A difficult but fundamental transition for the Mediterranean

It is inevitable, unemployment will rise, and GDP and direct foreign investment will take a step backwards. The transition started in 2011 by Mediterranean countries that were part of the Arab Spring will be a long journey full of pitfalls, just like Poland and other Eastern European countries experienced in the 90s after the collapse of the communist bloc.

" Southern countries will enter a phase of transition and move from an oppressive, authoritarian regime towards democracy. A business elite, very close to the seat of government, led to guaranteed private income. There was complicity during bidding. Corruption gradually became so widespread it reached the point where you had to obtain a permit to carry out a street trading activity”, says Jean-Louis Reiffers in the Euro-Mediterranean Forum of Economic Institutes  (FEMISE) 2011 annual report, entitled "A new Mediterranean: towards realising a fundamental transition."
 
In this document, the President of the Scientific Council of the Mediterranean Institute and FEMISE coordinator, along with Ahmed Galal, Chairman of the Economic Research Forum in Egypt, points to the deficiencies of Mediterranean States and above all calls for the creation of a stabilisation fund for basic foodstuff prices (oil, flour and sugar). Registered as a priority at the G8 meeting in Marseille, the compensation fund will be replenished by the international community, which has pledged to release  €27 billion for Tunisia, Egypt, Morocco and Jordan by 2013.
 
"The price of wheat had increased by 15% in three months. Try telling the Tunisian housewife that fires in Russia and speculative forward buyers in the Chicago market are at the root of soaring wheat prices! " said Jean-Louis Reiffers.
 

Femise points to growing inequality between the coastal areas, driven by tourism in particular, and rural areas where the poverty rate is higher, as is illiteracy, and where poor health leads to a higher rate of mortality, especially among girls. "The growth model is not inclusive. Poverty reduction is less than the growth rate. This benefits the winners even more and marginalises the poor even further”, says Jean-Louis Reiffers.
 
Economic development of Mediterranean countries therefore requires the development of more efficient transfer systems and enhancement of the sectors that provide labour for the poor.
 
Femise also suggests support for the creation of SMEs and SMIs so that the IDE can diffuse into all segments of the economy and not just benefit large groups. Intelligent decentralisation would also promote a better economic balance and equitable distribution of resources. Considered as the primary means of action, further trade liberalisation can contribute to solving the main problems of transition.

Download the Femise annual report