social contract in individual MENA societies, and a rejection of the post-WWI order/disorder more broadly, they should serve to refocus outside actors’ attention on the Arab states’ lingering legitimacy crisis. In engaging with the region, they should give priority attention to issues of governance and other deeper drivers of conflict.

Of course, a new social contract can only emerge locally, from within societies, and change must be driven by the region’s citizens. Past lessons serve as evidence of the limited capacity of external actors to impose order on the region and, moreover, Western governments are by no means the sole external actors in the region. Yet, in rethinking their relationship with the MENA region today, they should at the very least seek to become more aware of how their part in the interaction serves to either support or impede change.

External interventions interact with conflict drivers in their various clusters, often compounding them, and overly securitised, short-term policies directed towards individual events in individual conflicts pay insufficient attention to a conflict’s deeper drivers. The idea that authoritarianism can help tackle extremism continues to prove just as misguided today as it has done in the past. Meanwhile, efforts at mediating negotiated settlements to MENA conflicts flounder on these conflicts’ increasingly interconnected nature. The structure of Western governments’ and organisations’ bureaucracies does not help either: they remain compartmentalised in their understanding of, and approach to, the MENA region, having erected internal, artificial barriers that obstruct efforts at finding a collective way out.

It is clear that the last thing the region needs is a refashioning of the old order. Driven by fear of further chaos, Western states risk setting the stage for even greater chaos once their re-found allies breathe their last.

Instead, they should:

  • Rebuild the trust and credibility they have lost with the region’s people as a result of decades of support for postcolonial autocrats and the post-9/11 wars in Afghanistan and Iraq. Technical cooperation and development aid have the potential to do so, but only when that cooperation is actually based on the values that the international community purports to advance. Today, much aid continues to discredit the providers.
  • Use development cooperation to build up the autonomy of the region and its citizens, instead of perpetuating dependency ties. Donor countries tend to prefer working with and supporting national governments, overlooking local actors. As a result, recipient states too often treat the funds they receive as rents that help them resurrect the dysfunctional characteristics of the current (dis-)order instead of instituting overdue reforms. Encouraging substantial reforms will likely require finding a range of new partners, from local NGOs to local-level governments, and providing new incentives.
  • Beware of the inherent power imbalance of ‘partnerships’ involving a broader set of citizens, as the outside actor still holds the purse and sets the terms. To help build more participatory and representative structures, development cooperation should respond to local priorities, and external actors should be open to speak to all parties, regardless of political or ideological differences (for example, in the case of Islamists enjoying broad popular support).
  • Engage with MENA actors through a coordinated regional and inter-disciplinary approach. Careful inter-agency coordination is instrumental for consistency and for preventing adverse secondary conflicts, including across conflict clusters.
  • Start with an accurate real-time understanding of who and what drives conflicts when designing policy responses and be aware of how policies either help address or instead exacerbate deeper conflict drivers, of the actors they might empower or disempower, and of the grievances this might feed. This requires better independent cross-MENA analysis.

Conclusions

The Arab uprisings underlined the notion that existing conditions in MENA had become unsustainable and announced the region-wide expiry of a socio-economic order that had underwritten relative stability for decades –and with it, the shortcomings of the international system that helped sustain it–. Today, the grievances that led to the near collapse of the regional order persist, and economic trends paint a bleak picture of further decline. Arab states willing or able to only cater to wealthy elites will continue to feed frustrations among the mass of the population, fuelling unrest and outmigration.

At the same time, the 2011 uprisings produced a certain momentum for change, and in some places provided new opportunities. Somehow, new governing structures must emerge, and external actors, if they want to be part of the solution, should be aware that they have long been part of the problem. They need to be aware of how their policies towards the MENA region either help advance or thwart local agendas promoting reform and seek ways in which they may more positively engage with the region.

Joost Hiltermann
Director of the Middle East and North Africa Programme, International Crisis Group | @JoostHiltermann

Maria Rodríguez Schaap
MENA Programme Assistant, International Crisis Group
| @RodriguezSchaap


1 Jon Alterman (2019), ‘A new Arab Spring?’, Center for Strategic and International Studies, 15/IV/2019.

2 International Crisis Group (2019), ‘Post-Bouteflika Algeria: growing protests, signs of repression’, 26/IV/2019.

3 International Crisis Group (2019), ‘Bashir moves Sudan to dangerous new ground’, 26/II/2019.

4 For a detailed account of the five conflict clusters, see Joost Hiltermann (2018), ‘Tackling the MENA region’s intersecting conflicts’, International Crisis Group, 13/II/2018.

5 Reflections five years after the uprisings’, Project on Middle East Political Science, POMEPS studies, 28/III/.

6 The 2011 challenge to the regime (I-A) dragged in Iran and Hizbollah (II and III), as well as Turkey and Qatar (pro-Muslim Brotherhood, IV), which have competed with Saudi Arabia (anti-Brotherhood, IV); the war has fomented intra-Sunni radicalisation (IV), leading to an increasingly sectarian-tinged struggle (III and IV), while the Kurds have been emboldened to demand self-rule (I-B). To top it off, the rise of jihadists provoked military intervention by the US and its Western allies; the threat of Assad falling drew in Russia; and the PKK’s local affiliate’s progress in northern Syria triggered Turkish intervention (related to Ankara and the PKK’s own Cluster I-B conflict inside Turkey). The Syrian war itself is a Cluster V conflict, with an as yet unknown outcome.

8Hilary Clinton’s remarks at the Munich Security Conference’, 5/II/2011, US Department of State.

9 Marc Lynch (2019), ‘Is the next Arab uprising happening in plain sight?’, The Washington Post, ‘Monkey Cage’, 26/II/2019.

10 Hamid, op. cit.

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<![CDATA[ The US and the Iran Nuclear Deal: rejoining is wiser than destroying ]]> http://www.realinstitutoelcano.org/wps/portal/rielcano_en/?WCM_GLOBAL_CONTEXT=/elcano/elcano_in/zonas_in/us-and-iran-nuclear-deal-rejoining-is-wiser-than-destroying 2019-05-09T08:49:34Z

Twenty one Directors and Senior Fellows of leading European think tanks calls on the US to reconsider its approach to the JCPOA and preserve the nuclear deal.

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A European joint call on the US to reconsider its approach to the JCPOA.

One year ago, on 8 May 2018, President Donald Trump announced that the United States would cease compliance with the Joint Comprehensive Plan of Action (JCPOA), the nuclear agreement struck in July 2015 by the United States and Iran, along with China, France, Germany, Russia, the United Kingdom and the European Union. 

President Trump has argued that the JCPOA’s provisions are insufficient to block Iran’s progress towards a nuclear weapons capability, do not address Iran’s expanding missile arsenal and do nothing to counter Iran’s activities in the Middle East. He maintains that a strategy of ‘maximum pressure’ is the only way forward and has consequently re-imposed all the US sanctions that were suspended under the deal, including measures targeting foreign companies doing business with Iran (so-called secondary sanctions). 

President Trump’s concerns are not entirely misplaced. Withdrawing from the deal, however, will hardly contribute to achieving any of his stated objectives. In fact, his decision has been harmful in several respects. 

First, it has undercut global non-proliferation efforts. The JCPOA is a technically sound agreement that has established significant constraints on Iran’s ability to develop a nuclear weapons capability. As certified by the International Atomic Energy Agency (IAEA), the UN nuclear watchdog, and publicly acknowledged by top officials from the US intelligence community, Iran has continued to comply with the deal. However, Iranian President Hassan Rouhani’s announcement that Iran is ready to restart certain activities prohibited by the JCPOA shows that, following the US withdrawal, the benefits to Iran of staying in it diminish by the day. If Tehran restarts the full nuclear programme and limits the IAEA’s inspection powers, that would leave only far weaker mechanisms for monitoring its work, including the work reflected in the nuclear archive that Israel claims to have seized from Iran. Other states in the region – notably Saudi Arabia – might be tempted to emulate it and engage in a regional nuclear arms race. 

Second, President Trump’s decision has undermined the value of multilateral diplomacy. The JCPOA is a significant instance of effective multilateralism and successful diplomacy, involving countries with very different foreign policy outlooks such as the US and its European allies, Russia and China, and Iran itself. Whereas sanctions coupled with dialogue have proved to be effective in several international crises, the US choice of ‘maximum pressure’ over compromise devalues diplomacy as an effective way to address international disputes among rival states. 

Third, the decision has weakened international law and institutions. The JCPOA derives its legitimacy from the Nuclear Non-Proliferation Treaty, which bans Iran from ever seeking a nuclear weapons capability, and its authority from the United Nations Security Council, which has endorsed the deal through its Resolution 2231. By reneging on US commitments without proper cause, Washington has conveyed the message that international obligations can be disposed of at will. 

Fourth, it has harmed transatlantic solidarity. The JCPOA was the culmination of over thirteen years of hard, unremitting transatlantic coordination. By pulling out from it and, worse still, by threatening to punish EU companies and banks for doing business with Iran, President Trump has shown utter disregard for Europe’s foreign policy interests and eroded trust in the transatlantic partnership. 

Fifth, it has contributed to exacerbating regional tensions. The JCPOA has removed the imminent prospect of a nuclear-capable Iran from a regional landscape deeply fraught with geopolitical tensions. By replacing it with a strategy of ‘maximum pressure’, the US has galvanised Iran’s rivals and reduced the appeal of compromise solutions in Tehran. If Iran leaves the JCPOA, there will be far fewer diplomatic avenues to contain the risk of a military escalation that would plunge the region into further conflict. 

Sixth, President Trump’s decision has inflicted undue pain on the Iranian population, whom he claims to support. The JCPOA was supposed to end Iran’s economic isolation in exchange for strict and verified limitations on its nuclear activities. By re-imposing sanctions with extraterritorial effects, the US has scared companies and banks around the world into reducing, ceasing or not starting business with Iranian counterparts. Ordinary Iranians have seen living standards decrease because of a combination of inflation, higher costs for imports, scarcity of available goods (including food and medicine), and the impossibility of finalising transactions that were started before the re-imposition of sanctions. 

The JCPOA is doing what it was designed to do: preventing Iran from getting a nuclear weapon. As such, the deal is too important to be allowed to die. Although all remaining parties to the JCPOA say they are committed to the agreement, current efforts to sustain it have not been enough to guarantee its survival. 

Europeans should be applauded for the implementation of a Special Purpose Vehicle, called INSTEX, to help facilitate humanitarian trade. However, they should do more to ensure businesses have the clarity they need to conduct trade and should speed up the participation of other countries in the special vehicle. Europe should work to establish another special purpose vehicle expanding the scope of trade to include oil imports from Iran, again open to participation by other countries. Europe should also deepen its technical and political consultations with Iran to reduce risks and build resilience on a range of topics including regional flashpoints and disaster relief. 

Overall, JCPOA supporters across the world should increase coordination to make sure that US sanctions do not hamper the economic stability and technical nuclear cooperation Iran needs to comply with the deal. 

Most importantly, JCPOA supporters in Europe and elsewhere should re-articulate the merits of the agreement to various US audiences – in the administration, Congress, the expert community and media – so it is clear that the only way to reap the full benefits of the JCPOA and build upon it is for the US to rejoin it. 

A US return to the JCPOA would help contain the negative consequences mentioned above. It would also recreate a more cohesive international coalition applying pressure on Iran to curb activities – specifically its development of ballistic capabilities and support to its proxies – that contribute so much to instability in the region. That pressure would then be combined with a credible diplomatic attempt to lay the groundwork for détente and lead to a regional initiative on missile threats and an intra-regional dialogue on a security architecture for the Gulf. 

All of this stands a much better chance of success if the US reconsiders its approach to the JCPOA. Much as Europeans spearheaded the process that eventually led to the agreement, so they could lead the way on any future diplomatic initiative with Iran. But for multilateralism to be effective, international law and agreements must be respected. 

The signatories of this Joint Call have signed it in their personal capacity. The opinions expressed in the text do not reflect the position of their institutions of affiliation.

Charles Powell
Director
Real Instituto Elcano / Elcano Royal Institute
Madrid

Nathalie Tocci
Director
Istituto Affari Internazionali - IAI
Rome

Des Browne
Chair
European Leadership Network - ELN
London

Adam Thomson
Director
European Leadership Network - ELN
London

Esfandyar Batmanghelidj
Founder
Bourse & Bazaar London

Steven Blockmans
Head of EU Foreign Policy
Centre for European Policy Studies - CEPS
Brussels

Ian Bond
Director of Foreign Policy
Centre for European Reform - CER
London

Ondrej Ditrych
Director
Institute of International Relations - IIR
Prague

Thanos Dokos
Director General
Hellenic Foundation for European & Foreign Policy - ELIAMEP
Athens

Michel Duclos
Special Advisor
Institut Montaigne
Paris

Thomas Gomart
Director
Institut Français des Relations Internationales - IFRI
Paris

Charles Grant
Director
Centre for European Reform - CER
London

Mark Leonard
Co-founder and
Director
European Council on Foreign Relations - ECFR
London

Pol Morillas
Director
Barcelona Centre for International Affairs - CIDOB
Barcelona

Robin Niblett
Director
Chatham House
London

Laura Rockwood
Executive Director
Vienna Center for Disarmament and Non-Proliferation - VCDNP
Vienna

Daniela Schwarzer
Director
Deutsche Gesellschaft für Auswãrtige Politik - DGAP
Berlin

Andris Spruds
Director
Latvian Institute of International Affairs - LIIA
Riga

Teija Tiilikainen
Director
Finnish Institute for International Affairs - FIIA
Helsinki

The initiative was coordinated by:

Riccardo Alcaro
Research Coordinator
Istituto Affari Internazionali - IAI
Rome

Shatabhisha Shetty
Deputy Director
European Leadership Network - ELN
London

See also: Instituto Affari Internazionali.

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<![CDATA[ France’s Iran policy indicates INSTEX will not undermine sanctions ]]> http://www.realinstitutoelcano.org/wps/portal/rielcano_en/?WCM_GLOBAL_CONTEXT=/elcano/elcano_in/zonas_in/commentary-tanchum-frances-iran-policy-indicates-instex-will-not-undermine-sanctions 2019-04-25T05:07:28Z

Despite its rhetorical position as the leader of the Western opposition to the Trump Administration’s policies toward Iran, France’s Iran policy orientation has remained largely in line with US objectives.

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The US re-imposition of sanctions against Iran on 4 November 2018 prompted vociferous official protests from its European allies, particularly France, Germany and the UK, who remain signatories to the Iran Nuclear Deal . Among these so-called E-3 nations, France positioned itself as the leader of the European opposition to the new US position towards Iran. Despite the initial defiant tone from Paris and its advocacy for an alternative financial mechanism to evade sanctions, France has not acted to undermine the US objective of bringing economic pressure to bear on Tehran by limiting the revenue-earning capacity of Iran’s oil and natural gas industries. France’s actions indicate that the E-3’s implementation of the INSTEX alternative trade channel to Iran will, likewise, not be used to thwart US policy towards Iran, at least not at the outset.

“France’s actions indicate that the E-3’s implementation of the INSTEX alternative trade channel to Iran will, likewise, not be used to thwart US policy towards Iran, at least not at the outset”.

The re-imposition of sanctions resulted from US President Donald Trump’s 8 May 2018 withdrawal from the Iran Nuclear Deal. Formally known as the Joint Comprehensive Plan of Action (JCPOA), the 2015 agreement between Iran and the P5+1 nations (the permanent members of the UN Security Council plus Germany) exchanged a reduction in international sanctions on Iran for Tehran limiting its nuclear development programme. The Trump Administration’s renewed sanctions target Iran’s petroleum and shipping industries and place limits on financial transactions with the aim of crippling the country’s oil and natural gas exports.

Among the E-3 nations, France’s response was the most openly adversarial. ‘Europe refuses to allow the US to be the trade policeman of the world’, declared France’s Minister of Economy and Finance Bruno Le Maire in response to the new sanctions regime. Vowing to protect the EU’s ‘economic sovereign’, Le Maire threatened to make the EU’s currency, the euro, as strong as the US dollar, starting with the creation of a Special Purpose Vehicle, an alternative trade channel to the SWIFT system that would be immune to US scrutiny.

Despite the strident tone from the French government, French firms have been forced to comply with the new US sanctions against Iran’s energy sector, since Washington refused to grant France a sanctions compliance waiver such as it had given to eight other nations. As a result, France’s largest energy company, Total, was forced to withdraw from a US$4.8 billion development project in Iran’s massive South Pars natural gas field. Total is highly vulnerable to punitive action under the US sanctions as 90% of its financing operations involve US banks and the company also maintains US$10 billion in capital in US assets. Total, Europe’s largest refiner, did not seek a waiver to continue crude oil purchases from Iran and France’s Iranian oil imports had already ceased in September 2018 anticipating the new sanctions. While France constituted only 6.3% of Iran’s 2017 export market, the loss of French purchases will represent a US$2-3 billion annual revenue shortfall for Iran, if the Islamic Republic cannot find an alternative buyer under the new sanctions regime.

Like the cessation of French oil imports from Iran, French car manufacturers in Iran have suspended their operations. Following the initial defiant tone emanating from Paris, Renault's then CEO Carlos Ghosn vowed in June 2018 to defy US sanctions and maintain its operations in Iran. One month later, Renault reversed its decision, following its French rival PSA Group, manufacturer of Peugeot and Citroen, which had already suspended its operations in Iran.

“Despite its rhetorical position as the leader of the Western opposition to the Trump Administration’s policies toward Iran, France’s Iran policy orientation has remained largely in line with US objectives”.

In light of these emerging realities, in the run-up to the new sanctions regime the French President Emmanuel Macron struck a more conciliatory tone about the re-imposition of sanctions on Iran during his September 2018 address to the UN, suggesting that US economic pressure on Iran combined with the continued EU engagement with the country would serve to limit Tehran’s military capabilities while preserving the power of the reformist elements in the Iranian government. Speaking to reporters, the more circumspect Macron explained that ‘Perhaps because we’re able to keep this multilateral framework [the JCPOA], avoid the worst and act as a mediator, while the US sanctions create pressure and reduce the amount of money available for Iran’s expansionism, that can accelerate the process we want’.

France’s attitude has also been moderated by the discovery of Iranian covert operations on French soil. On 2 October 2018, France publicly accused Iran of being behind the failed plot to bomb a 30 June 2010 rally near Paris organised by the exiled opposition group, the National Council of Iran. The Macron government eventually expelled an Iranian diplomat allegedly linked to the plot.

In addition, France has also looked askance upon Iran’s efforts to enhance its long-range missile capability. Condemning a failed Iranian satellite launch that allegedly employed technology applicable to ballistic missiles, Paris threatened Tehran with sanctions if it does not reign in its missile development programme. Declaring on 16 January 2018 that ‘The Iranian ballistic programme is a source of concern for the international community and France’, the French Foreign Ministry issued a formal appeal to Iran to cease its testing: ‘We call on Iran not to proceed with new ballistic missile tests designed to be able to carry nuclear weapons, including space launchers, and urge Iran to respect its obligations under all UN Security Council resolutions’.

UN Security CouncilResolution 2331 formally enshrines the terms of the JCPOA that includes a call upon Iran to refrain for eight years from developing ballistic missiles capable of delivering nuclear weapons. In a response to criticism from France and other Western nations over the satellite launch, Iran’s then Foreign Ministry spokesman Bahrem Qasemi claimed ‘Such (space) capabilities have civilian nature and are by no means in violation of any of the international regulations in this area’.

France’s exhortation came a week after talks in Tehran between Iranian diplomats and envoys from the E-3 nations as well as from Denmark, the Netherlands and Belgium resulted in the Iranian side storming out of the meeting. In response, the EU imposed its first sanctions on Iran since 2015. Although largely symbolic, the measure was designed to send a clear signal to Tehran about EU member states’ concerns over both the missile programme and Iranian operations on European soil. On 25 January the French Foreign Minister, Jean-Yves Le Drian, a prominent advocate for an alternative EU-Iran trade channel, threatened Tehran with more significant sanctions if the negotiations on Iran’s ballistic missile programme makes no progress. In response to Le Drian’s remarks, Qasemi firmly stated, ‘Iran’s missile capability is not negotiable, and this has been brought to the attention of the French side during the ongoing political dialogue between Iran and France’.

“The use of INSTEX for the sale of humanitarian items will not undermine US goals”.

Iran apparently was able mollify Paris’s concerns, aided by its Deputy Foreign Minister Seyed Abbas Araghchi’s 4 February 2018 meeting with the Secretary-General of France’s Ministry of Foreign Affairs, Maurice Gourdault-Montagne. The February meeting in Paris was the first of the two biannual ministerial-level meetings established to improve bilateral relations between France and Iran. As a result of the progress in relations, France appointed Phillipe Thiebaud its new Ambassador to Iran on 6 March, followed two days later by Iran’s appointment of Bahrem Qasemi as its own Ambassador to France.

Iran’s undisclosed accommodation of France’s concerns seems to be tied to the E-3’s creation of the new payments channel, the Instrument for Supporting Trade Exchanges (INSTEX), based in Paris to enable European businesses to conduct financial transactions with Iran without US scrutiny. Although the details have not been made public, the system involves parallel payments within a particular EU state and within Iran. On 15 March 2018 the head of the Central Bank of Iran announced the creation of the Special Trade and Finance Institute (STFI) in Tehran to operate in parallel with INSTEX, following the 12 March meeting between E-3 representatives for INSTEX and their Iranian counterparts in Tehran.

To Tehran’s chagrin, France and the other two E-3 partners have made the operation of INSTEX contingent upon progress in the negotiations on Iran’s missile programme and Iran joining the Financial Action Task Force (FATF) designed to stop money laundering and terrorist financing. Ayatollah Sadeq Amoli Larijani, the Chairman of Iran’s powerful Expediency Discernment Council, described the terms as ‘denigrating conditions’. Furthermore, the E-3 has also said that INSTEX will be used only for Iranian purchases of food, medicine and medical equipment, and is holding out the possibility for wider use of the trade channel as an incentive for increased cooperation from Tehran.

The use of INSTEX for the sale of humanitarian items will not undermine US goals. While France and the other two E-3 nations continue to uphold the JCPOA, their lack of investment in the development of Iran’s oil and natural gas industries means that Iran will have a hard time maintaining its oil production and satisfy an increasing demand for natural gas and petrochemicals. Iran will not see the financial dividends that it had anticipated when entering into the deal. With insufficient oil, gas and petrochemical revenues, Iran’s economy will become increasingly fragile. The Iranian government’s predicament of needing to satisfy domestic consumer demands while simultaneously financing bloated state and military institutions could result in an economic collapse and therefore induce Tehran to return to the negotiating table.

Despite its rhetorical position as the leader of the Western opposition to the Trump Administration’s policies toward Iran, France’s Iran policy orientation has remained largely in line with US objectives. Until France and its two E-3 partners decide to use INSTEX as a channel for investments in Iran’s oil and gas sectors, US sanctions will continue to exert increasing economic pressure on Tehran. The recent history of France’s Iran policy indicates that INSTEX will not be used to undermine US sanction in the near future.

Micha’el Tanchum
Fellow at the Truman Research Institute for the Advancement of Peace, Hebrew University, and non-resident affiliated scholar with the Center for Strategic Studies at Başkent University in Ankara, Turkey (Başkent-SAM) | @michaeltanchum

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<![CDATA[ Algerian presidential elections and the energy reform agenda ]]> http://www.realinstitutoelcano.org/wps/portal/rielcano_en/?WCM_GLOBAL_CONTEXT=/elcano/elcano_in/zonas_in/ari128-2018-escribano-algerian-presidential-elections-energy-reform-agenda 2018-11-26T06:42:59Z

A new hydrocarbon law seems imminent in Algeria and progress has been made in improving the country's relations with international oil and gas companies. However, it appears that the introduction of substantive reforms will have to wait for the 2019 presidential elections.

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Original version in Spanish: Elección presidencial y reforma energética se citan en Argelia

Theme

This paper reviews the pre-electoral economic and energy contexts in Algeria and explores the virtues and limitations of the ‘energy spring’ narrative of the new Algerian energy sector authorities.

Summary

In recent months there have been more announcements of an imminent hydrocarbon law and progress has been made in improving Algeria’s relations with international oil and gas companies, with several contracts having been extended or renovated. Nevertheless, it appears that the introduction of substantive reforms will have to wait for the outcome of the 2019 presidential elections.

Analysis

Introduction

Against all expectations, 2018 has been a relatively untroubled pre-electoral year in Algeria. The rise in oil prices has considerably eased the country’s economic situation and the budget has been given a social focus with the reversal of some of the adjustment measures applied in previous years. The expansive fiscal election cycle has also been underpinned by the Central Bank’s financing of public debt. In the spring of 2018, a year ahead of the presidential elections in April 2019, much publicity was even given to a number of direct interventions by President Bouteflika to correct decisions of the Ouyahia government. From an economic perspective, he has insisted on popular measures like the need to reverse subsidy reductions, halt the increase in ID and passport issuing costs and prevent the sale of agricultural land to foreigners. In the political field, he dismissed the chief of police, Abdelghani Hamel, who –like many others– happened to be a possible presidential candidate.1

He has also taken similarly assertive action in the energy sector with, for instance, a presidential decree to increase his power to appoint senior Sonatrach staff and to reinforce the authority of the company’s new Chairman. The new team responsible for energy policy, appointed in 2017, has spent months attempting to transmit a narrative of an Algerian ‘energy spring’. Even if modest from a European perspective, it is an opportunity for greater openness and deserves some encouragement. Although not quite a ‘petroleum perestroika’,2 it does seem to suggest a greater willingness to reform and an increased flexibility in the face of a changing global energy environment. This analysis will first look at Algeria’s overall economic context and then on the hydrocarbon sector, focusing on the indications in recent months of a possible increased openness.

Pre-election economy

If the narrative of an ‘energy spring’ is still premature, applying it to Algeria’s broader economic policy is simply inappropriate (other than in reference to the season’s usually unsettled weather). The tension between reformists and conservatives in Algeria gives rise to decisions that are contradictory, subsequently corrected or ultimately abandoned and therefore in a wildly erratic economic policy.3 The 2018 budget was far removed from the relative discipline of previous years, and the rise in oil prices has aggravated the electoral fiscal cycle. This is confirmed by the 2019 budget proposal (Loi de Finances) presented at the end of September: a close to 8% rise in public spending, particularly current expenditure –and, within that item, social transfers–, continued recourse to monetisation of the fiscal deficit and, of course, not a single new tax or cut in subsidies.4

Figure 1 shows Algeria’s main economic indicators, along with their recent and projected performance. First, economic growth fell from 3.7% in 2000-15 to only 2% in 2017. According to IMF projections growth will rebound in 2018 as a result of the pre-election fiscal expansion and the recovery in oil prices, whose effects will persist through 2019, although not as strongly. The Economist Intelligence Unit (EIU) expects slightly lower growth rates for 2018, but with an upturn beginning in 2019 due primarily to the rise in oil prices and the coming on stream in the next few years of the most recent investments in the gas sector.5

The cost of having maintained growth with counter-cyclical measures during the years of low oil prices shows in the deterioration of the country’s main macroeconomic balances. Inflationary pressure, contained until 2015, will push inflation in the next few years above 7%, with a resulting rise is discontent among a population already beset by rising prices. Conversely, the recovery in oil prices could reduce the bulky public deficit recorded in 2015 and 2016 of over 15% of GDP to 7% by 2018. This substantial budget deficit stemmed from the increase in social transfers, which the 2018 budget has raised by 8% to account for total 9% of GDP. Should the 2019 budget proposal be approved, social transfers would rise to 21% of the budget and foreseeably again expand as a percentage of GDP.

After the increase in current expenditure estimated for 2018, the public deficit should again drop to below 5% of GDP. This would slow down an escalating debt, set to rise from 8.8% of GDP in 2015 to above 30%. The data relating to the Algerian Treasury’s recourse to the Central Bank was released in June and, as expected due to fiscal expansion, was above the Finance Ministry’s target. Nevertheless, there was no further monetisation after February, showing that fiscal emergencies have receded as a result of higher oil and natural gas prices.

In the external sector, after the ending of the enormous surpluses recorded in the years of high oil prices, the recent price recovery will allow the current account to be rebalanced: from a deficit of over 16% of GDP in 2015 and 2016 it should drop below 10% from 2018. Foreign currency reserves should continue to decline, although at a slower pace and always with a relatively comfortable margin to cover over a year’s imports. The EIU expects slightly more favourable estimates for 2018 and slightly more favourable forecasts for subsequent, especially a faster rebalancing of the public deficit to around 6% of GDP in 2018.

These projections, estimates and forecasts are clearly very sensitive to oil price fluctuations. The penultimate row in Figure 1 shows the fiscal breakeven oil price, ie, the price of oil required to achieve budgetary balance. Between 2000 and 2016 the Algerian budget required average oil prices of over US$100/barrel to maintain a balance. The (modest) fiscal adjustments of 2016 and 2017 achieved a certain effect by reducing the fiscal breakeven price from US$102/barrel to US$86. The election budget cycle should raise the fiscal breakeven price to close to US$106, to subsequently decline to around US$84 in 2019, more in line with oil price forecasts (although the estimate is prior to the expansive budget proposal for 2019). It should be borne in mind that oil companies do not expect oil prices to be much above US$80/barrel, but they do require investment projects to be profitable at prices of only US$50. For the sake of prudence, hydrocarbon mono-producers and their public companies should therefore adopt a reasonably similar framework.

Figure 1. Algeria: main economic indicators
  2000-14 2015 2016 2017 2018 (1) 2019 (1)
Real GDP growth (%) 3.7 3.7 3.3 2.0 3.0 2.7
Inflation (CPI, %) 3.7 4.8 6.4 5.6 7.4 7.6
Public deficit (% of GDP) 2.9 -15.7 -13.5 -7.1 -8.2 -4.8
Public debt (% of GDP) 24.8 8.8 20.6 25.8 33.3 38.4
Current account balance (% of GDP) 11.4 -16.5 -16.6 -12.3 -9.3 -9.7
External debt (% of GDP) 15.3 1.8 2.4 2.3 2.0 1.8
Foreign exchange reserves (months of imports) 26.9 28.4 22.6 19.0 16.2 13.4
Fiscal breakeven oil price (US$) 102.1 106.8 102.5 86.7 105.7 84.3
External breakeven oil price (US$) 70.2 84.5 73.4 74.5 76.8 76.6

(1) Forecasts.

Source: IMF, Regional Economic Outlook Update: Middle East and Central Asia, May 2018, Statistical Appendix.

In general, the macroeconomic scenario reflects the inconsistencies of economic policy. Although the government has tried to adjust to a lower oil price environment, the election cycle has only partially allowed it to do so. The recourse to unconventional financing of the budget deficit raises serious questions over the middle term, as highlighted by the World Bank.6 Now that the narrative of ‘lower for longer’ appears to have proved to be wrong, the short-term incentives to maintain fiscal discipline could become even weaker.

Volatility has also had its effect on 2018’s microeconomic policy. An area of particular interest to Europe (and Spain) is trade policy. Since 2015 Algeria has applied one protectionist measure after another, significantly affecting commercial relations with the EU. The Algerian rationale is to contain the balance of payments deficit, but there is also a clear element of political economy: incumbents aim to protect the rent generated by licences, tariffs and bans typical of protected markets.

Algeria first paralysed the trade liberalisation foreseen in the Free Trade Agreement of the Algerian-EU Association Accord. Then it introduced discretionary import licences on products like vehicles and cement and other construction materials. From 2018 licences are no longer applicable to vehicle imports, but further restrictions have been introduced, including the halt to imports of various product groups covering some 850 tariff line items, increased tariffs on around 130 additional line items and further administrative and financial requirements.7

As explained below regarding the energy sector, the economic context prior to the elections has been marked by a temporary improvement due to the oil price rise. The problem is that the window of opportunity for fiscal adjustment and microeconomic reforms created by the rise has come at the same time as the run-up to the elections. The two factors combined reinforce the temptation to continue banking on a continued price recovery and avoiding or minimising reforms. But as with the energy sector, a relatively more favourable situation for the election cycle in the short term should not obscure the many economic challenges facing the country in the medium and long terms.

Gas and prices to the rescue

Contrary to other hydrocarbon mono-exporters, such as Venezuela, Algeria’s economic policy has not been so poorly managed as to prevent it from benefiting from the current rising trend in oil prices.8 The worst-case scenarios considered in 2014, when prices started to drop sharply, have not materialised. Neither has there been a return to the instability of the black decade of the 1990s or a coup d’état, as in Egypt.9 On the other hand, in line with expectations, the country continues to mark time while President Bouteflika’s succession remains unresolved. Because of this, economic policy-making continues in a context of slow but sure deterioration as it awaits more favourable political and economic circumstances.10

It was a risky gamble, and largely taken by default, given the political unviability at the time of engaging in tough fiscal adjustments and thorough microeconomic reforms. The bet was partly based on the hope of oil prices eventually recovering, but also on something more tangible: the entry into operation of new gas projects than can temporarily reverse the country’s declining production.

Figure 2. Oil production (thousands of barrels a day)

Figure 3. Gas production (bcm)

Figure 2 shows how Algerian oil production has stagnated in recent years and the decline expected over the medium term. With all due caution regarding the various forecasts, the short-term trend for gas production, shown in Figure 3, is more favourable. After the swift drop in production during the 2000s and the stagnation recorded in the first half of the current decade, production rose significantly in 2016 (but not in 2017) and further increases are expected as projects currently underway are completed and come on stream. In the case of gas, production is not expected to decline until the beginning of the coming decade, although all the increases registered during the period will be a thing of the past by 2027. While the possibility of President Bouteflika making endless future re-election bids cannot be ruled out, it is Algeria’s immediate election that is the more urgent concern.

Figure 4. Hydrocarbon exports (US$ million)

Before the 2018 pre-election year, oil prices again began to rise, boosting the country’s export income. Figure 4 shows the forecasted increase in hydrocarbon export earnings up to 2022, driven by the increase in both gas production and oil prices. As with the expected decline in gas production, the problem arises in 2022. Regardless of the trend in oil prices, Algeria needs to undertake the gas investments necessary to reverse the expected production decline.

However, it is advisable to regard the optimistic projections for Algerian gas production with a degree of scepticism.11 For instance, to include the production of shale gas is clearly premature, as explained below. The forecasts shown in Figure 3 depend on how production develops at the Hassi R’Mel field, particularly in winter when temperatures drop and gas is reinjected. Although Algeria has so far been able to fulfil its contracts, in 2017 it was unable to supply France with any additional quantities of gas. Some forecasts are so pessimistic that they consider no Algerian gas exports by 2030 under a scenario of high domestic demand, as has already occurred in Egypt.12 More importantly, even the most favourable projections are only optimistic in the short term, suggesting a very difficult scenario from 2023-24 onwards.

Similarly to the economy, the recent improvement in the Algerian energy sector indicators and projections cannot mask the challenges it faces in the short and medium terms. Considering how long it takes to develop gas projects, particularly in Algeria, investments should be undertaken as soon as possible. But the truth is that in recent years unfavourable contractual, fiscal and administrative conditions in Algeria have made it impossible to attract the necessary investments from international companies. The latest bidding rounds for exploration licences have been met with scant interest, with the country’s overall business environment seen to be highly discouraging.13 Indeed, further rounds have been indefinitely postponed and none are expected under the current regulatory framework.

Excessive red tape and long delays in approval, difficulties in operating in an erratic trade policy framework, obstacles to international flows (from financial to customs-related) and the security situation in general all raise the transaction cost of being in the country. Additionally, the tax system limits potential income by penalising extraordinary profits (ie, a windfall tax), adding a strong disincentive to the current market context. The limitation on foreign participation in projects (the so-called Rule 49/51 restricting it to 49%) is a further hindrance mentioned by foreign companies.

Finally, despite having some of the world’s largest reserves of unconventional (shale) gas, Algeria’s strategy for its exploitation has been equally erratic. According to various estimates, the country has the third or fourth largest ‘technically recoverable’ reserves, after the US, China and Argentina. The Ghadames Basin, extending from eastern Algeria to southern Tunisia and western Libya, is one of the world’s largest in terms of unconventional gas resources.14 But the advantages of favourable geological conditions and an established gas industry have so far been offset by technical, political and economic obstacles.

Concern about competition from fracking for a scarce resource like water –although played down by the industry, which is banking on further technological development– has given rise to violent protests in the affected localities in the southern part of the country (like those in In Salah in 2015 following the first perforations). On the other hand, the bureaucratic inefficiency and excessive red tape plaguing the development of conventional gas resources also affect shale gas.15 In a context of low prices and a hostile public opinion, those previously in charge of Algeria’s energy policy had as a priority the development of conventional gas reserves with lower production costs. Although they did not rule out exploiting shale gas, they decided to postpone it in the hope of more favourable conditions in the future, such as higher natural gas prices, more advanced technology to minimise costs and reduce the impact on aquifers and water consumption, and (linked to the latter) and a more amenable public opinion.

A late ‘energy spring’, of a limited character and yet to be confirmed

Given the lethargy induced by the political paralysis in the Algerian energy sector, in the spring of 2017 the government began to signal a change of course. The first step was to stabilise the situation at Sonatrach, paralysed by both corruption scandals and the rapid succession of five chairmen in barely seven years. The appointment of Abdelmoumen Ould Kaddour changed the trend. In 2007, Kaddour had been the subject of a shady plot devised by the then all-powerful intelligence services (Département du Renseignement et de la Sécurité or DRS), which were later disbanded by Bouteflika in 2016. Accused of being in possession of DRS documentation, he was charged with espionage by a military court and sentenced to 30 months in prison in a hurried trial rife with inconsistencies. After 20 months in prison he was set free with no explanation thanks to the influence of someone in Bouteflika’s trust. He then moved to Dubai as a consultant.

In early 2017, presidential emissaries travelled to Dubai to visit Kaddour and managed to convince him –apparently with some difficulty– to take charge of Sonatrach.16 This was not just a personal rehabilitation for Kaddour himself, but also indirectly for his mentor, Chakib Khelil, Minister of Energy from 1999 to 2010, the real target of the DRS intrigues aimed at taking over control of Sonatrach.17 The fact that Khelil is one of the potential presidential candidates has given rise to a number of interpretations of Kaddour’s appointment. In June 2018 a presidential decree modified Sonatrach’s statute, granting new powers to Kaddour, essentially as regards making appointments to the board of directors. Nevertheless, it also strengthened presidential control over the company, whose chairman and deputy chairman would henceforth also be appointed by presidential decree. Sonatrach is close to completing the renovation of its management team and already has new directors for its major divisions (Strategy, Upstream, Pipeline Logistics and Commercialisation).

Around the same time, Arezki Hocini was made head of the National Hydrocarbon Resources Development Agency (Alnaft), the sector regulator. Hocini is close to Kaddour and Khelil and was the first to be rescued from oblivion by the regime, although in his case simply from mundane retirement. The new Energy Minister, Mustapha Guitouini, was previously at the distribution company Sonelgaz rather than being involved with upstream exploration and production; neither does he have a significant political profile, so until recently he has kept a low profile and barely intervened in extraction policy.

The new energy team immediately returned to the spirit of greater openness enshrined in the 2005 oil law promoted by Khelil but later curbed by measures such as the 49/51 rule and the windfall tax, which placed restrictions on foreign investment. In parallel, Alnaft seems to be in the process of extending its responsibilities, which –although no details have been released– may involve taking over some of Sonatrach’s historical regulatory and control functions, thus making it more commercially-oriented and comparable to other major international companies.

The stated aim was to revive the Algerian oil and gas sector with the backing of the presidential circle. To begin with, contact was re-established with the international companies to try to find an amicable solution to pending disputes and brush up its tarnished image. A year later Sonatrach was able to resolve 80% of its outstanding litigation, including its disagreements with Norway’s Statoil and the US company ExxonMobil.18 The most notable case was the partnership reached with Total, putting an end to a fraught history and returning to a climate of mutual understanding between the two companies.

Then came the signing of new contracts and the extension of others, among them several with Total. One of the agreements is a concession signed at the end of 2017 within a new legal framework between Sonatrach, Total and Alnaft to develop the Timimoun field.19 At the beginning of 2018 Cepsa, Sonatrach and Alnaft agreed on a further concession to exploit the Rhoude el Krouf (RFK) field, located in the Berkine Basin. Subsequently, in April 2018 Sonatrach signed an ambitious framework agreement with ENI to relaunch exploration and development in the same basin and to strengthen their cooperation in other areas of the energy sector (including shale gas, petrochemicals, renewables and offshore exploration).20 More recently, in June, another agreement was signed by Sonatrach, Total and Repsol to extend the Tin Fouyé Tabankort (TBT) gas-concession contract.

These initiatives were accompanied by a round of consultations with international oil companies to gather information on the measures that would be necessary to reform the Hydrocarbon law and make the sector more dynamic. Although a welcome novelty, the outcome of the consultations has not been made public and nor have the companies been informed whether their suggestions will ultimately be taken into account. This vagueness and lack of transparency are a further significant limitation to the past few months’ narrative of a more open energy sector. While international companies appear to have been led to believe that host government take (HGT, which in most cases is around 90%) will be reduced by the new Hydrocarbon law, they are discounting that it will continue to be too high.

Foreign policy adds a further layer of complexity. Thus, the success of the contracts signed with Total has partly been due to France’s aim of preserving its interests in Algeria. Meanwhile, it has continued to block the Midcat gas pipeline and the access by pipeline of Algerian gas to the rest of the European market. These strategic inconsistencies have a considerable impact on the prospects for Algerian gas exports to Europe.

The other remaining challenge was the renewal of gas supply contracts with Algeria’s main customers, many of which were close to expiration. The negotiations, of which little has been made public, had been stretching out for years with no visible progress. European companies, supported by the Commission, insisted on more flexible contract conditions, reducing their duration and the possibility of less rigid price indexation formulas, as Russia was already doing to adapt to the new far more competitive context of a more abundant supply of natural gas.21 Although the Algerian authorities showed some understanding, they countered by stressing the importance of security of demand and insisting on a certain stability of expectations.

In June 2018 Naturgy (previously Gas Natural Fenosa) became the first European company to renew its contract, ensuring its supply of Algerian natural gas until 2030. Although no details have been released, the terms appear to be more flexible, both as to time frame (10 years) and price formulas. Foreseeably, negotiations with all other clients –some enshrined in framework agreements like those between Sonatrach and ENI and Total– will follow the same format. While late, this is a welcome development that reveals an inkling of rationality in Algeria’s energy policy, fostering positive expectations about the long-announced new hydrocarbon law.

After a long wait and much rumour-mongering, on 4 June Kaddour announced a contract with the US consultancy firm Curtis, Mallet-Prevost, Colt & Mosle to provide advice on designing the country’s new oil sector legislation. He also stressed the need for it to be enacted and applied swiftly to ensure a better investment context and to attract the interest of international companies. This strategy appears to consist of the new law being approved with practical implementation mechanisms being adopted at the same time –contrary to 2005, 2006 and 2012, when the relevant decrees were delayed for years, paralysing the sector as a result–.22 Minister Guitouni, on the other hand, has expressed his disagreement for the first time and has showed his preference for a more cautious approach that could hinder the process.23

Something similar is happening with respect to the future of unconventional gas. Conscious that an increase in conventional gas exploration and production will be insufficient to offset the declining output at existing fields, the new Algerian energy sector authorities are again showing an interest in developing the country’s vast shale gas reserves. In recent months they have started talks with the US companies ExxonMobil and Chevron, although they seem to be at a very early stage and with a long-term prospect.24 Shale is also the object of the partnership with Eni and Total, although the negotiations that have made the most progress appear to be those with Anadarko and BP. In recent declarations to Bloomberg, Kaddour included among Sonatrach’s priorities both offshore exploration and what he termed ‘new energies’ (‘We don’t want to call it shale… I don’t like the term’).25

Given time constraints, none of these projects will see the light of day before the upcoming presidential election, thereby avoiding political costs during the campaign and allowing the government’s cautious stance to be maintained for a few more months. Given the difficulties facing conventional gas production, it is unlikely that shale gas will be any easier. Considering the difficulties faced by conventional production, it is unlikely for the development of shale gas to be any easier. To the contrary, its success would depend on maximum operational efficiency, which would require a favourable business, tax and regulatory framework that as of today is present almost only in the US: a smooth decision-making process, services companies that operate in a highly competitive market, technological development appropriate to each specific project and an uninterrupted flow of equipment and technical staff. For instance, equipment imported by international companies is held up by customs, on occasion by up to six months, which is plainly at odds with the speed required by the shale industry. In any case, the new law is expected to have a more favourable tax treatment for shale and offshore gas, as well as promoting the investigation of underexplored basins.

Conclusions

Algeria’s macroeconomic situation reflects the inconsistencies of its economic policy, further aggravated by the elections. Resorting to unconventional financing of the deficit and the recovery of oil prices have further weakened fiscal discipline in the run-up to the presidential election. The latter’s timing has reduced the window of opportunity for fiscal adjustments and reform that had been made possible by the temporary improvement in the economic context, masking the many economic challenges facing the country over the longer term. The hydrocarbon sector is in a similar situation. Improved conditions should not mask the absence of the investments that are necessary to reverse the decline in production. In addition to the excessive red tape hindering projects –from long delays in approval and execution to obstacles to international transactions– there is an unsatisfactory fiscal framework and a 49% limit on foreign participation in gas projects. Algeria’s shale gas strategy to date has been erratic and raises the same doubts that also affect the conditions for exploiting conventional gas.

To deal with these difficulties, the new Algerian energy-policy authorities have shown signs of being more amenable to reforms and laid the groundwork for the new hydrocarbon law and for a shift in policy as regards unconventional gas. In only a few months, Sonatrach, the national oil and gas company, has resolved a large number of its disputes and arbitration problems with international companies; it has signed new contracts and renewed or extended others with Cepsa, Eni, Naturgy (Gas Natural Fenosa), Repsol and Total; and it has also rekindled an interest in unconventional gas and sought support from US and European companies. The new hydrocarbon law, in the offing for years now, is probably a unique opportunity to culminate these efforts and provide a firm setting to attract the international investment needed to develop Algeria’s gas reserves. Sontrach’s Chairman and the hydrocarbon sector regulator have spent months resorting to a narrative of an Algerian ‘energy spring’, although certainly not with a name that is so uninspiring in the North African context.

However, the new slant in Algeria’s oil and gas policy does have certain limitations. This paper has highlighted red tape and lack of transparency as two of the main burdens weighing down the possibility of a more open energy sector (which are particularly critical to the shale industry), as well as the distortions caused by foreign policy considerations. Nevertheless, the conclusion is that the foremost limitation, as for the economy as a whole, is that the timing of reforms overlaps and is subordinate to the election cycle. Furthermore, red lines such as ‘49/51’ rule and an excessive host government take cannot be crossed before the process is over and only with a substantial degree of difficulty afterwards. This makes complicates and delays taking of decisions, prevents the employment of high-quality contractors, pushes back reaction times and undermines the attractiveness of the county’s energy sector to international investors.

The future of Algerian energy is one of the most important strategic issues to be settled by the 2019 presidential elections. After years of paralysis, energy reform is something that cannot be postponed much longer, but neither is it likely to be resolved before the country’s political situation is clearer. A sound energy sector reform not only needs a new law and its effective implementation but legitimacy and political authority. If, as seems likely, Bouteflika accedes to the parliamentary majority’s demand that he run for President again, an ambitious reform programme could become one of the key legacies of his fifth term in office. He will have to confirm, broaden or reverse certain important measures, starting with the hydrocarbon law and its associated implementation decrees, and only in the medium term will it be possible to devise a coherent strategy for exploiting unconventional gas reserves.

Gonzalo Escribano
Director of the Energy and Climate Change Programme, Elcano Royal Institute
 | @g_escribano


1 The Economist Intelligence Unit-EIU (2018), ‘Bouteflika’s rivals bide their time’, 18/VI/2018.

2 See ‘Les hydrocarbures pris en otage par la présidentielle de 2019’, Africa Energy Intelligence, nr 818, 5/VI/2018.

3 G. Escribano (2017), ‘Algeria: global challenges, regional threats and missed opportunities’, in K. Westphal & D. Jalilvand (Eds.), Political and Economic Challenges of Energy in MENA, Routledge.

5 EIU (2018), Algeria. Country Report, July.

6 World Bank (2018), ‘Algeria Economic Outlook – Spring 2018’, April.

7 European Commission-High Representative (2018), ‘Rapport sur l’état des relations UE-Algérie dans le cadre de la PEV rénovée’, SWD(2018) 102 final, 6/IV/2018.

8 G. Escribano (2018), ‘Argelia no es Venezuela’, Elcano Expert Commentary, nr 22/2018, 4/IV/2018.

9 G. Joffé (2015), ‘The outlook for Algeria’, IAI Working Papers 15/38.

10 G. Escribano (2016), ‘A political economy of low oil prices in Algeria’, Elcano Expert Commentary, nr 40/2016, 19/X/2016.

11 H. Darbouche y J. Hamilton (2015), ‘North Africa’s energy challenges’, in Y. Zoubir & G. White (Eds.), North Africa Politics. Change and Continuity, Routledge.

12 A. Aissaoui (2016), ‘Algerian Gas: Troubling Trends, Troubled Policies’, Oxford Institute for Energy Studies Paper NG 108, May.

13 Algeria is 166th (of 185 countries) in the World Bank’s Doing Business 2018 ranking (http://www.doingbusiness.org/en/reports/global-reports/doing-business-2018).

15 T. Boersma, M. Vandendriessche & A. Leber (2015), ‘Shale gas in Algeria. No quick fix’, Brookings Energy Security and Climate Initiative Policy Brief 15-01, November.

16 F. Alilat (2018), ‘Algérie: Ould Kaddour, de la prison à la tête de Sonatrach’Jeune Afrique, 15/I/2018.

17 In June 2018 Kaddour said in an interview that the entire affair had been concocted by the DRS ‘pour casser Chakib Khelil’. See Y. Babouche (2018), ‘Ould Kaddour: “J’ai été jugé pour espionnage alors que BRC avait construit le siège de l’état-major de l’armée!”’Tout Sur l’Algérie, 3/VI/2018.

20 World Oil (2018), ‘Eni and Sonatrach strengthen cooperation in the gas sector in Algeria’, 18/VII/2018.

21 Essentially reducing contract time frames from 20 or 25 years and agreeing on indexation formulas with higher weightings for the prices of European hubs.

22 African Energy Intelligenceop. cit.

23 EIU ViewsWire (2018), ‘Algeria economy: quick view – US firms hired to advise on hydrocarbon law’, 7/VI/2018.

24 Natural Gas World (2018), ‘Sonatrach eyes foreign investors for shale gas: CEO’, 6/VII/2018.

25 Sonatrach CEO Kaddour on Oil Supply, Prices, Investment, Bloomberg Markets and Finance, 24/IX/2018.

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<![CDATA[ What to do with Iran? ]]> http://www.realinstitutoelcano.org/wps/portal/rielcano_en/?WCM_GLOBAL_CONTEXT=/elcano/elcano_in/zonas_in/ari63-2018-arteaga-what-to-do-with-iran 2018-05-04T03:08:02Z

The relationship of Western countries with Iran is difficult because it is a country with two faces: a reformist face, more familiar and accommodating; and another conservative face, very distant and tough.

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Original version in Spanish: ¿Qué hacer con Irán?

Theme

The relationship of Western countries with Iran is difficult because it is a country with two faces: a reformist face, more familiar and accommodating; and another conservative face, very distant and tough.

Summary

Like many Arab and Western countries, Iran is undergoing a process of ‘dualisation’. On the one hand, many people in Iranian society (and within its government) are cosmopolitan, globalised, well-educated, urbane, secular, liberal, self-sufficient and capable of wielding soft power with Western neighbours. On the other hand, however, much of Iran is isolationist, radical, rural, underprivileged and fanaticised. That side of Iran represents the darker side of the Revolution (and its hard power) and makes it difficult for the West to deal closely with Iran. This duality translates into a division of labour with, on one side, the government, diplomatic corps and the military, in charge of domestic reforms and formal relations with other countries, and, on the other, the Supreme Leader, the Revolutionary Guards and the militias, who wield responsibility for maintaining Iranian influence within the region.

Analysis

The portrait of Iran as divided into two groups –reformists and conservatives– is a simplification of reality that serves only to begin to understand the country. But this picture does not faithfully reflect reality. Although reformists and conservatives are very different in their visions and expectations, they are united by a common history. They share the same national pride. They cooperate and support each other in the face of external pressures. Their leaders have been socialised within the revolutionary regime. However, the dualist description of Iran does help to understand the above-mentioned division of labour between the two sectors who serve as Iran’s interlocutors with Western governments and Foreign Ministries: one group –amiable and accessible– is capable of maintaining relatively close economic, diplomatic and cultural relations with the West, but the other group –intransigent and fanatical– is bent on exporting the revolution and instability across the Middle East. The two faces of Iranian society are so obvious to Western observers that it becomes even more difficult to gauge the relative influence of either, and, above all, to avoided being seduced by the face which coincides the most with our own loyalties and fears. The lack of reliable data on social and political trends, and only limited knowledge of the revolutionary regime, impede any attempt to objectively calibrate the appropriate mode of relating to either sector (each with their defenders and critics), or with Iranian citizens and civil society in general. Therefore, the attempt of Western governments to get closer to Iran is as complicated as it is necessary.

The internal dynamic: progress and setbacks

The recent demonstrations in Iran make the country’s internal differences clear. While conservatives take advantage of popular anger in the face of inflation or shortages to criticise the Rouhani government, the reformists focus their critique on the religious authorities, including the Supreme Leader, Ali Khamenei and the Revolutionary Guards. The demonstrations ended up incorporating protesters against everything and everyone. The Western interpretation of these demonstrations has varied according to the sympathy or the aversion felt toward one or the other of these two Iranian factions. While the US has tended to see a new version of the 2009 ‘green spring’ movement against the regime, in Europe analysts perceive a pattern like that of other Arab and European uprisings which have been driven by lack of prospects, inequality and social disaffection with their governments. Beyond such subjective interpretations, however, the demonstrations have revealed the existence of serious social ills which, while still incapable of putting the system at risk, are nevertheless spreading in the small cities and across the rural areas that had previously remained on the margins of social demonstrations. These demonstrations have also made clear that they will be used in the future to radicalise the competition between conservatives and reformists.

The current social malaise can be attributed to the gap between expectations for economic progress –raised by the government to justify the Nuclear Agreement of 2015– and perceived economic results. The recently re-elected government of President Hassan Rouhani has maintained economic growth around 5%, kept inflation reasonably under control at around 10% (far below the 30% peaks experienced recently) and currently enjoys a current account surplus of around 4%. These economic results have stabilised the macroeconomy, but social expectations for improvement are linked to the economies of individuals and the reformist government cannot yet show clear results that can be felt in the daily life of the citizens.

Unemployment remained around 12% in 2017, but it is as high as 30% among the youths of the Iranian baby-boom (40% of the country’s approximately 82 million inhabitants are less than 24 years of age), a fact that explains the generational angst of Iranian youth. Although inflation has been contained at around 10%, the average basket of consumer goods has experienced spectacular price increases of up to 50% –some due to the Government raising fuel taxes but others stemming from drought and epidemics have reduced the supply of eggs and poultry–. It cannot be said that the government has not tried to foster investment, privatisation and commerce, but the reformists have not achieved their objective of cutting back on the economic privileges of the religious charity organisations (bonyads), the Revolutionary Guards and the elite rentiers. They have not been able to privatise monopolies, rationalise the economy, improve the rule of law, reduce tax exemptions to foster the entry of foreign investment or remove the structural barriers holding back economic growth –at least not to the degree that had been expected both inside and outside the country–. But it also needs to be acknowledged that US sanctions –still in place to punish the conservative support for terrorist movements and the proliferation of ballistic missiles– makes the launching of domestic reforms more difficult and it complicates Western participation in such reforms due to fears of reprisals against economic interests in the US.

The conservatives have produced better results in the international arena, where the diplomats and the military have slowly overcome Iran’s earlier isolation, restored broken relations with old partners and begun relations with new ones. Iranian diplomacy has a millennial tradition and a professional competence well known in the governments and Foreign Ministries of the West that have had the opportunity to negotiate agreements or development relations with Iran. Nevertheless, this enormous potential has been constrained in recent decades by the regime’s revolutionary expansionism and, above all, by its nuclear proliferation programme that led to its international isolation and the sanctions that were finally lifted in 2015.

Since the signing of the Joint Comprehensive Plan of Action (JCPoA), the external actions of the government have transformed Iranian diplomacy into a key interlocutor for the resolution of current conflicts, like that in Syria, and for the prevention of potential conflicts that now threaten the Middle East. It has taken advantage of internal differences between the Arab states of the Persian Gulf to move closer to Qatar, Oman and Kuwait, thereby breaking the simplification of Arab-Persian relations to the Shiite-Sunni reductionism still gripping Saudi Arabia and the Emirates. Now Iranian-Saudi competition is tinged less with religious and ethnic rivalries and more with political and personal motives and drivers. This is evident in the rhetoric of Prince Mohamed Bin Salman. His reasons are as good as those of President Donald Trump for distrusting and confronting Iranian expansionism, but they are both wrong in pressuring the reformists; their efforts only strengthen the most conservative sectors and feed Iran’s spiral of regression. Initiatives questioning the Nuclear Agreement of 2015, or which attempt to reinforce sanctions, tend to divide the US from its allies and partners, poisoning the attempts of Western and Asian diplomacy to tighten bilateral relationships with Iran. In the end, the threat of sanctions and rhetorical excesses strengthen the most conservative sectors in Iran who treat the Americans and the Saudis as enemies –totems around which to agitate their supporters into closing ranks behind them–.

The reformist sectors are conscious of the need to make progress on economic and political reforms to alleviate accumulating social pressures, but they are also aware that they do not yet have sufficient power to do so. They are likely to postpone and moderate their proposals to avoid provoking significant opposition. Significant progress in human rights –like freeing those arrested during the uprisings of 2009– or in economic liberalisation –trimming back the economic privileges of their conservative rivals– is therefore not to be expected. Because the government is not capable of undertaking structural reforms, it seems to be aiming to preserve stability, taking advantage of the improvement in the price of hydrocarbons and Chinese, Indian, Korean and Russian investment, in the hope that Western investment will soon then also come to develop infrastructure, reform the banking system and improve the productivity of the manufacturing and hydrocarbons industries. If the government maintains macroeconomic stability and registers some microeconomic improvements, the reformists could enter the 2021 elections very well placed to extend in time in office and therefore their control over Iran’s domestic agenda. However, the reformists will have to face Ebrahim Raeisi (Rouhani’s previous opponent in May 2017) who will also be running, and with the backing of the Supreme Leader Khamenei.

The risks of the dynamic of Iranian expansionism

When engaging Iran, its expansionist and confrontational policy of the last decades is certainly a negative point, and although the most conservative sectors are mainly responsible for this, it cannot be attributed to them alone. The reformists have not proved capable of influencing the design and directions of this expansionist policy but neither have they had the capacity nor the will to criticise its economic, political and social costs. If they were to be able to do so, linking these costs to the growing social disaffection, they could push back on the conservative hegemony controlling Iranian foreign policy and increase their credibility with their regional interlocutors who already know that Iran’s external projection eludes the control of the reformists.

In the current situation, the conservatives can present their supporters with a good list of expansionist results. In Syria they have given decisive support to their principal proxy, Hezbollah, in the religious and ethnic rivalries with their Sunni competitors in the region, an objective which explains their role in propping up the regime of Bashar al-Assad far more than any strictly political motive. Their involvement in Iraq has contributed to holding back the expansion of Daesh and the Sunni insurgency, and they have also managed to avoid the integration of the Shiite militias into the Iraqi armed forces, allowing them to preserve their autonomy and capacity to influence domestic Iraqi affairs. In Yemen –if perhaps due more to Saudi missteps than to any Iranian feat– the conservatives have managed to seize the advantage again, even after the failure of a risky and unnecessary intervention there (which only opened a second front). But the most successful achievement of the Iranian hawks has been to preserve their capacity of dissuasion: they remain capable of threatening their most direct and powerful rivals with asymmetric means, mobilising minorities, acting through proxies or commissioning terrorists for attacks. Such irregular means serve them well in maintaining the credibility of this dissuasive capacity. They do not need to rely as much on Iranian conventional military power, which is too weak and obsolete to project itself in the region, at least if the Nuclear Agreement –which limits until 2021 the import or export of conventional weapons and freezes missile testing until 2024– remains in effect.

The risk to regional security is that the conservatives do not remain content with profiting from the results obtained thus far, and instead commence a new expansionist dynamic, as symptoms of which are already beginning to show. The clearest and most dangerous risk is that Iran is consolidating its military presence in Syria in ways not directly related to the current civil war: installing militias there, participating in reconstruction projects and converting themselves into a domestic Syrian actor in general, something that had not been anticipated in the contingency and exit plans of either Russia or the US. The presence of Iranian-linked militias, rooted mainly along the land corridor from Teheran to Damascus, and the possible arrival and support of extra-regional actors only reinforces their capacity to influence negatively and forcefully in regional conflicts. Above all, their presence along Syria’s southern border poses a further existential risk for Israel which perceives (and correctly so) that in addition to the traditional threat emanating from Hezbollah in Lebanon, it now also faces the new threat posed by Iranian militias in Syrian territory. This growing Israeli perception explains much of Israel’s current rhetorical and military escalation.

Israel remained on the margins of the Syrian civil war, limiting itself to selective attacks against the supply lines that reinforced the military capacity of Hezbollah in Lebanon. While these air attacks have been numerous, they have also been permitted (or ‘de-conflicted’) by the Russians and limited only to attempting to contain the conflict to Syrian territory. Nevertheless, now that Iran can call directly at their door, even without the direct help of their proxies (Hezbollah, Hamas and the Islamic Jihad Movement in Palestine), Israel has no choice but to adopt more intense political and military policies of containment. Such intensified policies have been evident in recent months and constitute an escalation towards a conflict not necessarily caused by, but certainly announced by, Iran. While Israeli diplomats have met with Western leaders –both in private (with Putin, Macron and Merkel) and in public (during the Munich Security Conference in February 2018)– to explain the gravity of the situation and outline the measures they have adopted to confront it, ever since September 2017 Israeli military action has intensified. Only days before the Munich conference, the Israelis intercepted an Iranian drone in their airspace and attacked a Syrian base in retaliation. For the first time in decades, one of Israel’s F-16s was lost in the operation, downed by Syrian anti-aircraft fire just a few days before the Munich Conference.

Conclusions

In this potentially pre-war environment it is even more difficult to articulate bilateral relations between Iran and Western countries simply because it is impossible to completely ignore the risks of developing a relationship with an actor committed to launching military adventures as a tool for maintaining power, which only pose increased risks to security and stability for countries contemplating deeper bilateral relations with Iran.

Neither can anyone afford to ignore the risks of disregarding the opportunities thrown up by the existence of a reformist sector in Iran, which is supported by millions of votes from citizens who trust that results can be achieved. To postpone structural reforms time again until a social protest arises is a vain attempt to buy more time than Iran has at its disposal to insert itself in the technological and digital revolution now underway.

The policy planners of Western Foreign Ministries should, at a minimum, improve their situational knowledge. Iranian reality is changing and a reading of it should be neither static nor too distant. This reality is at the very least a dual one, and it requires a deeper knowledge of its dynamics and internal interactions if it is to be interpreted with any confidence or accuracy. Such knowledge cannot be obtained at a distance, relying only on indirect sources, without assuming some risk that comes from approximation. Although the two macro-sectors of Iran still have more binding them than dividing them, we need to know whether the current dynamic favours deeper division, or more integration and conciliation, between these two faces of Iran.

Presence is a necessary pre-condition for obtaining deeper knowledge, but it is not sufficient to orient influence. That requires running the risks implied by action or omission. The final denouement of the dynamic between conservatives and reformists, and between the social sectors they represent, will ultimately depend on Iranian society itself. But it would not be bad –even with the negative record of past Western interventions in the region, which weigh heavily on the collective imagination of the Iranian people (especially the most recent actions of the UK and the US)– if for once it could be said that Western will to support the Iranian reformists translated into something more concrete than mere goodwill. It is time for decisions, gestures and actions which demonstrate that Western countries are willing to act with hard power in the face of the tough challenges being poised by Iran, and with soft power to take advantage of opportunities for cooperation.

Félix Arteaga
Senior Analyst, Elcano Royal Institute
 | @rielcano

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<![CDATA[ The challenges of Rohani’s second term ]]> http://www.realinstitutoelcano.org/wps/portal/rielcano_en/?WCM_GLOBAL_CONTEXT=/elcano/elcano_in/zonas_in/ari83-2017-zaccara-challenges-rohani-second-term 2017-10-30T02:04:07Z

What are the domestic constraints (from the Revolutionary Guard to economic restrictions) and the external challenges (from the new tightening of US-Saudi relations to the crisis in the Gulf Cooperation Council) that re-elected President Hassan Rohani will face over the next four years?

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Original version in Spanish: Los desafíos del segundo mandato de Rohaní

Theme

What are the domestic constraints (from the Revolutionary Guard to economic restrictions) and the external challenges (from the new tightening of US-Saudi relations to the crisis in the Gulf Cooperation Council) that re-elected President Hassan Rohani will face over the next four years?

Summary

The renewed mandate of Hassan Rohani, begun on 3 August, represents continuity on the road to moderation both at home and abroad. However, despite a more reformist government than the last, no significant change is expected in foreign policy beyond the maintenance of previously acquired commitments to the Joint Comprehensive Plan of Action (JCPOA) and more engagement with Europe. On the contrary, the new anti-Iranian rhetoric of Saudi Arabia and the US, and the deep diplomatic crisis at the heart of the Gulf Cooperation Council (GCC) could produce a hardening of Rohani’s discourse about traditional adversaries and new challenges. The President will need to face not just foreign but also domestic policy challenges, including the Revolutionary Guard and its growing political and economic power, as well as the terrorism that broke out in June in the Iranian capital.

Analysis

The beginning of a second term and a new government

Once the scattered doubts of the followers of Ibrahim Raisi, the defeated candidate in the 19 May elections, had been put to rest, Hassan Rohani was proclaimed the 12th President in the republican political history of Iran.1 The seventh person to occupy the position since its creation in 1979, Rohani is the fifth President after Ali Khamenei, Hashemi Rafsanjani, Mohammad Jatamí and Mahmud Ahmadineyad to enjoy the maximum two consecutive terms permitted by the constitution.

The inauguration on 3 August was a demonstration of both domestic and international institutional support. Nine Heads of State and Government, 26 Presidents of legislative bodies, 38 high-level state and governmental officials and seven representatives of international organisations attended the ceremonies. Among the most notable present were: Pío García Escudero, President of the Spanish Senate; Federica Mogherini, High Representative of the EU for Foreign Affairs and Security Policy; Abdullah bin Nasser bin Khalifa al-Thani, Prime Minister of Qatar; Haitham bin Tariq al-Said, Minister of Culture of Oman; along with a special envoy of the Emir of Kuwait. The last three draw some attention given the existing tensions between Iran and the members of the Gulf Cooperation Council (GCC) in the wake of the attack on the Saudi embassy in Teheran, which forced the recall for consultations of the ambassadors of six countries. Their presence reveals the discrepancy at the heart of the GCC over the best way to deal with the Iranian neighbour, especially after the conflict that emerged in June 2017 between Saudi Arabia, Bahrein, the United Arab Emirates, Egypt and Qatar. After 20 months with its ambassador to Teheran recalled because of the attack on the Saudi embassy in January 2016, the Qatari government recently announced its ambassador’s return to Iran.2

In his inaugural address, Rohani once again emphasised the need to deepen the nuclear negotiation process but he warned against the policies of the US that could endanger the agreement. For his part, in his address Supreme Leader Ali Khamenei focused on the need to prioritise the living conditions of the Iranian population, a clear warning to Rohani about the lack of visible results since the signing of the Joint Comprehensive Plan of Action (JCPOA) in 2015.3

After the inauguration, Rohani presented for parliamentary approval the names of the ministers who are to serve in his second cabinet, and these included a few notable differences with respect to his first government. With a larger popular vote margin than he obtained in 2013,4 a more reformist-inclined legislative assembly after the elections of 20165 and facing the disappointment of only timid defence from certain ministers of his record during the election campaign, Rohani let go certain more conservative ministers, putting in their place others that can be considered more reformist.

As a result, 17 of the 18 ministerial candidates were approved by the 290-strong legislative body (only the candidate for Minister of Energy was rejected). With an average vote of 220 in favour and an average of only 47 against, these numbers are notably better for Rohani than during the parliamentary approval process of his ministerial candidates in 2013, when the average vote was 203 to 65, with three of his candidates rejected in the first round of voting. This time around, however, the assembly seems to have given a clear approval to Rohani’s previous term and overwhelming support to his current government plans. The eight ministers who are continuing on the job include the long-serving Bijan Namdar Zanganeh (with 20 years of experience at the head of the Ministry of Petroleum and Energy) and Mohammad Javad Zarif (who, while leading the Ministry of Foreign Affairs, made possible the nuclear agreement, the major achievement of Rohani’s last administration). Among the nine new faces, the appointment of General Amir Hatami as Minister of Defence stands out. Traditionally this post had been assigned to a member of the Revolutionary Guard (Sepah-e Pasdaran). Despite the controversy surrounding this nomination, however, it received the strongest backing of any within the Assembly, with 261 votes in favour, only 10 against and 13 abstentions. This implies that even the very conservative deputies and those ideologically close to the Revolutionary Guard have also given their support to the appointment.6 Once again the lack of women has been one of the central criticisms of Rohani’s cabinet line-up, something that has only ever occurred previously in Iran under President Ahmadineyad in 2009. Nevertheless, Rohani compensated for this by appointing three women vice-presidents, positions for which he requires no parliamentary approval. The three are: (1) Masumeh Ebtekar (the veteran reformist who was also Vice-President for Women and Family Affairs under Mohammad Khatami, the same post occupied in the last administration by Molaverdi); (2) Shahindokht Molaverdi (who will now head the Presidential Office for Citizens’ Rights); and (3) Laya Joneidi (appointed Vice-President for Legal Affairs).7

Other important posts were also filled as a result of the presidential and municipal election last May. These include the Mayor of Teheran and the head of the Municipal Council. Because Teheran is a megalopolis with enormous political power –expressed in the number of votes it wields– the absolute-majority victory of the reformist list allowed for the replacement of the conservative Mayor, Baqer Qalibaf, with the reformist Ali Najafí, and for the appointment of Mohsen Hashemi, the youngest son of the late Rafsanjani, as the head of the Municipal Council –no doubt in support of the figure that he represents for the revolutionary political establishment, to the detriment of the ultra-conservative sectors, which have attempted to seduce him ever since his support for the protest of 2009–.8

As something of a counterweight to Rohani, the Supreme Leader, Ali Khamenei, also announced the new membership of the Discernment Council, along with the identity of its new chief, a post that Rafsanjani had occupied from 1997 until his death. The new appointment to lead this powerful executive (and, at times, legislative) institution is Mahmud Hashemi Shahrudi, a conservative cleric who served as the head of the judicial branch for 10 years and as President of the Assembly of Experts. Some see him as a serious candidate to eventually replace Ali Khamenei as leader of the republic.9 This is a clear sign that despite the election results and the reformist pivot of Rohani’s new government, the same is not occurring in the other institutions of power.

Domestic constraints facing President Rohani

In his campaign, Rohani proposed to continue along the path of reducing tensions with the international community that he initiated four years ago. He also vigorously re-committed himself to the nuclear negotiations and the JCPOA; but he warmed that Iran’s patience had limits in the face of US provocations. He also promised that the economic situation would improve because the agreement would lead to more foreign investment, technology transfer and job creation. He also pledged to expand the civil rights and freedoms of Iranians, including ethnic minorities.

But what can Rohani really change over the next four years? It is clear that the presidency is not the most powerful institution in the Iranian political system, but whoever is elected president does have influence both domestically and internationally. Rohani’s first term will be remembered for the successful negotiations which produced the JCPOA, the diplomacy that led to the lifting of sanctions without the need to resort to a new military conflict and the breaking of the traditional taboo of negotiating directly with the US. Despite the harsh criticism Rohani received after the signing of the agreement, none of the conservative candidates proposed withdrawing from the nuclear pact, demonstrating that there is a general consensus on the benefits of the agreement. As a result. Rohani wielded his iron commitment to the accord as the symbol of his campaign. This will not change with four more years of Rohani as President, given that the parliament, led by Ali Lariyani (the moderate conservative who strongly supported Rohani during the campaign), and the Supreme Leader Ali Khamenei both support the nuclear deal; and none of this is expected to change over the short-to-medium term. On 31 May Lariyani was re-elected for his 10th consecutive term as the President of the legislative assembly (with 204 of 268 possible votes), while Ali Motahari (a conservative critic) and Masud Pezeshkian (a reformist) were ratified as his Vice-Presidents, despite rumours that an alliance among conservatives would push the reformists aside.10

With this institutional support, confirmed by his 24 million votes in the popular election tally and then again by the ratification of his cabinet nominees, Rohani should have sufficient strength to push forward reforms to invigorate the economy and reform the banking and tax systems, and to move legislation that will improve investor confidence, especially in the petroleum sector, which is in need of advanced technology. Such a mandate should also allow Rohani to implement the proposed ‘Bill of Civil Rights’, to relax restrictions on the press and Internet, and to free the leaders of the Green Movement, Mir-Hussein Musavi and Mehdi Karrubi, both of whom have remained under house arrest since February 2011 without being formally charged or sentenced for any crime. Karrubi began a hunger strike on 17 August, demanding the removal of security agents from his dwelling and a trial to clarify his situation. Although the agents did withdraw, with Karrubi returning home after a stint in the hospital, no other changes to this scenario are foreseen even despite the pressures of the reformist sector on Rohani to intervene directly in the situation of these and other political prisoners.

During his first term, Rohani had a tense relationship with the Pasdaran and any attempt to revitalise the Iranian economy will run straight against its interests. Necessary reforms to the banking system would affect certain financial institutions controlled by the Pasdaran, which were established to channel money that could not be transferred abroad as a result of the sanctions blocking Iran from the international SWIFT system. The imposition of a generalised tax system, to include the large religious foundations (bonyads) and other semi-public and private companies controlled by the Pasdaran, which to date have been exempt from taxes, will also become a point of friction with the President. Conscious of this challenge, in his first press conference after re-election, Rohani said that ‘our people love the armed forces from the bottom of their hearts. Our people also love the other branches of power and the media, but they cannot accept that a single national organisation becomes, in effect, a political party’.11 With this, he made clear his intention of limiting the powers of the Pasdaran in the future. The appointment of a regular-army General instead of the traditional choice of a Revolutionary Guard as Minister of Defence has been seen in this light.

In addition to those mentioned above, a new domestic challenge that might complicate Rohani’s second term has emerged for the first time in Iran: terrorist attacks claimed by Daesh/ISIS in the Iranian capital itself, in symbolic places such as the parliament and Khomeini’s tomb. The domestic critics of the conservative factions have not hesitated to launch attacks, mainly in media such as Kayhan, Raja News and Tasnim News, blaming the terrorist attacks on the President for his weakening of the Revolutionary Guard and the defence of national territory with his signing of the JCPOA.12 The recent launching of surface-to-surface missiles in the province of Kermanshah against territories controlled by Daesh/ISIS in Deir Exxor could be seen as a demonstration of the strength of the Pasdaran in response to the attacks that, according to Iranian sources, have been coordinated with the governments of Iraq, Syria and Russia.13

Rohaní’s external challenges

How much influence does the Iranian President have over foreign policy? Even more relevant to the search for solutions to regional conflicts, can Rohani convince the countries of the GCC, along with other regional powers, that Iran truly desires to reduce existing bilateral tensions and not to re-establish the Persian Empire, as many on the southern shores of the Gulf believe?

First, during the election campaign last May, foreign policy –with the exception of the JCPOA– barely appeared on the debate agenda. There seems to be a tacit agreement to avoid discussing issues, such as the role of Iran in Iraq and Syria, which could provoke more discontent within the military establishment. Although there is a general consensus, both in the political elite and among common Iranians, that it is necessary to defend the government of Assad in Syria in order to protect Iran’s own borders –given that a Daesh victory could clearly challenge Iran’s territorial integrity– there are now also voices arguing the need to end a war which has lasted too long. Without many visible gains in the Iranian economy as of yet stemming from the nuclear deal –aside from a fall in the inflation rate to only single digits– some feel that the high financial burdens and the cost in human life that the Syrian conflict implies is too high for Iran to bear. Still, this domestic debate is still too weak to cause a change in government direction, to say nothing of questioning the role of the Pasdaran in the wars of Syria and Iraq.

Rohani for his part does not appear to be very interested in changing any particular aspect of current Iranian foreign policy. This is especially the case with respect to Syria and Iraq, given that Rohani’s priority has not been regional, but rather international, politics in an attempt to improve political and economic relations with Europe, Asia and the international organisations so as to achieve an effective lifting of sanctions and attract foreign investment. In this respect, the very different reactions in the US and Europe to Rohani’s victory have been clear. While Federica Mogherini, the High Representative of the EU for Foreign Affairs and Security Policy, along with other European heads of state, sent messages of congratulations to the re-elected President, Donald Trump began a tour of Saudi Arabia during which he signed arms deals worth US$110 billion, sending a message that the real threat to the stability and security of the region is Iran, and that such arms were meant to curb Iranian threats.

In addition to these differences between the US and the EU, another striking feature has been the divisions within the Trump Administration itself over the terrorist attacks in Teheran. While the Secretary of State issued a skeletal but diplomatically correct communication of condemnation of the perpetrators and condolence to the victims, the White House declared that ‘we underline that the States which sponsor terrorism run the risk of the evil they provoke’. For Iran, therefore, to reinforce ties with Europe is key for compensating the negative effect of four years of a Trump presidency in the US. A closer engagement with Europe, particularly along economic and commercial lines, and with a deepening political dialogue, would help avoid the kind of international isolation that Iran endured during the 1980s and again during the Ahmadineyad period.

On the other hand, current security and defence policies seem to be more than ever aligned with the basic policy lines defined by the Supreme Leader Khamenei (which are not very different than those established by the founder of the republic, Ayatollah Khomeini) and implemented by the Revolutionary Guard, irrespective of the decrees of the President and the Ministry of Foreign Affairs. This idea, which is perceived at the heart of the GCC as a major impediment to establishing direct conversations with a government that will not wield total control over its foreign policy, is also subscribed to within certain sectors of Iranian society, verified by a series of interviews undertaken in Teheran between January and May. Many Iranians also feared that the Pasdaran would try to take over control of political institutions by way of the elections, although this did not finally happen on 19 May. Nevertheless, this does not mean that Rohani will shirk from challenging the influence of the Guard over foreign policy; however, he will do so only in areas in which there is no disagreement within the political class, and on the key issue that has been his principal accomplishment –the nuclear deal– and on which he can count on broad public support.

There is another worrying concern for the re-elected President: the challenge stemming from recent events and declarations on the southern shores of the Persian Gulf. In an interview at the beginning of May, the Saudi Minister of Defence, Mohamed bin Salman, said that it would be impossible to establish a dialogue with Iran because of the Shiite belief in the return of the Mahdi14 –an unprecedented escalation in the sectarian war of discourses–. Nevertheless, mention of ‘mahdism’ has been used before to criticise Ahmadineyad by claiming that due to this belief the idea of ‘nuclear holocaust’ clearly justified Iran’s interest in possessing and using nuclear weapons to accelerate the arrival of the hidden Mahdi.

On the other hand, the Arab-Islamic-American Summit in Riyadh the day after the Iranian elections, together with the statements of President Trump and King Salman, made it clear that the ‘anti-terrorism alliance’ is focused primarily on Iran as the sponsor of terrorism in the region.15 At this meeting, to which the only member-state of the Islamic Conference that was not invited was Iran, the only issues discussed were terrorism, arms deals and Iran. In his speech, Trump mentioned Iran or Iranians 11 times, and only once with a positive connotation. ‘Democracy’, ‘elections’ and ‘human rights’ were not mentioned at all. The messages coming forth from the summit and from the US Senate (which on the same day initiated debate on the imposition of new sanctions against Iran for its missile programme) rapidly reached Iran. Following the same logic, the recent appointment of Michael D’Andrea, a ‘hawk’ once charged with drone warfare and the hunt for Bin Laden, to head Iranian operations at the CIA, has been interpreted as a new escalation in Trump’s Iran policy, and it was quickly criticised in the more conservative Iranian news media like Fars News.

After the Summit –during which Trump remarked that ‘lots of beautiful military equipment’ had recently been sold to Qatar–, the Iranian Minister for Foreign Affairs, Javan Zarif, responded that ‘beautiful military equipment can’t buy Middle East peace’ in an article published in the New York Times on 26 May. Zarif reaffirmed the Iranian efforts and commitment to de-escalate the conflict in Syria (by providing the foundation of Resolution 2254 of the United Nations Security Council), and to secure a long-term agreement with Turkey and Russia. Even more, he confirmed Iran’s interest in bringing to an end the war in Yemen from the very beginning by offering a four-point plan that presumably would have been rejected by Saudi Arabia.16 In a similar tone, Rohani emphasised in his post-election press conference that ‘the terrorism question cannot be resolved by giving money to the superpowers’, in an allusion to the arms purchases of Iran’s GCC neighbours. He labelled the summit a ‘ceremonial event’ that was void of political value and incapable of producing tangible results. Rohani concluded his comments by saying that ‘the Iranian nation has decided to be powerful; our missiles are for peace and defence... the US should know that when we need to test a missile for technical reasons, we will do so, and we will not wait for its permission’.17 Weeks later, on 15 August, Rohani warned that Iran would denounce the nuclear deal in a matter of ‘hours’ if sanctions were re-imposed. The Director of the Iranian Atomic Energy Agency, Ali Akbar Salehi, insisted that Iran could ‘reinitiate uranium enrichment within five days’.18

Such statements should be understood as signs of strength which the Iranian authorities wish to underline not only in response to the declarations and military decisions of Riyadh and Washington, but also with respect to Rohani’s domestic adversaries who believe his administration has weakened Iran’s position in the region by buckling to US impositions with the signing of the JCPOA.

Another indication of just how sensitive the Iranian issue is within the GCC has been the outbreak of the crisis provoked by the supposed hacking of the Qatar News Agency website with declarations attributed to the Emir Tamim al-Thani and directed at Iran, Israel and the US.19 Nor is it an accident that the crisis broke out after the Riyadh Summit on 24 May and after Trump’s explicit support, via Twitter, was followed by a demand from the Emirates and Saudi Arabia that Qatar break off its diplomatic relations with Iran. It has not done so, despite the fact that both countries, together with Bahrein and Egypt, decided to unilaterally impose a blockade and tough sanctions against Qatar for supposedly supporting terrorism and other states that destabilise the region. Iran remains Qatar’s sole maritime and air corridor for getting around the blockade and securing exit from the Gulf. Accordingly, Qatar recently announced that it was sending its ambassador back to Teheran, from where he had earlier been recalled for consultations in January 2016. For its part, Iran, which also accuses Qatar of sponsoring terrorist groups in Syria and Iraq, has chosen the pragmatic policy, offering all types of aid to its southern neighbour, if it undermines the success and credibility of the Saudi cause.20 In this respect, a tightening of relations between Iran and Qatar is not expected to be anything more than a tactical convenience, beyond which neither state has any interest in moving. Despite the conflict situation generated with Saudi Arabia, Qatar continues to view Iran as a long-term regional threat. The recent signing of a contract with the US to purchase F-15 fighter jets for US$12 billion21 should not be interpreted only from the perspective of the current crisis, but also with respect to Qatar’s northern neighbour.

Conclusions

Within the framework of the domestic constraints and external challenges described above, it appears unlikely that President Rohani will be able to exercise a more moderate foreign policy than that which characterised his first term. If Rohani has made clear his intention of continuing on the path of moderation and dialogue, certain domestic and foreign challenges will continue to place constraints on his administration over the next four years. On the domestic front, the economic weight and political influence of the Revolutionary Guard will limit the President’s capacity to implement the reforms needed to reactivate the economy, to make the banking system more transparent and to implement a tax system which could lessen the state’s dependence on the fluctuating price of oil. The consensus politics which Rohani continually sought during his previous administration will also likely be shed for a more assertive policy and a more reformist cabinet.

The influence of the Pasdaran over the implementation of foreign policy will also constrain Rohani’s chances of achieving any change in the Iranian stance in Syria and Iraq. Nor is there any pressure domestically for such a stance to shift, given that the rhetoric from Saudi Arabia and the US raises the tone of sectarian and strategic confrontation in the Persian Gulf, particularly in the wake of the Teheran terrorist attacks and the ongoing crisis in the GCC, which reveals increasing tensions between all the states in the region.

Luciano Zaccara
Research Assistant Professor in Gulf Politics, Qatar University, Visiting Assistant Professor, Georgetown University in Qatar, and Director of Observatorio Político y Electoral del Mundo Árabe y Musulmán (OPEMAM)


1 The director of the Raisi campaign, Ali Nikzad, claimed that there had been irregularities affecting close to three million votes, and the Secretary of the Guardian Council demanded that the Ministry of the Interior recount the votes. In any case, the Council confirmed the results on 30 May. See: Guardian Council checking complaints by defeated Raeisi y Iran’s Vetting Body Approves Presidential Elections Results.

4 Rohani obtained 57.1% of the vote (or some 23.6 million) compared with only 50.7% (or 18.6 million) in 2013.

5 See L. Zaccara (2016), “¿Quién ha ganado las elecciones iraníes?”, OPEMAM, 3/III/2016.

9 See The Leader installs new members of Expediency Council, The Office of the Supreme Leader.

14 See Press Release: Terrorist Attacks in Tehran, US Department of State.

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<![CDATA[ The shrinking Euro-Mediterranean policy space ]]> http://www.realinstitutoelcano.org/wps/portal/rielcano_en/?WCM_GLOBAL_CONTEXT=/elcano/elcano_in/zonas_in/ari69-2017-escribano-shrinking-euro-mediterranean-policy-space 2017-09-14T02:24:53Z

The transformations that have taken place in the EU’s Mediterranean Neighbourhood have reduced the options for a shrinking Euro-Mediterranean policy.

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Also available the Spanish version: La reducción de espacio de las políticas euro-mediterráneas

Theme

The transformations that have taken place in the EU’s Mediterranean Neighbourhood have reduced the options for a shrinking Euro-Mediterranean policy.

Summary

This analysis addresses changes in the Euro-Mediterranean strategic context and the erosion of the economic incentives built into Euro-Mediterranean policy to deal with such transformation. It also puts the case for a reformulation of Euro-Mediterranean policies, but argues that, rather than pursuing an incremental continuity, the EU should engineer a more radical overhaul of its mechanisms of governance, its instruments and its discourse.

Analysis

There is a growing consensus regarding the calcification of Euro-Mediterranean relations in recent years, whether in the guise of the Union for the Mediterranean (UfM) or the southern dimension of the European Neighbourhood Policy (ENP).1 The transformations that have taken place on the southern shore of the Mediterranean rendered European strategies for the region obsolete years ago, and their inadequacy was already evident before the Arab uprisings broke out in 2011. Moreover, the priority placed on the European neighbourhood by the 2016 EU Global Strategy (EUGS) entails adapting Euro-Mediterranean policies and aligning their instruments to the new strategic context.2 From an economic perspective, it is unclear that a future re-launch of the ENP or a bolstering of the UfM and their respective policy instruments would be enough to provide sufficient economic incentives to foster reforms among the EU’s Mediterranean partners.

This paper argues that the Euro-Mediterranean economic policy space has been shrinking for years owing to the limitations that have restricted the scope and intensity of its application and have curbed expectations regarding its results. This involves an increasingly limited range of policy options amid a fluctuating hierarchy of objectives for European foreign policy towards the Mediterranean. Such a context appears to be inimical to a renewal of Euro-Mediterranean policy that does not consist of adopting incremental measures based on the same approaches (more commercial integration, more cooperation) for a more limited number of Mediterranean countries. However, the fundamental transformations witnessed in the region’s political economy balances require much more than incremental continuation of the existing Euro-Mediterranean policies if they are to regain credibility. The question is how to reverse the decline in the effectiveness of Euro-Mediterranean policies and what type of governance, instruments and narrative the EU should adopt with its neighbours to its immediate south.

This analysis looks first at the change in the strategic Euro-Mediterranean context, subsequently contrasting it with the erosion of Euro-Mediterranean policies over the last decade. It then turns to the way in which both these phenomena lead to a narrowing of the EU’s policy options for the Mediterranean in terms of the political and geographical realms, expectations and narrative-building. The following section sketches out some initial proposals for re-founding Euro-Mediterranean relations, taking the four aspects mentioned above into account. The final section concludes.

The new Euro-Mediterranean context

The global and regional contexts surrounding Euro-Mediterranean relations have changed a great deal since the 1995 Barcelona Declaration, and the EU’s strategic view of the Mediterranean has changed with them. At a global level, it appears that the international liberal order will have to be less ambitious than was expected just a few years ago.3 In Europe, the consequences of this new focus did not take long to emerge, with the geopolitical shift adopted by the EU in the 2016 EUGS, characterised by the strategic reorientation towards a liberal realpolitik, or hybrid, ‘liberal redux’ geopolitics.4

Together with principled pragmatism the EUGS implies there are more modest European ambitions in terms of modelling a global order in the EU’s own image. The promise to pursue an ‘effective multilateralism’ contained in the 2003 European Security Strategy has been watered down into one of maintaining a ‘rules-based global order’, featuring as the last of the EUGS priorities. The importance assigned to security and the European neighbourhood and the reduced emphasis on promoting values mean that the objectives of EU foreign policy now seem to be more restrictive.5

This tendency is by no means new, at least insofar as it applies to the Mediterranean. It has been argued that the Neighbourhood and Euro-Mediterranean policies were reasonably aligned with the 2003 European Security Strategy, a document in which the EU showed itself as a civil and normative power prepared to apply a widely-shared political agenda; by contrast, following the 2011 Arab uprisings and the European financial crisis there is an appreciable lack of EU strategic vision for the Mediterranean and less confidence in its capacity as a transformative power.6 Thus, in the EUGS the meta-narrative of ‘Europeanisation as modernisation’ and of normative European power appears in a much more nuanced way, contrary to the reasoning that had hitherto informed the neighbourhood policy.7

The EUGS does not, however, provide any major developments in the types of economic incentives that would enable reforms on the southern shore of the Mediterranean to be fostered: deep and comprehensive free-trade areas, with the inclusion of agriculture and services and new normative elements; the possibility of creating an ‘economic area’ with certain southern neighbours or broadening the Energy Community; strengthening bonds between societies by means of ‘enhanced mobility’, cultural and educational exchanges and civil society platforms; and the full participation of certain Mediterranean partners in European programmes and agencies.8

Perhaps the only innovation is the insistence on the resilience of neighbouring societies, a somewhat vague concept that spans everything from their capacity to reform themselves to their ability to confront climate change. However, the tensions between principles and interests and the ambiguity inherent in the term erode its potential as a guide to European foreign policy.9 The emphasis on resilience has been interpreted as a pragmatic retreat vis-à-vis democratisation, justified by the failure of all recent interventions and the conviction that it is essentially an endogenous phenomenon.10

A more critical standpoint has warned of the risk of falling into the ‘deceptive comfort’ of the ‘stabilisation versus democratisation’ argument and overlooking the fundamental lessons of the Arab uprisings.11 On the other hand, it has also been argued that resilience is a dynamic concept that should not be confused with a static stability based on the acceptance of authoritarian regimes, while recognising that democracy cannot be pursued with a ‘blind one-size-fits-all approach’.12 Finally, it has been argued that a tailor-made approach based on resilience would involve much greater EU support for countries such as Tunisia, Morocco and Jordan, which could serve as ‘resilient anchors’ for Euro-Mediterranean relations.13 The political debate has economic implications, however, because this is one of the types of support that some of the countries concerned require most urgently.

These tensions are less evident in the realm of climate-change resilience, the other major innovation of the EUGS, than in the political and social realm. But the concept of ‘energy and environmental resilience’ may also prove debatable in its application. Specifically, the narrative of securitisation being used is equally problematic, with the focus on the consequences of climate change and environmental degradation on potential conflicts in the European neighbourhood, strengthened by an explicit comparison with the security sector.14 It has been argued that the securitisation of climate change is not an ideal strategy, given that it may deflect attention from mitigation and adaptation efforts (climate financing, support for energy transition, etc) in order to strengthen security aspects (more resources for controlling borders or intervention in conflicts).15

Having furnished the pragmatism, next come the principles: to ‘encourage energy liberalisation, the development of renewables, better regulation and technical transfers, alongside climate change adaptation and mitigation’.16 Here the problem is the almost total lack of clear of objectives and effective instruments for attaining them in the European neighbourhood, as will become evident in what follows in the case of the Mediterranean. Social resilience also has an economic dimension, but it is scarcely mentioned and nor is it stipulated to what extent the existing mechanisms for managing the economic interdependence with the neighbourhood are consistent with it.

What does seem clear is that achieving the security and resilience targets set by the EUGS, both social and environmental, requires the development of new common capabilities and a substantial reform of the institutional framework of neighbourhood (and Euro-Mediterranean) relations.17 By contrast, what has been witnessed in recent years is a Euro-Mediterranean policy in retreat, not only incapable of securing the objectives set by the EUGS, but also displaying prior symptoms of exhausting the existing instruments, basically the association agreements and, within them, free-trade agreements.

A Euro-Mediterranean policy on the wane

While the southern flank of the Mediterranean has risen in the European hierarchy of priorities and changed its strategic nature, the effectiveness of the regime complex that manages Euro-Mediterranean relations seems to be in retreat. The Barcelona Process, set up by the conference held in that city in 1995, which created a comprehensive structure of association agreements with political, economic and social dimensions, went into decline for various reasons, both political and economic, analysis of which exceeds the scope of this section. Ranging from the deterioration in the conflict between Israel and Palestine to the inability to include agriculture in the free trade agreements, including the failure to make headway in the political dimension, the Euro-Mediterranean Association seemed to reach its natural limits a decade after its creation.

As recently pointed out, however, the EU never committed itself to a full deployment of all the economic incentives at its disposal.18 The new trade agreements being negotiated are now termed deep and comprehensive precisely because their forerunners were not, and are still not 20 years after being conceived. The 2003 European Neighbourhood Policy (ENP) was designed to complete the Euro-Mediterranean Association with a Europeanising normative focus befitting the vision that the EU had at that time of its own transformative effects.19

Despite its offer of participation in the single European market in exchange for normative convergence, the new policy passed more or less unnoticed and received a relatively frosty welcome among the Mediterranean partners, who detected in it a degree of normative expansionism. The offer of access to the single European market proved to be an excessively distant goal that could not be crystallised in short-term incentives. Countries such as Algeria even refused to draw up a Neighbourhood Action Plan, and the preferential arrangements, such as offers of advanced status, under this or other names, have proved to be ineffective in catalysing reforms to the extent that had been hoped. After the uprisings of 2011 there was a renewal of the ENP that again failed to extricate it from its ‘identity crisis’.20 The increasing complexity of the ‘South’ has clearly overwhelmed, at least since the Arab springs, the Euro-Mediterranean and neighbourhood institutional frameworks.21

The year 2008 saw the creation of the Union for the Mediterranean (UfM). Its narrative, based on major projects, replaced the Barcelona Conference’s discourse of shared peace and prosperity at possibly the least auspicious time. The founding of the UfM elicited a curious retrospective nostalgia for the Barcelona process: its greatest critics were precisely the first to miss its absence. It is true that the UfM was built on what it inherited from the Barcelona process and its framework of Association Agreements, including free trade areas between the Mediterranean partner countries and the EU. Indeed, it may be asked what added value the UpM has provided: its projects never succeeded in taking off and it lacks the necessary attributes to incentivise the economic reforms needed in many of the countries on the southern flank of the Mediterranean.22

Despite all their problems, what have worked best in Euro-Mediterranean economic relations have been the foundations laid down at the Barcelona conference, essentially the free trade agreements and economic and financial cooperation. In reality, the UfM did not have to wait long to face the challenge to Euro-Mediterranean policy implicit in the Arab uprisings of 2011. It was a tough test, and the UfM soon exhibited its irrelevance, given that none of the proposed projects (ranging from an abandoned Mediterranean Solar Plan to a scarcely necessary Euro-Mediterranean university) addressed the causes underlying the uprisings, offering only responses that tinkered with the problem and technical projects far removed from the demands of southern societies for greater participation, redistribution and transparency.

In short, it is a case of an initiative that sought to depoliticise Euro-Mediterranean relations precisely at the time that more political capital on the part of the EU and its member states was needed, and ended up creating a narrative that was unconnected to the political and social dimensions of the region’s development. Although built on the relationship between equals forged in Barcelona, the emphasis changed from a political discourse to one based on politically innocuous and, in some cases, economically unviable projects.

While the UfM languished, the building blocks of the Barcelona process started to show signs of fatigue. For example, the free trade areas established with almost all the countries along the Mediterranean’s southern flank were perceived by their populations as yet another strategy imposed by their elites to capture the rents of liberalisation.23 The liberalising enthusiasm of dictators such as Ben Ali and Mubarak, which was merely rhetorical when not extractive, contaminated the processes of trade liberalisation for many years. Nowadays, in both Tunisia and Egypt, there is strong opposition to continuing deepening Euro-Mediterranean free trade, and it is openly debated whether it has had any positive impact on the population; worse still, access to the European markets and financing is perceived as a perk exclusively for the elites and a major source of inequality of opportunities.24

Algeria, which is outside the Neighbourhood Policy, has simply halted the dismantling of its tariff regime and is seeking to renegotiate the free-trade part of its association agreement. Morocco has been dragging its feet for years on the new deep and comprehensive free-trade deal on the grounds that it is asymmetrical, and the recent decision by the EU Court of Justice to exclude the Western Sahara from the fisheries and agriculture free-trade agreement with the EU runs the risk of seriously undermining the ongoing negotiations.

More regionally-focused alternative frameworks, such as the 5+5 initiative comprising the 10 countries on the western shores of the Mediterranean, lack sufficient traction. It is true that by limiting the geographical area of cooperation this in initiative is assisted by a greater convergence of preferences and greater understanding of mutual interests. But the 5+5 initiative could prove to be little more than a platform for dialogue and, if it wishes, socialisation; the importance of which, given the delicate state of North Africa, should not be underestimated. The problem is that it lacks the economic mechanisms to offer commercial incentives, all of which are in the hands of the EU’s trade policy. It is true that there is more room for manoeuvre in the area of bilateral development aid, but it is obvious that the EU’s power of attraction is much greater than all the Union’s southern member states combined.

Something similar is happening with the projects managed by the UfM: although it has limited soft power for fostering reforms among its partners on the Mediterranean’s southern shore, the institutional framework and the political heft at its command scarcely leave room for other alternatives. In short, almost 10 years after the replacement of the Barcelona process’s cooperative narrative by the technicalities of projects, it seems increasingly clear that nothing has been gained by the change and that the UfM has proved unequal to the task of re-launching the Euro-Mediterranean project or engaging in the strategic reorientation called for by the priority placed on the region by the new vision of European foreign policy.

The shrinking of the Euro-Mediterranean policy space

As has already been pointed out, circumstances both in Europe and along the southern flank of the Mediterranean have changed, and Europe’s new foreign context requires the discourse to be updated. A growing sense of Euro-Mediterranean fatigue has set in on both sides: the EU has become frustrated at not reaping the rewards of its financial cooperation, while some of its Mediterranean partners continue fantasising about a Marshall Plan for the region, overlooking Europe’s new economic realities; as far as trade is concerned, the Mediterranean partners want to re-balance a relationship that they consider to be skewed, while European societies’ appetite for new free trade agreements is clearly in decline. The shrinking nature of the space for Euro-Mediterranean policies is evident in (1) the limitation of their expectations, (2) the ever-shrinking number of partners along the southern flank where such policies are perceived as relevant and (3) the growing competition with new regional and external actors.

European policies towards its neighbours, including to the south, already suffered from a crisis of expectations before the EUGS had a chance to undercut them.25 The perceived gulf between the EU’s potential and the yields of its policies have had an impact on its credibility. The clearest contrast between Europe’s potential to propel the economies on its southern flank and the measures actually taken is provided by the case of Tunisia. Amid the serious difficulties that the Tunisian economy was undergoing, the European Commission decided to raise the import quota for Tunisian olive oil, increasing it in September 2015 by 35,000 tonnes until 2017, in addition to the 56,700 tonnes already established by the Tunisia-EU association agreement. It is striking that after so many years negotiating and signing trade deals, facing a situation of serious economic crisis and only on an exceptional and temporary basis, the European solution should consist of raising an import quota by 60% over the course of two years and, in passing, simplifying its management by removing monthly quotas.26

This type of restricted access to European agricultural markets should have been abolished years ago and replaced by an approach based on the integration of the value chain in the food industry. Indeed, the shared peace and prosperity narrative can no longer be founded solely on trade preferences and financial assistance for the creation of institutional capabilities. If there are hurdles to be overcome in signing a free trade deal with Canada, the difficulties in achieving something similar with countries such as Sisi’s Egypt may readily be imagined. The same applies to Morocco, however, where the EU Court of Justice’s recent verdict excluding Western Sahara from the agricultural and fisheries deal could catalyse European political and civil society opposition to future agreements, such as the conclusion of the new deep and comprehensive free trade deal and the renewal of the fishing agreement.

Meanwhile, Morocco’s integration into Europe’s industrial (and food) value chains continues to grow. An ever-greater share of EU-Morocco (and Spain-Morocco) trade is intra-industry, and even intra-firm, in nature. The bilateral trade in services and the foreign investment needed to develop these Euro-Moroccan industrial networks are also continuing to expand. It is years since Euro-Moroccan trade shed the inter-industrial ‘tomatoes in exchange for manufactured goods’ pattern that remains alive in the collective European imagination. Such a strengthening of productive integration calls for an urgent extension of free trade deals, starting with the incorporation of agriculture and services, including professional services, as well as the adoption of European trade standards to obtain full access to the EU’s internal market.27

But in the new context and with the accumulated delays perhaps even this will not prove enough. It is possible that by this stage the major incentives that have been requested for decades, such as the full inclusion of agriculture in the free trade agreements and greater (though always limited) mobility for workers, have been rendered obsolete by the greater demands of certain societies along the southern flank, such as those of Tunisia and Morocco.

Apart from trade, other economic aspects of Euro-Mediterranean relations are also undergoing a period characterised by reduced policy space. For example, the failure of the Mediterranean Solar Plan, the UfM’s hallmark project, creates a rather discouraging precedent regarding its ability to manage the Mediterranean’s climate, energy and environmental resilience.28 It is difficult to envisage how the UfM is going to be able to manage an agenda that includes the liberalisation of the North African countries’ energy sector, the convergence of their regulations with European norms, the energy transition and climate change adaptation and mitigation.

Rather than its security-focused discourse, the EU should be developing an energy narrative that is more positive for its Mediterranean neighbours and better-aligned with its principles: replacing the emphasis on dependence with one of managing interdependence, progressing from the energy-rentier state pairing to another of energy for development, and addressing the problems of governance and transparency in the management of energy resources and the redistribution of their income among the population.29 The shrinking space has also been noted outside the economic realm, for example in the foundational dossier of the Barcelona process for supporting civil society.30

The waning of Euro-Mediterranean policies is also evident in its geographical space. The situation in Syria and Libya makes it very difficult for economic incentives to gain any traction whatsoever. In Egypt, the pragmatism with principles doctrine places (or should place) a ceiling on the economic incentives the EU can provide to President Sisi. In Algeria, the EU has not managed to find incentives that facilitate the formation of alliances for reform. The lack of Algerian interest in continuing to liberalise trade leaves the EU devoid of its traditional incentives, while being unable to offer an attractive model of energy interdependence based on access to the European market for Algerian gas to incentivise economic reforms, particularly energy reforms.31

In the end, the EU is left with the three anchors of Jordan, Morocco and Tunisia, more by default than by strategic decision. It is not as though partners are deliberately chosen with an impact on regional stability: it is simply that not many eligible countries are left where the traditional economic incentives of Euro-Mediterranean policies remain workable; and as has been pointed out, the pool of candidates is shrinking. The problem is that the new geopolitical situation has raised the level of European strategic preoccupation with the South, conceived as the ‘inner ring’ of the southern European neighbourhood, without any careful analysis being conducted of its specificities and interrelations, a basic prerequisite for designing strategies, distributing responsibilities and being able to make informed policy decisions.32

The very geopolitical conceptualisation of the Mediterranean is at stake. In contrast to the essentially hybrid concept of an inner ring of friends governed by Europeanised norms, architectures more in keeping with the new Mediterranean reality are emerging. Kausch characterises the regional system of North Africa and the Middle East in the wake of the 2011 Arab uprisings as ‘competitive multipolarity’, in which various regional and outside actors vie in varying alliances, something that introduces superimposed and sometimes contradictory geopolitical dynamics.33 Other authors suggest a structure of ‘regional heteropolarity’ spreading beyond states to include non-state actors.34 The presence of new actors has underpinned the EU shift towards liberal realism in its southern neighbourhood and restricted the room for manoeuvre in Euro-Mediterranean policy even more.

Rearranging options

The aforementioned limitations manifest themselves in a reduced range of options in Euro-Mediterranean policy. If trade deals and economic cooperation shed some of their attractiveness and capacity for incentivising reforms, the EU’s economic policies among its southern neighbours lose much of their effectiveness. 20 years of low-grade free trade, without full access to the European market for agriculture, services or energy, and lacking even a bare minimum of professional mobility, have ended up eroding the credibility and the transformative potential of Euro-Mediterranean policy.

As the reduction of the Euro-Mediterranean policy space coincides with an increase in the region’s strategic importance, the question becomes one of how to structure a new policy befitting the objectives being sought: a stable and resilient neighbourhood. But one year after the EUGS, calls to revitalise Europe’s policies towards its southern neighbours continue to be conspicuous by their absence. As pointed out in earlier sections, the full utilisation of the economic incentives at the EU’s disposal may no longer be enough, although it continues being the first step towards restoring the credibility of Euro-Mediterranean policies. It is not enough therefore to pursue an incremental approach, with free trade deals characterised by more and more adjectives and sectors; instead, what need to be adopted are new structures of governance, new instruments and, perhaps most importantly, a new narrative that bolsters the attractiveness of the EU on the southern shore of the Mediterranean.

As far as governance is concerned, Kausch has suggested that in the new age of ‘competitive multipolarity’ in the region the best thing for the EU would be to project its Euro-Mediterranean policy as a cooperative regional order based on flexible integration. Such flexible integration would include the possibility of participating in ‘opt-in policy communities’ for countries such as Tunisia and Morocco, creating a lesser prize than the prospects of enlargement in the East but greater than that being offered by the Euro-Mediterranean and neighbourhood policies.35

This model also seems to be in line with the EUGS and proposals such as widening the Energy Community to the aforementioned countries and getting them involved in other European programmes. This entails the deployment of new instruments, such as participation in the European energy market or adhesion to an economic area akin to the European Economic Area. Although it would be important to establish at least which policy communities the EU considers open to such countries, the path of integration is also subject to limitations. These include the growing scepticism, mentioned already, towards more profound free trade agreements on both sides of the Mediterranean and equally political issues, albeit with a technical component, such as the impossibility of offering Morocco entry into the EU Customs Union owing to its desire to maintain an autonomous trade policy (ie, its free trade deal with the US and greater tariff protection against third countries).

Lastly, there is a certain consensus that Europe’s narrative on the Mediterranean requires much more than rearrangement. It has been argued that the EU’s discourse on the Mediterranean since the 2003 Neighbourhood Policy has tended towards an emphasis on security and de-politicisation, mirroring the differences between Europe and its southern neighbours. It is thus suggested that the Euro-Mediterranean discourse be revised before addressing changes in the way its policies are designed, whether to develop existing policies or introduce new ones.36 The same argument regarding the need to renew the discourse has been made for the energy sector and with relations with Morocco and Tunisia.37

Conclusions

Demands for a recasting of Euro-Mediterranean policy need to start from the premise that the global, European and Mediterranean context is very different to the one that pertained in 1995 (the Barcelona Process), 2003 (the Neighbourhood Policy) and 2008 (UfM). This comes at the same time as the new strategic demand contained in the EUGS to prioritise the European neighbourhood, which in turn requires renewing the Euro-Mediterranean project. If it is to recover the impetus of its policies towards the Mediterranean, the EU cannot settle for another shake-up of the Barcelona process, their evolution under the UfM umbrella or reviews of the Neighbourhood Policy. For the purposes of renewal it will not do simply to push through and intensify some of the positive elements of past and/or present Euro-Mediterranean policies; rather it will be necessary to develop a new European project for the Mediterranean that is attractive enough to be capable of anchoring the expectations of its southern neighbours.

In a European context of strategic pragmatism and limited ambitions, before embarking on wholesale expansion and grand pan-regional designs, it may be helpful to reflect on the three elements that were emphasised earlier in this document: (1) regional governance that is more flexible but capable of realising all the potential of the economic incentives at the EU’s disposal and incorporating new areas and mechanisms of integration; (2) concentrating on a smaller number of countries with greater propensity towards reforms, but not abandoning those such as Algeria and Egypt where the political economy balances are especially complex; and (3) changing the Euro-Mediterranean narrative to make it more inclusive and attractive, especially for the population as a whole and not only for the elites.

In terms of Euro-Mediterranean economic policy, this entails abandoning low-grade free trade and opening up new opportunities of integrating into the European market. The participation of countries such as Morocco in European industrial networks demonstrates the potential for Euro-Mediterranean productive integration. As well as continuing to develop intra-industry and intra-firm trade, the new Euro-Mediterranean trade deals should ensure that value chains in the areas of agriculture, agribusiness and services are incorporated once and for all. Another field with the potential for opening up new opportunities is that of energy, both conventional and renewable. Cooperation in the area of renewable energy, sustainability and the fight against climate change, in particular, constitutes one of the vectors where the EU has the potential to construct a differentiating discourse in line with the requisites of a cooperative regional order.

Gonzalo Escribano
Director of the Energy Programme at the Elcano Royal Institute
| @g_escribano


1 R. Youngs (2015): ‘Introduction’, in R. Youngs (Ed.), Twenty Years of Euro-Mediterranean Relations, Routledge Studies in Mediterranean Politics.

2 For the purposes of this document the term ‘Euro-Mediterranean policies’ encompasses all EU policies towards Mediterranean countries, the Euro-Mediterranean Association, the new projects managed by the UfM and the Mediterranean dimension of the European Neighbourhood Policy.

3 C. Powell (2017), ‘¿Tiene futuro el orden liberal internacional?’, ARI, nr 56/2017, Elcano Royal Institute.

4 See S. Biscop (2016), ‘The EU Global Strategy: realpolitik with European Characteristics’, Egmont Security Policy Brief, nr 75, June; and R. Youngs (2017), ‘Is “Hybrid Geopolitics” the next EU Foreign Policy doctrine?’, LSE EUROPP blog, 19/VI/2017.

5 H. Dijkstra (2016), ‘One-and-a-half cheers for the EU Global Strategy’, Contemporary Security Policy, vol. 37, nr 3, p. 369-373.

6 R. Aliboni (2013), ‘The European Global Strategy and the Mediterranean’, IEMed Focus, nr 105. The article refers to a document drawn up by four European think tanks, including the Elcano Royal Institute, not to the Strategy endorsed in 2016.

7 G. Escribano (2005), ‘Europeanisation without Europe? A critical reflection on the Neighbourhood Policy for the Mediterranean’, Working Paper, nr 23/2005, Elcano Royal Institute.

9 A.E. Juncos (2017), ‘Resilience as the new EU Foreign Policy paradigm: a pragmatist turn?’, European Security, vol. 26, nr 1, p. 1-18.

10 S. Biscop (2017), ‘A strategy for Europe’s neighbourhood: keep resilient and carry on?’, ARI, nr 4/2017, Elcano Royal Institute.

11 Y. El-Shimy & A. Dworkin (2017), ‘Egypt on the edge: how Europe can avoid another crisis in Egypt’, ECFR Policy Brief, 14/VI/2017, p. 11.

12 E. Soler & N. Tocci (2016), ‘Implications of the EU Global Strategy for the Middle East and North Africa’, Future Notes, nr 1, July, Menara Project, p. 3.

13 K. Kausch (2016), ‘Resilient anchors in the Southern Mediterranean’, Carnegie Europe, 30/IX/2016.

14 ‘Mirroring security sector reform efforts, energy and environmental sector reform policies can assist partner countries along a path of energy transition and climate action’, EUGS, p. 27.

15 G. Escribano (2017), ‘Energías renovables y renovación de la geopolítica’, in Energía y Geoestrategia 2017, IEEE & Enerclub, Madrid.

16 EUGS, p. 27.

17 M.E. Smith (2016), ‘Implementing the Global Strategy where it matters most: the EU’s credibility deficit and the European neighbourhood’, Contemporary Security Policy, vol. 37, nr 3, p. 446-460.

18 K. Kausch, 2016, op. cit.

19 Escribano, 2005, op. cit.

20 R. Balfour (2015), ‘The European Neighbourhood Policy’s identity crisis’, IEMed Euromed Survey 2015.

21 H. Amirah-Fernández & T. Behr (2013), ‘The missing spring in the EU’s Mediterranean policies’, Think Global Act European, nr 1/2013, March.

22 G. Escribano (2017), ‘Casi diez años sin proceso de Barcelona’, Boletín de Economía y Negociosde Casa Árabe, June-July.

23 G. Escribano (2015), ‘The Political Economy of North African Political Transitions’, in Zoubir & White (Eds.), North African Politics. Change and Continuity, Routledge, Abingdon/New York, p. 3-17.

24 W. Haddouk (2016), ‘Letter from Tunis’, Judy Dempsey’s Strategic Europe, Carnegie Europe, 5/II/2016.

25 Balfour, op. cit.

26 G. Escribano (2016), ‘Túnez se estanca en la economía’, Working Paper, nr 10/2016, Elcano Royal Institute.

27 G. Escribano & C. Sánchez (2015), ‘Por la renovación del discurso hispano-marroquí’, Política Exterior, nr 166, p. 74-85.

28 G. Escribano (2017), ‘RES in the hood and the shrinking Mediterranean solar plan’, in I. Solorio & H. Jörgens (Eds.), A Guide to the EU Renewable Energy Policy, Edward Elgar, Cheltenham, p. 265-288.

29 G. Escribano (2015), “Towards a Mediterranean Energy Community: no roadmap without a narrative’, in Rubino, Otzurk & Lenziy Costa (Eds.), Regulation and Investments in Energy Markets. Solutions for the Mediterranean, Academic Press, Elsevier, p. 117-130.

30 R. Youngs & A. Echagüe (2017), ‘Shrinking space for civil society: the EU response’, European Parliament, Directorate-General for External Policies, Policy Department.

31 G. Escribano (2016), ‘The impact of low oil prices on Algeria’, Report, Center for Global Energy Policy, Columbia University, September.

32 L. Simón & V. Pertusot (2017), ‘Making sense of Europe’s Southern Neighbourhood: main geopolitical and security parameters’, ARI, nr 10/2017, Elcano Royal Institute.

33 K. Kausch (2015), ‘Competitive multipolarity in the Middle East’, The International Spectator, vol. 50, nr 3, p. 1-15.

34 Eduard Soler, S. Colombo, L. Kamel & J. Quero (Eds.) (2016), ‘Re-conceptualizing orders in the MENA region, the analytical framework of the MENARA Project’, MENARA Methodology and Concept Papers, nr 1, November.

35 Kausch (2016), op. cit.

36 Münevver Cebeci & Tobias Schumacher (2017), ‘The EU’s Constructions of the Mediterranean (2003-2017)’, MEDRESET, Working Paper nr 3, April.

37 Escribano (2015), op. cit.; Escribano (2016), op. cit.; and Escribano & Sánchez (2015), op. cit.

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<![CDATA[ Algeria: reform before demands turn revolutionary ]]> http://www.realinstitutoelcano.org/wps/portal/rielcano_en/?WCM_GLOBAL_CONTEXT=/elcano/elcano_in/zonas_in/ari37-2017-ghanemyazbeck-algeria-reform-before-demands-turn-revolutionary 2017-04-28T12:12:30Z

In a context of social and economic distress, Algeria is no longer able to maintain its current approach to the welfare state while avoiding deep structural reforms.

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Also available in Spanish: Argelia: reformar antes de que las demandas se vuelvan revolucionarias

Theme

In a context of social and economic distress, Algeria is no longer able to maintain its current approach to the welfare state while avoiding deep structural reforms.

Summary

The challenges facing Algeria today are numerous. Yet the major problems are socio-economic and closely related to the massive drop in oil revenues. The population’s habits and expectations of social benefits through a generous yet ineffective subsidy system are clashing with an ever decreasing budget. The older generation’s commitment to the current system’s ‘historical legitimacy’ might have a hard time containing the tensions emerging amongst the population, especially disenchanted youth. Algeria has yet to adopt a comprehensive set of socio-economic reforms and its old rulers have to commit to generational renewal and to power sharing before demands start becoming revolutionary.

Analysis

On 4 May 2017 Algerians are called upon to vote in legislative elections. The last legislative elections took place in 2012, immediately after the wave of uprisings that shook the Middle East and North Africa (MENA) region. Yet Algerians, participating at an official rate of 43.14%, decided to vote for the nationalist camp represented by the ruling party, the National Liberation Front (FLN), and the National Rally for Democracy (RND). The FLN won a majority of seats in Parliament, comprising 45% of the representative body, translating to 208 out of 462 seats. The results are partly explained by the regime’s capacity to buy social peace and the loyalty of interest groups by way of oil revenues.

The forthcoming legislative elections will take place in a different climate marked principally by political uncertainty, a declining economy and social tensions. Many specialists see the succession of President Abdelaziz Bouteflika as the breaking point for Algeria and speculate that it might lead to the country’s implosion and to civil war. Despite the succession issue, the Algerian regime is unlikely to collapse. The political-military elite does not want to antagonise society and will make sure to keep violence at bay by organising a smooth and peaceful transition with a more representative and consensual government and president. Rather, what might be a bigger risk is not the succession issue but the regime’s inability to maintain its ‘necessary generosity’1 because of a long-term decline in oil revenues. Will the current demonstrations and riots shaking the country on almost a daily basis remain ‘non-revolutionary’2 when protesters’ demands continue to be unmet?

The end of oil euphoria

One of the biggest challenges facing the Algerian regime is on the economic level. The plunge in oil prices since mid-2014 has considerably strained the Algerian economy that is heavily dependent on hydrocarbons (95% of the country’s export earnings). During the decade of high oil prices, the revenues allowed the regime to sustain a stable economy and to increase subsidies. In addition, the State amassed a substantial amount of foreign currency reserves, being the world’s eighth-largest until 2013.

Unfortunately, during that decade, the regime missed the opportunity to diversify its economy and the drop in oil prices in mid-2014 impacted the country’s growth, budget and exports. In short, Algeria is running low. According to the latest official figures, oil revenues have fallen from US$60.3 billion in 2014 to US$35.72 billion in 2015 to US$27.5 billion in 2016. The country experienced a trade deficit of US$17.84 billion in 2016, compared with US$13.71 billion in 2015. In order to fund its budget and to be able to continue providing subsidies, the government relied on its foreign currency reserves. As a result, they declined from US$194 billion in December 2013, to US$179 billion in 2014, to US$143 billion by 2015. According to the Governor of the Banque d’Algérie, Mohamed Loukal, reserves were at US$114.1 billion by the end of 2016. Loukal explained that, despite the decline, foreign exchange reserves remain above the US$100 billion mark and that the Algerian government can maintain it at that level for 2017-18. This goal could be reached if oil prices stabilise. A promising step in this direction came from the Vienna Agreement in November 2016, in which 14 OPEC countries agreed to freeze production at 32.5 million oil barrels/day, which made the price per barrel rise by 8% to US$50. Yet this will neither be enough to revive the energy sector nor to maintain spending at the usual level. With subsidies that cost 13.6% of GDP in 2015, the State needs a barrel at US$96.

In response, the government was forced to cut expenditure by 14% in the 2017 budget, compared with 9% in 2016, and adopted a new set of measures. For instance, fuel prices, VAT, electricity and vehicle registration tax were raised to 36%. More recently, the government decided to ‘rationalise’ its imports by applying new import licences, reducing the imports of vehicles and cement, and halting citrus fruit imports. In addition, several construction and transport infrastructure projects were put on hold or postponed, followed by a hiring freeze in the public sector, affecting some 41,000 jobs. The government announced in late 2015 that it was considering the suppression of one million positions in the public sector, which will have a 40% impact on the country’s 2.5 million civil servants.

Other government actions were to open up the business sector and further measures since 2016 to boost the private sector. As an example, private investors (Algerian citizens or companies) are now allowed to purchase up to 66% ownership in a State-owned company, although sales must be approved by the council of ministers. In addition, measures have been taken to facilitate investment and establish businesses. For instance, a new user-friendly online information portal dedicated to business creation/registration has been created. Several requirements such as obtaining managers’ criminal records or having a minimum capital for business incorporation have been eliminated. It is no longer necessary for a foreign investor to obtain the approval of the National Investment Council (CNI) before beginning a project. Potential investors can be in direct contact with the relevant Ministry to register and set up their businesses.

The State has taken these important first steps but the business environment remains unfavourable, with a burdensome bureaucracy, complex regulations and time-consuming procedures. According to the World Bank’s Doing Business 2017 report, when it comes to the facility of starting a business, Algeria ranked 142 out of 190 economies in 2016 while its neighbour Morocco ranked 40th. Opening a business in Algeria involves 12 procedures, takes 20 days and costs 11.1% of income per capita, while in Morocco it requires four procedures, takes 9.5 days and costs 7.9% of income per capita. As for the subsidy system, while the government has been talking about cutting subsidies, the steps it has taken towards this end are hesitant. Generalised subsidies are not only a burden to the State but they are also regressive as they benefit the rich more than the poor. As for the diversification of the economy, it remains more rhetorical than a reality. Bouteflika’s policies are a continuation of those adopted by past governments, in which rent was at the heart of social and economic development with a strong interventionist State.

A social life punctuated by demonstrations

Despite the welfare system in Algeria that subsidises a wide range of products from food, fuel, electricity, natural gas and water, to housing, transport, education and interest rates, social dissatisfaction and tensions are palpable throughout the country. Demonstrations have been spreading to new localities, reaching southern areas that were previously known to be calm. The majority of these protests are not political but social, denouncing the high costs of living and food. They are also demanding affordable water, gas and electricity, in addition to social housing, increased employment opportunities and improved work and school conditions (better salaries, increased security and more days off). Collective mobilisation takes different forms, ranging from peaceful pubic marches or sit-ins to road blocking, occupying public squares, blocking access, attacking public administrations, police stations and private companies, or initiating hunger strikes.

In 2015, the General Directorate of National Police (DGSN) registered 6,188 protests during the first six months of the year, compared with 3,866 events in the same period of 2014. This is a 62% increase and an average of 35 protests per day. Most of the time, protests are against the rising cost of living or demands for social housing. For instance, 974 of the 6,188 protests in 2015 were conducted by citizens to request social housing –a major social problem–. The housing programmes initiated by President Bouteflika in 1999 had an overall positive impact. Between 1999 and 2004 some 810,000 housing units were built, 912,326 between 2005 and 2009. Despite the State’s efforts, from 2010 to 2014 only 693,000 units of the 1.2 million planned were produced. In 2015 the Ministry of Housing and Urban Development reported that there was 720,000-unit deficit. This is partly due to lengthy bureaucracy procedures, the mismanagement of funds and corruption and a growing population. Other demonstrations and protests denounce high prices and ‘the ever rising costs of quotidian expenses’. In Algeria 5.5% of the population is believed to live in poverty and 10% –4 million Algerians– are at risk of slipping into a state of poverty.

Most of the time, people protest spontaneously without a political figure behind them and ask the State for more equitable treatment and for policies of fairer redistribution of government services. It is a parental paradigm where the State is seen as ‘the big man’, the ‘symbolic father’ who is supposed to ‘fulfil its responsibilities’ to better serve its citizens or to be more egalitarian by removing, for instance, a law seen as prejudicial. This was the case with the famous slogan ‘No to the finance Law’ that led to violent riots in January 2017. Since the nationalisation of natural resources under Boumediene in 1971, the population envisages its relationship with the State according to an implicit agreement of exchange: it gave its oil to the State and expects full compensation. The State is permitted to freely dispose of oil, among other resources, provided that it ensures the redistribution of its revenues in the form of political wages and other social benefits. In short, the State was and remains, according to this paradigm, the provider of basic social services for the population. Refusing or being unable to deliver on this promise is seen almost as a form of ‘parental neglect’, thus provoking angered reactions and eventually violence.3 Through these forms of mobilisation, Algerians are tacitly asking for their share of the oil rent. A request that is, according to many, more legitimate than ever since several cases of corruption and nepotism involving high-ranking officials were revealed by the national media. As explained by Dahmen, a 32-year old restaurant owner in Algiers:

‘We are not asking for much: we want jobs, houses, food, a decent life and dignity […]. This country is very rich, they take the money of the oil, so do we! It is normal to give us our share. We want our share! It is our soil too and we deserve a portion’ [Algiers, December 2016].

The feeling is that the benefits and privileges of oil revenues are given to only a small clique of officials and their networks, which are also monopolising the business sector. Hence, the ordinary citizen, referred to as el zawali,

‘… is left only with crumbs as everything goes in their pockets. They just don’t care about us, about the people. […] We need them to be fair and take their responsibilities’ [Lamia, a 33 year-old owner of a beauty salon in Draria, a suburb of Algiers, December 2013].

According to the Arab Survey Barometer, 40.8% of Algerian respondents think that the government and political leaders do not care about ordinary people, compared with 7.4% who strongly think they do care. Up to 18.2% agreed with the statement that officials cared about them while 33.7% disagreed strongly. Frustration over corruption has strengthened this feeling of distrust towards the authorities. Indeed, corruption is a major problem in Algeria. According to Transparency International’s 2016 Corruption Perception Index, Algeria ranks 108th out of 176 countries worldwide and 10th out of 20 in the MENA region.

To fight corruption, in 2010 the State 2010 the National Organisation for the Prevention and Fight against Corruption, as stipulated in the 2006 anti-corruption Law. In 2013 the Central Office for the Suppression of Corruption (OCRC) was established to investigate and bring to trial any form of bribery in Algeria. The same year, a new regulation gave more power to the Financial Intelligence Unit to report illegal monetary transactions and terrorist funding. To show the extent of its will to tackle corruption issues, the State prosecuted several high-profile figures of the State-owned oil company, Sonatrach. The Sonatrach 1, 2, 3, 4 cases made the headlines for months. Numerous personalities, including the CEO, Mohamed Meziane, his two sons, the top management officials and the former Minister of Energy and Mines, Chakib Khelil, have been accused of receiving bribes to allow large foreign companies to win multi-billion dollar contracts. Several people have been given prison sentences ranging from 18 months to six years as well as fines of up to US$45,000. Another major corruption scandal that dominated the news for months was the East-West highway. Twenty three defendants, including foreign companies (Canadian, Chinese, Japanese and Portuguese), were put on trial for embezzlement of public funds, criminal association and money laundering. The sentences ranged from one year to 10 years in prison and up to US$70,000 in fines. Nonetheless, the sentences and fines ruined the State’s credibility in its so-called fight against corruption and showed the extent of political interference in the judicial system. As a result, the lack of a genuine political will, the absence of transparency and bloated bureaucracies continue to contribute to corruption.

Being young and ‘navigating the system’

The Algerian regime is facing another major challenge: youth employment. This is aggravated by the demographic complications of a birth rate standing at 26.03%, with one million births in 2015. According to a 2016 World Bank report, unemployment stood at 11.2% in 2015 and there was no change identified in the first half of 2016. Out of a population of 39,666,519, around 26% is aged between 15 and 29 years, accounting for a considerable percentage of the country’s population.

Professional opportunities are obstructed by high level and widespread corruption, as well as by hogra (injustice) and ma’rifa (the use of connections, ie, nepotism). Most Algerians with whom this author discussed agree on these terms for describing the system and the lack of professional opportunities. According to the National Office of Statistics (ONS), young individuals between the ages of 15 and 24 are the first victims of long-term unemployment, accounting for 38.8% of all unemployed people. Having a diploma is no longer seen as a guarantee for employment in the labour market and Algerian youth lack confidence in the educational system. In Algiers, a common phrase used among many students and graduates is that the ‘university is training the unemployed’. In fact, 32% of young graduates are unemployed.

Employment policies put in place since the late 1980s have been strengthened over time through the reorganisation of the National Employment Agency (ANEM) and the creation of four new agencies: The National Unemployment Insurance Fund (NACC), the Social Development Agency (ADS), the National Agency for Microcredit Management (ANGEM) and the National Youth Employment Support Agency (ANSEJ). According to the ANSEJ’s General Director, Mourad Zemali, more than 23,676 micro-enterprises were created in 2015, compared with 40,800 in 2014, throughout the nation. The State injected some US$2.66 billion into this programme as of March 2016. Moreover, tax exemptions granted to these projects cost the State US$136 billion. Despite these efforts, there is a lack of a comprehensive long-term youth policy in the country as well as a deficiency across Ministry initiatives. President Bouteflika himself recognised in a speech in 2007 that ‘the State needs to improve its youth policy [...] How, indeed, do we give our young people confidence in their own abilities and the institutions of their country?’.

In addition, the young do not trust political institutions such as the government, parliament, political parties, etc. According to the Arab Barometer Survey, 46.2% of the Algerian respondents said that they had no trust at all in Parliament and 33.8% had no trust at all in the judicial system. What deepens this lack of trust is youth exclusion from the political arena and the little or no possibility of participating in decision-making, even at the local level. As a result, political participation is low: only 45.2% of the latest Arab Barometer Survey respondents voted in the previous national elections. Abstention is not a sign of passiveness but rather a militant act aimed at showing their discontent with political institutions. Associations are seen as ineffective and ‘useless’ because of their inability to channel people’s grievances, to facilitate the relationship between citizens and the authorities and thus fall short of accomplishing their stated goals. This was reflected by the views of several young Algerians with whom this author discussed the issue. Among them Raouf, aged 27, a security guard in an embassy, who commented:

Wech eddir [what do you want to do]? And even if you want, ykhellouk [will they let you]? Of course not. You can’t do anything to change the system, you can only navigate the system to change your own life and the lives of your family members […] There are thousands of associations and yet they are useless […] and the MPs are all corrupt. Do you know how much they earn per month for basically staying on a chair in that parliament? It is an indecent amount of money! […] Etkel ghir a’la rouhek [You can only count on yourself]. For instance in my neighbourhood we clean up the trash ourselves and we do not rely on the local authorities to do anything […] lately, we even made speed bumps alone because if we had waited for them, all our kids would have been killed by crazy drivers by now.’

This lack of trust is also due to a generation gap between the young and the older generation. Indeed, the leaders who fought for the war of independence against the French and who played and continue to play the ‘historical legitimacy’ card to legitimise their grip on power are no longer seen as those mythical figures that no one could criticise. The younger generation is more determined to disapprove their actions and condemn their failures than was the generation of their parents. They refer to them as lekdem (ancient) or périmés (expired or outdated). As stated by a 30-year-old woman interviewed in Algiers last December:

‘Before we used to respect them but today no one does. Yes, they freed the country and so what? What did they do with it? […] look at our President, hein! He was the strong man of the country, he was popular and loved and he was the first one to state three times ‘jili tab djenanou’ [reference to a speech where the president said ‘the time of my generation is over’] and we really respected him for that. He did a lot of good things. He put a roof over my head after years of galère [hassle] and I am grateful […] but now what? He [Bouteflika] is on a wheelchair, half dead and he is still holding on to power. They are all old! The average age among our leaders is 70 years old! Is that OK? As we say ‘ach men araf kedrou’ [long life to those who know self-respect]. We became a joke to the world […] It is sad but they [the old generation] don’t understand us and we can’t trust them because they failed us. They couldn’t care less.’

Today’s Algerian youths are more educated –with a primary education net enrolment rate that stood at 98% in 2016 compared with 73% in 1975– and more urbanised than their parents, with an urbanisation rate of 73.5% in 2017 compared with 40.33% in 1975. Their expectations for better jobs, higher salaries and decent housing and their new consumerist habits are greater. But then again, their potential is also greater.

Conclusions

To be productive members of their societies, Algerian youth need their old leaders to better invest in them, allow for a generational renewal and include them in decision making. Policy advocacy is essential as it provides training for those who might become the country’s future policy makers. Therefore, the authorities need to implement and systematise political training from an early age to teach debating and the respect of multi-party democracy (similar to Young Arab Voices or Youth and Political Engagement in Contemporary Africa, which are programmes intended to provide the young with tools and capacity building to better run and manage debate and to enhance pluralistic democratic dialogue). In addition, a local youth policy with national guidelines adapted to each region of the country is necessary. Likewise, the educational system should be reformed to deliver a better quality education (ie, encourage critical analysis) and systematise career guidance. The Ministry of Education should cooperate more closely with the private sector to understand its needs. It should also invest in capacity building and skill training in order to prepare the youth to face the labour market with better skills and to meet the needs of employers.

On the economic level, the cautious reforms that the Algerian authorities have been introducing are not enough to reduce the country’s dependency on oil. Even if the country is facing a challenging economic situation, Algeria remains in a better place today than it was in 1988-90 and has an opportunity to launch deep, wide-ranging structural reforms now. The generalised subsidies are a real affliction to the State and are ineffective. They can no longer be sustained. Instead, the authorities should consider an allocation programme targeted specifically at low-income households. To do that, the authorities should invest in communication campaigns in order to raise awareness among the population about the benefits of such a reform. As for the business sector, the Algerian authorities should improve the business environment and climate, and boost the private sector by unifying and simplifying regulations and administrative procedures and improving access to finance.

On the social level, protests have become part of daily political life, especially after the end of the ‘Black decade’ of the 1990s. Algerians know the system and how to ‘navigate’ it: hence, they understand that the best way to express demands and the quickest way to achieve results is to engage with the government on the streets. By choosing to use direct action rather than conventional means (ie, parties, associations and votes), they are renegotiating their citizenry and renewing their communication with their leaders. The regime has had the ability to be responsive to their requests by using oil revenues. Yet if these requests are no longer met –because of the regime’s inability to answer them due to a long-term financial crisis– it is possible that the population’s aversion to outright revolt may no longer stand. As a result, the nature of the protests might change and become more revolutionary, and the regime could turn to stepping up repression.

Dalia Ghanem-Yazbeck
El Erian Fellow at the Carnegie Middle East Center, Beirut, focusing on political and extremist violence, radicalisation, Islamism and jihadism, particularly in reference to Algeria
| @DaliaGhanemYazb


1 Jaffrelot, Christophe (1994), ‘Ouvres pies et rationalités économiques en Inde’, in Jean-François Bayart, La réinvention du capitalisme, Karthala, Paris, p. 145.

2 Rasmus Alenius Boserup (2016), ‘Contention and Order’, in Algeria Modern: From Opacity to Complexity, C Hurst & Co Publishers Ltd, p. 58.

3 Moussaoui Abderrahmane (1998), ‘La violence en Algérie. Des crimes et des châtiments’, Cahiers d’Études Africaines, vol. 38, Cahier 150/152, p. 267.

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<![CDATA[ The 2016 parliamentary elections in Morocco: context and interpretations ]]> http://www.realinstitutoelcano.org/wps/portal/rielcano_en/?WCM_GLOBAL_CONTEXT=/elcano/elcano_in/zonas_in/ari17-2017-lopezgarcia-hernandodelarramendi-2016-parliamentary-elections-morocco 2017-03-09T12:28:39Z

On 7 October 2016 the Justice and Development Party revalidated its victory in the Moroccan parliamentary elections.

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Original version in Spanish: Las elecciones legislativas de Marruecos de 2016: contexto y lecturas

Theme

On 7 October 2016 the Justice and Development Party revalidated its victory in the Moroccan parliamentary elections.

Summary

After four years at the head of a coalition government existing in a state of subordinate cohabitation with the Moroccan Monarchy, the Justice and Development Party (PJD) emerged victorious once again from the parliamentary elections with a simple majority of the votes cast. The electoral campaign was polarised between the victors and the Party of Authenticity and Modernity (PAM), which had the support of the Monarchy and defined itself as the liberal, secular alternative to the conservative, Islamist model represented by the PJD. Having been charged with forming a government as the party with the highest number of votes, the leader of the PJD is encountering difficulties forging a coalition, in a process that should help gauge the correlation of forces between the Islamist party and the Monarchy.

Analysis

On 7 October 2016 Morocco held parliamentary elections to choose the 395 members of the Chamber of Representatives, the lower house of the Moroccan Parliament, who are elected by universal suffrage. The importance of the ballot in the political life of the country is, however, fairly relative, given that the decision-making centres that govern the legislative sphere continue to lie (as they have since the 2011 Constitution) outside the parliamentary institution itself.

Nevertheless, in light of the singular coexistence of different powers, the nature of the players involved and the role of the country itself in its relationship with the EU and the West in general, the situation in Morocco merits an in-depth analysis.

First, the international, regional and domestic context in which the 2016 elections took place was very different from that of 2011, when the world was still reeling from the aftermath of the ‘Arab spring’. At a regional level, the wars in Syria and Yemen, the emergence of Daesh (the self-proclaimed Islamic State) and the chronic instability in Libya place security issues (refugees and the fight against terrorism) and the search for stability firmly at the centre of the region’s agenda.

Within Morocco itself, the Monarchy has managed to neutralise or at least limit the impact of many of the concessions it was forced to make in response to the 20-F movement (named after the spontaneous demonstrations that sprang up in the country on 20 February 2011). On the eve of the previous elections, the movement demanded a constitutional, parliamentary monarchy in which the Head of State would reign without governing and there would be a true rule of law, demands which the 2011 Constitution failed to satisfy. This climate of change and demands paved the way for the victory of the Islamist Justice and Development Party (PJD), which won a percentage of seats that was almost unheard of in the country’s electoral history. The PJD had been growing in popularity and votes since its emergence onto the political scene in 1997, as a result of King Hassan II’s initial attempts to integrate political Islam into the parliamentary workings of the country.

The PJD in government: subordinate cohabitation with the Monarchy

Having won 107 seats and beaten its closest rival (the Istiqlal Party, IP, which won 60 seats) in 2011, the PJD became the leader of a coalition government, as established by the new Constitution which had entered into effect just a few months before. In order to do so, the PJD was obliged to forgo engaging in an open interpretation of the new Constitution, which increased the prerogatives of the Executive while at the same time limiting those of the King.

Throughout the whole term, the leader of the PJD, Abdelilah Benkirane, accepted de facto the pre-eminent role of the Monarchy, and even echoed this position publicly and explicitly in statements and interviews, asserting that ‘leading the government is not synonymous with holding power’ and defining his relationship with the monarch as one ‘based on cooperation and collaboration’. As Prime Minister, Benkirane opted to make concessions in order to gain the King’s trust, rather than to assume a more conflictive stance by launching head-on attacks against the system.

At the beginning of his term, and in keeping with his electoral promises and the climate that characterised that crucial year, 2011, Benkirane did indeed make an attempt to denounce inequalities and corruption (for instance, by publishing the list of transport licences, which reflected a privilege-based system). However, he preferred to deal with these issues as individual cases and prudently avoided going any further, never, for example, denouncing the structural flaws of the rentier state system, which would have clashed with the Palace, the King’s business interests and Benkirane’s own political entourage.

For its part, the Monarchy restructured the Royal Cabinet, appointing royal advisers from among the King’s closest circle to act as a behind-the-scenes government. It also gradually regained control of almost all the ‘ministries of sovereignty’, with the exception of the Justice Ministry, which was assigned in 2011 to Mustafa Ramid, from the PJD. Following the prolonged governmental crisis of 2013, triggered by the IP abandoning the coalition, the Palace regained control of the Ministries of Foreign Affairs (through Salaheddine Mezouar, leader of the National Rally of Independents, RNI), Education (Rachid Belmokhtar) and the Interior (Mohamed Hassad), appointing ministers that reported directly to the King. Meanwhile, economic portfolios (Finance, Fishing, Industry and Trade) found their way into the hands of technocrats from the RNI.

The coalition government headed by Benkirane found its hands tied by the existence within its own ranks of parties with directly opposing ideologies, such as the RNI1 which joined the government after the IP’s withdrawal in 2013. Despite being a member of the government coalition, after the regional elections held in 2015 the RNI supported the main opposition party, the Party of Authenticity and Modernity (PAM), helping it to attain the presidency in five of the country’s 12 regions, even though it had received fewer votes than the PJD.

The PJD has had no choice but to admit that, from inside the government and ministries not under its party’s control, measures have been adopted that go directly against the ideas set out in its electoral programme. These measures include a project to generalise the French baccalaureate (the bac) and put an end to the Arabisation of the school syllabuses, a movement launched by the Minister of National Education within the framework of the instructions given by the King as part of the country’s educational reform. The name of the subject ‘Islamic education’ has also been changed to ‘religious education’. Moreover, the Rural Development Fund has also slipped through the Prime Minister’s fingers, and is now managed directly by Aziz Akhannouch, Minister for Agriculture, whose department is every day becoming more and more like a ‘ministry of sovereignty’, controlled by the Palace.

As regards foreign policy, through the instructions that he gives in his speeches, the King continues to establish the country’s strategic directives in relation to issues such as the Western Sahara, infrastructures and the COP22 Climate Change Conference. The monarch also intervenes in the daily management of the government with his tantrums about the inefficacy of the administration, which the pro-establishment media quickly make public.

Nevertheless, and despite his acceptance of the status quo regarding the Monarchy, Benkirane has somehow managed to remain immensely popular. This is mainly due to his new brand of politics, characterised by his warm, open speaking style, his run-ins with ministers from the royal circles, his use of dialect and his frequent speeches to both Parliament and the media.

Unlike that which occurred during the 1990s and early 21st century during the period of alternance, the PJD has managed to avoid the wear and tear that so often comes with governing. And it has done so despite the heavy cost of reforms such as putting an end to the hiring of civil servants who have not sat a competitive examination, the raising of the retirement age for civil servants and cuts in oil price subsidies. The party’s triumph in the municipal and regional elections of 2015, its clear victory in the major cities and its increasing presence in rural areas attest to the fact that the situation described above has done little to undermine its popularity.

A polarised electoral campaign

In this context, the electoral campaign for the parliamentary elections of 7 October 2016 was polarised between the PJD and the PAM, which, holding the presidency of five of the country’s regions, defined itself as the liberal, secular alternative to the PJD’s Islamist model, using an anti-Islamist discourse that, to a certain extent, was reminiscent of that espoused by the Tunisian party Nidaa Tounes during the 2014 elections in that country.

The PAM focused its attention on the rural areas and the north of the country, through a network of dignitaries with good connections in the administration and a pro-monarchist discourse promising stability. For its part, the PJD, which is a much more militant party, focused on large urban conglomerations and medium-sized cities, in which its popularity is on the rise.

Some months previously, at the beginning of February, the Council of Ministers chaired by the King approved a move to appoint a large number of walis and provincial governors that affected 22 provinces. The newspaper Akhbar al Yom claimed that the move was clearly politically motivated, since the Ministry of the Interior (from whence the proposal had originated) used it as an excuse to promote governors who had previously been appointed to provinces in which the PJD had obtained limited results, installing them instead in ‘large rural provinces in which the PJD had emerged victorious in the local and regional elections’. A serious rift began to emerge between Mohamed Hassad, Minister of the Interior, and Prime Minister Benkirane. It was a rift that would deepen over the following months, becoming evident in gestures such as the repeated demands by the government that the Ministry of the Interior publish a detailed breakdown of the results of the local and regional elections held in September 2015. This information was not made public until June 2016. The rift was also noticeable in the resignation of the Justice Minister Mustafa Ramid from the Electoral Supervision Committee, after accusing his fellow minister Hassad of tampering with the electoral process.

On 18 September, shortly before the start of the campaign, an anti-Islamist protest was organised in Casablanca through the social media. The protest was attended by several thousand people and in its timing certain media organisations claimed to see ‘the concealed hand of the authorities’. With no ‘identifiable organiser’, protesters from the silent, archaic segment of Moroccan society, most of whom arrived in well-organised transports, chanted slogans against the incumbent Prime Minister, Abdelilah Benkirane.

Over previous months, Benkirane had attempted to reposition the PJD as an opposition party to the so-called al-tahakkum system (literally the ‘hidden or de facto powers’ which pull the strings of the government behind the scenes) and the risks posed by the system to the transition towards democracy. This constituted a change in relation to the 2011 slogan: ‘against tyranny and corruption’ (did al-istibdad wa-l-fasad). Despite his position as Prime Minister, Benkirane intimated in his speeches that Morocco had in fact two governments: an elected one and another one controlled by a ‘hidden’ faction. By presenting himself as a victim, he managed to keep his management of the administration out of the spotlight of the electoral debate, while at the same time counteracting the narrative put forward by the PAM, which argued that the division so evident in Moroccan society was between conservatives and modernists. For Benkirane and his political partners, the divide was between democrats and advocates of an authoritarian system, embodied by the PAM.2

This discourse was not well received by the Monarchy. Mohammed VI himself questioned the anti-tahakkum rhetoric in his Speech of the Throne, admonishing those who believed that the King had any preference for any one political party and warning politicians to abstain from ‘exploiting the figure of the King for their own ends’.

Nevertheless, this ideological polarisation cannot quite conceal the convergence between the programmes of the two opposing political parties in economic matters. In this field, the main difference is the PAM’s call for the legalisation of kief, which would ensure the party an overwhelming victory in the provinces in which it is grown, which are precisely those located in the Tangier-Tetouan-Al Hoceima region, governed by the PAM’s General Secretary, Ilyas El Omari.

However, any ideological debate about the electoral programmes was conspicuously absent from a campaign plagued by leaks and scandals which each contender used to try to discredit his opponents. Some of the scandals that came to light included the import of waste from Italy during the run-up to the COP22 Climate Change Conference; the sale of publicly-owned plots of land in Rabat at knock-down prices to government officials (including Laftit, wali of Rabat; Hassad, Minister of the Interior; and Boussaid, Minister of Finance) and members of the Socialist Union of Popular Forces (USFP), such as Malki and Lachgar, in what was considered by Hassad to be a settling of accounts orchestrated by the PJD; and a sex and urfi customary marriage scandal involving two leaders of the MUR, the ideological parent organisation of the PJD.

The PJD has openly accused the Ministry of the Interior of a lack of neutrality during the electoral process, and the ‘Deep State’ of colluding with the PAM. Examples of this, according to the PJD, include the protest in Casablanca –mentioned above– against the Islamisation of society and the ‘exploitation of religion’, which while not expressly authorised by the Ministry of the Interior was nevertheless tolerated by it; the holding up of infrastructure projects in municipalities governed by the PJD; the mobilisation of votes in favour of the PAM in certain areas; and the exclusion of the Justice Minister from the preparations for the elections. Benkirane made his right to form a government in the event of winning the elections crystal clear, yet fearing manoeuvres designed to undermine his position and in an attempt to anticipate the problem of being unable to find the support required to make up a majority, he called for the repetition of the vote should his party fail to forge the necessary coalition.

The problem of the electoral register

A number of articles3 have pointed out the huge gaps in Morocco’s electoral register, which fails to include 30% of those entitled to vote. According to the general population census conducted in 2014, the country had 33,610,084 inhabitants, of which 23,527,055 were aged over 18. Even excluding those that have died in recent years and those who are not entitled to vote due to their position as soldiers, convicts or certain members of the civil service, such as judges, for example, the potential number of eligible voters is estimated at around 22,874,625.

However, the official electoral register for the 2016 elections included only 15,702,592 potential voters, which means that 7,172,033 Moroccan citizens –almost half the voting population– were excluded from going to the polls. And this does not even take into account the 3 million or so Moroccans living abroad (RME), of whom only the small minority who were present in the country when the register was compiled in 2014 are included. The RME community can only vote by proxy, and only a meagre few chose to use that option in the last elections. This is a major shortcoming that needs to be addressed in future elections in order to lend credibility to the results, since the number of people excluded is extremely high.

The voter turnout in the parliamentary elections of 7 October was officially estimated at 43%, but in truth, if we take those not included on the electoral register into account, the real figure is no higher than 29.5% of potential voters, even without counting Moroccan nationals resident abroad.

The Ministry of the Interior published the electoral register percentages on the official election website, in accordance with age group. Comparing these same age groups with the general population census of 2014, it can be seen that the highest numbers of absences are found among the youngest members of the voting population, ie, those aged between 18 and 24. In this group, a total of 4,031,600 potential voters are not included on the electoral register (see Figure 1). The number of absences drops as we move up the age groups, until the final figure of seven million is reached.

Figure 1. Electoral roll and potential electorate

The underrepresentation of urban areas

Morocco has, since colonial times, been a country moving at two different speeds. The composite society to which Paul Pascon referred in his writings was comprised by a modern world centred mainly along the more developed Atlantic coast, and an archaic, intensely rural one, upon which the established power structure relied for its continued dominance. This gaping divide between the urban and rural worlds continued unabated even after the country gained its independence, and its political tradition was characterised by what the late Rémy Leveau termed in his classic work from 1976 Le fellah marocain défenseur du Trône (‘The Moroccan Fellah –farmer–, defender of the throne’). The urbanisation process advanced at a slower pace in Morocco than in other countries in the region, mainly due to a policy designed to limit the rural exodus, which was implemented during the era of Driss Basri, Hassan II’s powerful Minister of the Interior. According to the 2014 census, 40% of the population still lived in rural areas. The political commentator Omar Saghi once wrote in an article that the protesters belonged to ‘that 40% of the population that eke out a living from sub-productive and sub-monetarised subsistence farming, a people enslaved by their native land, illiterate and (as yet) silent. A population that talks with the voice of its master; caidal control combined with the habit of obedience mixed with mistrust of the central power structure’.

This deeply rural Morocco is overrepresented, as evident in sparsely populated electoral districts such as Jerada, Figuig, Bulman and Ifrane, which have between 46,000 and 77,000 inhabitants per seat, whereas the national mean is 110,196 inhabitants per seat.4 At the other extreme, highly urbanised electoral districts such as the prefectures of Casablanca, Fez, Marrakesh and Salé are underrepresented (having between 128,000 and 147,000 inhabitants per seat). The case of the three Saharan regions is particularly telling. In Guelmim-Oued Noun, Laâyoune-Sakia El Hamra and Dakhla-Oued Ed-Dahab the inhabitant-to-seat ratios are just 54,176, 40,775 and 35,516 (respectively), the lowest in the entire country. There can be no doubt that these discrepancies have an impact on the final results in each electoral district.

Analysis of voter turnout and election results

Turnout in these last elections was amongst the lowest in the country’s history, with only 43% of those on the electoral register casting their votes, 1.5% fewer than in 2011. This is extremely worrying, since in addition to the fact that one out of every three Moroccans does not even bother to register to vote, over half of those that do register never actually take the trouble to go to the polls. Moreover, there is also a very high rate of invalid and blank ballots (something which is now traditional in Morocco’s electoral history). These ballots totalled around 1 million during the latest elections, although it is something that the Ministry of the Interior has chosen not to make public on this occasion, thus undermining the credibility of the results.

Figure 2. Morocco: election turnout (%)

The extremely polarised electoral campaign, with the PJD at one end and the PAM at the other, coupled with the support provided to the latter party by certain media outlets and official sources, turned the struggle to convince voters into the closest race in the country’s history since 1963, when Hassan II failed to win the parliamentary majority he sought. Article 47 of the 2011 Constitution stipulates that the King must appoint a Head of Government ‘from the political party that wins the most votes in the elections to the Chamber of Representatives’. The contest was between Benkirane and Ilyas El Omari, Secretary General of the PAM and an increasingly influential figure due to his proximity to the Throne.

However, in the end, the PJD emerged victorious, demonstrating once again, as in the 2015 elections, that the party’s time in government had done little to undermine its popularity, despite it having adopted a number of extremely unpopular measures. In the local constituencies5 the PJD won 1,571,659 votes, practically the same number as in the previous regional elections, whereas the PAM only won 1,205,444, around 100,000 fewer than in 2015. Both parties improved on their results in the previous parliamentary elections in 2011 (1,080,914 for the PJD and 524,386 for the PAM). All the other parties came in far behind the two frontrunners, since third place went to the Istiqlal Party with 621,280 votes, and the RNI came in fourth, with just 558,875. The results in terms of the seats won are shown in Figure 3.

Figure 3. Results of the elections held on 7 October 2016

Conclusions

The PJD won the Moroccan parliamentary elections of 2016, obtaining 16 seats more than in 2011. This result attests to the fact that the party has managed to avoid paying the political price of its subordinate cohabitation with the Monarchy, and its decision not to explore in more depth the possibilities offered by the 2011 Constitution as regards changing the balance of power between the Palace and the elected government. As leader of the winning party (having gained a simple majority of the votes), Abdelilah Benkirane was charged by the King to form a government, an undertaking that will necessarily require the formation of a coalition with other parties.

The negotiations are proving laborious and the outcome will constitute a true test that will help gauge the correlations of forces between Morocco’s leading political party and its Monarchy. Once the PAM (considered by many to be the King’s party) has been defeated at the polls, the Palace is trying to preserve its influence in the government through the actions of a block of ‘administrative’ parties (RNI, UC and MP), under the leadership of Aziz Akhannouch, whose conditions include the exclusion from any future government of the Istiqlal Party. This manoeuvre, described by Benkirane as an ‘attempted putsch against the results of the ballot’, has deadlocked the process and may well lead to a political crisis centred around what the winning party should do in the event of being unable to form a government, a circumstance not contemplated in the Constitution.

Bernabé López García
Emeritus Professor of Arab and Islamic Studies and researcher at the Mediterranean International Studies Workshop (TEIM), Autonomous University of Madrid

Miguel Hernando de Larramendi
Director of the Study Group on Arab and Muslim Societies, University of Castilla-La Mancha
| @mhlarramendi


1 A member of what became known, in the lead-up to the 2011 elections, as the G8, a coalition of administrative parties and other smaller groups of a diverse nature.

2 Note that the ex-communist PPS also adopted this approach. Party leader and Minister of Housing Nabil Benabdallah was even admonished in a communiqué published by the Royal Counsel for having identified the tahakkum with the PAM and its founding member, the royal counsellor Fouad Ali El Himma, in one of his speeches.

3 Bernabé López García (2013), ‘La question électorale au Maroc: Réflexions sur un demi siècle de processus électoraux au Maroc’, Revue Marocaine des Sciences Politiques et Sociales, vol. VI, nr 4, February, Rabat, p. 35-63.

4 This figure, calculated using the data published in the Official Gazette of 23 April 2015, would have been much more interesting if the number of people registered in each electoral district had been made public beforehand. The lack of transparency in the publication of previous data and results is one of the main pitfalls of Morocco’s electoral system. It is shocking that the Ministry of the Interior failed to publish the breakdown of the results of the municipal and regional elections until eight months after the vote was held, even after having been repeatedly called upon to do so by the Prime Minister himself. In past eras, although data were often manipulated and were rarely reliable, they were at least published promptly.

5 A total of 305 seats are elected in local constituencies, which correspond to provinces or smaller electoral districts in the case of highly populated cities. The remaining 90 seats are elected through national lists made up by 60 women and 30 young people, as a positive discrimination measure designed to boost the participation in the government of these two groups. In the national list, the PJD won 1,618,963 votes, while the PAM won 1,216,552.

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<![CDATA[ Making sense of Europe’s Southern Neighbourhood: Main Geopolitical and Security Parameters ]]> http://www.realinstitutoelcano.org/wps/portal/rielcano_en/?WCM_GLOBAL_CONTEXT=/elcano/elcano_in/zonas_in/ari10-2017-simon-pertusot-making-sense-europe-southern-neighbourhood-main-geopolitical-security-parameters 2017-01-30T11:01:12Z

Europe’s southern neighbourhood is a diverse but interlinked geopolitical ensemble, whose specificities need to be carefully assessed before Europeans devise dedicated security strategies, divide responsibilities and make policy decisions.

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Theme

Europe’s southern neighbourhood is a diverse but interlinked geopolitical ensemble, whose specificities need to be carefully assessed before Europeans devise dedicated security strategies, divide responsibilities and make policy decisions.

Summary

This exercise in geopolitical scoping seeks to make sense of the main security challenges present in Europe’s broader European neighbourhood, a space encompassing areas as diverse as the Gulf of Guinea, the Sahel, North Africa, the Levant and the Persian Gulf. It identifies (some of) the main sub-regions that make up the ‘South’, offers an overview of the threat environment in each of them and identifies relevant differences as well as common themes. In doing so we aim to provide a conceptual referent for further policy research on the security of Europe’s ‘South’, and to help inform future strategic and policy discussions within the EU, NATO and their Member States.

Analysis

Both the 2016 EU Global Strategy and NATO’s 2016 Warsaw Summit declaration identify Europe’s southern neighbourhood as an area of strategic priority. However, neither organisation has so far provided a clear-cut definition of the geopolitical parameters of the so-called ‘South’, offered a clear picture of the kind of security challenges present therein or explained how they matter to Europe from a geopolitical perspective. It is important to clarify these aspects before entering any sort of discussion about strategy or designing any lasting policy response to the challenges emerging from the South.

In its narrowest form, the label ‘South’ is used to refer to those countries of the Mediterranean rim that do not belong to either the EU or NATO. For instance, the EU’s Union for the Mediterranean (UfM) and European Neighbourhood Policy (ENP) include or aspire to include all the countries situated in North Africa (Algeria, Egypt, Mauritania, Morocco, Libya and Tunisia) and the Levant (ie, Israel, Jordan, Lebanon, Palestine and Syria).1 NATO’s Mediterranean Dialogue follows a somewhat similar principle, in that it includes all North African countries from Mauritania to Egypt (excluding Libya, for political reasons) and two countries from the Levant: Jordan and Israel.

A broader definition of the South would expand the scope to encompass the space running from the Gulf of Guinea in West Africa, through the Sahel, North Africa and the Mediterranean all the way to the Levant and Mesopotamia and then, through the Red Sea and the Horn of Africa, all the way to the Persian Gulf. This broader area or extended southern neighbourhood has gained increasing popularity in EU and NATO circles in recent years, with many experts alluding to the growing importance of the ‘neighbours of the neighbours’.2

Recent EU and NATO efforts to broaden the (geographical) scope of the South are understandable. European countries realise that the security and stability of their immediate southern neighbourhood (ie, the southern and eastern Mediterranean basin) is inextricably tied to developments in adjacent geographical areas. For the EU, this ‘broadening’ has led to the adoption of regional strategies for the Sahel, the Horn of Africa and the Gulf of Guinea/West Africa, which underscore the links between those areas and Europe’s immediate southern neighbourhood (ie, the Mediterranean proper). In addition to strategies, the EU has deployed missions and operations in the Mediterranean, Sahel and Horn of Africa areas, conducted within the framework of the Common Security and Defence Policy.

NATO, for its part, has in recent years been dragged into discussions about how it can contribute to the security of Iraq (deeper in Mesopotamia), whilst the presence of Turkey pushes for a more expansive geographical definition of the South, to include the broader Middle East. Thus, the Alliance’s Euro-Mediterranean dialogue and Istanbul Cooperation Initiative are increasingly referred to as different instruments to deal with an expanded South. Moreover, the Warsaw Summit has included the Sahel-Sahara region as an area of interest for the Alliance.3 However, in contrast to the EU, no explicit references have been made in NATO documents to the Gulf of Guinea and/or West Africa.

Taking into account the above considerations, it could be argued that the so-called South (in its extended version) could be broken down into seven main geopolitical referents or sub-theatres, namely: West Africa and the Gulf of Guinea, the Sahel, North Africa, the Levant, Mesopotamia, the Red Sea-Arabian Sea corridor and the Persian Gulf (ie, Iran and the countries of the southern Persian Gulf), and the (rest of the) Arabian Peninsula. Admittedly, this categorisation is just as arbitrary as any: these seven areas or sub-theatres can be regrouped differently as well as broken down into equally meaningful sub-categories (for example, it could be argued that the security dynamics in north-east and north-west Africa are very different, or that Egypt in many ways belongs in the Levant category). In this sense, it may be worth pointing out Libya’s specific importance as a geopolitical meeting point of sorts within the South, ie, one that acts as a transmission belt of a variety of threats and challenges irradiating from the Sahel and North Africa as well as the Levant. Be that as it may, it is a categorisation that promises to offer Europeans a useful starting point to help them organise and conceptualise the different challenges emanating from the South.

If the geographical parameters of the South are inherently contested, so is the nature of the security threats and challenges emanating from it. Over the last few years, much emphasis has been placed on irregular migration and human trafficking (a problem that bears both human rights and security concerns), as well as terrorism itself, whose possible connection with uncontrolled migration flows is as unclear as it is polemical. These two issues have been underscored by NATO and the EU, both of which have emphasised the importance of the so-called internal-external security nexus. But they are amongst the many security challenges emanating from the South. Other salient challenges relate to piracy and insecurity at sea, which can disrupt sea lines of communication (SLOCs) and threaten Europe’s energy security and trade, and drug trafficking. Ultimately, many of these challenges can be traced back to the endemic weakness or failure of several states in the South, a structural problem that acts as generator and magnifier of various kinds.

The prominence of state failure, terrorism, piracy, organised crime or uncontrolled migration flows means there is a tendency to associate the South with low-level and transnational security challenges. Such challenges are central, no doubt. However, when it comes to the South, Europeans cannot remain aloof from military-strategic developments at the higher end of the threat spectrum. The proliferation of precision-strike munitions and weapons in parts of the South is perhaps particularly noteworthy.4 While the proliferation of precision-strike systems in Europe’s South may still be relatively immature in terms of its technological sophistication, several state and non-state actors are exploiting the advantages offered by precision-guided munitions to progressively build up their own capabilities in creative ways. Iran and Syria perhaps stand out.5 But even terrorist and rebel groups are making forays into precision strike. Hizbollah already used anti-tank guided missiles against Israel in the 2006 Lebanon war, whilst Hamas has often used guided-missiles against civilian targets in Israel. Likewise, more recently, Houti rebels in Yemen have fired anti-ship missiles at US naval vessels in the Red Sea. The prospect of hostile state or non-state actors in possession of precision-strike capabilities at or near the South’s key maritime chokepoints (ie, the Strait of Hormuz, the Strait of Bal el Mandeb, the Suez Canal and the Strait of Gibraltar) is particularly relevant for Europeans, and demands greater strategic attention.

Figure 1. The South

Once the geopolitical and security parameters of the South have been more or less identified, a key question arises: which South-related threats (or challenges) matter most, where and how? While we acknowledge that there is no satisfactory way to address that question, below we try to offer the foundations of a conceptual model that can help make better sense of the South’s inherent complexity, by correlating geography and the threat environment. In this regard, we identify three main geopolitical areas:

  1. An inner or core ring in the immediate southern European neighbourhood, which share the Mediterranean with Europeans (formed by North Africa and the Levant). It goes without saying that these countries are of direct interest to Europeans. First, because of their geographical proximity, any changes in their economic, political and social situation, or in their strategic capabilities, is likely to be directly and deeply felt in Europe. They are of direct economic interest for Europeans, and their markets may offer future opportunities. They are perhaps particularly interesting from an energy security perspective, whether as an important source of European gas imports (eg, Algeria and Libya), by virtue of their role as transit countries for gas coming from beyond the immediate neighbourhood (eg, Turkey and Morocco) or of their potential in areas like solar energy. They are also of interest because of people-to-people and cultural ties, in that many European citizens originate from these countries. This translates into a greater sensitivity in Europe about their political evolution, not least due to the existence of relevant pressure groups and epistemic communities with a greater interest in those countries.

    By virtue of their proximity, this inner ring also matters greatly from a strictly military-strategic perspective. The proliferation of precision-guided munitions in the Levant and North Africa threatens to complicate European power projection in those areas –and could even pose a defence challenge for Europeans in the future–. Syria is a case in point. Russian-made, precision-guided surface-to-air missiles and thousands of anti-aircraft guns make up an advanced Syrian air-defence network that makes it increasingly difficult for Europeans to project power there. Relatedly, the changing military balance in the Levant and Eastern Mediterranean raises questions about Europe’s ability to preserve its political influence in those key areas.6 Yet, when it comes to Europe’s immediate southern neighbourhood, the problem posed by precision-strike proliferation could soon transcend Syria and the Levant. Egypt, Algeria and even terrorist groups in countries like Libya, are also likely to take advantage of precision-guided weapons in coming years, potentially posing a direct military threat to Europe in some cases.

    Secondly, because of their geographical location (straddling Europe and the ‘deep South’), these core southern countries play a key role in terms of regulating the impact that any political, economic or security dynamics at play in the ‘deep South’ may have upon Europe. Thus, North African countries play a key role in preventing or mitigating trafficking in persons, weapons or drugs coming from the Sahel or West Africa. Likewise, the Levant both filters and shields any instability that might come from Mesopotamia or the Persian Gulf area, whereas Egypt (straddling the Levant and North Africa and overlooking the Suez Canal) does the same for the Red Sea area. In this regard, stability in these core areas is a key geopolitical priority for Europe to the extent that it can help shield Europe from instability emanating further afield or, at least, mitigate it. Hence the importance of developing strong and lasting political, economic, societal and security ties with these inner-ring countries, with a view to building up their resilience and ability to shield Europeans from challenges emanating from further afield.

  2. Two intermediate areas (the Sahel and Mesopotamia) situated further afield give strategic depth to the core regions of North Africa and the Levant and, arguably, also to the two outer areas (see below). The Sahel provides strategic depth to North Africa, West Africa and the Gulf of Guinea area: some of the challenges and threats that are ‘cooking’ in the Sahel often ‘boil over’ in other parts of the southern neighbourhood –and go on to ‘let off steam’ in Europe itself–. Mesopotamia straddles the Levant and the Persian Gulf, and has a pervasive impact upon these two areas. A good example is the current situation in Iraq and Syria, which is simultaneously explained by meddling from countries situated in the Levant and the Persian Gulf, as well as having a negative impact in those regions by way of migration, refugees, disruptions in economic supplies and insecurity.

    For its part, the Persian Gulf not only has an impact on Mesopotamia and, through it, the Levant proper, but also on the Arabian Peninsula, the Arabian Sea and Red Sea continuum. As already argued, both of these areas matter primarily to the extent that they have a pervasive impact upon political, social and security dynamics in Europe. In particular, the lack of state control over large swathes of these intermediate areas, whether in the Sahel (eg, Mali) or the Levant (eg, Iraq and Syria), constitutes a breeding ground for terrorism (local and transnational), arms proliferation, organised crime and uncontrolled migration flows. Europeans should therefore help strengthen the security services of some of the countries in these intermediate spaces, reinforce their border-control capabilities and build up their political resilience.

  3. Two outer areas that delimit the maritime perimeter and regulate the entry and exit into Europe’s southern neighbourhood: the Gulf of Guinea in the south-west and the Red Sea-to-Arabian Sea corridor in the south-east, which includes the Gulf of Aden and Persian Gulf. These areas present a number of challenges and opportunities for Europeans. An important challenge relates to piracy, especially in the Gulf of Guinea and the Gulf of Aden areas –this can disrupt vital European SLOCs–. The importance of the Persian Gulf as an energy source for Europe is well known. The Gulf of Aden is critical in that it filters the passage of energy from the Persian Gulf to the Mediterranean (and Europe), as well as the vital trade line connecting Europe with South and East Asia. The Gulf of Guinea is also an important source of energy for Europeans, as well as an area of transit for energy imports from south-west Africa (especially Angola), and strategic minerals and metals from southern Africa. Another challenge, that is perhaps specific to the Gulf of Guinea relates to drug trafficking, with the Gulf acting as a transit area for illicit goods flowing from the Americas to Europe, through the Sahel and North Africa or through the West-African coast.

    Given the importance of the gulfs of Guinea and Aden to the security of Europe’s SLOCs, and their exposure to piracy, Europe needs to strengthen its investment in Intelligence, Surveillance and Reconnaissance (ISR) and local capacity building, not least with a view to reinforcing the indigenous security capabilities of those areas in which there is a direct link between state weakness/failure and piracy (such as Somalia and Yemen). Last but not least, Europeans need to strengthen their defences against precision-strike attacks against shipping in these chokepoints, whether those currently emanating from terrorist groups operating from failed states (such as Yemen and Somalia) or, more seriously, the potential of state actors to more significantly threaten the security of European SLOCs (eg, Iran in the Persian Gulf). Iran’s so-called Anti-Access and Area Denial (A2/AD) strategy combines technologically sophisticated elements –such as advanced air defences, cruise missiles and even attack submarines– with the application of precision-guided systems to more ‘rudimentary’ munitions, such as rockets or mortars. These capabilities mean that Iran may already be in a position to either block or substantially threaten passage through the Strait of Hormuz, thus menacing a vital European SLOC as well as threatening European allies and interests in the Persian Gulf. This problem is perhaps further compounded by Iran’s advances in missile technology (and its potential to reach Europe), and the lingering shadow of its nuclear programme. Given these trends, Europeans should perhaps strengthen their contribution to theatre air and missile defence in the southern Persian Gulf, as well as to their own defence against ballistic missiles, with a view to the future.

Conclusions

Europe’s South is neither unidimensional nor monothematic. It is an inherently diverse but interlinked geopolitical ensemble, whose specificities need to be carefully assessed before devising dedicated security strategies, distributing responsibilities and making policy decisions. The ‘South’ can be a land of opportunities for Europeans, given its economic, demographic and energy potential. But such opportunities can only be realised if its geopolitical dynamics are properly understood and existing security threats and challenges are effectively addressed. This geopolitical scoping exercise makes clear that an appropriate policy mix requires the involvement of a number of actors. Solutions to the various security challenges emanating from the South are likely to come from the active engagement of individual European countries, especially those who have a more direct stake in fencing off possible threats (eg, France, Spain, Italy, for instance), clusters of European and neighbouring countries (such as the 5+5 Dialogue) as well as multilateral organisations like the EU and NATO. This adds yet another layer of complexity to approaching the South, not least as the perspectives and threat assessments of this myriad of countries, clusters and organisations may at times diverge.

Luis Simón
Director of the Brussels office of the Elcano Royal Institute, and research professor at the Vrije Universiteit Brussel
| @LuisSimn

Vivien Pertusot
Head of the Brussels office of the French Institute of International Relations (Ifri)
| @VPertusot


1 Although, in a strictly geographical sense of the word, Jordan does not border the Mediterranean and is therefore not part of the Levant, it is commonly treated as part of it.

2 See, eg, Sven Biscop (2014), ‘Game of Zones: The Quest for Influence in Europe’s Neighbourhood’, Egmont Paper nr 67.

4 See, eg, Luis Simón (2016), ‘The “Third” US Offset Strategy and Europe’s “Anti-Access” Challenge’, Journal of Strategic Studies, vol. 39, nr 3, p. 417-445.

5 See, eg, Mark Gunzinger & Christopher Dougherty (2011), Outside-In: Operating from Range to Defeat Iran’s Anti-Access and Area-Denial Threats, Center for Strategic and Budgetary Assessments, Washington DC; and Sina Ulgen & Can Kasapoglu (2016), ‘A Threat Based Strategy for NATO’s Southern Flank’, Carnegie Europe, 10/VI/2016.

6 See Sinan Ülgen & Can Kasapoğlu (2016), ‘A Threat Based Strategy for NATO’s Southern Flank’, Carnegie Europe, 10/VI/2016.

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