Regionalism and Regionalizationin the Middle East:Options and Challenges

MARCH 2013

In today’s international system neighboring states tend to build regional orsubregional clusters in order to improve their capability to stand up to theunprecedented proliferation of new global challenges. This phenomenon hastaken shape as both a political top-down process—which we call regionalism—and a structural bottom-up process—which we call regionalization.Regionalism outlines cooperation in the economic, institutional, defense, orsecurity fields, occurring at a political decision-making level. Regionalizationdefines an increase of region-based activity, characterized by undirectedeconomic and social interactions between nonstate actors whether individuals,firms, companies, NGOs, etc.

While many attempts at regionalism have been launched in the Middle Eastover the last half century, progress has been limited in terms of political,security, and economic cooperation. Today’s changing political environment,fostered by the 2011 uprisings, provides unprecedented opportunities foropening new dimensions of regional cooperation. The disruptive demand fordemocracy, social justice, unemployment reduction, and job creation is likelyto exert greater pressure on the new political actors to explore new ways tofoster economic growth. This could provide unprecedented incentives forimproving regional cooperation.

The deteriorating conditions of some Middle Eastern economies, along withthe demographic growth of the population, represent a further challenge andopportunity to the region as a whole. Moreover, high-intensity conflicts, likethe Syrian civil war, are liable to affect the political and economic stability ofneighboring countries. The influx of people from Syria has been generating ahuge humanitarian disaster, which requires urgent measures. Reviewingexisting coordination mechanisms among national, regional, and internationalplayers—at both the governmental and nongovernmental levels—provides afoundation for critical thinking, possible adaptations, and creative newapproaches. The continuing absence of strengthened regional cooperation hasthe potential to exacerbate the bulk of conflicts and security threats. Thosethreats are furthermore interwoven with a persisting lack of responses todomestic social demands; empirical evidence, for instance, has proved thatthere is a linkage between the proliferation of terrorism and long-standing,stagnant underdevelopment. From this perspective, this paper will elucidatewhat factors have supported and limited attempts at regional cooperation inthe Middle East, particularly focusing on the analysis of regional initiativesconcerning the Arab world.

The paper, first, outlines attempts at regionalism undertaken by Arab states.Second, it examines exogenous projects, distinguishing between EU-led, US-led, and international multilateral initiatives.

This issue brief was drafted by

Matteo Legrenzi, associate professor

of international relations at Ca'

Foscari University of Venice, and

Marina Calculli, post-doctoral

research fellow at Ca’ Foscari

University of Venice and research

fellow at American University of

Cairo Forum.

The views expressed in this paper

represent those of the authors and

not necessarily the views of the

International Peace Institute (IPI). IPI

welcomes consideration of a wide

range of perspectives in the pursuit

of a well-informed debate on critical

policies and issues in international

affairs.

IPI owes a debt of thanks to its many

generous donors, whose support

makes publications like this one

possible. In particular, IPI would like

to thank the government of Canada

for its support of this project.

2

Regionalism in the ArabMiddle East

Despite the many endogenous and exogenousregional initiatives that have been undertaken since1945, regionalism in the Arab Middle East hasbrought about mostly unsatisfactory outcomes.Different features of the political and economicalstructure of Arab states can explain the limitedresults of those attempts.LEAGUE OF ARAB STATES

The first attempt at regionalism in the Arab MiddleEast has been represented by the foundation of theLeague of Arab States—or Arab League (AL)—in1945.1 The AL was created in the wake of “Pan-Arabism,” the ideological and political project ofunifying all the Arab people under the shelter of asingle Arab Nation (Umma ‘arabiyya).2

Despite this strong vocation to “Arab unity,” sincethe end of 1960s, the opposite has taken place: statesovereignties have been consolidated and crystal-ized into an interstate order, which has in turnhindered the consolidation of supranationalorganizations. Indeed, Arab states have designedweak regional institutions that don’t affectsovereignty. This is very apparent in the decision-making process: the AL functions as an intergov-ernmental negotiating framework rather than as asupranational organization. For instance, amongthe objectives of the AL, the most important wasthe establishment of the Arab Common Market.The project traces back to the Nasser’s era but itremains unaccomplished.3

Structural disparities among the member statesexacerbate the complexity of fostering regionalintegration. First of all, different regime types(conservative monarchies, modernist republics,and semi-democracies) tend to elaborate differentpolitical agendas. Second, significant disparities inwealth, particularly between rich states with low

population density (e.g., Qatar, with a per capitaGDP of $92,5014 and a population of 1.918million5) and poor states with high populationdensity (e.g., Yemen, with a per capita GDP of$1,3616 and a population of 24.527 million7) alsotend to thwart Arab integration. Externalinfluences and international alliances also have anexacerbating effect on intra-regional divisions.

Finally, the AL’s performance in conflict resolu-tion is ambiguous. In some cases, such as in thesettlement of the Lebanese civil war (1975–1990),ended by the Ta’ef agreements of 1990, AL’s actionhas been decisive. In other cases, however, the ALhas appeared weak, since it is difficult for memberstates to achieve a common position. During the1990–91 Gulf War and the Libyan civil war (2011)Arab states opted for appealing to the UN SecurityCouncil to settle the conflict. With respect to thepost-2011 Syria case, however, the AL has signifi-cantly improved multilateral political decision-making, suspending Syrian membership inNovember 2011. Such an unprecedented decisionmarks a significant recognition of human rights bythe Arab League.GULF COOPERATION COUNCIL (GCC)8

According to its charter, the GCC promotes “co-ordination, integration, and co-operation amongthe member-states in all fields [economic, political,and security].”9

The GCC is an example of subregional coopera-tion that has reached a level of success, compared toother regional organizations in the Middle East.GCC institutions are vaguely inspired by Europeanregionalism. They consist of the following:

1) the Supreme Council, which brings togetherthe six heads of state once a year to set theprinciples of GCC policies and acts as theCommission for the Settlement of Disputes;

2) the Ministerial Council, which is composed ofmember-state foreign ministers and meets

1 The AL is among the oldest attempts at regionalism. It was founded even before the United Nations. 2 Pan-Arabism strongly characterized the 1940s and 1950s.3 It is noteworthy that the 2009 Sharm el-Sheikh Arab Socio-Economic Summit paid lip service to Arab economic integration. Arab leaders only agreed to establish an

Arab common market by 2020 without a detailed timeline and steps for follow up. 4 World Bank Data, 2011, available at http://data.worldbank.org/indicator/NY.GDP.PCAP.CD .5 Government of Qatar, official statistics, available at www.qsa.gov.qa/eng/PopulationStructure.htm . 6 World Bank Data, 2011.7 Government of Yemen, official statistics, available at www.cso-yemen.org/content.php?lng=arabic&id=553 .8 Members: Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and United Arab Emirates.9 GCC Charter, available at www.gcc-sg.org/eng/ .

every three months; and 3) the General Secretariat, which is a permanent

body located in Riyadh that supervises andsupports the implementation of the GCCpolicies.

Contrary to the Arab Middle East as a whole, thesubregional reality of the GCC is marked by signif-icant homogeneity. The oil and gas sector accountson average for 44 percent of the GDP and forroughly 81-89 percent of the government revenues,with the exception of the United Arab Emirates.10They are all marked by similar regime type(absolute or constitutional monarchies) and bycommon security concerns.11 Indeed, GCCmembers have a common perception of externalthreats: i.e., Iran after the 1979 Islamic revolutionand Iraq as a historical regional challenger. Also,since members have a common sense of internalsecurity, the likelihood of an inter-GCC war isminimized. From this perspective, the GCCmember states endeavor to establish their defenseforces according to a common idea: unifiedoperational procedures, training, and militarycurricula. Furthermore, unlike the regional pan-Arab space, the GCC is ordered by a subregionalhegemonic power, Saudia Arabia. The memberstates share common characteristics and views onworld issues, which appear very clearly in UNvoting patterns. Finally, the GCC promotes labormobility for their citizens. For example, they cantravel from one state to another within the Gulfregion with their national IDs rather thanpassports.

There are some factors that still curb the GCCfrom achieving integration: First, all of the GCCstates, except Saudi Arabia, face a lack of humanresources, and are heavily dependent on oil exports.Oil dependence is at once a factor of strength and ofweakness. Indeed, any security threat liable to riskoil provision routes is likely to tremendously affectGCC economic sustainability. Second, all of theArab GCC states’ security is strongly dependent onthe US as an external security provider. Third, thereare some border disputes between some of the GCC

states, such as the one between Qatar and Bahrainover the Hawar Islands, which was addressed by theInternational Court of Justice rather than by theGCC.

On the whole, however, the GCC can be consid-ered the most successful example of subregionalintegration in the Middle East. ARAB MAGHREB UNION

The agreement to found the Arab Maghreb Union(AMU) was signed in Marrakesh in February 1989among Algeria, Libya, Mauritania, Morocco, andTunisia. It aimed to establish a Maghreb parlia-ment, bank, university, and court. The treaty grantsdecision-making power to the presidential council,which was originally supposed to meet every sixmonths and reach decisions through consensus.The goal was to mirror the European Union model,and it aimed for similar economic integration interms of a common market and currency, as well asto foster extensive political cooperation. Forinstance, in 1994, member states of the AMUagreed to a regional free trade zone.

Despite the many rhetorical and diplomaticefforts, the AMU remains one of the least successfulattempts at regionalism. Indeed, although it wasoriginally also thought of as a framework to settlethe Western Sahara conflict between Algeria andMorocco, the two countries have been unable to putan end to their hostile relationship, which datesback to the 1963 Sand War.

Moreover, at the time of its creation, intratradeamong AMU member states only reached 3 percentof the entire trade volume of the region, and thisfigure remained unchanged over ten years.12 In1993, when the European Community became theEuropean Union, the importance of EU trade toindividual states persuaded Morocco, Tunisia, andlater Algeria to sign bilateral trade agreements withthe EU.GREATER ARAB FREE TRADEAGREEMENT (GAFTA)

The establishment of GAFTA followed theadoption of the agreement to facilitate and develop

REGIONALISM AND REGIONALIZATION IN THE MIDDLE EAST 3

10 See UN Information on National Statistical Systems, available at http://unstats.un.org/unsd/methods/inter-natlinks/sd_natstat.asp ; IMF Data and Statistics,available at www.imf.org/external/data.htm ; Indexmundi statistics, available at www.indexmundi.com/middle_east.html; CIA World Factbook, available atwww.cia.gov/library/publications/the-world-factbook/wfbExt/region_mde.html .

11 Monarchical regime type seems to be an important requisite. To this end, it is noteworthy that in 2011 GCC has offered membership to Jordan and Morocco, thetwo non-Gulf Arab monarchies.

12 While it was 60.2 percent in the EU, 22.3 percent in the ASEAN, and 19.9 percent for the Mercosur.

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inter-Arab trade in 1981 by the Arab League’sEconomic and Social Council. It was originallyfounded by fourteen countries and currentlyincludes seventeen countries that have agreed on aprogressive elimination of trade barriers. Being inforce since January 1, 1998, GAFTA reached fulltrade liberalization of goods through the fullexemption of customs duties and charges. Theinternal trade among the members represents 96percent of the entire intra-Arab trade.13 From thisperspective, GAFTA could have been a reallyefficient agreement that could have broughtregional cooperation. However, a substantialabsence of a real, precise, and feasible implementa-tion plan seems to have limited the results.Moreover, the improvement of trade exchanges isaffected by the lack of economic complementarity(see below). AGADIR AGREEMENT

The 2004 Agadir agreement for the establish –ment of a free trade zone between the ArabMediterranean Nations, which came into force in2007, is aimed at establishing a free trade areabetween Egypt, Jordan, Morocco, and Tunisia. Itwas seen as a possible first step in the establishmentof the Euro-Mediterranean free trade area asenvisaged in the Barcelona Process, which aimed totransform the Mediterranean basin into an area ofdialogue and free exchange. It is also open tofurther membership by all of the Arab states thatare members of the Arab League and GAFTA. Ituses the Euro-Mediterranean rules of origin, whichallow for diagonal accumulation of origin among itsmember countries.14 Furthermore, the EU allows itsMediterranean free trade partners to cumulatevalue-added. In other words, it turns a blind eye towhere value was added as long as it was in a freetrade-agreement partner country. (Conversely, theUnited States only assesses value-added domesti-cally in the country exporting to the US).

The project is still upright and has hithertoreceived 4 million euros from the EU. It isnoteworthy that the agreement is open to all of theArab countries that enjoy trade relations with theEU in order to facilitate the EU-Mediterranean

integration process. Therefore, although theexpected results have not been fully achieved, itremains a crucial institutional framework.

Regional Challenges forMiddle East Initiatives

POLITICAL

• Weak institutions at both state and regionallevels: Political-diplomatic coordination occursmore at a personal-informal level than in thepursuit of shared norms and values.

• National interest vs. integration interests: Froma functionalist perspective, regionalism entailsthe harmonization of domestic state structures;for liberalization and integration to succeed,there must be a political coalition that favors bothover all alternatives, including the status quo.Nevertheless, Arab regimes have appeared to beparticularly concerned with maintaining thedomestic status quo, to the detriment of reformsand adjustment policies.

• Lack of democracy: It is not clear whether thepresence of authoritarian regimes can representan obstacle to regionalism. Authoritarianism iscommonly associated with a lack of democracyand accountability, which in turn brings aboutmistrust at the interstate level. However, the caseof ASEAN would suggest that regionalism can besuccessful despite authoritarian regimes beingmembers of regional projects. From the oppositeperspective, a link between robust regionalismand democratic consolidation has been proved toexist, as the cases of Europe and Latin Americademonstrate.15 After 2011, however, theoccurrence of transparent, democratic elections,along with the demand for democracy, are morelikely to exert pressure on new governments toimplement reforms.

• External penetration of the region: The MiddleEastern history of foreign domination has noparallels elsewhere. The asymmetry betweenMiddle Eastern states and international powers isthought to have obstructed regional cooperation.

13 IBP USA, Arab States Business Law Handbook (Washington: International Business Publications, 2008), p. 18.14 For an explanation of diagonal accumulation, which encourages greater regionalization of manufacturing, see World Customs Organization definition, available at

www.wcoomd.org/en/topics/origin/instrument-and-tools/comparative-study-on-preferential-rules-of-origin/specific-topics/study-annex/cum-dia-abs.aspx .15 It is noteworthy that Turkey’s efforts to accomplish a democratic transition in the last decade have been directed toward joining the EU, rather than improving

relations with their Middle Eastern neighbors.

Moreover, binding bilateral alliances betweensuperpowers and specific regimes, corroboratedby economic and security dependence, havediscouraged the implementation of economicand security coordination among regional states.

ECONOMIC

• Rentier Economies: Most of the Middle Easternstates are characterized by a rentier or semi-rentier economic structure, i.e., high dependencyon externally-derived and unproductively-earnedpayments. Rent can be royalties or paymentsassociated to oil and gas exports. Gulf states areconsidered pure rentier states, for their depend-ence on oil (or gas) exports, which account formore than 50 percent of budget revenues. Insome cases, such as Saudi Arabia, oil productionguarantees over 80 percent of budget revenues.Rentier economies are associated with the so-called “Dutch disease,” i.e., the relation between astrong state’s dependence on natural resourcesand the scarce competitiveness of its manufac-turing sector. In brief, unproductive highrevenues make the productive sector atrophy. Beyond oil, there are other factors that cangenerate a “rentier effect.” Some specific fees,such as those assessed to cross the Suez Canal, aswell as military and external aid are also typicallyconsidered rents.16 Foreign remittances are also asubject of controversy. Some economists considerthem as a positive factor for developingeconomies. Some others consider foreignremittances as a “non-governmental rent,”ultimately producing a distorted effect on theeconomy, inhibiting the potential stimuli tonational production.

• Lack of complementarity: Middle Eastern states(except Turkey and Israel) are very similar inwhat they export and what they import. After thefailure of ISI (import-substitution-industrial -ization) strategies, typical of developingeconomies during the 1960s, Middle Easternstates, unlike Latin American or Asian countries,have not reconceptualized industrialization. Theincreasing dependence on oil and other rentsources since the 1970s, and the interrelated“Dutch Disease,” have heavily discouraged the

industrial sector. Complementarity is one of thebasic features of regional integration. In well-integrated regions like the EU or the NorthAmerican Trade Association (NAFTA) thecomplementarity index17 exceeds fifty, while in theMiddle East it is very low, with oil-states rarelyexceeding twenty. Only Lebanon and Syria sendhalf of their non-oil exports to regional markets.

• Low levels of intra-regional trade: Similareconomic structures explains the scarce MiddleEastern states’ interest (particularly the Arabstates) in trading among themselves. Indeed,intra-regional trade in the Arab world rangebetween 6 and 9 percent. In a comparativeperspective, intra-EU trade is between 55 and 66percent, and in South America intra-MERCOSUR trade is between 11 and 23 percent.

• Business communities: The business sector isgenerally considered a vector for openness andgrowth, as well as for democracy. However,Middle Eastern business communities are heavilydependent on political power, which is a verydiscretionary provider of business opportunities,for it arbitrarily distributes or denies access toprivate capital and to national and internationalmarkets. This dynamic is often defined as “cronycapitalism,” since it describes the peculiardistorted complicity between economic andpolitical power.

• High tariffs: Despite the substantial number ofregional agreements to liberalize trade, tariff ratesremain high. The average trading tariff for Arabcountries is estimated at 17 percent, whileEuropean, American, Russian, and Asian tariffsrange between 8–13 percent. Nontariff barriers totrade are more substantial in the Arab MiddleEast than in any other region of the world.

• Intra-Arab Foreign Direct Investment (FDI) flows:Global FDI inflows have increased at a rate of 141percent from 1998 to 2008, while FDI inflows inArab countries increased at the rate of 630percent, thus twelve times faster than that of therest of the world. Nonetheless, FDI flows into theArab countries still did not exceed 6 percent ofthe total in 2008 (compared to the 0.8 percent of1998). This shows that no decisive measure has

REGIONALISM AND REGIONALIZATION IN THE MIDDLE EAST 5

16 After 1977, for instance, Egypt has received on average $1.2 billion in US military aid and $250 million of economic assistance annually. 17 The complementarity index compares the similarity between the product mix in one country’s export basket and another country import basket.

been taken to create better business opportunitiesand to improve Arab economies. This is due totwo principal reasons: 1) there is a particular FDIconcentration in GCC countries; 2) investmentsgo to “short horizon” sectors, such as services andreal estate, but less to the industrial or agriculturesectors, which would be likely to create more jobopportunities, along with more sustainablegrowth. Moreover, there are low rates of ArabFDI inflows in the region: more than two-thirdsof the total inflows come from non-Arab actors.FDI intra-regional flows are liable to suddenvariations, since they are strongly dependent onexcess of liquidity due to high oil prices.However, since 2000, Arab countries have beensearching for investment opportunities in otherArab countries, in order to compensate for theloss in extra-Arab FDI. This new trend is consid-ered to be very important for Arab integration.

• Lack of transportation: Compared to theOttoman era, when the Hejaz railway connectedArab capitals and served to drive regionalintegration, the current status of regionaltransports appears largely underdeveloped. Railin Morocco stops at the Algerian border; in theGulf, only Saudi Arabia has a rail system, whichconnects Riyadh to Damman, the capital of theoil-rich Eastern Province. Less than 10 percent oftrack is double track and less than 3 percent iselectrified. Many plans for rail projects areunderway but they halted in 2011. Gulf countrieshave already invested several billion dollars.Some EU initiatives, such as the Money, Market,Mobility Strategy (see below), are supervisingsome rail projects, for example, in Jordan.

SECURITY

• Iran-Gulf States rivalry: The rivalry between theIslamic Republic of Iran and the monarchies ofthe Gulf has prevented the emergence of a newsecurity framework in the subregion.

European Initiatives toDevelop Regionalism in theMiddle East

Europe has provided a variety of frameworks fordeveloping regionalism in the Middle East. First ofall, geographic proximity makes the two regionalspaces naturally interdependent. EU-MENArelations are marked by a strong mutual interest infostering regional cooperation between the northand the south of the Mediterranean Sea. On the onehand, non-EU Mediterranean countries needforeign aid to assist in stimulating economicgrowth. On the other hand, European policies havebeen also very focused on security issues and basedon the idea that a prosperous neighborhood wouldbe peaceful and non-challenging for the security ofthe EU territorial space. Ultimately, it is noteworthythat the EU is the main trade partner of all theMiddle Eastern countries.EURO-MEDITERRANEAN PARTNERSHIP

The Euro-Mediterranean Partnership has passedthrough different phases since 1970 onwards. Afterthe first Mediterranean Policy (1972–1992) and theso-called Renovated Mediterranean Policy(1992–1995), the most recent phase started in 1995in the framework of the Barcelona Process.Barcelona’s ultimate goal was “turning theMediterranean basin into an area of dialogue,exchange and cooperation guaranteeing peace,stability and prosperity.”18 The initiative flourishedin the wake of the post-Cold War esprit du temps,i.e., an atmosphere characterized by enthusiasm forthe diffusion of democracy and the free market.

In the Middle East the historical juncture wasstrongly marked by the Gulf War (1990–91), theMadrid Conference (1992), and the Arab-Israelipeace process.

The Barcelona Process was articulated in fourchapters: 1) Politics and Security, 2) Economics andTrade, 3) Socio-cultural, and 4) Justice and InteriorAffairs. Ultimately, it was based on the principle ofmultilateralism.

The European Security Strategy (ESS) waslaunched in 2003, with the motto “A Secure Europein a Better World.” Solving the Arab-Israeli conflict

6

18 Barcelona Declaration, available at http://ec.europa.eu/research/iscp/pdf/barcelona_declaration.pdf .

was affirmed to be a strategic priority for Europe.In 2004, the European Neighbourhood Policy

(ENP) was inaugurated. It was not contradictory tothe Barcelona Process but it was aimed to adjust it,shifting from a multilateralism orientation towardsa country-by-country dialogue.

In 2008, under the impulse of France, the Unionfor the Mediterranean (UfM) was created. Focusedon projects in the water sector, energy sector, andjob creation, the UfM was grounded on the beliefthat security would be achieved through boostingeconomic development. Unlike the BarcelonaProcess it removed the “democratic conditionality”of the regimes to enter the multilateral setting.

In April 2011, in the wake of the Arab Spring, theEU launched a new policy: the Money, Market,Mobility (MMM) Strategy. The policy focused onthe following concepts:• Money: “[R]esources that can go into the region

to help the transition to democracy, the supportfor civil society and of course the economic needsof countries . . .”

• Market access: “[T]he importance of making surethat we give advantages in trade and the peoplecan take advantage of that by being able to exportand import properly.”

• Mobility: “[T]he ability of people to movearound, for business people to be able to conductbusiness more effectively.”19

Challenges for EU Initiatives

POLITICAL

EU strategy in the Middle East is characterized bymany overlapping initiatives. While this denotesthe ability of the EU to adjust its policies in relationto changing context, a general lack of a uniformstrategy has also led to tensions. The UfM, forinstance, has brought about inter-Europeanrivalries.

Moreover, from Barcelona to the ENP, the transi-tion from a multilateral approach to a unilateralapproach remains controversial. On the one hand,this policy shifting was officially justified by the factthat potential competitiveness would be frustrated

by a multilateral approach. On the other hand, it isevident that favoring bilateralism over multilater-alism is contrary to the very idea of regionalism.Ultimately, it might be considered that the EU wasnot able to smooth over the hostility among theinvolved states, in particular the rivalry betweenArab States and Israel. ECONOMIC

While the EU has supported the raw materialexports of Middle Eastern countries, it has not beenable to promote the development of economies ofscale, which would improve intraregional trade. SECURITY

Given the different foreign policy attitudes of EUmembers, Europe was not able to play a role inconflict resolution in the late 2008–early 2009 GazaWar between Israel and Palestinian militants or inthe March 2012 Israeli operation into Gaza.

US Initiatives

QUALIFIED INDUSTRIAL ZONES (QIZs)

The QIZs are an extension of the alreadyestablished US-Israel Free Trade Agreement. Thoseagreements allow certain products from identifiedindustrial zones in Egypt, Jordan, the Gaza Strip,and the West Bank to be exported to the US marketduty free. Goods that are jointly produced by Israeland either Jordan or Egypt are entitled to enter theUnited States duty free and without any quota limit.The agreement requires specific rules of origin butdoes not require reciprocal treatment by Egypt orJordan. Far from being a regional trade agreement(RTA) or a free trade agreement (FTA), marketaccess is granted by only one partner, the United States.

From the US perspective, this promotes peace inthe region through economic development andintegration by fostering trade among Israel and theother Arab states of the QIZs. From this perspec-tive, although QIZs don’t comply with the GeneralAgreement on Tariffs and Trade (GATT) or WorldTrade Organization (WTO) rules, they were neverchallenged because of the political sensitivity of thescenario and the aim behind it: peace.

QIZs were also meant to achieve normalization

REGIONALISM AND REGIONALIZATION IN THE MIDDLE EAST 7

19 For further details, please see EU External Action, available at http://eeas.europa.eu/top_stories/2011/171211_arabsprin_en.htm .20 Quoted in Hassan A. Barari, Israeli Politics and the Middle East Peace Process: 1988–2002 (New York: Routledge, 2004), p. 104.

between Israel and its Arab neighbors byimplementing a practical economic interdepend-ence between them (QIZs were driven from theexperience of the European Steel and CoalCommunity in 1952, which aimed at preventing apotential war between Germany and France).

The thirteen QIZs have had a positive economicimpact on Jordan and Egypt—even if they aredwarfed by the challenges posed by the overallpolitical economy of those two countries—and lessso in Morocco. Furthermore, QIZs have beenunsuccessful in improving technological transfersto Arab countries and in providing them modern-ized vocational training programs in order toencourage the hiring of more people. More successin this area would call for a complete overhaul ofvocational training in each of these countries,which is outside the scope of regionalist efforts.MIDDLE EAST FREE TRADE AREAINITIATIVE (MEFTA), 2003

With the goal of creating a regional free tradeagreement in 2013, MEFTA envisages graduatedsteps for Middle Eastern nations to increase tradeand investment with the United States and withother international actors.

The initiative was conceived as led by the US towork closely with the countries that want tobecome members of the WTO, in order to facilitatetheir accession to it. According to the MEFTAstrategy, the US would pursue specific strategies toenhance trade and investment relations, eachstrategy tailored to the relevant country’s level ofdevelopment.

The conditionality required by Middle Easterncountries involved is the implementation ofdomestic reform agendas, the institution of the ruleof law, the protection of property rights, and thecreation of a foundation for openness andeconomic growth.

Bilateral FTAs with Bahrain, Jordan, Morocco,and Oman have already entered into effect. TheUnited States supports the WTO accession effortsof Algeria, Lebanon, and Yemen, and has also takensteps to revive dialogues with other key tradingpartners in the region, including Egypt and SaudiArabia.

Challenges for US Initiatives

POLITICAL

• Double standard: The US-Israeli “special rela -tionship” has been mistrusted by other MiddleEastern countries, that have accused the US ofonly pursuing Israeli interests.

• Credibility: Middle Eastern public opinionreflects a general hostility to American policies inthe region over the last decade.

• External hegemony: the US has acted as anexternal hegemon in the Middle East. Externalimpulses may be important in the start-up ofregionalism, whether in Africa, Europe, orelsewhere, but in consolidating regionalismendogenous coordination is needed.

ECONOMIC

• Bilateral agreements signed by the US and othersingle countries are likely to have pushed downregional agreements.

International/MultilateralInitiatives

G8 BROADER MIDDLE EAST ANDNORTH AFRICA (BMENA) INITIATIVE

The goal was establishing genuine cooperationamong governments, the private sector, andregional civil society.

The inaugural Forum for the Future held in Rabatin December 2004 established a process of dialogueamong G8 and regional governments in pursuit ofstrengthening freedom, democracy, and prosperityfor all. The initiative has been focused on civilsociety groups and partner countries with the aimof fostering transparency and good governance,democratic participation, women’s empowerment,legal reform, and human rights.

The yearly Forum for the Future is a centrepieceof the BMENA, since it provides an internationalvenue to support the reform voices in the region: itpermits the partners and other supportivecountries and organizations to engage in political,economic, and social reform on a regular basis.G8 DEAUVILLE PARTNERSHIP

The G8 Deauville Partnership is an internationalproject elaborated in 2011 by the G8 to support

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countries in the Arab world engaged in a transitiontoward free, democratic, and tolerant societies inthe wake of the Arab Spring. The Partnershipincludes: • states;21

• international financial institutions and organiza-tions committed to supporting reform in Egypt,Jordan, Libya, Morocco, and Tunisia; and

• several other supporting organizations,including, the Arab League, the Organization forEconomic Co-operation and Development(OECD), and the United Nations. At the 2012 Camp David Summit, G8 Leaders

recognized the important progress that has beenachieved in a number of countries undergoingtransition and committed to maintaining theirsupport for these transitions in four key priorityareas: stabilization, job creation, participation/governance, and integration.

One of the most promising initiatives under theshelter of the G8 Deauville Summit Declaration onthe Arab Spring is the encouragement of multi-donor partnership investments in solar powerdevelopment as a priority. Indeed, abundance ofsunshine, deserts, and proximity to the EU makesNorth Africa the most potentially competitivelocation for concentrated solar power in the world.It is important to mention also the MediterraneanSolar Plan (MSP) under the supervision of the UfM.The MSP aims at developing twenty gigawatts ofrenewable electricity capacity, along withinfrastructures for energy interconnection with theEU by 2020.

Solar power offers challenges and opportunities.The most important challenge stems from coordi-nating international and domestic action toovercome the traditional obstacle of higher costs ofsolar energy, compared to fossil fuel alternatives.On the other hand, however, developing the solarpower sector is liable to produce unprecedentedoutcomes, specifically concerning jobs creation andpositive environmental effects.

It is without doubt that the international financialcrisis has limited the impact of external financialsupport to Arab countries in the last few years, andespecially after 2011. Indeed, many projects remain

on paper and are likely never to be implemented.Ultimately, the underway transitions—some ofthem extremely challenging in the immediateaftermath of 2011 uprisings—bring about greatincertitude, thus discouraging investors and donorsto effectively implement agreed upon projects.

Conclusion

This paper illustrates a series of crucial features thathave impacted on the activity of regional institu-tions and organizations in the Middle East. Ithighlights how the general lack of political coordi-nation among the Arab states has constituted amajor hindering factor. This, in turn, depends onhistorical rivalries and structural disparities inwealth and power. A huge gap can be identifiedbetween the great number and variety of regionalprojects launched in the Middle East and theextremely modest objectives achieved so far.

However, it would be ungenerous to considerMiddle East regionalism as an overall failed experi-ence. It is, for instance, true that the mandate of theArab League has largely remained on paper since1945 onwards. However, it is noteworthy that post-Cold War coordination with international organi-zations has improved the ability of the AL to settlecrucial political issues. The suspension of Syrianmembership, in light of the human rights violationswitnessed during the civil war that erupted in 2011,serves as an elucidating example.

Moreover, when it comes to subregional organi-zations, evaluation on single experiences leads todraw very different conclusion. The GCC, forinstance, has created the conditions for more activecoordination between the Gulf kingdoms, while theArab Maghreb Union has proved to be unable toovercome historical frictions. In some other cases,there are prospects for revitalizing the existingstructures. More recent agreements, such as theGAFTA or Agadir, can indeed serve as institutionalframeworks for launching renovated policies inlight of the post-2011 juncture.

Yet overall, the development of closer ties amongregional institutions with extra-regional ones canconstitute the first step towards increasingefficiency of stagnant projects. From this

REGIONALISM AND REGIONALIZATION IN THE MIDDLE EAST 9

21 See www.state.gov/e/eb/ecosum/2012g8/deauville/index.htm .

perspective, the EU, US, and international-multilat-eral projects underway might work in compliancewith regional actors in order to strengthen theexisting endogenous potential.

A deeper reflection on the post-Arab Springcontext may also be needed. The 2011 uprisingsvery clearly brought to the surface the need forimproving domestic socioeconomic conditions.From this perspective, a positive signal stems fromthe fact that underway projects prioritize jobcreation and improving productive structures. This

is the first step for reaching domestic politicalstability, which is in turn a fundamental requisitefor fostering regional cooperation. Improvingproductive activities might also go with a moresystematic pursuing of economic complementarity,in order to improve intraregional trade andregional economic integration. In the long run,increased production can also attenuate rentdependence and discourage rent-seekingmechanisms, which are proved to be at odds withthe development of democratic governance.

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