Racing Against Time: Reform in North Africa and Transatlantic Strategies

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Mediterranean PaPer SerieS 2010

RACING AGAIN Im: RfRm IN NR AfRICA

ANd RANAlANIC RAGI

J. C CARpNR

Washington Institute or Near ast poicy



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Racing Against Time:Reform in North Africa and

Transatlantic Strategies

Mediterranean Paper Series

July 2010

J. S C*

W I N E P

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Racing Against Time:

Reform in North Africa and Transatlantic Strategies3

Summary

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Introduction1





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Table 1. Freedom Indicators in 1998 and 2008

Freedom House*World Bank Voice

and Accountability**

Index of Economic

Freedom***

1998 2008 1998 2008 1998 2008

Algeria 5.5 5.5 –1.37 –1.05 55.8 56.2

Libya 7 7 –1.60 –1.90 32 37

Morocco 4.5 4.5 –0.22 –0.70 61.1 55.6

Tunisia 5.5 6.0 –0.76 –1.26 63.9 60.1

* Average of political and civil liberties scores; 1 is most free, 7 least free; source: Freedom in the World 2008,

Freedom House

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*** The Heritage Foundation Index of Economic Freedom; 1 to 100, with 100 the most free

The most serious

challenge

has been the

slow evolution

of political

institutions

resulting in a

growing legitima

deficit that

threatens to dera

economic reform




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Without deeper

political, if not

democratic,

reforms to

accompany and

fuel on-going

economic reform

the prospects of

serious instability

in the region grow.





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Libya: The Transitioner

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Economic reform:

A Race Against Time?2

During the

rule of Colonel

Qadafi, Libya’s

small, educated

population was

cut off from the

rest of the world

over time.




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Tunisia: The Liberalizer

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As long as huge

swaths of income

and expenditure

remain off the

books, corruption

will continue

to threaten the

health of Libya’s

economic reforms.

Tunisia, ranks

ahead of one of

its main trade

partners, Italy, in

terms of overall

competitiveness.





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Algeria: The Statist

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Fifty-five to 60

percent of youth

are under 25

years of age and

pressures for

both university

educations and

the jobs expecte

to flow from them

are rising. Algeria

the most populo

country in the su

region, remains

mired in its statis

past and addicte

to its oil revenue




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A slew of

indicators

reveal the ugly

underbelly of the

Algerian economy

and the costs

of putting off

structural reform.

When it comes to

financial market

sophistication,

only one country,

Burundi, ranked

worse and, in FDI

and technology

transfer, it came

in dead last.





Morocco: The Darling of the West

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On most

international

indices

measuring huma

development

and economic

competitiveness,

Morocco comes

ahead of only

one or two of

its neighbors in

the Middle East

and North Africa

region, Algeria an

Yemen. Although

it contributes

only 14 percent

to the Kingdom’s

GDP, almost half

of the population

works in the

sector. Morocco

is a country

necessarily

in a hurry.




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Table 2. Intra-Maghreb vs. Maghreb-EU trade in billions of dollars

Trade with EU Trade with Maghreb

2000 2008 2000 2008

Algeria $20.70 $62.68 $0.34 $2.17

Libya $14.58 $59.99 $0.74 $2.50

Mauritania $0.70 $2.00 $0.03 $0.09

Morocco $12.49 $35.85 $0.44 $1.44

Tunisia $11.37 $20.21 $0.84 $3.85

Total $59.84 $180.73 $2.38 $10.05

Source: Direction of Trade Statistics, International Monetary Fund; 2009, 2005

Income disparities

between the

“haves and

have nots” are

stoking simmering

social tensions

created by the

reform process.





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Political Reform:

Moving at a Snail’s Pace3

Today, a shrinkin

group of elites

is becoming

dangerously

disconnected

from their people

leading to a

growing, if varied

legitimacy crisis

in each country.




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Tunisia’s police

state has

developed

much more

sophisticated too

for repression

and is referred

to within the U.S

Department of

State as “Syria…

with a smile.”




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What passes

for legitimacy

in each country

largely hinges on

the governments’

ability to

successfully

provide security

and services.

The ossification

of the political

systems does not

suggest imminent

revolution or

even wide-spread

social unrest, but

it does create

serious obstacles

to regional

integration and

further economic

reform.





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Toward a transatlantic response?4




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approach has

been heavily

process-oriented,

relies on positive

conditionality

and trade

liberalization, and

is complicated by

ambivalence on

both sides of the

Mediterranean

about Europe’s

colonial past. The

United States

as a status quo

power sought to

fundamentally

alter the status

quo in the region.





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To date,

the Obama

administration has

de-emphasized

political and

economic reform

in the region

while not officially

abandoning its

objectives.





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the regimes

themselves to

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Recommendations5

The United States

should work with

the European

Union and the

rest of the G8 to

refashion BMENA

with an eye toward

enhancing its

political aspects

for more reform-

oriented countries.





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The Obama

administration

should establish

Deputy Assistant

Secretary

dedicated

exclusively to

North Africa with

the Bureau of

Near East Affairs

or the Bureau of

African Affairs.



O f f

Washinton • Berlin • Bratislava • ParisBrussels • Belrade • Ankara • Bucharest

www.gm.g

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Racing Against Time: Reform in North Africa and Transatlantic Strategies

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