Europe’s Relations with North Africa: Politics, Economics and Security 9781784538354, 9781350986282, 9781786731685

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Adam Yousef is an economist who has worked for and advised governmental and non-governmental institutions in Europe and North America, as well as teaching economics and mathematics in European and North American institutions. He holds a PhD from the University of Cambridge.

EUROPE'S RELATIONS WITH NORTH AFRICA Politics, Economics and Security

ADAM YOUSEF

Published in 2017 by I.B.Tauris & Co. Ltd London • New York www.ibtauris.com Copyright q 2017 Adam Yousef The right of Adam Yousef to be identified as the author of this work has been asserted by the author in accordance with the Copyright, Designs and Patents Act 1988. All rights reserved. Except for brief quotations in a review, this book, or any part thereof, may not be reproduced, stored in or introduced into a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without the prior written permission of the publisher. Every attempt has been made to gain permission for the use of the images in this book. Any omissions will be rectified in future editions. References to websites were correct at the time of writing. Library of European Studies 24 ISBN: 978 1 78453 835 4 eISBN: 978 1 78672 168 6 ePDF: 978 1 78673 168 5 A full CIP record for this book is available from the British Library A full CIP record is available from the Library of Congress Library of Congress Catalog Card Number: available Typeset in Garamond Three by OKS Prepress Services, Chennai, India Printed and bound by CPI Group (UK) Ltd, Croydon, CR0 4YY

CONTENTS

List of Illustrations Acknowledgements List of Acronyms and Abbreviations Introduction European– North African Relations under the Spotlight 1. 2.

3. 4. 5. 6. 7. 8.

EMP, ENP, and UfM: Propelling Euro-Mediterranean and European– North African Relations Forward EMP, ENP, and Economic Progress in North Africa & the Southern Mediterranean: A Mission that Remains in Progress The EU and Morocco: A Growing Symbiosis Defies a Chequered History The Testimonies of EU and Moroccan Officials Analysing the Policy Instruments used by the EU to Foster Socioeconomic Development EU Policies and Socioeconomic Development in Morocco (I): The Successes and the Challenges EU Policies and Socioeconomic Development in Morocco (II): Income Inequality and Development EU Policies and Socioeconomic Development in Morocco (III): The Ideology behind the Approach

vii xi xii 1 19

46 72 87 134 152 189 234

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Conclusions EU – Moroccan and EU –North African Relations in a New, Fast-Evolving Regional Context

253

Notes Bibliography Index

259 290 307

LIST OF ILLUSTRATIONS

Figures Figure I.1 The Chain of Relations between Variables

14

Figure 7.1 Income Inequality vs. HDI in Morocco and the L24 (2005– 9 Averages)

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Figure 7.2 Per-Capita GDP vs. HDI in Morocco and the L24 (2005– 9 Averages)

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Graphs Graph 6.1 Morocco’s GDP Per-Capita (in Constant 2000 US$): 1978–2008

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Graph 6.2 Inflation, Consumer Prices (annual per cent): 1978–2008

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Graph 6.3 Evolution of Total Unemployment Rate in Morocco: 2000–9

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Graph 6.4 Unemployment in Morocco by Educational Background: 1998– 2005

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Graph 6.5 Morocco’s Production Possibilities Frontier (PPF)

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Graph 6.6 An Increase in PL and its Ramifications for Morocco

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Graph 6.7 Liberalising EU –Moroccan Trade Flows

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Graph 6.8 Morocco’s GDP (billions US$): 1980–2009

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Graph 6.9 Morocco’s Labour Force Size: 1980–2009

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Graph 6.10 Morocco’s Annual Population Growth (Per Cent): 1980–2009

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Graph 6.11 Morocco’s Gross Physical Capital Formation: 1980–2009

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Graph 6.12 Ratio of Exports Plus Imports to GDP in Morocco: 1980–2009

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Graph 7.1 Combustible Renewables and Waste (MT of Oil Equivalent): 1978–2008

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Graph 7.2 Urbanisation in Morocco: 1978 –2008

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Graph 7.3 Carbon Dioxide Emissions: 1978–2008

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Graph 7.4 Moroccan Children Immunised against Measles: 1982–2008

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Graph 7.5 Life Expectancy at Birth for Males, Females, and Total: 1978–2008

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Graph 7.6 Birth and Death Rates (per 1,000 people): 1978–2008

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Graph 7.7 Pupil– Teacher Ratio in Primary Schools

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Tables Table 1.1 Conflicts and Asymmetries between EU Members and the EU’s Mediterranean Policy

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Table 6.1 GDP Per-Capita (Purchasing Power Parity at Constant 2005 International $): Germany vs. Morocco (1980– 2008) 159 Table 6.2 Pupil–Teacher Ratio in Primary Schools: Germany vs. Morocco (1995–2008) 160

LIST OF ILLUSTRATIONS

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Table 6.3 HDI Values of Germany vs. Morocco (1990– 2010)

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Table 6.4 Number of Patents Issued Per Million People and R&D Expenditure (2006)

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Table 6.5 Patents and Trademark Applications in South Korea: 1975–2006 (Per Million People)

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Table 6.6 Number of Researchers in the Asian Tigers (per million people) (2006)

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Table 7.1 Morocco’s GINI Index (1991– 2007)

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Table 7.2 Share of Income Held by the Different Income Quintiles in Morocco

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Table 7.3 Urban/Rural Inequalities in Health Outcomes (2009)

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Table 7.4 Urban/Rural and Gender Inequalities in Education Outcomes (2009)

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Table 7.5 Percentage of Moroccans in Employment by Level of Education (2009)

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Table 7.6 Unemployment and Economic Inactivity (By Age and Gender) (2009)

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Table 7.7 Proportion of the Population (10 years old þ) Who Can Read and Write in a Given Language (By Gender and Geographical Location) (2007)

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Table 7.8 Inequities in Health and Education Outcomes along Gender and Geographical Lines (2002/3 vs. 2009)

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Table 7.9 GINI Index Value: Morocco vs. the L24 and the C2 (2005– 9 Averages)

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Table 7.10 HDI and Inequality-Adjusted HDI: Morocco vs. the L24 and the C2 (2010)

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Table 7.11 Robbery Rates (Per 100,000 People): Morocco, the L24, and the C2 (2008)

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Table 7.12 Income Inequality and Innovation (2005– 9 Averages)

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Table 7.13 Sustainability and Socioeconomic Development: Morocco vs. the L24 and the C2

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Table 7.14 Percentage of Respondents from Each Country Who Disclosed Mistrust

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Table 7.15 Percentage of Students Who Progress to Secondary Schools in Morocco

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Table 8.1 Real Interest Rates in Morocco: 1994– 2005

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ACKNOWLEDGEMENTS

This study is the fruit of years of commitment towards making a novel contribution to an increasingly important subject. I dedicate this book to every individual who aspires to see a stable and prosperous Mediterranean Basin. I also dedicate it to each and every academic, researcher, and policymaker who has scrutinised the politics, economics, and history of the Mediterranean, with the intention of bridging the many divides across its shores. This investigative endeavour was only made possible by the continuous support, advice, and assistance I have received over the years. Initially, I must express my utmost gratitude and appreciation to Professor George Joffe. I am also grateful to Professor Ha-Joon Chang, with whom I have had many interesting discussions. His insights on development theory and statistical analysis have been precious. Finally, it goes without saying that I’m extremely grateful to the bureaucrats, economists, and diplomats whom I have interviewed for this research. Their illuminative remarks have been vital to answering the study’s central questions, and to understanding the intricacies of EU– North African relations.

LIST OF ACRONYMS AND ABBREVIATIONS

1 KT AA AMDIM AMU AP(s) C2 CA CEC CEEC CFCs CLI COE COSEF CPI DCFTA DG DG-AIDCO

One thousand metric tons EMP bilateral Association Agreements The Moroccan Association for the Defence of Independence in the Magistrates Arab Maghreb Union ENP Action Plan(s) Two countries often referred to in Chapter 7: Kyrgyzstan and Moldova Cooperation Agreement Commission of the European Communities Central and East-European Countries Chlorofluorocarbons Cumulative Liberalisation Index Euro-Mediterranean Charter for Enterprise La Commission Spe´ciale pour l’Education et la Formation (au Maroc) Consumer Price Index Deep and Comprehensive Free Trade Agreement Directorate-General (a departmental unit of the European Commission) European Commission’s Directorate-General for External Aid and Development

LIST

DG-ECFIN

OF ACRONYMS AND

ABBREVIATIONS

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European Commission’s Directorate-General for Economics and Finance DG-ENTERPRISE European Commission’s Directorate-General for Enterprise and Industry DG-RELEX European Commission’s Directorate-General for External Relations DG-TRADE European Commission’s Directorate-General for Trade Diplomat 1 Refers to the first of two Moroccan diplomats interviewed, and whose accounts are outlined in Chapter 5 Diplomat 2 Refers to the second of two Moroccan diplomats interviewed, and whose accounts are outlined in Chapter 5 EC The European Commission ECSC European Coal and Steel Community ECTS European Credit Transfers System EE East European EEA European Economic Area EEC European Economic Community EIB European Investment Bank EMFTA Euro-Mediterranean Free Trade Agreement EMP Euro-Mediterranean Partnership ENP European Neighbourhood Policy ENPI European Neighbourhood and Partnership Instrument (instrument of financial support incorporated under the European Neighbourhood Policy) EP European Parliament EU European Union EU-15 EU member-states prior to the 2004 Enlargement EU-meds EU member-states adjacent to the Mediterranean Sea Euro-Med Euro-Mediterranean EuroMeSCo A European Commission-sponsored network of research institutes concerned with security studies and Mediterranean affairs FDI Foreign Direct Investment

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FEMIP FEMISE FSU FTA G20 GATS GATT GCC GDP GINI G-Med GMP GNP HCP HDI H-O IGAs IMF INDH L24 LDC MEDA MENA region MNC MT MU N/A NAFTA

WITH

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Facility for Euro-Mediterranean Investment and Partnership Forum Eurome´diterrane´en des Instituts de Sciences E´conomiques Former Soviet Union Free Trade Area Group of 20 Major Global Economies (Developed and Emerging) General Agreement on Trade in Services General Agreement on Tariffs and Trade Gulf Cooperation Council Gross Domestic Product Gini Coefficient A central executive body of the UfM Global Mediterranean Policy Gross National Product Morocco’s Haut Commissariat Au Plan Human Development Index Heckscher-Ohlin Model of International Trade Income-Generating Activities International Monetary Fund Morocco’s ‘Initiative Nationale pour le De´veloppement Humain’ A group of 24 middle-income countries referred to in Chapter 7 Less-developed Countries (or Developing Countries) Mediterranean Economic Development Assistance (Instrument of financial support under the Barcelona Process) The Middle East/North Africa region Mediterranean Neighbour Countries (which include the North African states) Metric Ton (1000 kg) The Mediterranean Union (President Sarkozy’s initial proposal, later replaced by the UfM) Not Available North American Free Trade Area

LIST

NEC NGO Non-meds NORAFS OECD PCHD PE PPP R&D RAMED SAP TACIS TAIEX TEMPUS TFP The Moroccan Economist The Moroccan Governor UEI UfM UN UNDP UNRISD WDI WTO WVS WWF [Web]

OF ACRONYMS AND

ABBREVIATIONS

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Neighbourhood Economic Community Non-Governmental Organisation EU member-states not adjacent to the Mediterranean North African states (in the context of this book, referring to Libya, Tunisia, Algeria and Morocco) Organisation for Economic Cooperation and Development Provincial Committee for Human Development (administers development projects at the provincial level in Morocco) Public Enterprises Purchasing Power Parity Research and Development Morocco’s Re´gime d’Assistance Me´dicale (medical coverage programme) Structural Adjustment Programme Technical Assistance for the Commonwealth of Independent States Technical Assistance Information Exchange Office Trans-European Mobility Programme for University Studies Total Factor Productivity Refers to a Moroccan economist who was interviewed, and whose account is featured in Chapter 4 Refers to one of four Moroccan officials whose accounts are outlined in Chapter 4 Unemployed and economically inactive The Union for the Mediterranean United Nations United Nations Development Programme United Nations Research Institute for Social Development World Bank’s World Development Indicators World Trade Organization World Values Survey World Wildlife Fund Internet web page (URL link listed in full in the bibliography)

INTRODUCTION EUROPEAN—NORTH AFRICAN RELATIONS UNDER THE SPOTLIGHT

Marcus Philippus, Jawhar, and the Mediterranean Basin In the year 244 AD , a Roman Praetorian Guard by the name of Marcus Philippus reaped the ultimate fruit of his phenomenal rise from amongst the ranks of the Roman military establishment. His life’s journey from an obscure commander to a Roman Emperor continues to inspire and bedazzle. Historian Michael Grant stated: ‘he [Philip] held the office of deputy praetorian prefect. Then late in 243 . . . he became prefect, and inflamed the soldiers against the emperor by blaming him for a scarcity of food’.1 Following Emperor Gordian III’s death, Philip ‘insisted on Gordian’s deification. The senators, with whom Philip immediately established a friendly relationship, concurred and recognised his claim to the throne’.2 In spite of its tumultuous nature and the unceremonious manner of its end, Philip’s reign was, in certain ways, a minor ray of sunshine within the so-called ‘Roman Age of Crisis’. For example, ‘he appears to have done what he could to palliate injustices and improprieties in the machinery of government. He intervened to prevent abuses in the treasury administration, and a number of his rulings . . . reflect vigilant protection of civil rights’.3 Circumstances prevented him from harnessing the true potential of his shrewd and assuming personality.

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Fast forward to the tenth century AD , during which the Fatimid Caliph al-Muizz was eyeing the consolidation of his North African Caliphate as well as its expansion eastwards. Prior to this expansion, he needed to secure the state’s Western territories. Walker wrote that ‘as commander of the whole expedition . . . he [al-Muizz] drew on the services of a remarkable . . . former slave and clerk, named Jawhar’.4 Jawhar’s leadership abilities captured the Caliph’s attention, as he subdued opposition to his rule in North Africa and the Southern Mediterranean. Jawhar progressed through the military and political echelons of the Fatimid Caliphate to become its most prominent commander and state administrator. His most significant achievement was the annexation of Egypt to the burgeoning Caliphate with virtually no opposition. In fact, ‘as Jawhar approached the Egyptian capital, Egyptian notables came to him [to welcome him]’.5 The remarkable stories of Marcus Philippus and Jawhar are lucid testaments to the historical and enduring political, economic, social, and cultural links between the two shores of the Mediterranean. After all, Marcus Philippus was in fact of Syrian Arab descent, and was born in a town close to modern day Damascus. Grant recounts that Philip ‘was the son of an Arab chieftain named Marinus, holding Roman knightly rank’.6 Nicknamed ‘Philip the Arab’, he made astute use of his father’s powerful connections to further his political career until he became Emperor. By the same token, Jawhar was born in Sicily to parents of Greek ethnicity. O’Leary remarked that Jawhar was ‘commonly known as “Jawhar the Greek scribe”, as he was a liberated slave trained as a secretary, whose father had been subject of the Byzantine Empire’.7 An early life of oblivion and destitution dramatically changed when he crossed the Mediterranean and ended up in North Africa. Over millennia, European, Levantine, and North African peoples crossed the Mediterranean Basin, weaving a profound and ever evolving tapestry of political, economic, and cultural interdependence in the process. Phoenician traders, Roman centurions, Muslim armies, and European colonisers all eyed the Mediterranean region with keen strategic interest, leaving their traces on what has been a multi-faceted interaction among different peoples in a progressively coalescing space. Placed in this context, the period between the mid-1960s and 1990 signified an anomaly in the history of Euro-Mediterranean and

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European– North African relations. For nearly three centuries, Europe’s major powers determined the trajectory of realities in that region, in light of their colonisation of the Mediterranean-adjacent territories of the Middle East and North Africa. Post-World War II, these European powers were in ruins, and decolonisation accelerated both globally and in the MENA region. Western Europe found itself in the midst of an entirely different international political and economic order. This new order brought with it new challenges – the imposing threat of the Soviet Union, the risk of nuclear warfare, wide-scale reconstruction, and US-supported regional integration. By virtue of these new developments, Europe suddenly found itself preoccupied by a plethora of pressing concerns, from which relations with Mediterranean Neighbour Countries (henceforth MNC), including North African countries (henceforth NORAFS), did not stand out. The anomaly alluded to earlier lies in the fact that a combination of global and regional issues afflicting Europe and the NORAFS meant that relations between the two during that period fell short of the historical norm. Like the contours of a business cycle, the relative slowdown that inhibited European–North African relations for nearly 25 years gradually metamorphosed into a boom in the early 1990s. Chapter 1 will show that a me´lange of regional and international events prompted members of the European Economic Community (EEC) (later the European Union (EU)) to resume the leading role they enjoyed in the Mediterranean Basin over the past few centuries and redirect their attention to the region. This attention grew remarkably, which in turn fuelled the EU’s bold aspirations. The culmination of this active engagement was the introduction of an unprecedented road map that was intended to delineate the foundations and direction of future relations between Europe and the MNC (including the NORAFS) on all fronts. This road map was inaugurated in late 1995, and is better known as the Barcelona Process. The same conference that launched the Barcelona Process also witnessed the debut of what would be the first of three central ‘Euro – Med’ initiatives – the Euro-Mediterranean Partnership (EMP). In spite of tension emanating from regional disputes and international conflicts, the momentum towards greater proximity would continue, as witnessed by the introduction of another initiative, the European Neighbourhood Policy (ENP), in 2004, to serve as reinforcement to the framework of the Barcelona Process. This drive did not abate, and the 2008

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reconfiguration of the EMP under the auspices of The Union for the Mediterranean (UfM) augmented the process. In the broad context of Mediterranean relations, the Barcelona Process marks a significant event in the histories of Europe, the Middle East, and North Africa, and may well fashion developments for many years to come. Despite being a European-inspired project in terms of design and management, the Process has also received the support of the NORAFS, who were particularly enticed by its potential rewards. Given its stated objectives, the Process also represented a watershed moment for peoples across the Mediterranean’s two shores. The Barcelona Process in general, and the initiatives deriving from it in particular, constitutes the foundation of this investigative endeavour. This book seeks to supplement the rich literature on the Process by investigating the topic from a different angle and presenting an original perspective on the subject.

Main Purpose of the Book Euro-Mediterranean relations (and European–North African relations) since 1995 have been the subject of continuous and ever expanding debate. Different studies evaluated the evolution of these relations, and the commitment of both parties to the terms agreed upon under the Barcelona Process, through a variety of prisms. The majority of these studies assessed relations from a political or international relations perspective, scrutinising the extent to which the EU’s policy tools provoked governance reforms in the MNC on the political sphere. Other studies, however, tackled macroeconomic considerations and devoted attention primarily to the role that free trade and financial aid have played to buttress growth, curtail inflation, and consolidate budget and current account positions in the MNC, including the NORAFS (a detailed discussion of the literature and its shortcomings is provided in Chapters 1 and 2). Nevertheless, most of the existing literature does not give much attention to the socioeconomic dimension of Euro-Mediterranean and European – North African relations (with the exception of, for example, Martı´n, who does look at this issue more closely – see Martı´n (2004) and Martı´n (2007) for examples). The importance of this dimension becomes apparent when one identifies the overriding concerns of the EU and the NORAFS. From the Union’s point of view, the Barcelona

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Process represented a comprehensive and ambitious effort to transform realities in the MNC (including the NORAFS) to improve regional security.8 Internal security would be enhanced by reducing the flow of migrants and contraband from the NORAFS, whilst external security would be realised once these countries experience superior economic and social conditions (which would reduce the likelihood of conflict across the Mediterranean). For the NORAFS, a key purpose behind stronger relations with the EU was to access greater opportunities for economic prosperity. The fulfilment of these Barcelona aspirations rests on the socioeconomic destinies of citizens in the MNC (including the NORAFS). Improving the incomes of these individuals is merely one of several targets under this category of the Declaration – others include boosting their living standards, ‘reduc[ing] . . . the developmental gap in the Euro-Mediterranean region’, and ensuring their economies’ developmental sustainability in the face of environmental challenges.9 By tackling these challenges, the NORAFS can provide a better quality of life to their citizens. A better quality of life for NORAFS citizens would address a paramount factor behind migration to EU members, would help these countries mitigate social unrest, and would set them on the path to a brighter social and economic future. As Chapters 1 and 2 will demonstrate, the discussion of the socioeconomic aspects of Euro-Mediterranean relations has been limited compared to the other facets of these relations (such as the political and macroeconomic issues) (see Martı´n (2007)); for one thing the social ramifications of EU policies emerge years after their implementation. Only Tunisia and Morocco signed accords with the EU in the mid1990s, allowing one to identify the socioeconomic dynamics and project their long-run consequences over a period of fifteen years. Even so, highlighting the developmental issues cannot be overstated, in light of the influence that the contrasting socioeconomic conditions have on both shores of the Mediterranean. It is this aspect of the literature that this book attempts to contribute to. This book addresses the following questions: (a) Have the EU’s Mediterranean policy objectives under the Barcelona Process ameliorated socioeconomic conditions in the NORAFS between 1995 and 2010?

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(b) Were these policy objectives the most appropriate for promoting socioeconomic development in the NORAFS, or were they simply those the EU could agree on? (c) Can these objectives effectively reduce the socioeconomic gap (i.e. the gap in standards of living) that exists between EU members and the NORAFS over time? After all, the main purpose of development studies (see Obstfeld and Rogoff (1996)) is to explain the reasons behind the divergence in outcomes between rich and poor countries prior to reducing these gaps to foster global prosperity. The primary objective of developmental policies, therefore, is to help developing countries ‘catch-up’ to developed countries. In the context of Euro-Mediterranean relations as a whole this is a central objective (see Nsouli (2006)). In order to fully establish the policy objectives’ medium-term and longterm impacts, one specific NORAFS was selected that signed and begun implementing the policies relatively early, and for which adequate information (both quantitative and qualitative) could be acquired. Chapter 2 will reveal that Morocco was selected for this case study, and will articulate the reasons. This study acquires profound importance on the backdrop of post2011 developments in the Middle East and North Africa. The so-called ‘Arab Spring’ prompted the EU as well as incumbent NORAFS governments to re-examine their policies and manoeuvre to effectively adjust to new realities. This investigation will not only concentrate on evaluating the performances of the EU and Morocco in implementing the terms of the agreements signed by the two parties between 1995 and 2010; it will decipher whether the policy objectives promoted by the Union are the most appropriate for development in Morocco and the NORAFS. After all, there is little point in praising or criticising the daily performance of builders at a construction site if the building’s foundations are questionable. Therefore, it is necessary to contribute to the debate by bringing a crucial dimension of Euro-Mediterranean relations to the fore, evaluating the EU’s approach to development in the Southern Mediterranean and North Africa, and whether the Union has provided an alternative approach to the one pursued by Morocco since the early 1980s.

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Theoretical Framework and Methodological Considerations10 This book will employ a structural change theory of economic development as a theoretical framework. This section commences by listing the key features of this theory, before providing an overview of alternative disciplines in economic development and explaining why structural change in particular will be adopted as the theoretical framework. Structural change (also referred to as structural transformation) theory is one of four theories that underpin the discipline of economic development (see Todaro and Smith (2008)). At the heart of this discipline is the idea that in order to develop, developing countries need to shift away from being agrarian via a process of industrialisation. The 2006 United Nations World Economic and Social Survey observed that structural change theory emphasises the need for developing countries to industrialise in order to transition towards engaging in economic activity that requires higher productivity levels. The Survey traced the roots of this theory to seminal contributions made by Kuznets (1966) and Chenery and Taylor (1968), both of which highlighted the point that industrialisation is vital to growth and development in less developed countries because it boosts the overall productivity of an economy’s resources.11 Subsequent work built on this idea of industrialisation and productivity being pre-requisites for an economy to transition from mainly producing and exporting agricultural products towards manufacturing (the UN World Economic and Social Survey cited the work of Kaldor (1978) as an example). Through ‘learning-by-doing’ (which refers to mastering the technical knowledge to produce more sophisticated goods and services) and technological innovation, productivity can be enhanced according to the theory, which will drive the structural change and help boost the economy’s output. In a speech delivered at Cairo University in 2009, the World Bank’s chief economist, Justin Lin, noted that structural change theory ‘envisioned’ proactive state intervention to promote economic development.12 This is in line with the Keynesian approach to economic management, which rejects the notion that free markets can efficiently allocate resources to generate economic growth and improve living standards.13

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Various theories sought to explain and examine what guides the development of nation states. Todaro and Smith mentioned that in the post-World War II era, four theories of economic development have dominated the scene. These are: (1) The linear-stages-of-growth model, which grew out of the experience of the Marshall Plan, under which the United States government injected massive amounts of physical capital to help reconstruct the economies of the war-torn West-European countries.14 Seminal contributions under this framework include Rostow (1960), who spoke of five stages that need to be fulfilled for successful development: (a) A traditional society characterised by subsistence activity. (b) A ‘pre take-off’ stage in which a society ‘exploits the fruits of modern science’15 to develop. (c) The ‘take-off’ stage, epitomised by dramatic changes in production that impact the political and social structure of society. (d) The ‘maturity’ stage – ‘the stage in which an economy demonstrates that it has the technological and entrepreneurial skills to produce not everything, but anything that it chooses to produce’.16 (e) The ‘high mass-consumption’ stage – individuals enjoy the benefits of consuming a high variety of goods and services. In spite of its initial popularity during the early post-World War II era, the model was limited in the sense that it focused solely on investment as the primary variable without taking into account other determinants: increased investment by itself did not guarantee long-term economic growth, and the reason why the Marshall Plan succeeded in Europe is due to the presence of ‘necessary structural, institutional, and attitudinal conditions . . . to convert new capital effectively into higher levels of output’.17 (2) The international-dependence theory, which traces its origins to Marxist ideas on the relationship between developed and developing countries in a post-colonial ambience.18 Within this discipline there are three variants: the ‘neo-colonial dependence model’, which links the misfortune in developing countries to a capitalist global economic

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structure that perpetuates global inequality (see Dos Santos (1970)), the ‘false-paradigm model’, which attributes the blame for underdevelopment to inappropriate advice disseminated by developed countries and multinational agencies without taking into account the ad hoc characteristics of developing countries’ economies, and the ‘dualisticdevelopment’ approach, which shares the neo-colonial dependence model’s view of a globally unequal world, but also seeks to highlight the presence of two ‘faces’ within a developing country: a relatively modern, capital-intensive sector whose participants tend to be affluent, and a less developed, labour-intensive sector whose participants tend to be poorer. International-dependence theory has come under criticism for a variety of reasons. It tends to marginalise the internal obstacles to development, focussing mainly on the unequal political and economic power of rich countries that skew the system in their favour.19 (3) The neoliberal approach to economic development, which gained prominence in the 1980s. In the words of Todaro and Smith, this approach asserts that ‘underdevelopment results from poor resource allocation due to incorrect pricing policies and too much state intervention by over active developing-nation governments’.20 Chief proponents of this ‘counter-revolution’ to dependency theory are Kreuger (Kreuger (1993)), Bhagwati (Bhagwati and Srinivasan (1999)), and Lal (Lal (2000)). This theory posits that the constraints to economic development are predominantly internal – by providing the state with a prominent position in economic management, the market is not allowed to allocate resources efficiently to generate the required growth, and this inhibits the realisation of greater socioeconomic outcomes. In spite of becoming a feature of developmental policy over the 1980s and 1990s, the neoliberal framework has become the subject of criticism due to a variety of factors. This approach, while positing the primacy of the market mechanism over a command economy structure, ignores the fact that ‘many LDC economies are so different in structure and organization from their Western counterparts that the behavioral assumptions and policy precepts of traditional neoclassical theory are sometimes questionable and often incorrect’.21 According to Lin, deficiencies within the neoliberal approach to development have led to the resurgence of ideals that retain the emphasis on structural change of the economic basis of a country as a prerequisite

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to development (see for example Chang (2007) and Mosk (2010)) whilst acknowledging the primacy of the market mechanism over the command economy structure. Further criticism of the neoliberal approach has come from environmental economists (see Davis (2006)), neo-Marxist economists (see Harvey (2005)), and others (Chapter 8 elaborates on such criticisms and discusses them in further detail). (4) Structural change theory, which essentially focuses on the transformative definition of development; in other words, it views development as a process by which a country acquires the capacity to transform its productive capacity and industrialise in order to boost standards of living. This strand of developmental theory advocates a more primary role for the state in managing the economic development of a country in transition. Major contributions within this field include: (a) Lewis’ ‘two-sector’ model. Devised by W. Arthur Lewis, this model assumes a dual economy with an underdeveloped rural sector with excess labour and an advanced urban sector that espouses high levels of technological production, and which attracts the excess labour in the rural areas. As a result of this movement of labour, output in the advanced sector expands, thereby stimulating economic growth. According to Todaro and Smith, ‘this process of modern selfsustaining economic growth and employment expansion is assumed to continue until all surplus rural labor is absorbed in the new industrial sector’.22 (b) Chenery’s ‘patterns of development’ approach, which utilised empirical data to pinpoint several features of developmental transition that are common for countries that have successfully developed, including industrialisation, shifts in consumption patterns towards greater variety and luxurious goods (as opposed to necessities such as food and shelter), urbanisation, and decline in population growth rates.23 Structural change theory continues to be popular amongst many development economists,24 but has been criticised for ‘emphasizing patterns rather than theory . . . this approach runs the risk of leading practitioners to draw the wrong conclusions about causality’.25 Nevertheless, structural change theorists maintain that they accept

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that different countries and scenarios retain distinct features, and that while particular patterns would not adequately account for these different scenarios they can still shed insight into the process by which countries can develop and transform economically. As an example, Kay and Gwynne used empirical evidence from the Latin American developmental experience to assess whether structural change theory depicts a more accurate picture of the developmental needs and challenges of these countries than the neoliberal approach. They concluded that structuralism (and dependency theory to a lesser extent) provided a better framework to assess the problems and design policies to overcome the state of underdevelopment in the region.26 Another point they raised is the ‘adaptability’ of structural change theory, a concept that refers to the fact that the theory has been able to accommodate new realities and phenomena provided by recent developmental experiences. For example, they referred to how structural change theorists have recently utilised the experience of the ‘Asian Tiger’ economies to call for measures such as ‘selective integration into the world economy’ and ‘well designed industrial policy’ to promote industrial productivity in a globalised world – concepts that convey an implicit admission of the importance of market forces whilst arguing for the need for a developmental state to manage such forces.27 For its part, since the early 1980s, Morocco has adopted a broadly neoliberal approach to development, starting with a structural adjustment programme devised by the World Bank and the IMF (see Chapter 3 for more details). The Kingdom has continued to adopt this approach since. At the same time, as Chapters 4 and 6 will demonstrate, the Moroccan economy continues to be agrarian in nature, and that the country has been unable to industrialise and expand its manufacturing sector (see the Interviews with the Moroccan officials section in Chapter 4 for further details). This has curtailed the country’s growth potential, and its inability to mitigate income inequality (see Chapter 7) has not aided its efforts to improve the standards of living of its citizens. These factors make the Moroccan scenario similar to the situation portrayed by structural change economists. Thus the book adopts a structural change theoretical framework to evaluate the situation concerning Morocco’s economic development, and argues that such a framework can shed better insight into the challenges afflicting European–North African economic relations.

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While this book looks at EU policy objectives and how significant they have been to improving Morocco’s socioeconomic outcomes, Morocco has also resorted to financial aid and support from various parties, including the World Bank and the African Development Bank. In essence, the book evaluates whether the Union has introduced a novel element to Morocco’s developmental project that would be more effective in helping the Kingdom realise its developmental aspirations than the World Bank’s SAP. The dependent variable under investigation is socioeconomic development. If, as Hunt suggested, ‘Development itself is . . . a process of economic growth combined with reduction of unemployment, poverty and extreme asset inequality and with protection of non-renewable resources’, then the focus becomes one on outcomes. But Hunt goes on to suggest that it also entails, if development is to be self-sustaining, the transformation of productive structures and the development of an endogenous technological capacity and an appropriate organizational capability underpinned by institutions which are effectively enforced.28 As part of its approach under the Barcelona Process, the Union has utilised policy instruments that include financial aid (as administered by the MEDA and ENPI programmes for example to help Morocco dismantle trade barriers and reduce the role of the state – see Chapter 5) and policy dialogue and liaison to transmit technical information to help the country reform. These instruments have been utilised to accomplish four primary policy objectives: trade liberalisation (as promoted by the bilateral Association Agreements), reducing the role of the state in economic management by promoting private enterprise and liberalisation within economic sectors (as featured in the Association Agreements and Action Plans), macroeconomic stability through maintaining low inflation rates, and the insistence on good governance as a precondition for development (a feature of EU initiatives towards the NORAFS). From the EU’s point of view, these objectives are prerequisites to improving socioeconomic outcomes in the MNC (including the NORAFS). Intermediate variables will link the aforementioned policy objectives to Morocco’s socioeconomic outcomes. These variables are export

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diversification, technological sophistication (i.e. the ability to undergo a technological transition towards producing goods and services with a higher economic value-added through ‘learning-by-doing’), and income inequality. By utilising the Heckscher-Ohlin model of international trade, Chapter 6 will reveal that the drive for trade liberalisation has impeded Morocco’s efforts to structurally transform its economy in order to industrialise and develop as per structural change theory. The same chapter (Chapter 6) will also allude to Lucas’ endogenous growth model, which will illustrate the impact of free trade on a country’s effort to enhance its human capital formation in order to transition towards producing more sophisticated products that accrue a higher economic value-added. This model emphasises the importance of human capital accumulation to structurally change a country’s economic basis. Structural change economists argue that development is a process of productive transition from elementary products such as agriculture to more sophisticated products that would generate greater income. Meanwhile, they also endorse state intervention to guide this productive transformation as well as mitigate the income inequality that would arise from dualism (See Lin (2009) and Mosk (2010)). The increase in total income would allow the state to expand its support for the socioeconomically disadvantaged and improve their social outcomes, while the reduction in income inequality, as Chapter 7 will show, is likely to improve socioeconomic outcomes. The links between export diversification, technological sophistication, and income inequality on the one hand, and the socioeconomic outcomes on the other, will be established using the aforementioned two models as well as elements of the economics literature, notably Voitchovsky’s work on the relationship between growth and inequality, Machin’s work on the impact of inequality on educational outcomes, and Nel’s study of the effect of high inequality levels on standards of living in developing countries. Within the structure of this study, socioeconomic outcomes will be assessed using five indicators that retain influence in the Moroccan scenario: health, education, economic growth, social cohesion, and social mobility. Figure I.1 illustrates the theoretical chain of relations between the variables. Another important issue to raise is the nature of the information that will be collected to answer the central questions and present the

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The EU’s Policy Instruments: Financial aid and technical/logistic assistance through policy dialogue

Policy Objectives Promoted: Trade liberalisation, reducing role of the state, low inflation, and good governance

Intermediate Variables: Export diversification, technological sophistication, and income inequality

Socioeconomic outcomes investigated: health, education, sustainable (long-term) economic growth, social cohesion, and social mobility

Figure I.1

The Chain of Relations between Variables

argument. This study will adopt a ‘mixed-methods’ approach as far as data is concerned, whereby ‘mixed-methods’ refers to the utilisation of both qualitative and quantitative data to substantiate the argument. Scholars have said a great deal about qualitative methods in development research. Mayoux, for example, acknowledged that in the context of development studies, qualitative methods allow ‘a holistic understanding of complex realities and processes . . . the aim is to understand differing and often competing “subjectivities” in terms of very different accounts of “facts”, different meanings and different perceptions’.29 As part of her breakdown of the advantages and disadvantages of different research methods, she highlighted the following additional ‘pros’ of qualitative methods: ‘captur[ing] different local perceptions . . . [providing] in-depth longitudinal investigation [which] decreases the likelihood of falsification . . . [and] uncover[ing] processes and causality’.30 Nevertheless, she warns that qualitative methods ‘may lack focus . . . [and] may be over-influenced by the biases of the researcher’.31 Hulme concurred with Mayoux, observing that ‘qualitative research can indicate the direction of causalities between variables and explain the linkages between different processes in detail’.32 He also noted that qualitative techniques ‘[provide] a rich picture of social

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phenomena in their specific contexts – [revealing] critical incidents’.33 Like Mayoux, he recognised that it is ‘difficult to demonstrate the scientific rigor of the data collection exercise . . . [and] often results cannot be generalised’.34 As for quantitative data, Hulme listed the following as some of its advantages: ‘results from sample surveys can be generalised for entire populations . . . [they] can be aggregated and are comparable across population groups . . . [the] reliability of data and findings provides powerful indicators to guide policy . . . [and] replicability [of data]’.35 The precision of empirical results is, however, offset by weaknesses, including the fact that ‘it [quantitative data] sacrifices potentially useful information through process of aggregation . . . [and it] commonly under-reports on difficult issues’.36 Accordingly, he posited that an investigation that incorporates both qualitative information and statistical analysis can make use of the advantages that both types of data provide whilst circumventing or reducing the weaknesses of each method.37 He observed that ‘in development studies there is an emerging consensus that combined approaches and “mixed methods” can create knowledge that is more socially useful and can contribute to more effective policy’.38 By combining qualitative data (from narrative or semi-structured interviews for example) with statistical information collected from databases and/or surveys, one can fuse the rich account of relationships between variables that qualitative data provides, with the greater empirical certainty that statistics can potentially offer. Diversity of informational sources could help corroborate the findings and strengthen the case to be presented. A ‘mixed-methods’ approach that takes advantage of the benefits both qualitative and quantitative data offer would boost the quality of the findings made. Below are the sources from which data will be collected and analysed: Semi-structured Interviews (Qualitative): Semi-structured interviews represent a significant part of the data collection process. Willis asserted that ‘semi-structured interviews are usually the most popular [type of interview]. By doing this, you can ensure that the areas you think are important are covered, but you also provide the interviewees with opportunities to bring up their own ideas and thoughts’.39 As to why interviews are popular, she contended that they provide researchers with a precious opportunity to acquire a wide array of data, and hence

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they can detail methods and outline the reasons for the emergence of given situations.40 Mason suggested that you may choose qualitative interviews if your view of the ways in which social explanations and arguments can be constructed lays emphasis on depth, nuance, complexity and roundedness in data, rather than the kind of broad surveys of surface patterns which, for example, questionnaires might provide . . . In other words, you may wish to achieve depth and roundedness of understanding in these areas, rather than a broad understanding of surface patterns.41 In the context of this research, the contemporary and evolutionary nature of EU– Moroccan relations make semi-structured interviews invaluable; the comprehensiveness of details surrounding the attitudes and responses of both the EU and Moroccan officials to existing policies must be captured to answer the central questions. With that said, qualitative interviews can only provide invaluable information if ‘relevant’ interviewees are selected, and if researcher bias is minimised. Interviewees were chosen based on their direct involvement in EU – Moroccan relations and Morocco’s developmental efforts. Both sides (Morocco and the EU) are represented, allowing an array of perspectives to be revealed. To minimise researcher bias in the data collection process, interview transcriptions (when recorded) were performed by a professional company. Despite the tedious logistics, qualitative interviews are ideally situated to provide the breadth of insight this investigation requires. Statistical Databases (Quantitative): Throughout this study, statistics are used to portray socioeconomic conditions. Databases such as the World Bank’s World Development Indicators (WDI) and the United Nations Development Programme (UNDP) database will be used. These statistics will provide another dimension via which the study’s argument can be made. Primary Source Archives and Documents (Qualitative and Quantitative): In addition to officials’ accounts and statistical data, the study makes use of primary source EU and Moroccan documents. These documents include agreements signed by the two parties, statistical

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surveys conducted by various Moroccan ministries and commissions, and evaluation reports and communications written by the European Commission (EC) for the attention of its bureaucrats and members’ representatives. These documents include information that will be alluded to throughout the study – from qualitative accounts describing the progress in relations between the Union and Morocco, to household surveys conducted by Moroccan officials to depict the welfare of the Kingdom’s citizenry. Secondary Source Publications (Qualitative and Quantitative): These comprise reports, academic studies, articles, and books published by economists, journalists, sociologists, and development experts. These publications will offer the theoretical foundations for the book’s arguments. They range from seminal models and studies by leading economists on trade theory and development, to newspaper articles by journalists investigating Moroccan society. The importance of these secondary source publications cannot be overestimated: they will provide theoretical reinforcement to the study’s proposed answers to the central questions. Moreover, the wide spectrum of publications used will harness both qualitative and quantitative information that will be referenced at different stages to critique the EU’s policies. Finally, they play an instrumental role in substantiating causal relations between the different variables that will be examined throughout the study.

Book Overview This book is comprised of nine chapters. Chapter 1 will review the literature on post-World War II Euro-Mediterranean and European– North African relations in the political, economic, and social spheres. It will set the scene for the second chapter, which will focus solely on the economics of these relations under the Barcelona Process between 1995 and 2010, before pinpointing the shortcomings of the existing literature and recapping the study’s main objectives. Chapter 3 offers an historical account of EU –Moroccan relations in particular, as Morocco will serve as the NORAFS of attention for the book’s main case study. It will highlight the chief economic features of the two principal accords signed between the two parties following the inauguration of the Barcelona Process – the EMP Association Agreement of 1996, and the ENP Action Plan of 2005.

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Chapter 4 will articulate the testimonies of the EU and Moroccan officials interviewed on the subject. Chapters 5 – 8 represent the focal point of the analysis: Chapter 5 will examine the policy instruments employed by the EU to support Morocco’s development, and discuss limitations to policy implementation on the Moroccan side. Chapters 6– 8 will combine information from the interviews, the statistical databases, primary source, and secondary source data to present the case (in response to the central questions) that while the EU has been more supportive financially and logistically of Morocco’s reform attempts than other major donors such as the World Bank, the policy instruments and the objectives to which they have been directed have not provided the Kingdom with the most appropriate strategy to improve the social standards of its citizens and reduce the socioeconomic gap between itself and the Union’s members. The final chapter concludes by summarising the argument that was made throughout the book, and by briefly reflecting on the direction of EU– Moroccan and European– North African relations.

CHAPTER 1 EMP, ENP, AND UFM: PROPELLING EUROMEDITERRANEAN AND EUROPEAN—NORTH AFRICAN RELATIONS FORWARD

Introduction Let those who have been accustomed unjustly to wage private warfare against the faithful now go against the infidels and end with victory this war which should have been begun long ago.1 These words were uttered by Pope Urban II on 27 November 1095, in the French town of Clermont, as he addressed an audience of clergy and laymen. This speech was meant to galvanise the masses and initiate what would become the first of nine Crusades meant to secure the Holy Land. One can only imagine Pope Urban’s surprise had he witnessed what transpired on 27 November 1995, in the city of Barcelona. Exactly nine centuries after the Council of Clermont convened, the foreign ministers of fifteen European Union (EU) members met their counterparts from twelve MNC (including the NORAFS) to inaugurate the Barcelona Process and launch the Euro-Mediterranean Partnership (EMP). This chapter will start by chronicling the history of EuroMediterranean relations prior to the mid-1990s. It will reveal a catalogue of events during which the European Economic Community

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(EEC) considered trade and economic liberalisation the optimal instruments to achieve prosperity and stability across the Mediterranean. Until the late 1980s, there was no distinct drive towards a multilateral agenda to cultivate deeper ties on multiple fronts. Structural changes in the international order after the Cold War, the EEC’s resolution of the Exchange-Rate Mechanism crisis, and seemingly positive developments in the Middle East peace process at the time, prompted the EEC to lay the groundwork for the EMP. What was initially hailed as a panacea to the paralysis in Euro-Mediterranean relations would fail to match the ambitious expectations it had generated, with most assessments pointing to disappointing results. Subsequently, the chapter will describe the European Neighbourhood Policy (ENP), which was meant to provide the answer to the EMP’s failings. After describing the Policy and its features, the chapter will go on to reveal that verdicts on the ENP’s performance so far are mixed, with most observers stating that it is heading in the right direction, but that it still requires additional measures to buttress its efficacy. The Union for the Mediterranean (UfM), its background, characteristics, and performance will also be examined.2 The UfM is seen by the EU as an extension of the original EMP. Discussion of the UfM will examine its background, characteristics, and performance. The chapter will then review the relationship between the EMP, the ENP, and the UfM. The EU has never considered either the ENP or the UfM substitutes to the EMP framework. Ultimately, the ENP and UfM have been amalgamated into the overarching and comprehensive Barcelona Process introduced in 1995. Questions have often been raised concerning the Barcelona Process itself, which has been seen as lacking in rigour. The chapter will point out that limitations in the EU’s approach to the Mediterranean stem from the fact that with regards to the Mediterranean region, stemming the flow of migrants from the southern Mediterranean remains the primary policy realm on which EU countries’ interests coincide. Asymmetries in members’ foreign policy priorities, economic capabilities, and domestic and regional concerns, have thwarted the conception of a more effective strategy towards the NORAFS. This process has also been impeded by conflicts amongst the NORAFS, asymmetry between the EU and the NORAFS, and NORAFS regimes’ exploitation of the status quo.

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Euro-Mediterranean Relations Prior to 1995 Until 1995, relations between the EEC and the MNC (including the NORAFS) can best be described as fragmented. According to Gomez, ‘the Treaty of Rome (1957) contained no formal foreign policy provisions and offered little stimulus for the definition and pursuit of common external interests and objectives’.3 Back then, relations were predominantly bilateral, as European countries sought to reinforce existing commercial ties with their former colonies in the Middle East and North Africa. Gomez posited that interest in closer ties to the Mediterranean began in the 1960s primarily for security reasons, with commercial considerations having a smaller influence: ‘attention primarily focused on security in the north-east Mediterranean, while the Maghreb was seen more as a problem for France than a military problem for the “West”. Yet both regions were sufficiently close to the Community to pose serious security problems were they to become hostile’.4 Insofar as economic liberalisation was the device by which European countries pursued peace and stability on the continent, the EEC had hoped to adopt this modus operandi to establish an area of peace and stability with its neighbours. This is verified by the Commission of the European Communities’ (CEC) 1995 Bulletin, issued to outline the EEC’s vision of a Euro-Mediterranean ‘partnership’: ‘the Community began establishing contractual links with most of the Mediterranean non-member countries during the 1960s . . . They were expanded in the 1970s to include economic and financial cooperation intended to back economic development’.5 The Global Mediterranean Policy (GMP) was established, under which so-called Cooperation Agreements were signed between the EEC and various MENA countries to liberalise trade and reinforce economic ties. Despite these efforts, no substantial progress was made towards creating a more comprehensive and unified framework of relations, with the Bulletin noting that economic relations across the Medierranean’s shores remained bilateral and asymmetric.6 Until the late 1980s, the EEC was focused on more pressing contemporary foreign policy issues such as relations with Warsaw Pact countries and the accession of recently democratised south-European states. The accession of both Spain and Portugal in 1986 presented a challenge to many MENA countries, as the EEC became less reliant on their agricultural commodities, thus making the NORAFS export-oriented growth strategy more vulnerable.

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Nevertheless, ‘additional protocols were concluded . . . in order to mitigate the effects of the accession of Spain and Portugal; these improved the concessions granted for agricultural products’.7 European attention to the Mediterranean intensified from 1989 onwards: ‘since 1989, the Community has, as a result of rapid geopolitical changes, focused its attention on the policies needed to support economic development, both in Central and Eastern Europe, and in the Mediterranean region’.8 By then, multilateral action was being considered, and attempts were made to encourage a broad decisionmaking framework on a host of issues. An example of such attempts include the 1990 Algiers Mediterranean Water Conference. The Bulletin also acknowledged the lacklustre state of EuroMediterranean cooperation, which was seen as another motivation to introduce a more extensive scheme that addresses the urgency of meeting the requirements of people across both shores of the Mediterranean.9 By 1994, the Cold War had ended, Germany was re-unified, and the monetary crisis caused by Britain and Italy’s withdrawals from the Exchange-Rate Mechanism had been resolved. As crises on the European continent abated, cataclysmic changes on the global and Mediterranean fronts were occurring. The end of the Cold War provoked a transition from a bipolar international relations system epitomised by superpower involvement in regional disputes, to a hegemonic system that encouraged the proliferation of regional formations within a liberal international political and economic order. This transition provided another reason for a stronger initiative towards the MNC: ‘at a time of globalization and reinforced regionalism in North America and in Asia, the Community cannot renounce the benefits of integrating its southern neighbours’.10 EuroMeSCo, a European Commission-sponsored network of research institutes, noted that the need for a joint EMP ‘was born out of specific circumstances in the 1990s, and the overwhelming feeling that multilateral governance and regionalism were essential components of a post-Cold War international order’.11 Attina described this drive towards a multilateral Mediterranean decision making framework as being ‘in harmony with the neo-liberal principles of the globalized economy’.12 The EuroMeSCo report cited above also elaborated on the EMP’s origins: ‘the Barcelona Process is much more the successor of European integration, building on the . . . strategy devised for the post1989 process of eastward enlargement’.13

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Meanwhile, in the Middle East, President Clinton oversaw the historic signing of the Oslo Peace Accords between Israel and the Palestinian Authority in 1993. There was a realisation within European corridors that the timing was appropriate for a comprehensive engagement with the MENA region: ‘at a moment when the peace process in the Middle East is progressing . . . it is timely to set out the possibilities for developing peace through cooperation, dialogue and mutual understanding’.14 Amirah Fernandez and Youngs also cited ‘considerable optimism’15 (particularly on the Arab – Israeli front) and the EU’s willingness to buttress its international role16 as factors conducive to the development of new measures towards the NORAFS. Against the backdrop of this situation, the gestation of a new Mediterranean initiative commenced. At a 1994 summit in Corfu, the EEC ‘pointed to the need to strengthen the Union’s Mediterranean policy and to develop the Mediterranean region into an area of cooperation guaranteeing peace, security, stability, and economic well-being’.17 The contours of this novel approach became clearer in October 1994, as part of a communication that ‘proposed the establishment of a EuroMediterranean partnership likely to lead, in due course, to the creation of a free trade area’.18 The exact details of the proposed Partnership were mapped out during the course of the following year: in June 1995, the Commission agreed to create MEDA and put forward plans for the upcoming EuroMediterranean Conference to be held in Barcelona in November 1995.19

Literature: History and Assessments of the EMP Following arduous negotiations, representatives of 27 European and Mediterranean states endorsed the Barcelona Declaration. This consensus led to the official inauguration of the Barcelona Process. None was more ecstatic than Javier Solana, then Spanish Foreign Minister, who remarked that ‘it was the first time countries in dispute had sat together and unanimously approved a common document’.20

The Characteristics of the EMP In light of the situation prior to 1995, it was hardly surprising that high expectations were placed on November’s Barcelona Conference.

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Mouna Naim, of Le Monde, described the EMP as ambitious,21 while The Guardian’s John Hooper succinctly summarised the event’s significance: ‘Club-Med sets seal on a brave new era’.22 Besides the distinct seniority of the participating delegates, the unique and comprehensive nature of the initiative attracted considerable interest. The EU’s external relations website described the EMP as ‘an innovative alliance . . . seeking to create a Mediterranean region of peace, security and shared prosperity’.23 The Declaration viewed this initiative as one that would be ‘stressing the strategic importance of the Mediterranean and moved by the will to give their [the EU and neighbour countries] future relations a new dimension, based on comprehensive cooperation’.24 The 1995 CEC Bulletin provided an outline of the EEC’s vision: ‘this would start with a process of progressive establishment of free trade, supported by substantial financial aid. It would then develop through closer political and economic cooperation’.25 At the heart of this vision lay the EU’s desire to secure stability in the Mediterranean, and in order to do so, several issues needed to be resolved. Foremost among these were the need for political reform and economic modernisation to enhance socioeconomic outcomes and reduce the flow of migrants from the MNC (including the NORAFS) to Europe.26 With that in mind, ‘the Community’s Mediterranean policy should . . . encompass the many areas of interdependence’.27 In other words, the various facets of policy action (political, economic, social, and cultural) would be harnessed by the EU to establish security on its southern frontier. The EMP incorporates three so-called ‘policy baskets’: (1) Political and Security Dialogue: To foster democratic governance, the rule of law, and respect for human rights via creating a common area of peace and stability. (2) Economic and Financial Partnership: To achieve balanced and sustainable socioeconomic development in the region, in order to facilitate the creation of a Euro-Mediterranean FTA by 2010. (3) Social, Cultural, and Human Partnership: ‘Aimed at promoting understanding and intercultural dialogue between cultures, religions and people, and facilitating exchanges between civil society and ordinary citizens, particularly women and young people’.28

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A distinctive feature of this EMP is its stress on multilateral decision making, and its resolve ‘to establish to that end a multilateral and lasting framework of relations based on a spirit of partnership’.29 Still, the EMP was not meant to replace previous bilateral arrangements, as countries deem ‘this multilateral framework as the counterpart to a strengthening of bilateral relations which . . . [are] important to safeguard, while laying stress on their specific nature’.30 On the political front, dialogue is recommended in order to promote democratic values as well as ensuring commitment to good governance and human rights in the MENA countries.31 Economically, the EU is expected to develop Free Trade Areas (FTAs) with the MNC whilst insisting that these countries reform their economies to withstand liberalisation.32 Additionally, the Bulletin recommended that ‘the Community should be prepared to enter into wide-ranging areas of cooperation . . . These could cover industrial cooperation, energy . . . illegal immigration, and tourism’.33 Aliboni et al. recognised that ‘the EMP is . . . about using the Community approach that was successfully applied to enlargement in developing Euro-Mediterranean relations’.34 Moreover, the Partnership adopted far-reaching targets. To attain these, the Barcelona Declaration emphasised a multilateral and bilateral agenda between the EU and the MNC. Multilaterally, frequent meetings between the Ministers of Foreign Affairs of the 27 countries were meant to re-examine policy objectives and implementation mechanisms. Additionally, a ‘EuroMediterranean Committee for the Barcelona process’ was to be set up that would ‘hold regular meetings to prepare the meeting of the Ministers for Foreign Affairs, take stock of and evaluate the followup to the Barcelona process and all its components’.35 Bilaterally, Association Agreements (AAs) were negotiated between the EU and the MNC. These agreements were to tackle a variety of issues, including helping the MNC adjust to the realities of economic liberalisation, improving the socioeconomic situations of these countries, and fostering an integrated Mediterranean region. Central to these targets is the creation of an FTA that liberalises the flow of services and capital, and cooperation on political, economic, and social issues.36 These agreements were legally binding, and formed part of the EMP’s acquis communautaire. They were specific to each, yet they addressed issues

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relevant across these countries, namely respect for democracy and human rights, the establishment of free-trade-compatible economies, and cooperation on socioeconomic and security issues. Embedded within these agreements is a ‘conditionality clause’, which according to Baracani, ‘entitles either party to the agreement to take appropriate measures, including suspending the agreement, in the event that the other party fails to comply with specified human rights norms.’37 In fact, Baracani referred to this as the ‘negative conditionality’38 mechanism – to stress the possible punishment for any transgression.

Evaluating the EMP’s Performance The CEC Bulletin acknowledged that ‘the required economic take-off [envisaged by the EMP] supposes substantial efforts to be accomplished by these countries [the MNC] . . . as well as the implementation by the Community of policies aiding them to meet the . . . challenges they face’.39 In other words, the EMP’s performance hinges on the EU’s capacity to support the reformation of MNC economies, and these countries’ capacities to undertake the necessary adjustment. EuroMeSCo evaluated the Partnership using six criteria: (1) The political and social impact of its economic policies, (2) Democracy and Human Rights, (3) The Role of Civil Society, (4) Political and Security Cooperation, (5) Justice and Home Affairs, and (6) Migration. The report lauded the EMP’s positive impact on social networking between northern and southern Mediterranean civil societies, and the increased confidence between Northern and Southern countries on issues of political and security cooperation, but it rendered the initiative’s impact on the promotion of democracy, on judicial reform, on good governance, and on stemming the flow of migrants from south to north ineffectual. Geiger and Stetter have contended that politically, the EMP’s performance has not been significant: freedoms were curtailed in several countries, and the Union’s worry that Islamist parties would win elections in the NORAFS (and other MNC) has hindered its resolve to push for greater political freedoms.40 Regarding the economic basket, even though trade flows have been augmented, the MNC ‘could not significantly increase their share in total European imports . . . Despite the fact that southern partners have reduced their overall tariff level, they

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were in reverse not granted access to the European agricultural market’.41 On the social front, progress was barely existent as the EU was hesitant to resolutely condemn the lack of political reform in the NORAFS (due to fears that political liberalisation would give the Islamists more political clout).42 Holistically, assessments treated the EMP with suspicion, deriding the divergence of the policy from its primordial agenda. According to Del Sarto and Schumacher, ‘in the literature, there may be some disagreement on what constitutes the most serious flaw of the EMP. However, most observers would agree that the EMP did not live up to the expectations the initiative raised’.43 For Kienle, ‘the . . . causal link between economic and political liberalisation . . . has not materialised’.44 As for Aliboni, he branded the Partnership ‘mostly disappointing’.45 Attina opined that ‘analysts look at the EU initiative with scepticism and question the appropriateness of applying the conceptual and analytical tools of regionalism to the Mediterranean area’,46 while Khader criticised ‘the prioritisation of European security [under the EMP], exposing the Barcelona Process as an order, rather than a partnership-building endeavour’.47 According to Balfour and Missiroli, Youngs described EU policy as ‘the most significant deviance from rewards-based conditionality’,48 citing the fact that Egypt received the largest amount of EU aid without undertaking any reforms. The castigating tone was best captured by Attina: no elite is more stable today than it was seven years ago nor inclined to comply with the human rights and democracy standards of the Barcelona Declaration. No country is benefiting from the economic liberalization measures enough to plan national economic growth and contain migration to Europe. The Arab countries have strong and heavily imbalanced economic relations with Europe . . . EU protectionist attitudes in the agricultural sector result in further economic problems for the Med-Partners . . . there is the feeling that the EMP documents and programmes still do not cope well with tackling the problems of the current changes in the Mediterranean world.49 These shortcomings have set the stage for another Mediterranean policy.

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Literature: History and Assessments of the ENP Our Neighbourhood Policy provides us with a coherent approach that ensures that the whole of the EU is committed to deeper relations with all our neighbours. At the same time, it allows us to develop tailor-made relations with each country.50

The Characteristics of the ENP Following the enlargement of the EU in 2004, there were fears that the larger EU would lose its zeal for bolstering relations with its Mediterranean partners on all fronts. This enlargement prompted a redefinition of the European ‘neighbourhood’, such that it encompasses countries with no foreseeable EU membership prospects. These worries provoked the creation of a new initiative – the European Neighbourhood Policy (ENP). Scrutiny of the factors prompting the formation of the ENP would attribute this development to strategic and geopolitical changes that have transpired between 1995 and 2004. Del Sarto and Schumacher identified the collapse of the Middle East peace process, the events of 9/11, the War on Terror, the 2003 Iraq War, the EU’s 2004 enlargement, and inherent problems within the EMP, as elements that were collectively responsible for this new policy.51 The European Commission described the ENP as an offer of ‘a privileged relationship’ in which partners share ‘common values’. The privilege refers to the stronger political and economic relations that are envisaged so long as the EU and its neighbours continue to share the same values.52 On that note, it is important to articulate the ENP’s concept of ‘jointownership’, whereby ‘the EU does not seek to impose priorities or conditions on its partners’.53 The aims of this policy include achieving ‘political stability, economic development and the reduction of poverty and social divisions’.54 At the heart of the ENP was the idea that agreement must be reached between the EU and each neighbour over reform paths and priorities. According to the ENP’s official website, policy objectives would be agreed upon between the two parties and incorporated in Action Plans (APs) that tackle a multitude of issues including political reforms, trade liberalisation, justice reform, energy, and the environment. Central to

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the APs was the idea that the jointly agreed objectives build on common values that the MNC are expected to share with the EU – such common values include respect for human rights, good governance, and economic liberalisation.55 Moreover, ‘the Action Plans will draw on a common set of principles but will be differentiated, reflecting the existing state of relations with each country, its needs and capacities, as well as common interests’.56 It is worth noting as well that the Policy ‘is designed to prevent the emergence of new dividing lines between the enlarged EU and its neighbours and to offer them the chance to participate in various EU activities, through greater political, security, economic and cultural cooperation’.57 The ENP was also meant to contribute to the regional integration framework espoused by the EMP: ‘the Commission will continue to promote the regional dimension of the partnership [EMP] with significant financial support’,58 and that ‘regional and sub-regional cooperation in the Mediterranean . . . will build on the “acquis” of the Euro-Mediterranean Partnership by fully integrating a tailor-made approach adapted to each country’.59 Crucially, the ENP offered the NORAFS (and other MNC) the opportunity to integrate into the EU’s single market, following a period of trade and economic liberalisation that would allow them to converge to the Union’s economic standards. It is important to stress that the European Commission considered the Policy a new element within the existing platform: ‘the new neighbourhood policy should not override the existing framework for EU relations with . . . the Southern Mediterranean. Instead, it would supplement and build on existing policies and arrangements’. 60 The Policy’s merit, according to the Commission, lay in the fact that ‘the full potential of these agreements [the EMP AAs] has not yet been realised. The ENP points the way to enhanced cooperation . . . to enable the EU and its partners to attain the full benefit of the structures which are in place’.61 Implementation of the ENP has proceeded as follows: the EU conducts a study into a partner’s political, economic, social, and institutional attributes to determine the timeframe and method by which to establish deeper ties. During this stage, the MNC (including the NORAFS) are also consulted to agree on a set of priorities. Once the

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report is formulated and approved, the ENP APs are created with that partner. These plans reflect the distinct characteristics of each country’s political and economic situations, and provide an incentive in the form of greater proximity to EU programmes and integration to the Common Market in exchange for commitment to the agreed-upon objectives.62 Joint committees are assigned to monitor implementation, and the instruments to be employed would include tools successfully used in the 2004 EU enlargement process and a variety of new instruments (such as the European Neighbourhood Partnership Instrument ‘ENPI’ and the Neighbourhood Investment Facility). Del Sarto and Schumacher explained that while the EMP focused on regionality, the ENP employed differentiated bilateralism, in which policies were tailored for each partner rather than universally applied to all partners. While the EMP utilised a ‘negative conditionality’ approach (penalising MNC that do not conform to the AA), the ENP introduced ‘positive conditionality’ measures. This reconfiguration better suited the differentiated bilateralism on which the ENP was constructed. In line with this conditionality approach was the ENP’s emphasis on common values whereby ‘only those states that share the EU’s political and economic values and/or commit themselves to . . . reforms will have anything to gain from the EU’s Neighbourhood Policy’.63 Emerson, meanwhile, distinguished the EMP’s ‘passive engagement’ from the ENP’s ‘active engagement’ insofar as the ENP gives the MNC a say in the policies and targets stipulated by the APs;64 Moschella cited a difference between the EMP’s ‘logic of policy change’, whereby relations with Europe were conditioned on changes implemented by the MNC (including the NORAFS), and the ENP’s ‘logic of policy level’, in that relations with Europe were determined by MNC institutional competencies.65 Sasse posited that the crux of the ENP’s approach evolved from the Union’s 2004 accession of eight East European countries as well as Cyprus and Malta;66 this point was also made by Van Elsuwege in a paper published as part of the IEMed 2011 Yearbook: ‘the ENP’s methodology has been largely inspired by the EU’s recent enlargement experience’.67 Sasse also noted that ‘the ENP Action Plans follow the broad Copenhagen criteria stipulating conditions of democracy, a market economy and the ability to take on the EU’s acquis communautaire. In the context of the ENP [Romano] Prodi spoke of “Copenhagen proximity criteria”’.68

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Evaluations of the ENP’s Performance In 2007, a CEC report admitted that even though the ENP has achieved satisfactory results so far, the Policy could be made more robust. Ultimately, ‘what is at stake is the EU’s ability to develop an external policy complementary to enlargement that is effective in promoting transformation and reform’.69 In their assessment of the ENP after two years of operation, Emerson et al. noted that both ‘the Commission and the Council agree that the ENP needs to be strengthened’:70 while the ENP was heading in the right direction, more measures were necessary to amplify its potency, including encouraging institutional connections, democracy promotion, increased trade liberalisation, and visa facilitation to encourage the greater movement of people. Balfour and Missiroli cautioned that assessing the ENP’s success is difficult, since the policy is ‘neither enlargement nor foreign policy: it cannot exercise conditionality as effectively as the former, nor can it bring to bear all the tools and levers of the latter’.71 Overall, the ENP did not manage to have a substantial effect on MNC where a reform process was not present.72 Their recommendations included regrouping ENP countries into sub-regional clusters based on regional proximity to Europe and comparability in order to achieve greater policy coherence. Both Rossi and Grabbe73 endorsed Balfour and Missiroli’s views on the lack of effective conditionality in the ENP, in that the ‘reward’ of prospective European membership is not present. In Rossi’s words, the ‘narrower and less principled approach [of the ENP] . . . may reflect a critical and weighted assessment of failures and success of previous EU policies and might reveal a more realistic . . . way to express [the] EU’s goals’.74 She predicted that the Union’s focus on incentives pertaining to its single market might make the policy succeed. Finally, Moschella also posited that since the ENP’s main objective is increased association rather than integration, it needed to be compared to the EMP. However, as the ENP was introduced only in 2004, the empirical efficacy of the ENP APs was difficult to ascertain in 2007 so she attempted to predict its performance by looking at similarities between the EMP and the ENP and then assessing how successful these similar attributes were as part of the EMP. For example, she cited Smith

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in recognising that conditionality has been used reluctantly and is hence ineffectual under the EMP. Therefore, it would be hard to imagine any greater effectiveness from using the same policy under the ENP. Furthermore, by recognising the endogeneity of policy changes, the ENP places the burden of the adjustment process on the MNC.75 Generally, the literature praised the ENP’s abandonment of the regional focus in favour of differentiated bilateralism, as this strategy accounted for differences in institutional capacity across the MNC, and the inclusion of positive conditionality has been welcomed. Nevertheless, there was awareness amongst academics and policymakers that the initiative was in need of additional measures to deliver the required results: ‘the . . . (ENP) is substantially deepening the EU’s relations with its neighbours, and has become the established vehicle for cooperation with these countries across a wide policy spectrum’.76 The European Commission proposed various methods to strengthen the Policy, including the reinforcement of regional economic integration, dialogue on political reform, and financial support to the MNC, amongst other measures.77 Whether such recommendations would have enhanced the ENP is a matter of speculation.

Literature: History and Assessments of the UfM Le monde entier vous regarde . . . C’est ensemble que nous allons construire la paix en Me´diterrane´e, comme hier nous avons construit la paix en Europe78 (The entire world is watching you . . . together we will create peace in the Mediterranean, in the same way as yesterday we created peace in Europe).

The Characteristics of the UfM The elementary foundations of the UfM can be traced back to Nicolas Sarkozy’s 2007 election campaign. The assimilation of migrant communities, Western – Islamic relations and Turkish membership of the EU79 were issues on the minds of many French voters. As a result, Sarkozy conjured a plan to address these challenges and to reassert French leadership in the Mediterranean. Following his victory, he spoke of a Mediterranean Union (MU) that would be exclusive to Mediterranean-adjacent EU states and the non-EU Mediterranean States.

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In Gillespie’s words: it [the proposed MU] was viewed as: a stratagem to reassure France’s population of North African descent that the French state was still committed to addressing the problems faced by Mediterranean peoples; a plan to renew French influence in an area that it had dominated during colonial times; an initiative to rebalance French – German relations and acquire a more influential role in the EU by playing the initiating role in reshaping the Union’s southern dimension, to offset the preeminence of Germany in relation to the East; as part of a commercially-oriented drive to make France the main provider of a nuclear energy infrastructure in the southern Mediterranean; as a response to the air of disappointment that had affected the EMP . . . and as a ‘big idea’ for the French Presidency of the EU during the second half of 2008.80 Aliboni et al. also credited the prioritisation of the Eastern over the Southern frontier as ‘one of the drivers behind France’s proposal for the Union for the Mediterranean’.81 Sarkozy’s vision did not materialise, however, due to widespread criticism from Germany and some Arab states.82 Several nonMediterranean EU countries, spearheaded by Germany,83 objected to any initiative that would undermine the Barcelona Process. According to Florensa, German Chancellor Angela Merkel was opposed to the idea of ‘two separate zones of influence’ that ‘leaves the Mediterranean for France’, whilst leaving Eastern Europe for Germany.84 The nonMediterranean EU countries were also reluctant to finance a ‘French project’ from which they would be excluded. Spain and Italy also had reservations, as Spain had a great deal invested in the Barcelona Process, while Italy viewed the MU as a tool to advance French interests at the expense of other EU countries. Libya dismissed the proposal as a form of ‘neo-colonialism’, while the Arab League questioned the effect the MU might have on the Peace Process and European– Arab relations. These concerns prompted Sarkozy to refine his plans. According to France’s EU Affairs Minister at the time, Jean-Pierre Jouyet, ‘there is no Mediterranean Union . . . one should now speak of a ‘Union for the Mediterranean’’,85 which is a ‘semantic shift that is not neutral’.86 In

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March 2008, a Franco-German summit ‘paved the way for the Europeanization of the project’.87 Turkey was reassured that membership of this Union did not preclude eventual accession to the EU, while the now-termed Union for the Mediterranean (UfM) was to include EU members and 16 non-EU states, and would derive from the Barcelona Process. The official UfM website stated that the Barcelona Process was re-launched in 2008 as the Union for the Mediterranean at the Paris Summit . . . This re-launching aimed to infuse a new vitality into the Partnership and to raise the political level of the strategic relationship between the EU and its southern neighbours. While maintaining the acquis of its predecessor . . . the Union for the Mediterranean offers more balanced governance, increased visibility to its citizens and a commitment to tangible, regional and trans-national projects.88 Gillespie observed that the ‘pattern is somewhat reminiscent of the genesis of the EMP’.89 Nonetheless, the UfM introduced novel measures, such as ‘the bi-annual meetings of the heads of state and government’.90 Gillespie agreed that the French initiative proposed ‘new institutional structures based on a degree of parity in North – South representation’.91 To reflect the image of partnership between the EU and its southern neighbours, the UfM incorporated two presidents: one representing the EU and the other from outside the EU. Even though the UfM championed ‘co-ownership’ between the EU and the neighbours, the fact is that ‘the equality between states also depends on the distribution of political and economic power, which is by and large tilted in the EU’s favour’.92 While the onus of the effort to advance relations has been on EU governments under the EMP, the UfM replicated the ENP’s spirit of cooperation in policy making between the EU and MNC governments, and went a step further by encouraging engagement and cooperation between the private sectors and citizens on both Mediterranean shores. It also enhanced the multilateral institutions created under the EMP, whilst introducing joint projects to directly impact on the lives of UfM citizens, thereby adopting an innovative approach to fulfilling the longterm objectives of the Barcelona Process.

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The UfM ‘has identified six priority projects which are at the heart of the Partnership’s efforts, including projects for: . . . . . .

the de-pollution of the Mediterranean Sea; the establishment of maritime and land highways; civil protection initiatives to combat natural and man-made disasters; a Mediterranean solar energy plan; the inauguration of the Euro-Mediterranean University in Slovenia; and the Mediterranean Business Development Initiative focusing on micro, small and medium-sized enterprises’.93

In terms of the UfM’s administration, the central body is the twoyearly summit of Heads of State and Government (often referred to as the G-Med). During the G-Med summits, ‘the Heads of State and Government will approve a two-year Work Programme to direct the activities of the UfM organisation’.94 Aliboni and Ammor described the UfM’s governance structure, in which the two Co-Presidents suggested items to be discussed by the G-Med and ‘launch the UfM Work Programme’; they also got to observe and verify implementation of the Programme by UfM member-states.95 The other element of the UfM is its Secretariat, which ‘has the task of generating key projects to enhance the UfM’s economic and social development, thus contributing towards deepened integration and developed capabilities in the region’.96

Evaluations of the UfM The story [of the UfM] is one of a balloon that lost its air . . . The outcome has been a downsized project of much lesser impact, by and large representing a return to little more than ‘business as usual’ in the relations between the two shores of the Mediterranean.97 According to the IEMed Survey for 2010, the overall assessment of the UfM between July 2008 (the point of its introduction) and 2010 is ‘slightly negative: 51.2 per cent of respondents assess the performance of the UfM negatively’.98 However, the survey also pointed out that more respondents from the neighbouring states held favourable views of the

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UfM due to the increased ‘co-ownership’ that was meant to be fostered by the initiative.99 The literature pointed to several strengths of the initiative. Aliboni and Ammor argued that by introducing a new configuration to EuroMediterranean relations (in the sense that there is a greater emphasis on co-ownership between North and South and more private-sector cooperation), the UfM added something new to these relations. Moreover, the projects proposed by the UfM were meant to provide more direct benefits to the peoples of Europe and the Mediterranean, something which the EMP did not effectively achieve.100 Two aspects made the UfM unique relative to previous initiatives – one being the fact that all member-states were equal in terms of say (the principle of co-ownership) and decision making was a joint process, and the other being the fact that the heads of governments of UfM members met biannually.101 Gillespie also argued that the UfM helped rekindle the debate about the limitations of previous initiatives: ‘the importance of the French initiative . . . lay in the tacit recognition that, while the EMP has brought forward some positive developments in Euro-Mediterranean relations, the major objectives outlined in the Barcelona Declaration of 1995 have remained elusive’.102 Criticisms of the UfM have touched on its minimisation of the political reform and human rights agendas. For example, by stressing on co-ownership in the decision making process between democratic EU polities and the less democratic MNC, the EU’s push for political reform and protection of human rights would suffer,103 as would its push for significant changes within these countries. Balfour also touched on this point.104 Gillespie also questioned whether the UfM fostered ‘partnership’, as ‘the UMed [UfM], like the original EMP, is first and foremost an aspect of European foreign policy, a reality that is in some tension with the principle of equality implied by the term “partnership”’.105 Other critiques were levelled towards its structure. There were risks associated with the regular summits envisaged by the UfM: such risks included boycotts and failure to arrive at decisions due to the large number of member-states included in the UfM.106 Balfour referred to this point, citing the fact that ‘the senior officials’ meeting planned for January [2009] was cancelled due to the inability of the UfM members

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to talk with each other at a time of conflict’.107 She also questioned the principle of co-presidency, stating that ‘the political differences between the southern Mediterranean states and the endurance of conflict in the region could undermine the effectiveness of the co-presidency’.108 A third set of criticisms addressed the confusion surrounding interaction between the EMP, ENP, and UfM. On the UfM projects, Balfour asserted that ‘some of these projects were already being developed within the EMP and are now supposed to receive an additional impetus. What remains unclear is how this impetus is to materialise. In practice, the UfM has not altered the financing of projects’.109 Gillespie also cited concerns about ‘how to avoid duplication with the work of other bodies’,110 while Aliboni et al. observed that ‘during . . . discussions held over the Union for the Mediterranean, the ENP was almost completely ignored. This is of major concern as the ENP is today the driving force, at a bilateral level, of reform and financial cooperation’.111 A fourth set of reservations scrutinised UfM projects. The IEMed 2010 Survey noted that all six projects covered by the UfM were deemed ‘important’ by respondents irrespective of the respondents’ geographical location and professional background.112 Nonetheless, for four of the six projects, the majority of respondents did not believe there had been enough progress; in addition, ‘15 per cent of respondents are unfamiliar with their [the projects] importance and between 28 per cent and 40 per cent do not know their level of implementation’.113 This attested to the lack of visibility of UfM projects at the moment, perhaps a result of the fact that the UfM was only introduced in 2008. According to Aliboni and Ammor, projects in the energy and transport sectors should have been substituted with projects that focus more on education and technology to have a larger impact on the livelihoods of individuals in the MNC.114 Gillespie questioned the feasibility of these projects, contending that ‘the ambition is constrained by insistence on adhering to the existing EU budget for Euro– Med activity, which applies through to 2013. This set a very clear limit on the possibility of real innovation’.115 Attempts at inserting an innovative dimension into EuroMediterranean relations have fallen prey to internal EU politicking, unhelpful political and economic realities, and policy coordination problems. At this stage, one question remains: What is the nature of the relationship between the EMP, ENP, and UfM?

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EMP, ENP, and UfM: Amalgamated Components of the Barcelona Process In a paper published in IEMed’s 2010 Yearbook, Andreu Bassols, the Deputy Head of DG-RELEX in 2010, asserted that in its approach to foreign policy, the EU had always adopted an economic solution to political problems using the one ‘toolbox’ that it had experience using – liberalisation of regional trade: ‘the response was economic because the EU’s tools, in the sphere of foreign policy, were mainly economic’.116 The hypothesis adopted by the Union in the case of the Mediterranean region is that by having economic interconnectedness across the two shores of the Mediterranean, ‘economic progress and modernisation’ would ensue in the South, which would empower the middle class in these countries to take the initiative in terms of political reform.117 Officially, the EU insisted that all Euro-Med initiatives operate within the framework of the Barcelona Process. The ENP buttressed the bilateral dimension of Euro-Mediterranean relations, particularly on the economic front, while the UfM incorporated the private sectors of both the EU and the MNC. This signified a composite approach whereby the so-called ‘Barcelona Process: Union for the Mediterranean’ managed regional and sub-regional relations between EU and MNC governments, civil societies, and private sectors, while the ENP followed a complementary bilateral track that introduced country-specific measures to assist the MNC and enhance the multilateral framework. The European Commission stated that ‘the ENP and the EuroMediterranean Partnership are mutually reinforcing: the bilateral frameworks of the ENP are better suited to promoting internal reforms, while the Euro-Mediterranean cooperation framework provides the regional context’.118 In his discussion of the UfM’s relationship with the EMP, Gillespie proposed that ‘rather than renew or replace the substance of the EMP, the outcome is likely to be the addition of a new UMed “track” to the Barcelona Process’.119 In his view, the UfM ‘would not only be complementary but indeed supplementary to existing frameworks’.120 Aliboni et al., however, warned that the UfM must operate in tandem with the Barcelona Process and the ENP since the aims of the Process were clearly set and officials across both shores of the Mediterranean were familiar with them.121 Aliboni and Ammor cited the Reiffers Report on

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the UfM, which concluded that the UfM ‘pourrait avoir une place comple´mentaire importante’.122 The report reaffirmed the importance of a complementary relationship between the EMP and the UfM. Nevertheless, Balfour raised an important point, which was that the UfM was introduced without the Union engaging in a comprehensive assessment of its approach to the Mediterranean under the Barcelona Process.123 In other words, even though the ENP and the UfM had different origins and were initially envisaged as genuine alternatives to the original Barcelona Process framework, the result has been a situation in which both have been amalgamated into the framework of the Process. Therefore, it would be a mistake to isolate the three EuroMediterranean initiatives, especially given that they have ended up adopting the same ideological foundations.

Limitations within the EU’s Approach to the Mediterranean The fact that the ENP and the UfM have been incorporated within the Barcelona Process, without the weaknesses of the Process being addressed, points to a lack of rigour in Euro-Mediterranean relations. The reasons are multifold. It can be argued that one of the main reasons pertains to conflicts and tensions amongst the Union’s member-states. Asymmetries in members’ foreign policy priorities, economic capabilities, and domestic and regional concerns, as well as the restrictions faced by the European Commission, have derailed the EU’s quest for a coherent approach towards the NORAFS and other MNC. Three additional factors exacerbate the situation: (1) The economic asymmetry between the EU and the NORAFS. (2) Conflicts amongst the NORAFS, which have prohibited the NORAFS from exerting adequate leverage. (3) NORAFS governments themselves, which have exploited the situation to avoid undertaking certain reforms.

Conflicts in the Foreign Policies, Capabilities, and Priorities of EU Members In its relationship with the NORAFS and other MNC, the EU has always prioritised the security agenda. The asymmetric nature of the

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economic status quo between the prosperous and economically developed EU and the less developed NORAFS was always going to endow the EU with leverage in policy formulation and dictation. The EMP’s creation came against the backdrop of a sequence of political battles that pitted EU members against each other, with each seeking to see its interests reflected as much as possible in the Union’s Mediterranean policy. The main clash was between the Mediterranean-adjacent EU states, with a considerable stake in forging stronger political and economic relationships with the NORAFS, and northern and east-European EU states, which have traditionally ‘looked Eastward’.124 In the early 1990s, the Mediterranean-adjacent EU countries (henceforth EU-meds) took the initiative towards a more active engagement with the NORAFS. The EU-meds’ desire to advance a novel approach towards the NORAFS was partly meant to counter Germany’s leading role in the 2004 Enlargement process. Yet given their relatively privileged financial position, the northern EU countries (henceforth Non-meds) would only dedicate funds to Mediterranean policy so long as their priorities were substantially reflected in that policy. While the EU-meds prioritised security cooperation and agricultural protection, the Non-meds insisted on economic and governance reforms in the NORAFS, forcing the EMP’s architects to adopt the Partnership’s comprehensive framework. Since then, most shortcomings have been the result of clashes surrounding the priorities of EU countries. On the one hand, the EUmeds were hesitant about agricultural liberalisation as they felt it would disadvantage their agricultural sectors, and on the other hand, the Nonmeds were reluctant to channel additional aid to the Mediterranean, instead focussing on the east-European accession countries. The ENP only materialised after the Non-meds insisted that the new policy should encompass both the Eastern and Southern frontiers, and only after the EU-meds insisted that the policy be built on the existing framework so that they could protect their stakes in the Barcelona Process. It is in the origins of the UfM, however, that one can appreciate the impact of conflicts and asymmetries in EU members’ domestic concerns, capabilities, and priorities with respect to the Mediterranean. France saw the UfM as an opportunity via which it could counter Germany’s central role in European policy formulation. As discussed above, it initially

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proposed a Union of the Mediterranean that would have excluded the Non-meds and eschewed previous policies. But France soon found itself isolated: Germany used its financial clout within the EU to force a transformation of the MU into the UfM (which included the Nonmeds), while Spain and Italy, wary of France’s attempts to procure an undue advantage from its relations with the NORAFS, forced Sarkozy to integrate the UfM into the Barcelona Process. There are certain actors within the EU sphere whose financial clout, geographic location, domestic and regional concerns and foreign policy priorities have forced a strategic interplay that impinges on a coherent Euro-Mediterranean policy: France: Whilst being a significant political and economic playmaker within the EU, France has always vied for supremacy within the Union with Germany (the latter happens to be economically stronger). This has motivated France into assuming a leading role vis-a`-vis the Mediterranean. Other reasons for this proactive stance include significant North African and Mediterranean minority communities within France and its adjacency to the Mediterranean. Germany and the UK: For geographical and cultural reasons, the Non-meds have always been more concerned with Eastern Europe than the Mediterranean. Seen as financial EU powerhouses, Germany and the UK have been hesitant to provide aid to the NORAFS unless they embark on governance reforms. The Non-meds’ financial clout has probably been the chief factor in shaping the EU’s approach to the NORAFS. One can go further and conclude that the incoherence of European strategy towards the NORAFS could be attributed partially to the relative apathy of the Non-med’s – the other factor being Spain and Italy’s reluctance to concede their advantages from the EMP (especially in terms of the exclusion of agricultural commodities from liberalisation measures). Spain and Italy: Considering their initial insistence on a proactive form of engagement with the NORAFS, it is ironic that Spain and Italy would later impede Sarkozy’s attempts to introduce something new to Euro-Mediterranean relations. Domestic considerations (mainly agriculture, fisheries, and security) have induced both countries to shun the MU. Besides, both countries realised that they needed the financial support of the Non-meds to implement any policy towards the NORAFS and other MNC.

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Table 1.1 demonstrates the complexity of the situation. With the exception of curtailing migration, flow of contraband, and hosting sizable minorities from the NORAFS (all of which fall under the umbrella of internal and external security, especially in the post-9/11 era), there is little overlap in the foreign policy priorities and main domestic and regional considerations of different EU countries. The asymmetry in members’ economic influence within the Union has forced a situation of internal politicking over the past fifteen years that has produced a series of policies that have featured a series of second-best, sub-optimal outcomes: (1) trade liberalisation in most goods and services except agricultural goods, the very commodities that the NORAFS generally export, (2) a series of initiatives (the ENP and the UfM) that have simply built on the framework of the Barcelona Process without effectively addressing the shortcomings of the EMP, and (3) a meagre flow of financial support from the EU to the NORAFS. This was the ‘common denominator’ on which EU members agreed under the circumstances, and this denominator has been inadequate in fulfilling the original ambitions of both the Union and its neighbours. Finally, there is one actor whose role must be addressed: the European Commission. Gomez noted that since the 1970s: ‘The Commission took a more prominent role in setting the agenda on Mediterranean policy. It attempted to sell to the member states the idea that the economic development of the Mediterranean . . . was “a natural extension of European integration”’.125 Moreover, the Commission actively participated in the bargaining process amongst EU countries and between the EU and the NORAFS. It historically championed closer ties to the NORAFS and MNC in general. However, the EU’s acquis communautaire restricted its abilities, because while it could formulate legislation, this legislation had to be ratified by the Council of Ministers (which represents the interests of members’ governments), and the European Parliament (which represents EU citizens). Moreover, it was the Council and especially the European Council of heads of states and of government (and not the Commission) that shaped the Union’s foreign policy.126 Finally, the Commission was constrained by internal politicking between different directorates. For example, ‘the negotiations [for agricultural market access between Morocco and the EU] appear to have

Germany (and the UK)

France

†

Spain and Italy

Trade liberalisation should exclude agricultural goods † Security † Geographic proximity and historical links necessitate strong relationship † Cultural and social links to the Mediterranean region. † Security † Geographic proximity and historical links necessitate strong relationship † Economic & governance reforms † Security † Geography/weak historical links do not favour strong relationship

Main Foreign Policy Priorities vis-a`-vis the Mediterranean

3

2

1

Economic Clout within the Union (1 being relatively weak, 3 being relatively strong)

† †

† †

† †

†

† †

Domestic agricultural lobby Worries about French Mediterranean leadership Preserving stakes from the EMP and ENP Sizeable minorities from the NORAFS Worries about German pre-eminence in EU policy formulation. Sizeable NORAFS minorities Domestic concerns about the EU’s future (especially pertaining to Turkish accession) Greater interest in Eastern frontier Sizeable minorities from the NORAFS and other MNC

Main Domestic and Regional Considerations in Mediterranean Policy Orientation

Conflicts and Asymmetries between EU Members and the EU’s Mediterranean Policy

EU Member Grouping

Table 1.1

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been influenced by a conflict regarding agricultural concessions between two directorates general of the European Commission: the External Relations . . . and the Agriculture Directorate[s]’.127 Hence, while the Commission might have prioritised EuroMediterranean relations, its abilities were limited. Internal politicking between EU member-states (which in turn is symptomatic of the conflicts and asymmetries between members) has generated a suboptimal approach towards the NORAFS.

Additional Considerations The aforementioned sub-optimal outcome was perpetuated by the asymmetrical economic relationship between the EU and the NORAFS, with the NORAFS failing to coordinate amongst themselves to redress the situation. In a sense, this incoherence within the NORAFS resembled the inherent conflicts amongst EU countries, in that different NORAFS had different priorities, and some were even engaged in bitter rivalries and disagreements with each other as well as with the EU (an example includes the rivalry between Morocco and Algeria over the issue of the Western Sahara – Algeria supports the Polisario movement for independence from Morocco). Tensions resulting from south– south conflicts inhibited cooperation amongst the NORAFS, and undermined their bargaining position vis-a`-vis the EU. Finally, various NORAFS regimes have exploited the Union’s incoherent approach to delay reforms and garnish their political position. For example, instead of actively fostering reforms as mandated by the Barcelona Process, some of these countries have reached out to other financial donors (including the US and the Gulf Arab countries) for financial support that is more loosely conditioned on reforms.128 This outreach for other sources of financial support has not only restricted the Union’s ability to cultivate reforms within the NORAFS, but also has discouraged certain EU members (particularly the Non-meds) from allocating more resources towards closer engagement with the NORAFS. Stated differently, there has been little incentive from either side to change the status quo, so the result has been the perpetuation of a constrained multi-pronged approach that has inhibited the enhancement of Euro-Mediterranean relations.

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Conclusions This chapter examined Euro-Mediterranean relations over the past four decades. Dramatic changes in the late 1980s and early 1990s prompted the EEC to reconsider its relative lack of engagement with the NORAFS and other MNC in favour of a more comprehensive and proactive strategy, which set the stage for the 1995 Barcelona Process. The inability of the EMP to satisfy ambitions led to the introduction of the ENP, which has yielded mixed results so far. In response to existent limitations, the EU devised measures to buttress the ENP’s efficacy. A situation arose whereby the ENP increasingly focused on bilateral economic relations with the MNC (including the NORAFS), while the EMP would handle multilateral agendas on various fronts. In 2008, and in response to a series of domestic and regional concerns, President Sarkozy attempted to rejuvenate Euro-Mediterranean relations with an initiative that did not draw upon the Barcelona Process, and was exclusive to Mediterranean-adjacent states. The outcome, however, was the UfM, a ‘watered-down’ initiative whose ability to enhance EuroMediterranean relations was questionable. The outcome has been a situation in which the EMP, ENP, and UfM coexist under the Barcelona Process. The three policies complemented each other, with the UfM extending the EMP’s multilateral focus by introducing co-ownership and private-sector interaction, while the ENP concentrated on bilateral economic relations to help the MNC (including the NORAFS) modernise and fully reap the rewards of the multilateral framework. In spite of the complementary nature of these initiatives, various individuals have pointed out that the ENP and the UfM have been introduced without addressing the problems in the Barcelona Process. The EU’s Mediterranean policy lacks overall coherence, which is a result of asymmetries and conflicts in the foreign policy priorities, economic capabilities, and the domestic and regional concerns of EU members. Moreover, differences amongst the NORAFS, asymmetries in EU – NORAFS relations, and NORAFS regimes’ exploitation of the status quo, have perpetuated the situation. These factors have collectively generated an inadequate framework on which to enhance Euro-Mediterranean relations.

CHAPTER 2 EMP, ENP, AND ECONOMIC PROGRESS IN NORTH AFRICA & THE SOUTHERN MEDITERRANEAN:A MISSION THAT REMAINS IN PROGRESS

Introduction Projectors disturb nature in the course of her operations on human affairs, and it requires no more than to leave her alone and give her fair play in the pursuit of her ends that she may establish her own designs . . . Little else is required to carry a state to the highest degree of affluence from the lowest barbarism but peace, easy taxes, and a tolerable administration of justice; all the rest being brought about by the natural course of things.1 This statement was made by Adam Smith, who is considered by some the father of economics, during a lecture he delivered in 1749. Contrary to common belief, Smith was not the pioneer of what has become known as classical economic liberalism. Viner noted that ‘the great eclectic . . . drew upon all previous knowledge in developing his doctrine of a harmonious order in nature manifesting itself through the instincts of the individual man’,2 from the writings of classical philosophers to Roman ideas to ‘the naturalistic philosophy of Shaftesbury, Locke, Hume, Hutcheson . . . [and] the Scotch philosophers’.3

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Nevertheless, Smith’s ‘richness of argument, the power of his exposition, [and] the attractiveness of his conclusions’4 gave economic liberalism a significant edge. The relevance of economic liberalism to the nature and progression of Euro-Mediterranean relations cannot be overestimated. Its application in the European sphere dates back to the European Coal and Steel Community (ECSC) of 1952, which was envisaged by Schuman as a way of making a future war between France and Germany ‘not merely unthinkable, but materially impossible’.5 In other words, free trade would make ECSC members increasingly reliant on each other, thereby increasing the opportunity cost of political and military aggression. This rationale directly follows on from Smith’s and Ricardo’s assertions that the liberalisation of economic relations would allow ‘the natural course of events’ to foster prosperity amongst these nations, reducing any wealth gaps between them and increasing their interdependence. This would make war less probable, and subsequently, peace and stability would ensue. Since then, the European Economic Community (EEC) (and later, the EU) has adopted this logic with relation to its neighbours. It is worth noting also that the same logic has been adopted across the Atlantic by the United States and some of the world’s leading multilateral institutions (such as the World Bank and the IMF). This chapter will start by highlighting the European Commission’s (EC) assessment of economic relations between the EU and the MNC (including the NORAFS) prior to the EMP, before describing the economic basket of the EMP and reviewing the literature. It will then present a similar review for the ENP. Afterwards, the chapter will discuss several topics that have not been adequately investigated so far. While there have been numerous studies on the effects of liberalisation under the EMP and ENP on the macroeconomic situation within the NORAFS, only a few studies tackled the issue of socioeconomic development in the context of Euro-Mediterranean relations. Before offering concluding remarks, the main objectives of this study will be restated, which are to scrutinise EU policies under the Barcelona Process between 1995 and 2010 to assess whether they have offered Morocco alternative measures to the approach introduced by the World Bank and the IMF to promote socioeconomic development in the Kingdom during the 1980s. Conclusions can then be drawn not only as to the rationale behind the policies but also their appropriateness in

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terms of the declared aim of the Barcelona Process of helping the Kingdom and other NORAFS promote their social conditions in the future, as well as effectively reduce the gap in living standards across the Mediterranean over time.

EC Evaluations of Euro-Mediterranean Economic Relations Prior to the EMP Prior to discussing the EMP’s economic policies, it is important to illustrate the context in which these policies materialised. With regards to trade across the two shores, the European Commission contended that: ‘Between 1979 and 1993, the overall share of total MNC exports to the European Union occupied by manufactures rose from 28 to 54%’.6 However, it did acknowledge that export diversification remained a challenge for the majority of MNC.7 The EEC assumed that a combination of trade concessions and aid for structural adjustment would stimulate growth and make MNC (including NORAFS) economies less reliant on agricultural products and commodity exports. Yet ‘viewed against the background of the MNCs’ own imports, trade in agricultural products demonstrates the failure of efforts at diversification . . . Dependence on imports from the Community remains the rule’.8 On the issue of industrial restructuring, the EEC’s limited financial support represented a major drawback and could not substantially induce economic reform within the key sectors of the MNC.9 In sum, pre-1995 efforts fell short due to a combination of financial limitations (on the part of the EEC) and negligible reform to the administration of aid in the NORAFS. A more dedicated and sensible effort was required to help the NORAFS overcome their economic hardships.

The Economics of the EMP: Objectives and Characteristics Within the Barcelona Process, the EU emphasised the economic dimension of its Mediterranean policy. The Union saw economic liberalisation as the vehicle by which to reduce unemployment, induce reforms, and foster development in the MNC (including the NORAFS). In return, reducing the prosperity gap across the Mediterranean’s two shores would stem the flow of migrants from the MNC. This outcome,

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along with increased economic inter-dependence across both shores of the Mediterranean, would ensure the attainment of political stability in the long run. It is propitious to revert to the CEC’s 1995 Bulletin on strengthening the EU’s Mediterranean policy. It listed ‘economic disorder and socioeconomic destabilization’10 as significant challenges ‘in the forthcoming years in the Mediterranean’,11 which would require ‘more active Community involvement in the socioeconomic development of the partner countries’.12 The EU had six objectives on the economic front: (1) Promotion of Free Trade: Integrating MNC economies into the EU via ensuring regulatory convergence, boosting sectoral productivity and private investment into the sectors, and promoting socioeconomic development.13 After creating bilateral FTAs with each MNC, the EC would encourage these countries to create FTAs with each other ‘to maximize the economic benefit to all the parties involved’.14 (2) Promoting the Private Sector: Besides improving industrial competitiveness and production methods within MNC sectors, the EC would oversee efforts to ‘improv[e] the legal and regulatory environment in which firms operate . . . increase[e] . . . partnership with European firms . . . moderniz[e] . . . vocational training . . . and simplif[y] . . . administrative procedures’.15 The goal was ‘to make the private sector . . . capable of withstanding a liberalization of trade and therefore also competition on the world market’.16 (3) Promoting European Private Investment: Private investment from Europe would be fundamental in order for the prospective EuroMediterranean FTA to function properly. It would allow for the dissemination of capital and technical expertise from Europe to the MNC, which would allow these countries to promote economic growth and, by consequence, socioeconomic development.17 Such investment could include ‘production bases around the Mediterranean . . . investment in energy . . . encourag[ing] joint-ventures, industrial cooperation and subcontracting’.18 In parallel, the MNC were expected to undergo the necessary economic, institutional, and legislative reforms. (4) Improving Socioeconomic Realities: This included improving the economic infrastructure of these countries, and assisting the MNC

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in implementing modernisation programmes. Also, ‘a substantial role will be played by privatization and other methods of financing’.19 Inter alia, the Community suggested that social services needed to be enhanced (especially in rural areas), the environment needed better protection, and that democratic reforms needed to be pursued.20 (5) Financial Assistance: ‘The Commission [proposed] that the Community’s financial support should focus on . . . five priority objectives: (i) support for the process of economic modernization [of industries and firms] and restructuring [in order to achieve adequate competitiveness] . . . (ii) support for structural adjustment in countries less advanced in this process . . . (iii) support for regional cooperation . . . (iv) strengthening of north – south economic and financial cooperation, and among southern and eastern Mediterranean countries themselves, particularly through programmes of decentralized cooperation . . . (v) support for the Middle East peace process’.21 (6) Cooperation: The Bulletin recommended that both the EU and the MNC espouse and work towards stronger cooperation in a variety of fields (examples include energy, education, and industry).22 These policies reflected the EU’s perception that the MNC exhibited abject levels of development, high population growth, structural unemployment, a poorly educated labour force, and resistance to reform.23 This ambitious programme required a host of instruments. The Union incorporated two financial instruments, budget resources and EIB loans, which were meant to fulfil various objectives, including the promotion of the private sector and providing financial support for infrastructural activities. The EIB loans were meant primarily for long-term projects.24 These priorities, policies and instruments formed the foundation of the basket. The EMP’s economic basket promoted a ‘sustainable and balanced socio-economic development’25 process in the Mediterranean, upon which greater prosperity and stability in the region could be achieved. The EU conjured three mechanisms that would be employed to realise this objective:26

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(1) Establishing a Euro-Mediterranean Free Trade Area (FTA) by 2010: The liberalisation of trade in goods and services lied at the heart of the EMP Association Agreements (AAs) with the MNC. The EMP envisaged mutually introduced tariff reductions as the foundation upon which economic growth and development in the MNC could be achieved. In this context, aid was a complementary instrument. Earlier, it was mentioned that the EMP adopted a regional framework. The CEC Bulletin expected that the emergence of a Euro-Mediterranean FTA would augment north –south and south– south trade flows.27 The FTA lay at the heart of EU plans to foster prosperity and subsequently, security in the Mediterranean region. The EU also advocated south– south FTAs, as it viewed such arrangements as conducive to its ultimate plan for a Mediterranean FTA; one example was the Agadir Agreement between Morocco, Egypt, Tunisia, and Jordan. (2) Favouring the Economic Conditions of Growth: In addition to liaising and coordinating action with international multilateral organisations, and introducing aid programmes such as MEDA, the European Commission established the Facility for EuroMediterranean Investment and Partnership (FEMIP) in 2002. FEMIP ‘has become the main lending institution in the Mediterranean. With more than e6 billion invested since October 2002, more than 1600 SMEs helped, and e10.7 billion earmarked for 2007–13, it is now the main actor in the region’.28 The Commission had also been ‘supporting. . . investment, innovation, market instruments, legal and regulatory harmonization, exchange of best practices and overall convergence’.29 Examples of such programmes include the ANIMA investment network, whose purpose is to combine the efforts of various governmental, NGO, and global organisations to cultivate an enhanced economic ambience to attract investment into the MNC. Moreover, the EU launched FEMISE, a network of institutes whose purpose is to research economic issues afflicting the MNC. (3) Reforming Key Sectors: Another policy instrument to be used by the EU to help the MNC in their developmental quest are so-called ‘technical meetings’, which referred to meetings (whether in the form of seminars or fora) to provide specific information on EU rules and norms that the MNC needed to converge to at sectoral level, and how

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to reform economic sectors in order to match their counterparts in Europe in terms of regulation (Chapter 4 will cite an example of such seminars as reported in the account of one of the EU officials interviewed for this study).30 Some of the sectors covered by these proposed reforms include energy, the environment,31 health, transportation,32 tourism, and industry.33 As for financial aid, the principal provision under the EMP was the MEDA programme, which ‘supports the economic transition of Mediterranean non-member countries [in the case of Morocco, e1.5 billion were allocated between 1996 and 2007 – see Chapter 5] and the establishment of a Euro-Mediterranean Free Trade Area by promoting economic and social reforms for the modernisation of enterprises and the development of the private sector’.34 Additional activities of this programme involve ‘support[ing] sustainable socioeconomic development . . . regional, sub-regional and cross-border cooperation’.35 Financing could assume the form of grants, EIB risk capital, and interest-rate subsidies for EIB loans. Finally, to monitor MEDA’s progress, ‘the Commission, in collaboration with the EIB, submits an annual report to the European Parliament and the Council summarising the actions financed during the year and assessing the results obtained’.36

Assessing the EMP’s Economic Performance There has been continuous debate on whether the EMP’s economic objectives have been fulfilled. Handoussa and Reiffers conducted a macroeconomic examination of the transition and implementation of the EMP in the MNC (including the NORAFS). Across all countries, they identified the following since the EMP’s creation: (1) Average growth rates of 1.7 to 5.4 per cent, with vulnerability to commodity prices in part due to adverse weather conditions; (2) Increased diversification (with services and manufacturing gaining share in overall GDP); (3) Considerable reduction in average interest rates; (4) Relatively large budget and trade deficits; (5) Increased external debt;

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(6) Appreciation in real exchange rates, as most currencies were anchored to the US Dollar, which appreciated against the Euro; and (7) Increasingly prudent monetary policies. Despite some positive trends, the reforms could not yield rates of economic growth to match the increase in entrants to the labour force – the result was that unemployment remained a pressing issue for the MNC to resolve.37 Martı´n and Lannon observed from the results of the 2009 IEMed survey that ‘the assessment of the EMP’s achievements is far more negative among Southern and Eastern Mediterranean respondents (i.e. the assumed main beneficiaries of the process) than among EU ones’.38 The survey listed some positive trends: 70 per cent believed there has been improvement in transport and energy cooperation between the EU and MNC, and 65 per cent believed there has been progress in the promotion of investment.39 Nonetheless, the same individuals cited concerns that benefits from the Partnership have not been felt by a wider segment of the population, as challenges with respect to job creation and poverty reduction remain. Also, those surveyed had not observed any progress in citizens’ political participation, in sustainable development, job creation to reduce youth unemployment, or any reduction in the wide gaps in educational outcomes across the Mediterranean’s two shores.40 In a 2009 study on economic integration in the Euro-Mediterranean area through trade liberalisation, de Wulf and Maliszewska investigated the strengths and weaknesses of the FTAs proposed under the Barcelona Process. They praised the reinforcement of bilateral free-trade agreements between the EU and the MNC, which added to the Cooperation Agreements signed decades ago between the two parties. Nevertheless, the report lamented the fact that the trade liberalisation process had yet to increase trade amongst the MNC themselves.41 They concluded that in terms of the Barcelona Process’ impact on trade flows between the EU and the MNC, there was ‘very little direct evidence’ of any effect; however they also pointed out that without the Process, trade flows could have been even smaller.42 Reasons for the limited effect include the fact that the trade liberalisation schedule as per the Association Agreements had not yet finished (to be able to appreciate the impact of the process on trade flows),

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and the fact that ‘MFN (most favoured nation) liberalisation’ meant that trade between the MNC and other parties (besides the EU) would have increased, limiting the effect of the Association Agreements. Finally, they also cited implemental failures that were primarily attributable to limited financial resources (to follow through with the adjustment required for the liberalisation process), and lack of ‘technical capacity’ on the part of the MNC to follow through with the adjustment process;43 whilst they did not elaborate on that latter point, it could refer to the fact that the MNC was unaccustomed to the demanding endeavour that would accompany adjustment to the trade liberalisation process. Other papers emphasised the short-term distortions and adjustment costs that the NORAFS have to bear as a result of implementing EMP policies. Jakubiak and Paczynski cited Francois et al.’s finding that ‘Egyptian domestic price distortions during the transitory period can lead to inadequate preparations to the competition with the EU producers once [the] FTA is implemented’.44 Tovias agreed that as part of its reform package, the EC was hoping to restructure domestic sectors in the MNC via a process of administrative reorganisation, mergers between companies, quality control, and privatisation. In the short run, these changes would mean that the MNC would incur substantial restructuring costs.45 He also predicted minute positive welfare improvements to the MNC due to ‘the discriminatory nature of the trade liberalization to be operated by [the] Arab states . . . and thus the inevitability of trade diversion effects’.46 Gavin contended that the EMP failed to encourage south – south integration, and ‘as a result . . . the costs of trade diversion have outweighed the benefits of trade creation’.47 Another study, by Radwan and Reiffers, highlighted ‘how resilient the Mediterranean countries’48 had become, as witnessed by the rise in commodity prices in the mid-2000s and the contemporaneous rise in interest rates. Nonetheless, the study also stressed the vulnerabilities of existing budget policies, and MNC (including NORAFS) failure to capitalise on trade liberalisation opportunities. Disequilibria caused by macroeconomic intervention to provide poverty relief in the face of rising commodity prices have created macroeconomic dilemmas for MNC that wanted to stabilise and reduce their deficits. The lack of revenues and the inflexibility of the debt burden exacerbated the

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situation. While the EMP amplified trade volumes between the EU and the MNC, it did not allow them to exercise their full potential, as their institutions remained poor. The Partnership, therefore, encouraged openness and export reform, but ‘these effects have been insufficient’.49 Concurrently, EuroMeSCo cited ‘a positive contribution to Southern modernisation efforts’.50 In its evaluation of results in the MNC ten years after the inauguration of the Barcelona Process, it remarked that unemployment, transparency, and bureaucratic procedures continued to pose major hindrances to further economic progress. The report concluded by revealing that ‘the impact of EMP cooperation on these areas was marginal, failing to trigger the reforms enunciated in the Barcelona Declaration’.51 In his scrutiny of the EMP and foreign direct investment in the MNC, Joffe´ questioned the economic principles on which the EMP was designed, deducing that ‘foreign investment to southern Mediterranean states has failed to increase . . . the EMP has failed to hone in on the fundamental blockages to endogamous growth in Arab states’.52 A detailed macroeconomic assessment of the EMP was undertaken by the IMF on the Partnership’s ten-year anniversary. While the report highlighted some positive developments between 1990 and 2003 (including ‘some progress on trade liberalization’53 in the Southern Mediterranean, the increase of financial assistance, and more ‘macroeconomic stability’),54 it asserted that the Partnership might have played a limited role in cultivating such improvements. It also revealed that standards of living in the MNC did not converge to those of the EU member-states, whilst job creation rates had not been as high as required to keep pace with population growth.55 In their reflections, Aliboni and Ammor noted that of the primary economic shortcomings of the EMP, the limited impact of EU policy in the MNC had been the greatest.56 Also, the EU itself, alongside the University of Manchester, conducted a Sustainability Impact Assessment of the proposed Euro-Mediterranean FTA under the EMP. In the revised 2007 edition of this ‘SIA-EMFTA’ assessment, the report concluded ‘that the direct change in static equilibrium economic welfare from the EMFTA is generally positive but small . . . The expected welfare changes in MPCs [MNC] lie in the range minus 1 to plus 2 percent of GDP for industrial products and between zero and 0.5% for agriculture’.57 It also anticipated ‘a significant adverse impact on tariff revenues’58 and a shortterm adverse effect of trade liberalisation in the industrial sector.

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In general, assessments highlighted limitations in EMP policies when it comes to fostering economic progress in MNC. Many papers chastised the Partnership’s utopian policies, which assumed that the NORAFS and other MNC would easily restructure their industries and transform their macroeconomic situations in order to extract maximum gains from its policies. The CEC Bulletin admitted that ‘the Community cannot, of course, tackle all these tasks alone’.59 Some studies cited improvements in the NORAFS, especially with regards to macroeconomic variables such as economic growth and budgetary stability. Yet even these studies admitted that such improvements were either inadequate to bring about economic improvements across the Mediterranean, or that they were not even a consequence of EMP policies.

The Economics of the ENP: Objectives and Characteristics The regional dimension proved impervious because of objectively different capabilities and willingness on the side of the partners. This is why the goal of creating a free trade area by 2010 has been put off and why the ENP, with its bilateral and differentiated perspective, was put on track.60 Concerning economic ties, the European Commission underscored the need for ‘enhanced preferential trade relations and increased financial and technical assistance’.61 Moreover, the introduction of positive conditionality (with an opportunity to participate in the single market and various programmes administered by the Union, in return for demonstrating the willingness and capacity to develop) was meant to create a positive feedback effect over time, allowing for the agglomeration of economic gains to both the EU and the MNC (including the NORAFS). The Commission expected significant mutual benefits from this process. By reducing barriers to trade, it anticipated that there would be gains in efficiency within MNC markets as well as welfare gains for their citizens. It also expected that closer integration would make the MNC more attractive for investors and thereby encourage private-sector growth in these countries.62 With regards to implementation, ENP policy states that there must be continuous liaison between the EU and the MNC (including the

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NORAFS) to discuss the latter’s economic and social aspirations, as well as regular consultation with multilateral institutions for advice.63 The communication also highlighted areas on which the Policy would concentrate to strengthen trade relations, which included the dismantlement of barriers and investment in the economic infrastructure of the MNC. Central to achieving this objective was that the MNC converge to the EU’s acquis communautaire, and the EU would utilise its policy instruments (aid under MEDA and ENPI as well as technical assistance provided via meetings and seminars) to help the MNC achieve this convergence.64 With regards to agricultural products, cooperation under the APs would focus on hygiene of products and production methods in order to improve the quality of MNC agricultural exports and protect consumers in both sides of the Mediterranean; this would facilitate the export of agricultural products to the EU’s member-states.65 The ENP also targeted ‘legislative approximation in fields such as company law’66 and ‘a comprehensive prudential regulatory framework’.67 Combined with greater access to European financial markets, these moves ‘should . . . add to the stability of partners’ financial markets and help enhance their overall economic performance’.68 The ENP also covered investment issues, calling for improvements in the investment climate of the MNC and insisting on the ‘nondiscriminatory treatment of investors [and] . . . [a] strengthening of the functioning of the judicial system’.69 Economic measures included efforts to promote competitiveness within the major economic sectors, as well as measures to promote economic transparency (especially as it relates to tax regulations in those countries).70 The EIB was to continue to provide loans (as it did under the EMP), and the EU would provide emergency aid when necessary. The European Commission emphasised, however, that ‘the ambitions of the European Neighbourhood Policy must be matched by adequate financial and technical support . . . The Commission has proposed that a new set of harmonised instruments will support assistance to third countries’.71 Furthermore, ‘particular attention will be devoted to institution building. Twinning and technical assistance along the lines provided by the EU’s Technical Assistance Information Exchange Office (TAIEX) will be extended to partner countries’.72 For regional programmes, ‘the Regional Indicative programmes of MEDA and TACIS for 2005 –06

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provide support for the regional dimension of ENP’.73 The EU would also combine these instruments with other forms of aid supplied by the European Bank for Reconstruction and Development and other financial institutions. Advances on these issues would hinge on the economic situation of each neighbour state, hence the ENP’s emphasis on a differentiated bilateral approach, as opposed to the EMP’s holistic and multilateral framework. In its 2007 Communication, the European Commission adopted additional strategies to augment the ENP’s economic measures, which incorporate the introduction of DCFTAs (Deep and Comprehensive Free Trade Agreements), making short-term travel between the EU and the MNC easier, further modernisation of the economic sectors, and further integration.74

Assessing the ENP’s Economic Performance There have been various attempts to project the ENP’s economic performance. Fantini and Dodini investigated whether adopting the EU acquis improved regulatory environments in the MNC, whether successful implementation of ENP policies could generate economic growth, and whether the ENP could induce the MNC (including the NORAFS) to improve their economic situations. They contended that while the early signs were encouraging, the future of the Policy depended on comparing the benefits of tighter integration to the EU to the costs of converging to the acquis communautaire.75 Furthermore, ENP policies would have to take into consideration ‘the development goals and implementation capacity’76 of the MNC. Haddad and Pogodda also discussed economic reform under the ENP in the case of the Southern Mediterranean countries. They remarked that as a result of emphasising economic liberalisation, the ENP ‘has been successfully hijacked by the ruling elites in the Southern Mediterranean’.77 To address the lack of competitiveness of MNC firms, the ENP incorporated a series of liberalising measures that have ended up being used by the rulers ‘to protect their economic and political position’. They also cited that fact that the ENP did not do enough to incorporate MNC civil societies in the economic measures, and regretted the ‘focus on economic liberalisation as a launch pad for democratic reforms’ because this relationship ‘is at best tenuous’.78

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Meanwhile, Wolczuk studied the effect of ENP conditionality on Ukraine between 2005 and 2007. She pointed out that ENP conditionality ‘helped change the opportunity structure by providing an external reference point for domestic actors to pursue domestic reforms’,79 and empowered EU-oriented bureaucrats within the state. However, she concluded that a lack of EU membership prospects, along with ambiguities concerning the ENP’s targets, debilitated the Policy’s efficacy: ‘the “unlocking” impact of the ENP can be attributed to the opening up of Ukraine to EU influence owing to Ukraine’s aspirations to membership, even if these aspirations are not recognised by the EU itself under the ENP’.80 She also cited a study by Jakubiak and Kolesnichenko, which determined that economic progress under the ENP was insufficient to allow Ukraine to establish deeper economic ties with the EU. Using a selection of MNC, Jakubiak and Paczynski examined the effect of economic integration under the ENP on trade in goods and services as well as migration flows. In examining the FTAs between the EU and MNC (including the NORAFS), they lamented the curbs on liberalisation in the agricultural sector, whilst admiring the broad coverage of free trade measures, which could potentially reap substantial rewards for both parties. As far as the ENP’s impact on MNC economies goes, they asserted that countries that trade significantly with the EU would reap greater benefits from liberalisation, and would experience productivity gains at the same time.81 According to Jakubiak and Paczynski, further progress in agricultural-sector liberalisation was necessary for macroeconomic gain; they cited Conforti et al., who revealed sizeable macroeconomic gains from extending the FTA to agricultural products (as Chapters 6 and 8 will reveal, the notion that trade liberalisation is beneficial to Morocco’s and NORAFS socioeconomic development does not necessarily follow). Moreover, Jakubiak and Pazcynski do not focus on the effect of trade liberalisation on development but rather its impact on growth). Using computable general equilibrium models, they concluded that integrating the MNC into the EU single market would increase productivity if: (1) trade diversion were minimised [vis-a`-vis third parties], (2) trade creation were maximised, and (3) ‘trade [were] initially a small share of national production’.82 With regards to services, they used predictive models and concluded that partial liberalisation of trade in services would be beneficial to the

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MNC [less so for EU countries], but that it was very difficult to achieve due to the differences in regulatory and procedural environments between the EU and the MNC.83 As for migration flows, they anticipated that ‘migration from ENP countries to the EU is expected to continue at levels observed in recent years, but the outlook might change depending on political, social and economic developments in the ENP countries and migration policies of the EU’.84 More importantly, they stated that the outcome of migrations from the south to the north depended on the policies adopted in the EU and the MNC themselves and not on how integrated the MNC were to the EU economically.85 On whether the ENP would impact the distribution of gains from migration to both parties, they found that the ENP’s impact would be insignificant, and that ‘domestic policies towards migrants’86 in EU countries would be more pivotal. They also admitted that greater financial integration via the ENP could have a positive impact on remittances made by NORAFS migrants working in EU countries.87 Gstohl chose to analyse the EU’s measures to strengthen the ENP; she claimed that in the beginning, the European Commission desired to offer MNC ‘a stake in the internal market with the free movement of persons, goods, services and capital’. Over time, the idea of freedom of movement as per the European Economic Area (EEA) was replaced by ‘the concept of a Neighbourhood Economic Community (NEC)’.88 She elaborated that the NEC would be structured on ‘Deep and Comprehensive Free Trade Agreements’ [DCFTAs], covering substantially all trade in goods and services as well as ‘“behind-the-border” issues’.89 In her point of view, what commenced as a ‘stake in the internal market’ has been reduced to simply ‘improved access’;90 she rendered this metamorphosis a significant downgrade of economic relations, since the term ‘economic community’ represents a ‘Common Market minus’ situation. There is a caveat with this argument, however. Gstohl based her claims on the idea that the Action Plans (APs) were designed so that the ultimate result would be an association similar to the European Economic Area that incorporates the EU, Norway, Iceland, and Liechtenstein. According to her, the EEA was the model on which the economic integration process between the EU and MNC would be based. This assertion is questionable: the European Commission always stressed

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that the ENP builds on and constitutes an additional component of the existing Barcelona Process, which in turn does call for ‘facilitating exchanges between civil society and ordinary citizens’,91 but it never promised unrestricted freedom of movement of labour [as is the case for the EEA]. The ENP did offer the MNC ‘greater integration into European programmes and networks, increased assistance and enhanced market access’,92 subject to undertaking the necessary amendments, but enhanced market access does not equate to complete freedom of movement of products, physical capital, and labour. Economic assessments of the ENP have generally shown that its promise of greater access to the EU Internal Market induced the MNC (including the NORAFS) to transform economically. Nevertheless, more commitments were required from both the EU and the MNC. The literature cited the Union’s need to adhere to its promise of single market access and to continue utilising positive conditionality, while the MNC (including the NORAFS) needed to maintain the spirit of modernisation to reduce the prosperity gap with EU countries and to develop successfully. Concurrently, these measures would put both parties on the path to a more successful fulfilment of ENP guidelines.

Shortcomings in the Existing Literature With respect to the NORAFS, the previously cited elements of the literature on the EMP and the ENP tended to focus on the following issues: (1) Evaluating the effect of trade liberalisation in the context of both initiatives on economic growth and per-capita incomes in the NORAFS. (2) Examining the effect of economic liberalisation on macroeconomic management in the NORAFS and the strength of future EU – NORAFS relations. (3) Analysing the potency of conditionality measures in both the EMP and the ENP on governance reforms in certain NORAFS. In spite of the invaluable insight these investigations have shed, particular gaps in the literature on the economics of Euro-Mediterranean relations remain.

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For example, the literature reported on the impact of the EU’s Mediterranean initiatives on economic growth, real exchange rates, budget and current account deficits, and inflation rates. However, these reports generally: (1) Failed to Project the Effect of the EU’s Policy Objectives on Social Outcomes in the NORAFS: A complete assessment of the impact of EU policies on the NORAFS must address whether the policy objectives have promoted and are the most appropriate to facilitate the amelioration of socioeconomic conditions in the future. Economic growth is a means to achieve an end – that end being the amelioration of social welfare. So far, the studies evaluated the policies mainly on political and macroeconomic fronts, on the basis of both parties’ fulfilment of the conditions agreed upon in the AA and the AP. Accordingly, it will be necessary to evaluate whether any macroeconomic gains have been translated into improvements in social conditions in the NORAFS, and whether such a translation is possible in the long run. (2) Failed to Focus on Evaluating the Appropriateness of the Objectives on which the EU based its Policies toward the NORAFS to Promote their Socioeconomic Development: While previous studies looked at the outcome of the EU initiatives from a primarily political or macroeconomic perspective, this study focuses on their socioeconomic developmental implications. Most existing studies have focused on evaluating the ‘implemental performances’ of both the EU and the NORAFS (whether they have successfully implemented the conditions of the AA and the AP). This book goes beyond these considerations, and asks whether the approach adopted by the Union is the most appropriate to promote sustainable socioeconomic development. While the literature (see UNDP (2003) for example) does concur that growth in per-capita income is a necessary condition for developing countries so that they successfully achieve long-term socioeconomic progress, it also does not equate per-capita GDP with the state of a country’s living standards.93 Hence, this study will focus on evaluating whether the EU has a dominant ideology that entails apropos policy positions on development

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to secure sustainable socioeconomic development in the NORAFS, and consequently reduce the gap in social outcomes that exists across the two shores of the Mediterranean. It must be noted that the works of Martı´n on the socioeconomic impacts of Euro-Mediterranean policies represent an exception to the trend described in the previous page (that the socioeconomics of Euro-Mediterranean relations have not been discussed as extensively as the political, macroeconomic, and other dimensions). Looking at the socioeconomic effects of trade liberalisation in the NORAFS, he evaluated the effect of trade liberalisation as envisaged by the Association Agreements on four variables: job creation, nature of employment, incomes of the socioeconomically disadvantaged, and social spending on services for the poor.94 He made the following deductions: (a) Given how high unemployment levels are in the MENA region in general (and in the NORAFS in particular), and in light of the significant proportion of youth in the demographic structure of these countries, the EMP did not provide any strategy to effectively deal with this problem.95 In fact, he went further to deduce that ‘the best that can be said is that EMFTAs are potentially damaging to the MPC [MNC] economies and will do nothing to alleviate, let alone improve, their social situation’.96 (b) EMFTAs would reduce the price of imports (since barriers would be removed); the issue, however, is that only the privileged socioeconomic classes benefit from this as imports represent a higher share of their consumption basket. Furthermore, the EMFTAs did not preclude the possibility that European firms would charge higher prices for their exports to the NORAFS to extract more revenue. Hence when it comes to price levels for consumer goods, the benefits would be skewed in favour of the European producers.97 (c) The reduction in state revenues as a result of the dismantlement of trade barriers under the Association Agreements would force NORAFS governments to levy VAT (value added taxes), which would hit the socioeconomically disadvantaged sections of society the hardest because ‘the increased weight of indirect taxes . . . reduces the real disposable income of the poorest sectors of the population and has a negative impact on income distribution’.98

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(d) The EMFTAs would lead to lower investment in ‘social infrastructure’ for the poor, especially in rural areas (due to lower state revenues). (e) The effect of the EMFTAs on economic growth was ‘largely overstated’.99 As far as Morocco is concerned, for example, Martı´n pointed out that in 2003, the government lost more than e225 million in tax revenues as a result of trade liberalisation, which exceeded the e142 million provided to Morocco by the EU in that same year under the MEDA programme.100 In addition, he criticised the MEDA programme for the fact that until 2003, ‘less than one-third’ of the e1,180 million committed to that point (from 1996 to 2003) was actually disbursed, and that ‘of the 25 projects approved during that period [approved for receipt of financial aid from the EU], only a few have a true social dimension’.101 These observations reveal that Martı´n had doubts about the socioeconomic effects of trade liberalisation as envisaged under the EMP, especially concerning its impact on the socioeconomically underprivileged sections of society. Martı´n, however, is an exception, and little attention has otherwise been focused on the socioeconomic dimension of Euro-Mediterranean relations. One possible reason is that existing papers have generally conducted cross-country studies whereby the policies’ impacts were measured with respect to a selection of countries on multiple fronts (political, economic, security, etc.). This emphasis on breadth, whilst shedding valuable insights into the differences in results across different countries, compromised the studies’ abilities to shed further detail into the consequences of EU policy on social standards within each NORAFS. There is another possible reason for this dearth. In another paper, Martı´n contended that ‘the social effects of the Euro-Mediterranean Partnership are a largely under-researched field so far’,102 and as such he offers a technical explanation for this status: In 2006, most of the MPCs [MNC] find themselves in the early stages of implementation of the EMFTAs . . . The EMFTAs set up transitory periods of twelve years and concentrate the dismantling of tariffs on nationally produced consumer products (i.e. the

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sectors most sensitive to competition from European products) in the last four years of this period.103 Hence, Martı´n argued that the socioeconomic effects of the EU’s Mediterranean initiatives are only observable years after their introduction; free trade, for example, is introduced and phased in continuously under the EMP AAs, and the economic outcomes of such policies are not instantaneously translated into societal changes (such as improvements in access to health and education). However, with the EMP AAs and the ENP APs drawing to the conclusion of their timeframes in some countries, one is in a better position to uncover whether these policies could improve standards of living in the NORAFS. To sum up the above, most previous studies focused on evaluating the macroeconomic effects of the EMP and ENP, without adequately assessing either the policies’ ideological foundations or their abilities to promote social outcomes. The promotion of social outcomes is fundamental to NORAFS future economic prospects and to EU efforts toward curbing migration from these countries. The Introduction listed the book’s central questions: (a) Have the EU’s policies between 1995 and 2010 ameliorated socioeconomic conditions in the NORAFS? (b) Were these objectives the most appropriate for promoting socioeconomic development in the NORAFS, or were they simply those the EU could agree on? (c) Can these objectives effectively reduce the socioeconomic gap (i.e. the gap in standards of living) that exists between EU members and the NORAFS? A case study will be conducted that will account for EU policies towards one NORAFS. This differs from cross-country studies (which compare the impact of either the EMP or ENP on a group of NORAFS) in that attention is devoted to one country, thus providing a unique opportunity for greater analysis and scrutiny. Morocco was selected as the NORAFS of interest for the following reasons:

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(a) Morocco demonstrated the greatest willingness to engage in political and economic reforms (as per EU policies) in order to establish stronger ties with the Union. Despite the chequered history of EU –Moroccan relations (see Chapter 3), the Union praised the determination of the Moroccan government to forge closer ties. The EU’s 2008 bestowment of the ‘Advanced Status’ label to classify its relations with the Kingdom serves as another indication of this positive trend in relations. By understanding the impact of EU policies on Morocco, a politically, economically, and culturally similar example can be set for other NORAFS, which would find in the Moroccan experience a befitting guide to their attempts to strengthen ties to the Union. (b) Following the earlier discussion of Martı´n’s answer to why societal outcomes have not been discussed in depth so far, it is worth noting that Morocco’s FTA with the EU (as per the AA) commenced its implemental phase in 2000, and is expected to be implemented over a twelve-year period. At this stage, one is in a considerably better position to provide an educated assessment of the results of the FTA between the Kingdom and the Union. (c) Logistically speaking, Morocco is arguably the most transparent of the NORAFS when it comes to the provision and availability of information. An abundance of information is an important consideration for any researcher embarking on a project, so this factor must be taken into consideration. (d) Since 1983, Morocco has been embarking on an ambitious structural adjustment programme (SAP) to stabilise its macroeconomic budget and improve the socioeconomic conditions of its citizens. Assessing the EU’s influence within the Moroccan scenario can reveal whether the Union simply followed the same approach adopted earlier by the SAP reforms envisaged by the World Bank, or whether it employed alternative policy objectives and targets. Looking specifically at Morocco, various studies looked at the Kingdom’s economic features and performance. For example, Gasiorek et al. studied the impact of Morocco’s business environment on the productivity of the Kingdom’s firms. In particular, they evaluated the effect of credit allocation (i.e. the ability of firms to receive and access credit) and firms’ total factor productivity (TFP), whilst also examining how Morocco’s

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bureaucratic environment influenced TFP by looking at panel data across Moroccan firms in the late 1990s and the 2000s. They found the following: (a) There was a negative correlation between a firm’s access to credit and TFP. Logically, one would expect firms that were more productive to have easier access to credit (and hence the expectation would be that a positive correlation exists). They accounted for this finding by suggesting that credit markets in Morocco were imperfect: ‘while it may be true that less efficient firms might need more financing, if credit markets work efficiently it should also be the case they will typically find it harder to get that financing’.104 (b) There was also a negative correlation between financing levels via domestic credit and TFP for large, exporting firms. Their suggestion was that these firms received disproportionate financial assistance even when they were not operating efficiently. They qualified these findings (points (a) and (b)), however, by alluding to difficulties in obtaining data from Moroccan banks on access to credit and other financial indicators of Moroccan firms.105 (c) A positive correlation existed between ‘fiscal homogeneity’, which refers to the presence of uniform taxation and regulations covering all firms within a particular industry, and TFP. This could indicate that in an industry where regulatory codes applied equally to all firms (i.e. firms do not get exceptional treatment due to political connections or due to their economies of scale for example), firms were motivated to boost productivity.106 (d) A negative correlation existed between bureaucracy in Morocco and TFP that applied for small firms and ones that did not export products overseas. They suggested ‘that regulatory differences and infrastructural difficulties make it more difficult for smaller [and non-exporting] firms to operate as effectively’.107 Gasiorek et al.’s findings were constrained by data availability, and yet they suggested that large exporter firms benefited from bureaucratic and financing advantages even when they were not very productive, at the expense of smaller firms that directed their products to the domestic market. The suggestion that the political and economic connections of these large firms (or their owners) played a role in

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skewing the overall productivity of Moroccan firms in a given sector indicates yet again that when it comes to promoting development through sectoral projects, the EU’s aid cannot be held solely responsible for the limited results: bureaucratic blockages (specifically connections between the political leadership and the economic elite) have been detrimental to the Kingdom’s efforts to develop and boost sectoral productivity (Chapter 8 will allude to this theme in another context: Morocco’s real estate sector). Dawson alluded to Kebabdjian’s econometric test as to whether free trade would bring any benefits to the NORAFS. In the Moroccan scenario, an FTA with the EU would increase economic growth by 1.5 per cent. One thing to note, however, is that ‘the model assumed agricultural free trade [which is not the case under the AA], and the growth was generated almost solely in the agricultural and phosphate sectors’.108 Dawson believed that while the study revealed meagre short-run economic gains, free trade would bring more significant ‘indirect’ gains: by this he meant that markets would allocate resources more efficiently, and that the flow of technical know-how (from the EU to the NORAFS) would be facilitated; the cost, however, would be substantial readjustment before the realisation of these gains.109 Hemal calculated that the AA would contribute about 2 per cent to long-term economic growth.110 He also concluded that the AA did not result in significant FDI inflows from the EU; FDI inflows would only help Morocco (and the NORAFS) if south – south trade were simultaneously improved in order to avoid a so-called ‘hub-and-spoke’ situation.111 Worries concerning the historically adverse effect of FDI on Moroccan firms were also cited by Haddad and Harrison.112 In another study, Ravallion and Lokshin looked at the impact of removing tariffs on cereal imports on Morocco’s urban/rural inequality. Unlike previous studies, which focussed ‘on just one or a few categories of households’,113 they used 5,000 households and combined partial and general-equilibrium analyses to provide ‘a detailed picture of the welfare impacts, so as to better inform discussions of the social protection policy response to trade liberalization’.114 They found ‘a small negative impact on mean household consumption and a small increase in inequality . . . Rural families tend to lose; urban households tend to gain’.115 They accounted for this finding by noting that rural producers of cereals lose

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revenue, and this loss is greater than the benefit to rural consumers from lower market prices for cereals.116 Finally, Radwan and Reiffers looked at the impact of agricultural liberalisation in the context of the EMP on a selection of MNC including Morocco. After simulating different liberalisation scenarios, they found that unilateral liberalisation by the EU would lead to modest gains for the MNC; the main benefactors in the MNC would be ‘exporting farmers, large farms and large landowners’,117 whilst consumers and the traditional agriculture sector would be hurt. Unilateral liberalisation by the MNC would lead to greater agricultural ‘production . . . exports and employment’.118 Meanwhile, bilateral liberalisation by both the EU and the MNC (as envisaged by the FTA) would benefit the MNC ‘modern agricultural sector, urban consumers and the industrial sector’,119 but would harm ‘the traditional agricultural sector and consumers of the rural areas’.120 The study scrutinised the effect of agricultural liberalisation on prices and earnings within the agricultural sector, without examining the effects on social outcomes for individuals within the MNC. The purpose of this book, therefore, is to portray the consequences of the EU’s policy objectives on social conditions (using Morocco as a reference), before ascertaining whether a continuation of these policy measures is likely to produce sustainable gains to the Kingdom’s socioeconomic situation.

Conclusions It is important to clarify that while Chapter 1 discussed the EMP, the ENP, and the UfM (given that all three initiatives were introduced between 1995 and 2010), the discussion will henceforth focus primarily on the EMP and the ENP when evaluating the EU’s developmental approach towards Morocco. This is due to the fact that the UfM is an initiative involving multilateral private sector projects that have not yet begun, and because it is the Association Agreement and the Action Plans that take centre stage in terms of managing the socioeconomic aspects of the relationship. According to Hunt, in the case of the UfM, ‘it is impossible to make accurate predictions of likely development impacts . . . when most component projects are yet to be implemented . . . [and] when the time horizon for their implementation is uncertain’.121

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In light of their paramount significance to the fortification of EuroMediterranean relations, considerable attention has been granted to the economic baskets of the EU’s two major Mediterranean initiatives: the EMP and the ENP. Through its communications (see Bulletin (1995) and COM (2003)), the EU presented the objectives of the approach it intended to adopt towards the MNC, and committed support through financial and logistic aid (see Chapter 5 for more details on these instruments and what sectors they targeted), whilst underscoring that the MNC (including the NORAFS) needed to liberalise their key economic sectors to prosper (see EMP official website for details, as well as the EU – Morocco Action Plans). Most studies showed that while the EMP managed to yield certain economic gains in the NORAFS (and MNC in general), it failed to induce the far-reaching transformation it envisaged at the outset: it failed to fulfil its aim of a Euro-Mediterranean FTA, and did not take into account the sizeable adjustment costs the MNC would have to incur to modernise their economies (similar critiques have been levelled at the World Bank and the IMF after they introduced the structural adjustment programme in Morocco in the 1980s – see Chapter 3 for a discussion of that). These shortcomings were a result of failures by both the EU and the MNC. The introduction of the ENP was meant to address some of the EMP’s shortcomings. The EU saw the ENP’s economic policy as a form of reinforcement since it would involve more active bilateral economic engagement with the MNC, which would then complement the EMP’s regional and sub-regional economic projects. Assessments of the ENP’s economic effect were less critical than for the EMP’s end product. They cited positive conditionality measures as a necessary mechanism to entice the MNC to reform on all fronts. Nevertheless, the EU acknowledged the ENP’s limitations and introduced additional tools to strengthen the Policy in early 2007, including the pursuit of deeper trade liberalisation and the allocation of additional financial and logistic support to assist the MNC. Such strategies were meant to speed up the fulfilment of the economic integration of the MNC into the single market. Assessments of the EU’s initiatives have so far focused on their impacts on macroeconomic indicators and governance within the MNC (including the NORAFS). It is true that macroeconomic stability and proficient macroeconomic management are important to the cultivation

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of economic progress; nevertheless, an accurate portrayal of the effects of such policies on NORAFS citizens would have to go beyond macroeconomic effects and look at their societal consequences. In addition to evaluating how successfully the EU and the NORAFS implemented the Association Agreements and Action Plans, one needs to examine whether the policy objectives are the most appropriate to promote socioeconomic development in the NORAFS. The literature’s concentration on political, security, and macroeconomic issues as opposed to socioeconomic conditions lies at the heart of the proposed investigation. This study seeks to find out whether the EU’s Mediterranean policies are likely to enhance socioeconomic development in the NORAFS and thereby reduce the gap in social conditions between the Union’s members and the NORAFS. In lieu of cross-country studies that contrasted policy impacts across a variety of countries, this single-country study examines whether EU initiatives have improved Morocco’s socioeconomic conditions, and whether the Union’s policy objectives depart from the paradigm that Morocco has been following since the early 1980s following the introduction of the World Bank SAP (see the next Chapter for more details). The determination of whether the Union’s Mediterranean initiatives are the most appropriate to spur the amelioration of social outcomes in Morocco, and whether the Union’s policies provide alternatives to the approach adopted by the Kingdom since the 1980s in order to reduce the gap in social conditions between the Kingdom and the EU’s memberstates, will constitute the cornerstone of this investigative enterprise, and will guide the progression of the remaining parts of this book.

CHAPTER 3 THE EU AND MOROCCO: A GROWING SYMBIOSIS DEFIES A CHEQUERED HISTORY

Introduction1 This chapter will initially describe the state of EU– Moroccan relations between 1970 and 1999, before recounting the history of Morocco’s structural adjustment programme (SAP), which was designed by the World Bank and implemented by King Hassan II. These reforms signified a turning point in the Kingdom’s economic history; ever since they were introduced, Morocco has been adopting a neoliberal approach to develop and prosper. The primary economic features of the EU – Morocco Association Agreement (AA) and the EU– Morocco Action Plan (AP) will also be outlined.

EU –Moroccan Relations: 1970 – 99 Relations between Morocco and Europe predate the establishment of either the EU or the Moroccan monarchy. The geographic proximity of Morocco made political, economic, and social interaction between Europeans and Morocco’s Arab-Berber population inevitable. These historical links are beyond the scope of this book, but suffice to say, economic and cultural links between the two sides flourished over centuries, and future initiatives would use these links as stepping stones to closer and mutually beneficial bonds.

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The birth of a relationship between Morocco and the EU coincided with the moment at which the European Economic Community (EEC) was ‘seeking to draw the Mediterranean third countries towards it’.2 Gomez noted that while the EEC was motivated by security considerations, the NORAFS and other MNC prioritised trade, especially since ‘south–north trade was dominated by the agricultural and energy sectors. Unprocessed agricultural exports to the Community were a vital source of export revenues for countries such as Morocco’.3 He further posited that France was the most influential EEC actor in the region at the time due to its trade links with the recently decolonised countries of the Southern Mediterranean, and also because France needed the help of North African migrants for reconstruction efforts post-World War II.4 France was keen on forging stronger ties with the NORAFS (especially its previous colonies), whilst utilising the EEC’s resources to implement its vision. In return, the EEC would ensure that its security demands were met via association with the NORAFS. An economic association was proposed which ‘did not include financial aid, technical assistance and provisions for the free movement of workers. In effect, it was a half-way house between a simple trade agreement and full association’.5 This outcome was a result of pressure from other EEC members, who made it clear that ‘for various reasons, these states [the NORAFS] were of secondary importance to the Community and would have to wait to have their status upgraded’.6 Despite its limited nature, the economic association was endorsed by Morocco in 1965, but this agreement was endangered by Italian objections raised out of concern for the harm Moroccan agricultural exports would have on its farmers; a compromise was reached in 1966. In the 1970s, the EEC devised ‘“Cooperation Agreements” that covered financial, technical, and social matters as well as the expansion of the geographic scope of the associative network. The long-term objective was the creation of a Mediterranean free-trade area’.7 This process did not evolve smoothly: ‘the progression of the . . . proposals . . . was impeded by an increasingly bitter dispute between free-traders and protectionists’.8 A policy framework was agreed, which included the removal of trade barriers on industrial products (except textiles and refined petroleum), ‘improved access to the Community for Maghrebi agricultural exports’,9 financial and technical cooperation, and committees comprised of EEC and neighbour state officials.10

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Following the Global Mediterranean Policy (GMP), Morocco signed a Cooperation Agreement (CA) with the EEC in 1976. The agreement included tariff reductions that averaged about 30 to 40 per cent; moreover, the EU liberalised its industrial sector to allow access to Moroccan firms.11 Unfortunately, ‘quantitative restrictions were . . . applied to wines, tinned sardines, potatoes, oranges, and tomatoes . . . these products ranked among the most valuable exports’.12 Textiles, another important sector for Morocco, were not included in the CA. From Morocco’s point of view, ‘the accords [CA] merely perpetuated economic dependence [on Europe]’.13 Nonetheless, ‘financial aid to the Maghreb . . . increased progressively after the 1976 accords, rising from e339 million . . . to . . . e1167 million (1991– 5)’.14 The 1980s heralded a series of challenges to EU – Moroccan relations. Morocco’s economy suffered a downturn and ‘rising external indebtedness as import substitution strategies and indigenous economic development policies faltered’.15 The inability of the CA to address these issues was coupled with the accession of Greece, Spain, and Portugal to the EEC. This presented a major challenge to Morocco and the other NORAFS, as ‘agricultural exports were also affected by the Union’s enlargement to include Spain and Portugal, a move that rendered the Union nearly self-sufficient in most agricultural products and especially those in which the Maghreb is most competitive’.16 The prospect of diminished export revenues threatened the Kingdom’s economic development strategies. Statistically, ‘the Community’s self-sufficiency ratio in most Mediterranean agricultural products [as a result of the accession of Spain, Portugal, and Greece] would rise from between 80–90 per cent to a situation of surplus’.17 Consequently, Morocco asked for compensation, and France supported the Kingdom’s claim for compensation and endorsed reviewing the existing agreements to provide provisions that would help Morocco and other NORAFS export agricultural products to Europe.18 Nevertheless, the Moroccan delegation reproached the European Commission for not providing adequate concessions for the country’s agricultural producers.19 Measures to facilitate the access of Moroccan agricultural exports to Community markets were hampered by recurring disputes between south-European EEC members and the more economically liberal northEuropean EEC members. ‘The negotiations resulted in a compromise

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between the Spanish government and the Commission that restricted future imports of Mediterranean agricultural products to “traditional exports”, thus . . . limiting the potential for competition with European producers’.20 The increased negotiating power of the south-European EEC members hurt Morocco’s economic prospects since ‘export revenues failed to deliver sufficient coverage rates, trade deficits rose and external debts rapidly grew’.21 The deteriorating situation prompted Morocco to apply to join the EEC in 1987, in order to obtain greater financial assistance and confront its growing problems. Gomez described the application as ‘a sign of frustration [rather] than a serious attempt to join’.22 Other commentators, however, challenged the ‘frustration’ argument, noting that economic patterns and a preference for stronger ties to Europe played a role in the application.23 The attempt was dismissed by the EEC due to Morocco’s geographic position in Africa, its undemocratic political system, and its objectionable human rights record. Nevertheless, this attempt signalled to the EEC that Morocco desired closer integration with the Community. Dawson noted that in 1991, and as a result of Gilles Perrault’s 1990 book Notre Ami le Roi (Our Friend the King), which detailed human rights abuses in Morocco, ‘the EP [European Parliament] linked an impending renewal of the Moroccan financial aid package to progress on human rights’.24 The situation deteriorated in 1992, when ‘the EP failed to approve the Moroccan aid package’.25 At the time, the Spanish and Portuguese fishing fleets were dependent on Morocco’s fishing waters, which prompted the Kingdom’s leadership to consider using its fishing waters as leverage during negotiations with the EEC. The country ‘responded by renouncing the aid package and closing its coastal fishing waters to Europe, with devastating effects on the Spanish and Portuguese fleets’.26 Finally, after intense negotiations between Morocco and EEC members, ‘the European Parliament . . . reinstated the Moroccan aid package in late 1992, and the fisheries agreement was renewed with increased compensation for Morocco’.27 At the time, the EEC was already contemplating ‘a “twin-track approach” in which agreements were reached separately with each of the three states (Morocco, Algeria and Tunisia) but with the long-term goal of the economic integration of those three nations with each other and with the Community’.28 In 1993, the Council of Ministers ratified a

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draft agreement that would form the basis of negotiations with Morocco. According to Dawson, ‘the Council of Ministers had greatly reduced the concessions to be offered to Morocco under pressure from certain member states, most notably Spain. The Moroccan response . . . was one of disappointment’.29 Since then, Morocco has continued to leverage its fishing waters in pursuit of greater trade concessions and additional aid from the EEC. For instance, ‘in January 1995, a transitional trade agreement between Morocco and the EU . . . eroded the few European access preferences enjoyed by Moroccan agricultural products under the 1976 cooperation agreement’.30 In response, ‘Morocco reacted by formally linking European market access for Moroccan agricultural products to the European presence in Moroccan coastal fisheries’.31 Eventually, ‘the EU . . . prevailed in its insistence that there would be no association agreement before a new fisheries accord, and the negotiation of both deals took place from July through November’32 of 1995. Several months later, and in accordance with the recently inaugurated EMP, Morocco and the EU signed an Association Agreement (AA) (in 1996).

Morocco’s 1983 Structural Adjustment Programme (SAP): In Search of Stability and Developments It is illuminating to start this account with the 1961 ascension to the throne of King Hassan II. His father, Mohammed V, had already put in place a strategy involving central planning by the government to attain economic growth. Hassan II adhered to this plan, which was beginning to stir domestic unrest. According to Zartman, ‘when massive riots broke out in Casablanca in March 1965 . . . the king . . . suspended his constitution . . . the parties no longer had even the minority formal role they had held . . . In the absence of elections or parliament, they were unable to vote or be voted for’.33 Towards the late 1960s, Hassan II found himself in the unenviable position of trying to stimulate economic reform whilst maintaining the Royal Court’s unchallenged authority in the face of potential civil unrest. Nonetheless, he managed the situation effectively, dividing the different factions vying for leverage whilst maintaining his control over the country’s affairs.34

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The early and mid-1970s witnessed a reinvigorated attempt by Hassan II to consolidate his authority over political and economic affairs. As a result, the king boosted investment in different sectors of the economy and shored up the country’s defence force. GDP grew considerably, reaching 8 per cent in the mid-1970s, as have investment and government spending.35 A central reason behind the king’s growing political and economic clout had been the rise in phosphate prices during the 1970s – phosphates being the major source of government revenue at the time. According to Denoeux and Maghraoui, ‘international prices for phosphates tripled’36 during that period. As phosphate revenues filled Morocco’s coffers, the government chose to provide higher wages in the public sector and augmented subsidies on necessities.37 Hassan II used the government’s newly found riches to cement his political power and construct a base of loyal supporters to solidify his control and weaken his opponents. By the late 1970s, however, the country started running into serious economic problems caused by the drop in the global market price for phosphate, which forced the government to borrow in order to keep up with the ambitious investment and spending programmes it had put in place.38 From 1977 to 1981, the government tried various measures to stabilise the growing budget deficit, including taxation, caps on public wages, and curbs on public expenditure.39 Matters were exacerbated by the oil shock of the late 1970s, which led to greater inflationary pressures. The stagflation period of high inflation and low growth (following the oil shocks) led to rising unemployment in Europe, which consequently reduced remittance flows from Europe-based Moroccan expatriates. An inopportune combination of inflation, restrictions on spending, a drop in phosphate prices, and a drought that dilapidated agricultural harvest, provided fertile ground for social unrest. Denoeux and Maghraoui noted that the stabilisation efforts between 1977 and 1981 failed because of reluctance on the part of the government, which faced political opposition to the efforts.40 By 1983, unsustainable interest payments had to be made on foreign debt accumulated to finance the growing current account deficit. Consequently, Morocco, the World Bank, and the IMF agreed a Structural Adjustment Programme (SAP) in September 1983 to resolve the crisis.

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According to Rhazaoui, the 1983 SAP involved: (a) ‘a devaluation of the dirham . . . and a relaxation of both export and import regulations’,41 (b) ‘an accelerated privatization of the economy’42 to ‘remove as much economic activity as possible from state control’,43 (c) promoting foreign direct investment, (d) ‘rescheduling of the service payments’44 to manage external debt, (e) ‘reducing government current spending’45 and public investment, and (f) ‘maintain[ing] . . . strict price controls’46 to curb inflation. In the short term, these policies were meant to control inflation and reduce the budget deficit. However, the SAP was also meant to address the long-term deficiencies of the Moroccan economy, namely its inefficiencies, lack of competitiveness, and extreme vulnerability to global commodity shocks. These adjustments were not warmly received, and the currency’s depreciation, high interest rates, and restrictions on state support led to widespread socioeconomic suffering. Nevertheless, the king used his robust influence to enforce his authority and maintain the country’s commitment to the SAP. It was only in 1988 that the Royal Court publicly outlined the process of ‘neo-liberal economic restructuring’. Central to the leadership’s propagation of this approach was its contention that trade openness was ‘the only way Morocco can modernize and develop’, and that ‘the private sector has to be stimulated’ at the same time.47 Consequently, SAP principles became entrenched in the Moroccan economic psyche, and would shape the Kingdom’s economic vision. To Denoeux and Maghraoui, the SAP achieved mixed results: ‘while no one in the mainstream press questioned the overall wisdom of the policies, almost everyone acknowledged the continuing weaknesses of the economy and the need to achieve better results in the social sphere’.48 The SAP’s macroeconomic stabilisation, export stimulation, inflationary curbs, and debt reduction objectives were successfully accomplished. Additionally, ‘GDP grew in real terms at an average rate of 4.3% a year from 1986 to 1990’.49 The economy’s improved ability to withstand shocks, and its ‘ability to attract international capital’,50 represented further evidence of the SAP’s macroeconomic success. Nonetheless, the economy continued to exhibit frailties in spite of the SAP, and the socioeconomic conditions of Moroccan citizens hardly improved. Denoeux and Maghraoui cited fast population growth, rising unemployment, limited productive diversification, and heavy reliance

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on economic conditions in Europe as sources of continuing vulnerabilities within the Moroccan economy.51 Davis was more critical of the SAP, stating that Morocco was unable to boost growth effectively compared to other middle-income countries during the 1990s and early 2000s.52 She continued that neoliberalism tended to socioeconomically disadvantage the most vulnerable members of society, especially since government intervention to provide support for this segment of the population would be reduced.53 What can be deduced from this is that the SAP did not improve the socioeconomic welfare of Moroccan citizens. The World Bank’s Independent Evaluation Group (IEG) report recognised that while Morocco ‘performed well in the face of considerable obstacles . . . it remains below its true potential and needs . . . the Bank’s focus on deficit reduction was not matched by sufficient attention to structural reforms and social development’.54 The IEG report recommended that the World Bank focus on ‘redirect[ing] public spending toward the social sectors’,55 most importantly through ‘public investment in rural development and human resources, increas[ing] the budget shares of health and education . . . [and] improv[ing] public spending efficiency’.56 In sum, the SAP represented a turning point in the Kingdom’s economic history whereby the Moroccan leadership’s commitment to the World Bank’s programme was the stepping stone to the introduction of a neoliberal developmental discourse that emphasised structural reform, which would continue to shape its economic view. While the SAP was responsible for some macroeconomic success, its performance on the socioeconomic front was limited according to the aforementioned commentators.

Comments on the Economic Features of the EU –Morocco Association Agreement (AA) EU–Moroccan economic cooperation was designed ‘to support Morocco’s own efforts to achieve sustainable economic and social development’.57 The AA called for key economic sectors within the Kingdom to be liberalised and reformed in order to withstand the competitive pressures that trade liberalisation would generate, in addition to investing in infrastructure and promoting the role of the private sector.58 Under the EMP-instituted MEDA programme, Morocco was to receive about

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e1.33 billion between 1995 and 2004, making it the largest MEDA beneficiary.59 The AA called for the FTA’s establishment ‘over a transitional period lasting a maximum of 12 years starting from the date of the entry into force of this Agreement’.60 Also included were provisions allowing Morocco to ‘increase tariffs of up to 25 per cent for a period not exceeding five years in the case of infant industries or sectors in serious difficulty, but no such restoration . . . can extend the life of a tariff beyond the 12-year implementation period’.61 Nevertheless, while the AA allowed the Union to retain trade barriers for agriculture and fisheries products (to protect its producers from Moroccan competition),62 its Article 16 also asked that both parties ‘implement greater liberalisation of their reciprocal trade in agricultural and fishery products’.63 In fact, both parties agreed to the liberalisation of trade in agricultural products and fisheries in 2010 (see Chapter 4 interview with DG-RELEX official). In order to enhance the agriculture and fisheries sector in Morocco, the Agreements recommended that Morocco invest in greater production machinery as well as ‘the improvement of private distribution and marketing chains’.64 The AA also mentioned Morocco’s education sector; it requested that the country prioritise the provision of educational services to females as well as enhancing the quality of the higher education and vocational training systems. This was to be done via constant liaison through seminars and podia to share technical expertise.65 Moreover, the Agreements did acknowledge the importance of achieving sustainable development in Morocco, in light of Morocco’s resource scarcity (especially when compared to regional counterparts Algeria and Libya, who happen to be resource-abundant).66 As part of the Union’s effort to promote private enterprise and to reduce the role of the state in managing the economic development of the Kingdom, the AA also listed an article that explicitly called for ‘foster[ing] an environment which favours private initiative’.67 The article on industrial cooperation did, however, call for active liaison between the Union and Morocco to promote the research and development (R&D) sector in the country. Another theme the Agreements discussed that is pertinent to development was the issue of infrastructural investment: examples being

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the construction and development of highways and maritime ports,68 as well as cooperation in the telecoms and information technology sectors, which would take the role of ‘dissemination of new information technologies . . . [and] stimulating research on and development of new communication and information technology facilities to develop the market in equipment, services and applications related to information technology’.69 A preliminary observation of the AA uncovers a drive towards economic liberalisation and ensuring that the state did not play the leading role in economic management. Dawson noted that, in the AA, ‘the EU made only minor concessions on agricultural products’.70 Tariff reductions and reducing the role of the state in developing the economy (see interview with DG-ECFIN official in Chapter 4), were part and parcel of the Agreement. Nonetheless, the Articles did acknowledge that Morocco would require assistance during this transitional phase, so that it could effectively withstand the shocks introduced by liberalisation. Whether such assistance has been adequate will constitute part of this study’s enquiry. In spite of its shortcomings, one must also recognise the importance of the AA, as it represented a profound extension of the previous cooperation agreements that Morocco and the EEC signed prior to the 1990s. Those agreements covered free trade, agriculture, and financial aid, but none went to the prodigious lengths (in terms of objectives, coverage, and implementation) that the AA went to. Moreover, the Agreement’s shortcomings were to be addressed by the 2005 EU – Morocco Action Plan.

EU –Moroccan Relations: 1999 –Present The year 1999 represented a watershed in the history of EU– Moroccan relations. Following the death of King Hassan II, his son, Mohammed VI, ascended to the throne and adopted additional measures to bring the Kingdom closer to the Union. Dawson has observed that many political prisoners (including Islamists) were released, bureaucratic corruption was widely tackled, and much anticipated parliamentary elections were planned for September 2002. These measures were partly in response to a harsh 1995 EU report that ‘accused the country of being the world’s leading cannabis

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exporter’,71 and ‘a World Bank report that described corruption as endemic in Moroccan governance . . . the combined effect of the corruption and drug allegations led to a massive crackdown on smuggling, drug trafficking, and illegal immigration’.72 In addition, he noted that the Moroccan government’s public image suffered since it could not redress the balance of power away from the Palace, could not introduce substantial reforms, and could not reduce the budget deficit.73 Even the September 2002 vote, ‘which at the time was generally acknowledged to have been mostly free and fair, has since been the subject of allegations that the results were “managed” by agreement between the Royal Palace and some political parties’.74 The events of 9/11 brought terrorism and Western – Islamic relations to the forefront of international relations. The EU began prioritising agendas pertaining to security, intelligence sharing, and migration even more than issues such as human rights protection. The authoritarian regimes that were repeatedly chastised for their reluctance to undertake governance reforms became an integral component of the EU’s plan to confront Islamic extremism. Dawson argued that ‘the September 11th, 2001 terrorist attacks have complicated the situation by blurring the line between social and political issues such as immigration, on the one hand, and military security concerns such as terrorism, on the other’.75 EU Moroccan relations were further tested in 2002 by the Spanish Moroccan ‘Perejil-Layla Islands’ dispute. US intervention forced Spanish troops to withdraw after their military campaign against a Moroccan contingent that placed the Kingdom’s flag over the disputed territory. Tensions only eased following the election of Prime Minister Zapatero in Spain. From the Moroccan perspective, the exclusion of agricultural products from liberalisation efforts under the AA, the EU’s stance on the Western Sahara conflict, the Union’s insistence on major political reforms, and the islands’ dispute with Spain represented major hurdles. Meanwhile, the leadership’s reluctance to undertake major political reforms augmented the EU’s suspicions of the Kingdom’s intentions. Nevertheless, the Moroccan leadership envisaged greater benefits from closer ties to the EU, and in accordance with the ENP, the Kingdom and the Union agreed an Action Plan. Morocco remained the largest recipient of EU financial assistance under the ENP. In a strategy

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paper projecting the contours of EU Moroccan relations for the years 2007–13, the European Commission noted that it would focus its efforts on ‘the social sector . . . [Morocco’s] national human development initiative [INDH] . . . economic modernisation . . . institutional support . . . good governance . . . [and] environmental protection’.76 In October 2008, the EU accorded Morocco an ‘Advanced Status’, in recognition of the Kingdom’s continuous reforms and in response to its demands for stronger ties. This improved status was meant to demonstrate the Union’s willingness to extend these ties. While Morocco’s insistence on ‘Advanced Status’ was widely viewed as an attempt to gain special favours vis-a`-vis the other NORAFS, this view was not shared by Jaidi: ‘Morocco’s request for advanced status was not an attempt to stand out from the rest or to gain exclusive rights’.77 Morocco’s acquisition of ‘Advanced Status’ did indicate an increasing momentum towards deeper ties between the two parties – a momentum that culminated in the staging of the first-ever EU Morocco summit in March 2010. The summit’s joint statement reported that this was a first of its kind between the EU and a NORAFS since the Treaty of Lisbon; furthermore, the summit ‘illustrates the degree of maturity and confidence attained in the political dialogue and highlights the strategic importance of the EU Morocco partnership’.78 Amongst the issues agreed upon79 were: (1) supporting UN efforts with regards to the Western Sahara conflict, (2) supporting the Arab Maghreb Union (AMU) and deeper intra-Maghreb economic integration, (3) urging a comprehensive, just, and lasting settlement of the Arab Israeli conflict, (4) greater cooperation to confront the security and economic challenges posed by the Sahel region, (5) combating illegal immigration and dealing with its causes, (6) supporting democracy, human rights, and good governance, and (7) confronting the negative repercussions of the global financial crisis. Both parties pledged ‘to intensify joint proceedings in all the areas covered by advanced status’,80 which would be achieved by ‘setting-up the EU Morocco Joint Parliamentary Committee . . . Participation of Morocco in EU programmes, [increased] technical and financial cooperation . . . and intensify[ing] current negotiations on liberalising trade in services’,81 amongst others. It was on this basis that the EU and Morocco foresaw stronger political, economic, social, and cultural association.

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Comments on the Economic Features of the EU –Morocco Action Plan (AP) With regards to improving the macroeconomic situation, the AP urged Morocco to stabilise the economy by ensuring that the budget deficit did not spiral out of control. Moreover, it called for improvements to macroeconomic indicators as a means to boost growth, which would then enhance living standards;82 this reflects in essence what is known as the ‘trickle-down’ notion – the idea that stimulating economic growth would subsequently improve standards of living (see Chapter 8 for more details). With regards to sectoral reforms, the AP emphasised the need to improve the ‘competitiveness’ of the Moroccan economy.83 This refers to improving productivity in the sectors such that they can withstand the effects of trade liberalisation and be able to maintain their comparative advantage in producing major exports (which in Morocco’s case comprise agricultural commodities and textiles). Within the agricultural sector, it asked that Morocco ensure not only improvements in productivity, but also enhance the quality of its exports; this was a ‘necessary condition. . . for establishment of a Moroccon –EU free trade area’.84 To pursue reform in the agricultural sector, the policy instruments include sharing information, transferring technological information to enhance agricultural production, and financial assistance to improve rural infrastructure85. An example of a key measure the AP recommended to enhance the Kingdom’s rural infrastructure was improving transport networks; to help Morocco in that respect, EU financial aid via the ENPI was channelled to support the country’s existing ‘national sustainable transport policy [and] . . . accelerat[ing] the development of the Moroccan motorway network with a view to completion of the North–South and East–West links by 2010’86 (the next section gives a breakdown of amounts and projects financed by the Union’s policy instruments). Such measures demonstrated that the EU was aware of the importance infrastructural projects have on Morocco’s ability to integrate urban and rural areas as well as improve the conditions for production and export of goods and services. There has also been an emphasis on the need for private enterprise to assume a substantial role in production (in fact, one of the officials interviewed for this research stated that the private sector

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needed to assume the lead rather than simply take on a greater role – see Chapter 4). This is in line with previous references to the idea that private initiative needed to be fostered. The Action Plans also insisted on Morocco’s need to ensure sustainable development such that there was ‘better distribution of resources in the various regions of the country and combat poverty in urban and rural areas’.87 Policy measures that the AP proposed included ‘developing basic social and economic infrastructures [to support disadvantaged groups]’ as well as providing funding (via MEDA and ENPI, which is transferred to the Moroccan Treasury in the form of budget support – see Chapter 5 for more details) for projects to create more jobs (an example of such projects is Morocco’s Plan d’E´mergence, which is discussed in Chapter 4 as part of the interview accounts). Highlighting the issue of sustainable development is fundamental given the fact that Morocco’s output is vulnerable to capricious weather patterns that affect agricultural output (for example, earlier in this chapter, a reference was made to the drought that reduced output in the late 1970s). As far as trade in goods was concerned, the AP continued the AA’s emphasis on liberalisation, including in agricultural commodities.88 In addition, the AP required that Morocco converge in terms of ‘legislation on industrial products . . . to European rules and practices’.89 To help Morocco undergo such legislative convergence, the EU highlighted the importance of seminars with technocrats to share technical know-how (this point is made by an EU official from DG-RELEX who was interviewed for this study – see Chapter 4). To sum up, the following key points can be made about the objectives and policy measures/instruments proposed by the AP: (1) Most AP policy objectives built on the AA’s articles. For example, AP policies insisted on fiscal prudence (maintaining a low budget deficit), greater liberalisation, and reducing the role of the state in economic activity.90 (2) The AP utilised the policy instruments introduced under the EMP (such as MEDA), whilst introducing the ENPI since 2007. Moreover, it fostered greater communication between EU and Moroccan technocrats through seminars and regular liaison to disseminate the technical know-how needed for Morocco to converge to EU standards.

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Conclusions Since Morocco will serve as the NORAFS of scrutiny for the purpose of this study, this chapter started by reviewing the state of EU Moroccan relations between 1970 and 1999, and found that relations centred on security and the intensification of trade between the two entities. It then presented an account of Morocco’s economic history from the early 1960s, leading towards the 1983 SAP and its significance to the economic management of the Moroccan state. The SAP represented a watershed moment as it marked Morocco’s adoption of a neoliberal developmental framework that was devised by the World Bank and the IMF. Placed in that context, the central question this book asks is whether the EU’s policy objectives provided Morocco with an alternative to this approach to development, and whether this approach has been the most appropriate for the Kingdom’s endeavour on that front. After that, the chapter reviewed EU Moroccan relations from 1999 to the present, and revealed that Morocco’s current king, Mohammed VI, initiated political, economic, and governance reforms to forge even closer ties with the Union. The early twenty-first century witnessed a series of international and regional events that tested the EU Moroccan relationship, but these events did not stop both parties seeking a stronger association. The 2005 signing of the ENP AP reaffirmed this drive, and represented a more ambitious and committed effort towards identifying and resolving Morocco’s economic challenges to facilitate the Kingdom’s integration to the Union. This mutual desire for stronger ties continued throughout the previous decade, culminating in the endorsement of the ‘Advanced Status’ in October 2008, and the holding of an unprecedented EU Morocco summit in March 2010.

CHAPTER 4 THE TESTIMONIES OF EU AND MOROCCAN OFFICIALS

Introduction This chapter will articulate the testimonies of EU and Moroccan officials concerning the Union’s Mediterranean initiatives and Morocco’s attempts to improve its social outcomes. It will report the information obtained from various EU and Moroccan officials, alongside relevant data collected from EU documents and other sources. Analysing the data to determine whether the EU’s policy objectives are the most appropriate to help Morocco develop and reduce the existing developmental gap between the two entities, will be the features of the subsequent chapters.

The EU’s Mediterranean Initiatives and Morocco’s Socioeconomic Development: Testimonies of the EU Officials Interviews with the EU officials centred on three themes: (1) EU strategies and their results, (2) EU perspectives on Morocco’s behaviour and the Kingdom’s performance, and (3) Contemporary and future tasks for the Union and Morocco to address. The following section details the testimonies of the Moroccan officials.

EU Strategies and their Results Explaining the Strategies One interview was conducted with an official from the European Commission’s External Aid and Development Directorate (DG-AIDCO).

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He initially stated that from AIDCO’s perspective, there are ‘two axes’1 that the EU prioritised in its mission to help Morocco develop, namely health and education. With regards to health, the Union has been adopting the UN’s Millennium Development Goals as a benchmark, and has been supporting the reforms that Morocco introduced to improve maternal health and reduce infant mortality. These reforms are linked to the health agenda proposed by the ENP Action Plan. Generally, the EU has been satisfied with Morocco’s health reforms. According to the European Commission’s (EC) Mise en Oeuvre de la Politique Europe´enne de Voisinage 2010 report, the Union has been endorsing Morocco’s Vision, Sante´ 2020, the country’s principal health initiative. The same report for 2006 elaborates the EU’s priorities pertaining to health standards in Morocco and the NORAFS: ‘better access to care . . . enhancing quality, reorganising and decentralising the system and strengthening administrative and financial capacities’.2 The other axis, education, has been ‘more difficult to tackle’. The EU supported certain aspects of Morocco’s educational reform, including the Kingdom’s programmes to reduce the number of dropouts from the school system and to build educational institutions in remote areas. Nevertheless, the Union also withheld support for other programmes due to reservations: for example, one programme for vocational training did not, in the EU’s opinion, ‘contribute to the enlargement of Morocco’s economic basis’. The 2010 Mise en Oeuvre report noted that the Kingdom’s EUendorsed ‘urgent plan for 2009– 12 . . . aims at accelerating the implementation of reforms to improve the quality of education in Morocco’s lyce´es and universities and to make education up to the age of fifteen obligatory’.3 In addition, the Union has striven to ensure that Morocco’s (and NORAFS) higher education system converges on the requirements of the Bologna Process; the EU is also close to establishing a ‘system of mutual recognition of academic qualifications’.4 Support is provided for, inter alia, Morocco’s ‘National Charter for Education and Training’ (whose strategies are ‘to ensure access for all, improve the quality and relevance of teaching . . . restructure governance mechanisms and strengthen institutional capacity’),5 the Kingdom’s integration to the Tempus programme (which ‘has had a positive impact on university reform in Morocco’),6 and its incorporation into the Erasmus Mundus programme.7 As for managing the educational system, the Action Plan

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(AP) specifically insists that Morocco ‘strengthen the process of devolving and decentralising education services and the decentralisation of higher education’.8 In addition to encouraging health and education reforms, the EU wants to have a deep and comprehensive free-trade agreement (DCFTA) with Morocco, in line with the 2008 ‘Advanced Status’. This move is part of the overarching strategy to foster development in the country, which necessitates that it absorbs the acquis communautaire and converge on EU regulations. The official considered this condition ‘a big chunk of what needs to be done’, since absorbing the acquis would generate improvements in the quality and standards of Morocco’s exports. This would enable the Kingdom’s products to compete with the EU’s own products, bring Morocco closer to the single market, and deliver greater socioeconomic welfare. As for the relationship between the Association Agreement (AA) and the AP, and their respective roles in promoting development, the two initiatives have to be examined in tandem. In his view, the Action Plans (AP) ‘derived from the Association Agreements’. Still, the AP is more comprehensive and ‘it tackles more issues’. A new AP (covering the years 2010 – 15) has been agreed, which is ‘more organised, and includes structured and more precise measures that would deliver more reliable programmes of cooperation’. The AP basically incorporates a ‘wish list of both parties – there is the wish list of the EC DGs that is created and sent to Morocco, and Morocco has its wish list. Negotiations are held to reduce the gap between the two sides’ wish lists’. More significantly, the official stated that ‘given that the EU and Moroccan officials see eye-to-eye on the objectives of EU– Moroccan ties’, the negotiations have centred on ‘how to achieve the desired outputs rather than what the outputs should be’. Additionally, the new AP included more nuanced targets and ‘unlike its predecessor, it does not set audacious targets to be achieved in a relatively short period of time’. In his opinion, ‘this would increase the likelihood of successful implementation’. On the subject of aid and trade liberalisation, the official opined that ‘trade liberalisation and aid are meant to work together’. In other words, any aid that the EU would disburse to Morocco would only be transferred if the Kingdom committed to trade liberalisation, since the

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two operate symbiotically. Chapter 5 will reveal that the EU disburses aid to Morocco in the form of budget support, and would only do so once it is confident that the Kingdom would fulfil two preconditions associated with the aid: (1) that Morocco conforms to the policy objectives enshrined in the AA and the AP (which include trade liberalisation); and (2) that the Kingdom commits adequate domestic resources towards the reform projects. According to a report by Christian Aid, the Union has made access to its aid subject to the recipients undergoing more trade liberalization, which has put developing countries in Asia, Africa, Latin America, and developing countries in an awkward position, since ‘if aid is on offer, and there is no alternative, there is an incentive to take it, but it has hardly been a level playing [field] to reach that situation’.9 One specific demonstration of how the Union has come to trust Morocco completely in fulfilling its preconditions to receive support is the EU’s increased use of the sectoral budget support mechanism, under which the Union’s ‘aid is paid directly into Morocco’s budget for a specific sector’. This reflects the Union’s increased faith not only in the nature of the sectoral strategies devised by the leadership, but also in its ability to implement these reforms. Previously ‘the EU used to work in a strictly top-to-bottom approach, a process by which the Union pushed forcefully for specific actions in the different sectors’. For example, the Union financially supported the creation of different centres in the tourism sector for personnel training, producing thousands of employees trained to occupy jobs in that sector. The Union’s increased confidence in Morocco’s ability to devise strategies and implement them led it to anchor its cooperation with the country on the basis of the Kingdom’s proposals, instead of the Union directly imposing a specific sectoral policy. The official also cited an incident when the Union initially refused to disburse aid to help the Kingdom: The EU has initially criticised the Kingdom’s ‘Initiative Nationale pour le De´veloppement Humain’ (INDH) [the Kingdom’s overarching development programme] for its poor management and planning. This prompted a rethink from the Moroccan government, leading to modifications that satisfied the EU,

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improved the programme’s implemental capacity, and ensured resumption of the Union’s assistance. To this official, this example reveals that the EU has no reason not to withhold aid or assistance to Morocco if it is unhappy about the nature or implementation mechanisms in place. A final issue the official raised pertains to reforming Morocco’s justice system. ‘Due to the sensitive nature of this subject, the EU’s approach has been to provide assistance subject to the Kingdom having good reforms in place’. As far as he is concerned, both the EMP and the ENP were meant to provide opportunities rather than cure-alls for Morocco’s socioeconomic pains. Ultimately, ‘it is Morocco’s responsibility to make good use of these opportunities in order to realise its aspirations’. Another interview was conducted with an official who is an economist from the European Commission’s Economics and Finance Directorate (DG-ECFIN). She is in charge of liaising with the economics and finance ministries of Morocco and NORAFS and assisting these countries in responding to their economic concerns. A principal preoccupation of her directorate had been the 2008 financial crisis, and its reverberations on Morocco’s economic reforms schedule. In fact, the Royal Institute for Strategic Studies in Morocco published a brief on this issue: while the Kingdom was initially resilient to the crisis due to limited ‘exposure to international financial markets’, it began to feel the adverse effects in late 2008 as the crisis affected the flow of tourists and migrant remittances. The brief also revealed that although the situation would ameliorate in 2009, it is simply due to ‘good agricultural output’: non-agricultural sectors would be hit due to Morocco’s lack of competitive advantage in manufacturing and nonagricultural sectors.10 This reveals that the country’s inability to structurally change its economic basis (i.e. industrialise and produce more sophisticated manufactures that reap a greater value-added to the economy) has made it vulnerable to global economic crises in spite of its relatively insulated financial system. However, according to the interviewed DG-ECFIN official, the EU opted to adhere to incumbent policies since there was ‘no pressing need to amend any of the guidelines, and since the new AP would soon come into force’. She argued that the EU was right to support Morocco’s domestic initiatives, like the INDH, since ‘this support encourages the Kingdom to develop its own way of

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pinpointing and resolving developmental problems, with logistic support from the Union’. A third interview was conducted with an official in the Commission’s Enterprise and Industry Directorate (DG-ENTERPRISE), which is responsible for transmitting the Union’s enterprise and industrial policies to Morocco to ensure convergence on enterprise promotion practices. According to her, a crucial part of the EU’s wider strategy for Morocco pertains to enterprise promotion, or ‘informing Morocco about enterprise and industrial policies adopted by EU members; once Morocco shows interest in these policies, financial and logistic support is channelled (in coordination with DG-AIDCO) to the Kingdom’. This account illustrates an interesting point: on the one hand, EU officials state that the developmental initiatives are indigenously crafted by the Moroccan authorities, and yet it is clear that the Union’s policy instruments have been pre-conditioned on adherence to a particular set of targets. Nonetheless, it must be said that this is not only an EU practice: the World Bank and the IMF, for example, also precondition the assistance they provide.11 In terms of logistic assistance, the Union has prioritised regular meetings with Moroccan technocrats and industry officials: Ministers meet every two years, and once priorities are agreed between the two parties, work programmes are created that explain how the EU would exchange information, knowledge, and good practice. These meetings are multilateral and include all the NORAFS. In parallel, there are bilateral follow-ups that are performed with each MNC (including the NORAFS), which focus on the enterprise section of the AP. To assess enterprise standards in Morocco, the EU alludes to a scale that includes five different levels of performance – ‘Level One’ is the lowest in terms of quality of regulation, while ‘Level Five’ represents internationally recognised good practice. Obtaining Level Five requires having a policy that is implemented with evaluation mechanisms in place, the necessary budget, and individuals with the right skills. The idea is that Morocco would gradually ‘climb between levels’ with EU support, but the onus of the effort has to come from the Kingdom.

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The official observed that ‘tourism is fast becoming a priority for both the EU and Morocco, and additional resources will be channelled to that sector over the next few years’. As for textiles, the EU and Morocco cooperate extensively, with ‘the Union frequently providing logistic assistance’. This assistance includes providing information on productive innovations in textile manufacturing, and training sector participants to enable Morocco to withstand competition in the global textiles market. A similar programme will be introduced for tourism. So far, it must be said that such assistance has had a limited impact on improving Morocco’s competitive advantage in these industries: Chapter 6 will refer to a World Bank study that showed that the composition of products Morocco exports had not changed. However, it would seem that some EU officials interviewed were also aware of Morocco’s need to transition away from traditional sectors towards new ones, which according to structural change theory, would help the Kingdom industrialise and modernise its production structure and generate products of a higher value-added to its economy. The EU also created the Euro-Mediterranean Charter for Enterprise (COE), which was agreed with MNC’ industrial ministers in 2004: ‘The COE is a reference – a policy paper with about seven pages of guidelines covering access to finance and markets, innovation, skills development, quality of services to companies, and administrative simplification. The countries have pledged they would comply with the COE’s guidelines’. Evaluations of enterprise policies in the Morocco and the NORAFS are conducted as per COE guidelines. Moreover, regular meetings are arranged under the auspices of the COE, involving industry ministers, private sector representatives, charter coordinators, EU countries, UfM countries, and international organisations. These meetings are held twice per year and focus on evaluating the implementation of the previously agreed work programmes. A fourth interview was conducted with an official from the Commission’s External Relations Directorate (DG-RELEX). He started by pointing out that the EU’s ultimate objective is to ensure that Morocco absorbs the acquis communautaire. This process is gradual; it is centred on frequent meetings between representatives of both parties, which act as ‘fora to discuss everything without taboos, thereby transmitting the EU’s perspectives, ideas, and strategies to the Moroccan technocrats’. Accordingly, he attached considerable importance to the

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March 2010 EU – Morocco summit held in Granada, which he hailed as ‘successful’. He also praised the ‘Advanced Status’ for producing a road map – a mutually agreed document that outlines the values both sides share. Following on the spirit of strong interaction between the two parties, the EU ‘granted Morocco access to its agencies; the Kingdom is the only non-EU Mediterranean country to have this privilege’. However, he acknowledged that ‘in return for this increased interaction, the EU expected Morocco to support its positions and stances in international organisations, such as the United Nations’. It must be said that this contrasts with Martı´n’s views on the ‘Advanced Status’: he argued that underlying this ‘Advanced Status’ is an asymmetric relationship in which ‘the EU demands “shared values” and “legislative approximation” [from Morocco] . . . [but] it only offers a conditional, limited and ad hoc participation in Community programmes’.12 The official stressed the point that EU initiatives since the Barcelona Process have been ‘more about changing the mentality, political, and economic structures of Morocco, a process which, in his opinion, cannot and should not be carried out too fast’. This official brought up the issue of ‘changing the mentality’, whilst accepting that this process is gradual in terms of pace. Through its meetings and fora (a policy instrument via which logistic assistance is provided to help Morocco reform), the Union would convey to the Moroccan technocrats that accepting the policy objectives on which access to the instruments is preconditioned is in the country’s best developmental interest. Given the fact that the EU is the Kingdom’s biggest trading and financial aid partner, Morocco realises that accepting the preconditions can help the country access more resources to help it develop. As for the impacts of the AA and the AP on development, this official believed that they were meant to directly influence the Moroccan leadership’s decisions because they incorporated carrot-and-stick measures, and included opportunities which could deliver results if taken sagaciously, as well as instruments of pressure which could force the implementation of reforms as per the agreed guidelines. Added to these tools are the frequent meetings and summits, which this official holds in high regard due to their ‘invaluable role in

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reshaping the mentality of Moroccan officials’. As an example of such meetings, the directorate itself actively ‘participated in the formation of thirteen sub-committees under the AP to rigorously monitor Morocco’s progress on human rights, internal market integration, justice, agriculture, and other areas of cooperation’. These sub-committees are technical, and are meant to provide Morocco with the assistance needed to help the Kingdom absorb the acquis. This official also commended the EU’s role in supporting Morocco’s domestically driven development programmes like the INDH, and he viewed greater EU exposure to these programmes as advantageous since they happened to enjoy comprehensive coverage of the entire country. By transmitting its ideas on reform to the individuals in charge of these programmes, the EU could ensure that its principles reached and affected as many Moroccans as possible. Hence, these initiatives were seen as another vehicle via which the Union can promote convergence. A final point he raised relates to the introduction of the new AP for 2010– 15. He remarked that this AP envisages the complete liberalisation of trade in most agricultural products and fisheries, including ‘sensitive products like tomatoes and cucumbers’. The EU expects that all trade barriers in agriculture and fisheries would have been removed by 2015, allowing a DCFTA to emerge. The 2010 Mise en Oeuvre report remarked that in December 2009, ‘EU and Moroccan negotiators . . . verbally agreed on improving conditions for the bilateral trade of agricultural products and fisheries’.13 According to the same report, ‘the dismantlement of trade barriers is conforming to the schedule created under the Association Agreement . . . [however] Morocco has extended the protective measures in the ceramics sector’.14 Furthermore, the Union insisted that Morocco’s industrial products conform to the ‘ACAA’ standards for industrial product quality. The Kingdom introduced a law to that end, which was approved in December 2009. A similar process existed for sanitation, whereby ‘Morocco has continued to converge to EU regulations’.15 Still, ‘the effectiveness of Morocco’s legislation in the field of intellectual and industrial property rights protection needs to improve’.16 Ultimately, he restated that the Union’s main task was to ensure that Morocco converge to EU values on all fronts. Interviews were also conducted with two individuals from the Commission’s Trade Directorate (DG-TRADE). The first official

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(henceforth Official One) started by describing the FTA with Morocco under the AA as a ‘first generational FTA that only includes external goods and manufactures and deliberately excludes agricultural commodities and services’. This FTA incorporated the asymmetric dismantling of trade barriers, with Morocco expected to completely phase out barriers by 2012. The EU’s trade strategy works as follows: As Morocco demonstrates progress in trade liberalisation over the twelve-year period, it will be rewarded with greater engagement from the EU. This engagement will take the form of a DCFTA, which incorporates complete liberalisation of services, subject to a mutually agreed dispute settlement mechanism and the harmonisation of product quality standards. Both officials pointed out that the directorate also utilises meetings and fora for exchange of know-how as a policy instrument. These meetings are meant to exchange insights, principles, and ideas, in addition to discussing ways of ensuring convergence to EU standards, including respect for intellectual property rights and sanitary standards of products exported to the Union. An example of such meetings is the ‘Confe´de´ration Ge´ne´rale des Enterprises du Maroc’ meeting, which took place in Casablanca in 2005. During that meeting, the Union provided additional information concerning research and technology in the field of textile production to Morocco’s ‘Technical Centre for Textile’ in order to improve the sector’s competitiveness, in addition to reinforcing its commitment to help Morocco liberalise other sectors.17 There have been significant strides in the negotiations for trade liberalisation in services, as well as in the field of mutual recognition of qualifications, which would facilitate the employment of Moroccans in EU countries. Both officials were also adamant that ‘the AA and the AP are incentives, in the sense that their main purpose is to motivate Morocco to reform and converge to EU standards comprehensively’. Official One elaborated this point by mentioning that ‘the promise of integrating to the single market did succeed in acting as an incentive for the likes of France, Spain, Portugal, and others to reform in order to integrate’.

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Subsequently, Official One discussed the EU’s attempts to minimise any adverse social and economic effects of trade liberalisation. He explicitly rejected the notion that such liberalisation would burden Morocco disproportionately, noting that ‘the moment that any NORAFS starts to liberalise, the EU begins conducting sustainability assessments. The fundamental objective of these assessments is to monitor the social and economic impacts of the FTA’. For example, assessments for some NORAFS looked at agriculture, and took into account whether and how additional liberalisation would affect the sector’s productive capacity. He cited the example of Algeria, which initially complained about the issue of adjustment costs from trade liberalisation. DG-TRADE and Algeria then agreed to hire a private consultant to establish the effect of the FTA on Algeria’s restructuring costs. The consultant established that there have been no adverse effects, although the positive effects were insignificant as well. While one must not conclude that the same applies to Morocco, Official One cautioned that ‘Algeria is not as integrated as Morocco. The FTA has not been completely phased-in yet [Morocco is at a more advanced stage], and so far the Moroccan leadership has not complained about the adjustment costs’. The assumption made by the interviewee in this case is that only via increased integration would a NORAFS reap positive rewards socioeconomically. Moreover, while it is possible that the Moroccan leadership did not complain about the adjustment costs, there is evidence that the poor bear a disproportionate burden of any adverse effects of liberalisation, as Ravallion and Lokshin (2004) discovered in their study of the effect of liberalisation on rural producers in Morocco. Official Two was equally critical of the idea that adjustment costs will rise after the FTA is phased-in: ‘The EU is already aware of potential adverse effects and has done everything it can to help Morocco address the social safety net issue and adjustment costs within the economic sectors’. For example, in addition to the financial and logistic support provided, the agreements included provisions for infant industry support to protect vulnerable companies and help maintain their competitiveness.

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EU Policies’ Influence on Morocco’s Decisions As for the effect EU policies since 1995 have had on Morocco’s strategies and the Kingdom’s long-term developmental prospects, the DGAIDCO official described this effect as ‘positive so far’. He asserted that these strategies ‘have reaped the most fruits in the economic corridors of Morocco’s policy making’. The policies also reinforced the Moroccan leadership’s faith in pursuing closer ties with the EU, the evidence (according to him) being that ‘the Kingdom is taking the initiative to attain stronger relations even though it’s not a pre-accession candidate’. He then discussed the AP. On the downside, he considered it ‘too broad and ambitious, thus restricting their practicality and ability to generate results’. He opined that ‘the document may not have been the best roadmap to implement actions’. Nevertheless, the AP has led to improvements, such as ‘allowing for reliable evaluations of Morocco’s performance’. Still, the interviewed official stated that the 2010– 15 AP factored in the weaknesses of the previous AP, and was expected to outperform it since ‘it is more organised and has better structured guidelines’. Since these EMP and the ENP were introduced, ‘Morocco’s strategies have been going in the direction the EU deems desirable’. As a result, ‘there is no doubt that the AA and the AP have influenced the thinking of Morocco’s leadership; the country has been absorbing the acquis communautaire, which has reconfigured its way of thinking’. Another ramification of the policies relates to Morocco’s management of public finances: ‘There has been steady albeit slow progress on this front. The public procurement code was revised as part of the Kingdom’s efforts to comply with the AP’. This concurs with the finding of an OECD study on public finance management in the MENA region, which praised Morocco for its ‘ambitious and comprehensive budget reform’18 so far. Absorbing the acquis also helped Morocco ‘remove some of the nontariff barriers impeding greater trade with the Union, and has helped it develop the expertise required to promote the quality of exported products’. This effect has been identified across Morocco’s major economic sectors. He did note, however, that ‘progress in sectoral restructuring has been slow’. This point is important, as it acknowledges the fact that Morocco has been unable to industrialise and transition towards producing and exporting products that reap a higher added value to its economy (more on this in Chapter 6).

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On the issue of restructuring costs in response to convergence to the acquis, the official contended that ‘there would be no adverse effect on social support provided by Morocco’s government to the public, since the government would have buttressed its financial and administrative capacity to provide support to vulnerable socioeconomic groups’. He also noted that ‘Morocco had room to manoeuvre in response to external shocks as a result of improvements in state efficiency and budget execution’. One distinct advantage of the AP is that it provides Morocco’s leadership the opportunity to decide how the Kingdom should proceed. The AP has widened the possible set of strategies Morocco can take to promote socioeconomic progress, as well as its ability to manoeuvre (in terms of policy implementation) in the face of external shocks. In his opinion, it is noteworthy that ‘by including Morocco’s priorities and objectives, the AP allows the country to incubate and implement indigenously driven development strategies that account for the Kingdom’s social attributes’. Nevertheless, Morocco continues to lag behind in reforming its judicial system; the Kingdom has been taking recourse to the Union for advice and is worried that the EU will withhold future cooperation on justice and other issues, which ‘shows that the Action Plans have prompted Morocco to take the initiative and seek advice from the Union’. In light of its status as a lower middleincome country that needs to address its acute socioeconomic problems, the country needs any assistance it could receive since domestic resources by themselves are inadequate to address these problems. Hence the Kingdom would accept EU aid and its attached preconditions. Overall, the official was adamant that Morocco is on the right path when it comes to fostering long-term socioeconomic development. The EU’s initiatives are helping Morocco absorb the acquis communautaire, which in turn is reshaping the Kingdom’s perspectives, strategies, and ability to undertake reforms to promote socioeconomic progress. The DG-ECFIN economist, meanwhile, believed that the AA and the AP have changed how technocrats in the Ministry of Finance and the

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Economy and Morocco’s Central Bank respond to economic challenges: ‘The policies adopted on the macroeconomic and financial levels are more concrete than ever before’. She also believed that the EU’s initiatives have enhanced ‘the bilateral exchange of information, which is as important as the bilateral exchange of products and resources’. Macroeconomically, ‘Morocco has low inflation levels and is growing’, which ‘means that for long-run development, the Kingdom is heading in the right direction’. There is an implicit assumption in the interviewee’s argument that macroeconomic improvements should translate into better socioeconomic outcomes; there is no acknowledgement of the distributional effect of these macroeconomic gains, and whether low inflation and growth are adequate to help structurally change the economic basis of the country. In economic terms, the DG-ECFIN official’s argument is known as the ‘trickle-down’ hypothesis, and Chapter 8 will discuss the validity of this idea in greater detail. She did suggest that the AA and the AP could have done more ‘to speed up the reduction of the size of the state in favour of private-sector job creation in the Kingdom’. On this front, there had been a limited effect, since ‘the public sector remains substantial’. Another implicit assumption the official makes is that so long as the state plays a substantial role in economic development, a developing country would not be able to progress. This assumption will be examined in later chapters. Generally, however, she was satisfied with the Kingdom’s progress and direction, as well as its increasing responsiveness in most areas; she considered this a corollary of the ever-strengthening relationship between the two parties. The DG-RELEX official echoed the aforementioned sentiments as far as the effect of EU initiatives on the strategies adopted by Morocco’s leadership is concerned. In his view, the Union is ‘a crucial tool for the Moroccan government to secure long-term sustainable development’; as such, the leadership’s decision to get closer to the EU is commendable. He was keen to highlight what one may describe as the ‘interaction effect’ of EU policies, in that since the Barcelona Process, ‘the EU has been conducting more seminars and presentations on issues that are important to Morocco’s reform agenda’. As an example, he cited ‘a seminar conducted by the Union on press freedom in Morocco after the government closed down opposition newspapers. Following the seminar, Morocco’s leadership opted to honour its obligations under the AP in

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terms of press freedom. They have even established an ethics code for journalism’. He saw the fact that Morocco is not an EU-accession candidate as ‘a strength rather than a weakness’ when it comes to inducing reform. He believed this situation ‘has led to greater co-ownership and a more honest exchange of ideas and perspectives. This is not the case with preaccession candidates such as Turkey and Croatia’. However, several commentators on Euro-Mediterranean relations challenged this view: Martı´n, for example, asserted that there was a state of confusion as to the progress of EU – Moroccan relations because of the absence of the possibility of accession to the Union, which means that the final outcome of these relations is less certain;19 a similar point was made by Reinhard (Reinhard (2010)). Finally, the interviewed official was extremely optimistic about the new AP, which reveals that the Union welcomes Morocco’s progress so far, but that ‘the leadership needs to take bolder action on justice and human rights’. His optimism also stemmed from the fact that trade liberalisation will henceforth cover agricultural products and fisheries, a previous ‘sticking point between the two sides’. He hailed the influence the AA and the AP have had on the flow of insights and information between the two sides, which ‘has ameliorated the leadership’s ability to converge to EU values in all dimensions’. Officials One and Two of DG-TRADE also praised the significant strides taken by both parties, which would lead to the future introduction of the DCFTA as called for by the ‘Advanced Status’ joint document. Official Two cited a September 2010 study conducted by DG-TRADE to look at trade liberalisation’s overall effect on Morocco’s economic sectors. The study revealed that ‘there has been a positive albeit minute effect from trade liberalisation on Morocco so far; hence the aggregate effect of trade liberalisation is modest’. Other studies, however, demonstrated an adverse effect from the Morocco – EU FTA: Elbehri and Hertel (2006) used an applied general equilibrium model to show that the FTA was likely to be detrimental to Morocco because it reduced the productivity of small Moroccan firms, reduced total demand for labour, and harmed the country’s terms of trade. Another study by Minot et al. (2010) also concluded that ‘the net effect [of the Morocco – EU FTA] would be a small decline in [Morocco’s] national income’.20

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Official Two also argued that the Union should be praised for directing Morocco to the right path in terms of socioeconomic development. As an example, she cited ‘the reduction in rates of child labour’. Both officials concluded that the initiatives did provoke the ‘right’ responses from the Kingdom, and that trade liberalisation is getting deeper and stronger. The officials’ implication that liberalisation provoked the ‘right’ responses confirms the IEMed Survey for 2010’s findings that EU respondents were more likely to report that the effect of the FTA is positive than neighbour state respondents. That being said, this finding must be treated with caution as ‘only 28 per cent of all respondents’ answered this question as 72 per cent of the total did not have ‘knowledge or a clear perception’ of the FTA and its impact.21

EU Opinions on Morocco’s Domestic Strategies Reflecting on the Strategies Pertaining to Morocco’s own developmental strategies, each official chose to share his/her perspectives. The DG-AIDCO official mentioned that the Kingdom put in place very important health reforms to reduce child mortality and improve maternal health, which have been praised and supported by the EU. On education, the government has been focusing on initiatives to reduce the high school dropout rate amongst primary school students, develop educational infrastructure, promote private education, and increase the capacity of the workforce. He observed that Morocco’s chief strategy is to get closer to the EU, since the country envisages the Union ‘as a vehicle via which it can create the ideal economic, political, and social environment that will deliver sustainable socioeconomic development’. There has also been an emphasis on reforming standard practices and institutional regulations – a natural progression of the ‘acquis absorption’ process. In addition to revising the public procurement code, Morocco invested heavily in training staff on how to manage public finances. The OECD report on public finances verified the interviewee’s claim; it noted that Morocco managed to improve its management of public finances by adopting an ‘incremental, learning-by-doing approach’ that involved

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familiarising bureaucrats with regulations on budgeting for programmes.22 The government’s vocational training programme, however, ‘has been unsuccessful: due to limited resources, only a small number of people are trained, and the methods used to train these individuals are out-dated’. This led to an impasse with the EU, which refused to provide assistance to this project unless it was reformed. The official then discussed important policies adopted by Morocco at the sectoral level. For agriculture: the Kingdom introduced the ‘Plan Maroc Vert’, an ambitious plan to increase agricultural output. Another programme was also introduced that targets participants in the rural agricultural sector. This particular programme is more about poverty alleviation than promoting development. Another plan is ‘Maroc Export Plus’, which seeks to maintain Morocco’s comparative advantage in traditionally exported products (such as agricultural and textiles), whilst ensuring that the country can rise to the challenge of competing globally to increase the volume and promote the quality of its exports. He stated that these programmes are seen as crucial components of the country’s policy direction, at least for the medium term, and that the EU has been supporting them financially and logistically. ‘Maroc Export Plus’ demonstrates that the developmental approach in place runs counter to the structural change approach that was adopted by today’s developed economies in order to develop (see Mosk (2010) on this point). The official also posited that the 2008 financial crisis did not slow the pace of reforms in Morocco: The country was affected by the crisis. It did hit the real economy through the tourism channel (since less people vacationed in Morocco) and the remittance channel (Moroccan expatriates in Europe were sending less money, as some lost their jobs due to

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unemployment in the Eurozone). Nonetheless, the Kingdom has been prudently managing its public finances, and as a result its deficit and debt levels were unsubstantial. He also mentioned that he had been analysing payment files for sectoral budget support; for the ones reviewed, he did not see a slowdown in the implementation of reforms. To this official, the cornerstone of Morocco’s efforts to promote longterm development is ‘to anchor itself to the EU, and use trade relations with the Union as well as the acquis communautaire to converge politically, economically, and socially to the Union’s norms and values’. Both the EU and the Moroccan leadership believe this would consequently lead to improvements in Moroccans’ standards of living. The DG-ECFIN economist concurred that Morocco’s financial market is developing: ‘More companies are now quoted in the domestic stock exchange than before’. Despite the Kingdom’s commendable desire for stronger ties with the EU, she believed that: some of Morocco’s economic strategies belie its verbal commitments to economic liberalisation. Markets for necessities (like food and fuel) still rely heavily on government subsidies, the collective importation of certain agri-food products still exists, and the Kingdom remains relatively isolated from the international financial system. Otherwise, she was pleased with the advanced state of relations, and praised Morocco for ‘selecting proximity with the EU as a strategic instrument for securing development’. As for DG-ENTERPRISE, its official lauded the instrumental role Morocco played in initiating the COE. She noted that ‘it was Morocco that asked for an evaluation on whether it has made sufficient progress in implementing the COE’. She believed that the Kingdom was using the EU as ‘a source of inspiration’ to achieve progress – in issues of enterprise and industry, Morocco ‘has continually shown interest in EU views and perspectives’. She saw this as a positive sign that the Kingdom’s leadership wanted to absorb the Union’s ideals. The DG-RELEX official contended that Morocco’s overarching developmental strategy was ‘proximity and integration to the EU’s

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single market’. He considered this strategy natural in light of ‘Europe’s position as Morocco’s leading export market, and given the importance of remittances made by Moroccan e´migre´s based in the Eurozone’. Morocco’s leadership decided to absorb the acquis communautaire, and has opted for openness and honesty during summits with EU officials to confront its challenges. To him, this was proof of the leadership’s genuine conviction that convergence to EU standards on all fronts would lead to greater development.

Results of Morocco’s Developmental Strategies With respect to the results of Morocco’s strategies, the DG-AIDCO official admitted that the Kingdom’s Human Development Index (HDI) remains ‘very low’. Morocco’s performance in education was also a source of worry, as ‘illiteracy rates remain high, and while reforms to increase the retention rate of primary school dropouts and develop educational infrastructure are taking place, uncertainty clouds the future of educational progress in Morocco’. UNESCO confirmed the interviewee’s assessment; it remarked that illiteracy was still a pressing problem that affected one in every three Moroccans over the age of 10.23 Morocco’s aforementioned stratagem to use the EU as a vehicle for socioeconomic development yielded numerous benefits, including the possibility of a future DCFTA following the 2008 Advanced Status, improved public finance management and state efficiency, alignment of legislation to that in the EU countries, public revenue increases following fiscal reforms, and an increased capacity to implement reforms compared to ten years ago. He strongly believed that compared to where it used to be two decades ago, the Kingdom has progressed in general as well as socioeconomically. Morocco’s leaders remain fervently ambitious and committed to further progress, which is always necessary for long-term success. When one also considers the fact that the Kingdom is relatively resourcedeficient, then Morocco’s achievement deserves great appreciation and praise.

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Finally, he noted that the Kingdom went up in the HDI rankings for 2010, which is perhaps an indication (in his view) that ‘it is starting to fully reap the fruits of the programmes and decisions it has put in place’. The DG-ECFIN economist used macroeconomic figures to suggest that the country is on the right track: ‘GDP growth is between 4 and 5 per cent, and the country’s inflation levels are low and stable. Morocco is in a solid macroeconomic position, and given the strong relationship with the EU, the Kingdom’s socioeconomic future certainly looks bright’. The DG-ENTERPRISE official, meanwhile, admitted that ‘following a thorough evaluation conducted in 2007, the Kingdom attained average scores over a range of 77 indicators used by the DG’. She warned that ‘this is merely a snapshot of the situation in 2007: the next evaluation will be in 2012, and only then can an assessment of progress over time be carried out’. She did claim that ‘progress has been reported concerning Morocco’s industrial strategies and actions’. The DG-RELEX official lauded Morocco’s ‘adoption of international regulations on human, women, and children’s rights’. He described the infrastructural projects in urban areas such as Rabat and Casablanca as ‘breath-taking and comparable to ones in cosmopolitan European cities’, but acknowledged that the situation in rural areas remained ‘dire’. These observations resemble what economists describe as ‘dualism’ within developing countries: a situation in which modern urban areas and impoverished rural areas coexist due to a country’s failure to redistribute resources and reduce inequality between the two parts (see Krugman and Obstfeld (1994)). Finally, the official remarked that while Morocco’s poverty index figure has fallen [i.e. the number of Moroccans below the poverty line], this is no indication of profound improvements in social indicators, especially education, where Morocco continues to lag significantly behind the other NORAFS. When asked why these social outcomes have not improved in spite of Morocco’s increasing convergence to EU norms and regulations, he replied that ‘this remains a mystery to the Union’. Last but not least, Officials One and Two of DG-TRADE asserted that with the exception of Tunisia, Morocco outperformed its

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Agadir Agreement partners macro-economically and in terms of trade liberalisation with the EU. Official Two hailed Tunisia’s developmental performance as ‘impressive’ and a ‘success’, whilst describing Morocco’s liberalisation of its textiles sector as ‘truly commendable’.

Challenges for the EU and Morocco to Address The final theme discussed relates to shortcomings and challenges that both the EU and Morocco need to confront in order to deliver the Kingdom the long-term socioeconomic development it craves. The DGAIDCO official recognised that Morocco needs to address the following areas: (1) Justice Reform and Transparency: in spite of revising the public procurement code, the Kingdom ‘has yet to take additional bold steps to accelerate the reconfiguration of the justice system’. He stated that one ‘can partly understand why they do not want to adopt them. There are what may be described as political and “cultural” constraints that hinder the reform process’. He did not want to expand on these constraints though; the implication is that he was referring to Morocco’s conservative social attitudes, a point shared by the official from DG-RELEX (see below). He described the justice issue as ‘the big stumbling block. Even though the king talks about reforms, there have been no visible improvements on the ground. We [the EU] haven’t seen any proposals implemented so far’. His criticism of the Kingdom’s judiciary is supported by the account of a Moroccan judge who rebelled against the system in protest at its lack of transparency (see Chapter 6). More recently, nearly 1,000 Moroccan judges held a protest in front of the Kingdom’s Supreme Court to call for greater judicial independence.24 (2) Enlargement of the Economic Basis: In his words, ‘Morocco’s Plan d’E´mergence does not introduce any new proposals to nourish emerging industries’. In the long run, ‘Morocco can only do so much to reform the economic basis, by virtue of the country’s limited natural resources, geography, and cultural constraints’. The idea, therefore, is that Morocco should do as much as possible given the constraints it faces. (3) Workforce Training: The official lamented the presence of high unemployment in Morocco, with the victims being mainly young

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people. One reason relates to the economic situation. Nonetheless, it is also because the education system in Morocco does not provide the necessary skills for the labour market. Hence there is a mismatch between the competencies of students graduating from the education system, and what is truly required by the labour market. On education, the 2010 Mise en Oeuvre report stated that ‘the net rate of education at the primary level has reached 93.8 per cent in 2008–09 and access to secondary education has also improved, but it does remain low, especially for people in rural areas and for women’.25 The report continued that the ‘problem is the gap between the goals of educational policy and the levels of finance available’.26 Moreover, the vocational training system is limited and has already been criticised by the Union for its outdated methods, and nothing is being done to re-train labourers in order to reduce unemployment and adapt workers to labour market needs. In addition to these concerns, the official questioned some of the decisions adopted by the Kingdom’s leadership. For example, with respect to Plan Maroc Vert, he wondered ‘how Morocco will manage to financially sustain agricultural development considering the lack of natural resources (including water) in the country. Time will tell whether these agricultural policies will be sustainable and costeffective’. Another concern that he raised was the limited ‘redistribution of resources’ in Morocco: ‘In spite of gains in economic growth and macroeconomic management, these gains have not been adequately shared and felt across Morocco’s population’. In her reflections on the IEMed 2010 Survey’s findings, Cordet-Dupouy observed that the findings demonstrated that ODA providers (not just the EU) were simply content on promoting economic growth in the MNC without paying attention to the ‘growth of inequality’.27 Finally, he reiterated that education reform ‘remains a fundamental challenge for the foreseeable future. Illiteracy rates are high, and while Morocco is on the right path, certain political and cultural constraints are impeding further reform’. He remarked that ‘the institution in charge of literacy is the Ministry of Religious Affairs, which signals how sensitively the Moroccan leadership treats the education issue’. As a result, he thinks that on such politically and culturally sensitive issues the EU can only push so much. He described Morocco as a country

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‘with two faces and identities: a progressive segment that favours radical reforms, and a conservative segment for whom religion, identity, and tradition override the need for reform. This reflects how cultural factors are impeding the country’s reform process; there is a difficult balance to strike’. The DG-ECFIN economist also offered her views on the Kingdom’s economic and financial shortcomings. She cited population growth as an acute dilemma, in that ‘rates have dropped over the past few years, but they remain high’. More importantly, in her view, the country needs to give the public sector a more restricted role: Morocco has a large public sector, with a lot of bureaucracy, ministries, and agencies. If one looks at the Ministry of Finance’s expenditures, one can see that a lot of money is spent on wages and employment in the government or public sector. While she did not advocate removing the public sector completely, she did endorse a ‘radical reduction in its size to improve administrative efficiency and to give the private sector the primacy in developmental efforts’. This latter point is particularly significant to her, as she believed that ‘the private sector should take the lead in terms of job creation’. This view of development is in line with the tenets of the so-called ‘Washington Consensus’, which espouse a neoliberal approach to economic development and call for reducing the role of the state, trade liberalisation, lowering inflation, and financial sector liberalisation. According to Holden, the EU’s policy in the Mediterranean is essentially predicated on the neoliberal developmental model,28 and Chapter 6 will demonstrate that the Union and the World Bank have collaborated in the creation of the policy objectives and guidelines of the ENP Action Plans. She mentioned ‘high subsidy rates’ as another impediment to socioeconomic development. While she understood that subsidising necessities is logical to provide support for socioeconomically disadvantaged citizens, it has also: restricted Morocco’s ability to channel much needed funds to promote free enterprise and the private sector and encourage individuals to harness their entrepreneurial spirit to start businesses

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and create more jobs. Bureaucratic rules and requirements to start an enterprise are arcane. Additionally, if somebody is highly educated in Morocco and the NORAFS in general, he or she will first try to find a job in the government sector, when the private sector needs those very people to manifest their entrepreneurial spirit and promote job creation in the Kingdom. The economist also considered social support ‘a long-term challenge’ for the country: Health standards have been improving, and combined with high population growth, this is likely to strain the public sector in the future. While Morocco has a young population at the moment, these people will eventually retire and require state support (for example, pension benefits and healthcare). Accordingly, the government needs contingency plans to confront what could become a major problem. Another issue she raised was bureaucratic streamlining in the public sector: ‘If you have a Ministry of Finance and you have a Ministry of Planning, why should you have your fiscal policy split over two ministries whose tasks may overlap? Why not merge these ministries to streamline the administrative capacity of the government?’ Additional criticism was levelled at Morocco’s lack of integration in financial markets. She admitted that, at first glance, given the 2008 financial crisis, lack of integration into global financial markets would seem advantageous, as it mitigated the impact of the crisis on Morocco’s economy. Still, this is only one side of the coin, since Morocco could also have been on a much higher welfare level had it been better integrated into global financial markets throughout the nineties and early 2000s. Further elaborating this point, she contended that ‘while the Moroccan stock exchange did not collapse in the same fashion as other exchanges, it also did not reap the rewards when other exchanges were booming’.

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She alluded to the example of Europe and rhetorically asked: Why is Europe at a very high welfare level? It is because of its good, solid, and efficient banking system. It is because we are investing across borders. One can diversify one’s risk by investing in different countries. The solidity of the banking system in particular, the fact that you can buy a house by going to the bank and asking for a loan, ensured that consumption levels were high, and this contributed to economic growth because consumption is a massive part of GDP. She acknowledged that Western banks lent credit too easily, which led to the crisis, but her point was that ‘Morocco is too insulated and needs to open up to global financial markets. Only by promoting a solid and more open banking system can Morocco truly attain the ideal foundation to promote socioeconomic development’. However, FEMISE’s 2010 Report on the Euro-Mediterranean Partnership took a different line, advocating ‘a cautious approach’ from the Moroccan government to liberalising the financial sector in order to avoid ‘higher output fluctuations’ and to shore up ‘a solid institutional framework’. Such divergence suggests that the EU may not fully acknowledge the detrimental consequences of fluctuations caused by liberalisation in a situation (like Morocco’s) where the financial sector needs to be more robust prior to exposure to capital flows from abroad. The DG-ECFIN economist also referred to governance reform as a mandatory condition for development, since ‘transparency and accountability of government decisions are lacking in Morocco, and the government does not interact as frequently with its citizens as it should. Accountability for decisions and citizen participation are necessary components of a healthy socioeconomic ambience’. Finally, she endorsed the view that Morocco’s cultural values pose an obstacle to development because ‘the world is changing so quickly, and while it’s good to have traditions, Morocco needs to be open to new ideas since it is part of a globalised economy’. The convergence objective acquired additional significance in her opinion. In conclusion, she believed that while Morocco made the right choice to anchor its socioeconomic development on proximity to Europe, there are other values towards which the country has not

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converged, and which could speed up the procurement of better social outcomes. Principally, she believed the country should encourage the private sector and reduce the economic role of the state: ‘Only by providing a solid and efficient banking system, an environment of accountability and transparency in decision making, and undergoing the necessary liberalisation can the country truly realise its long-term developmental aspirations’. As for the DG-ENTERPRISE official, she suggested that Morocco improve the mechanism through which things were implemented, with an accurate matching of individuals and tasks so that policies are translated into action on the ground. This relates to the issue of limitations to policy implementation on the Moroccan side, which will be discussed in Chapter 5. Ammor, however, noted that there were implemental constraints on the European side too: ‘at the end of 2000, only 28 per cent of the amount committed to Morocco during the 1995–9 period had actually been disbursed’. However, he also admitted that MEDA played a significant part ‘in funding projects related to economic reform’.29 She also recommended that Morocco ‘improve the smoothness and efficiency of its commercial courts, in addition to reducing the duration for introducing legislation and obtaining parliamentary approval’. She also noticed a wide discrepancy in competence between the decision making officials and individuals who set things in motion, stating that while the policymakers tend to be highly-skilled and very committed people, this skill and desire needs to percolate down to the people who do the work on the ground, because you can have the best ideas and intentions, but the quality of results obtained will depend primarily on the service provider on the ground, not the policymaker who designs the measure. She also referenced a shortcoming in EU policy, whereby ‘the Lisbon Treaty gives DG-ENTERPRISE a supporting role in the area of enterprise policy. The major responsibility rests with EU members and therefore this limits our role’. This she regretted, considering that ‘it is DG-ENTERPRISE officials who are on the ground and they are the ones who are aware of Morocco’s (and the NORAFS) needs and abilities’.

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The DG-RELEX official also identified governance reform and transparency as issues for Morocco to address. Nevertheless, he empathised with the leadership, particularly given the demanding nature of the task. There are, according to him, ‘political and cultural hindrances that have obstructed the convergence of justice standards to those of EU members, and Morocco’s ability to train future judges who can induce judicial reforms’. Like the DG-AIDCO official, he did not want to delve deeper, simply remarking that Morocco’s culture is too conservative. The same official also brought up the fact that the benefits of infrastructural improvements were not widely shared in the Kingdom: ‘While parts of major cities resemble cosmopolitan Europe, parts of other towns and cities resemble impoverished slums’. He observed that in some areas (such as justice and women’s rights), ‘Morocco may verbally agree to implement the reforms without taking the requisite actions’. He cited the example of women’s rights, where ‘Morocco told the EU it would honour commitments to women’s rights, only to fail to communicate its adherence to these commitments to the UN. This effectively means that the country does not consider its commitments binding’. In sum, the official listed the following as pressing challenges: (1) Justice and Human Rights: ‘In 2007, e50 million were allocated to justice reform, but nothing materialised from this aid’. He did not put the entire blame on the leadership’s decisions: Morocco’s society is too conservative and unprepared for the kind of reforms required – the social environment does not allow it. Even if the political will exists, no progress ensues due to cultural constraints. Morocco has to put more effort into ensuring complete convergence for the EU’s policies to bear developmental fruits in the long run. (2) Social outcomes remain abject. This is particularly the case for education and poverty reduction. Environmental considerations have also been largely ignored. Officials One and Two of DG-TRADE admitted that the value-added of trade liberalisation under the AA has been limited, even though they

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did not consider this a weakness of EU policies, since these policies’ objective was ‘to induce Morocco to reform as per EU guidelines’. Official Two supported aforementioned contentions that political and cultural factors in Morocco have inhibited progress on the socioeconomic front. However, this official confessed that ‘while Morocco should adjust in order to converge to EU standards on multiple fronts, adjustment is a two-way street, and the Union should do its share of adjustment as well’. The official was referring to issues like trade in agriculture and services, as well as recognition of Moroccan qualifications. Another criticism of the AA and the AP was that ‘they have failed to keep pace with the international relations environment they operate in. Globalisation is going much faster than the AA and the AP’. Both Officials expressed disdain towards the Morocco– US FTA; in their view, this FTA allowed Morocco to manoeuvre strategically and avoid convergence to EU standards on some fronts. While Official Two would love to see Morocco converge to EU standards, she recognised that the US and emerging powers were starting to take an interest in Morocco and North Africa. In fact, the IEMed 2010 Survey noted that respondents from the Maghreb countries tended to be more likely than any of the other respondents to believe that the EU’s prominent role as an economic partner in the region would diminish as the United States, China, and the GCC countries vie for stronger economic ties to the region.30 Thus, it is important that the Union capitalises on the Kingdom’s desire to converge before this interest fades in favour of stronger ties with the Union’s geopolitical rivals. While the official did not expect the Union to abandon its mission to induce reforms in Morocco, she recommended that it ‘show more flexibility in this pursuit given the constraints imposed by the geopolitical environment. Otherwise, it risks sabotaging the progress achieved and losing an invaluable ally’.

The EU’s Mediterranean Initiatives and Morocco’s Socioeconomic Development: Testimonies of Moroccan Officials On the Moroccan side, three of the four cited individuals were interviewed. The fourth individual gave a seminar (attended by the author) on Morocco’s developmental efforts. The interviews/seminar

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revolved around two themes: (1) Morocco’s socioeconomic outcomes and challenges to future progress, and (2) The role of the EU on this front so far, and options which the Union could exercise in the future.

Morocco’s Socioeconomic Outcomes and Challenges to Future Progress The first official interviewed was a Moroccan economist and journalist who has been involved in the North African economic scene for over 25 years. She agreed that in spite of the growth that Morocco experienced, this growth did not adequately translate into better social outcomes. One reason for this was the fact that growth has occurred in sectors that do not promote better social outcomes. For example, there has been remarkable growth in the tourism and real-estate sectors, neither of which employs many people or contributes significantly to GDP. She then discussed why this situation persists. In her opinion, the enormous weight of the agricultural sector and the rural areas in employment and in the economy stifles the country’s socioeconomic progress. More than two in every five participants of the labour force work in agriculture-related sectors. Methods of agriculture are for the most part technologically unsophisticated, unlike agricultural practices in developed countries, and the sector remains labour-intensive in production. The situation has not been aided by the fact that productivity in rural constituencies has been very low, and that agriculture does not contribute significantly to the country’s GDP: ‘The rural areas, where nearly 45 per cent of the population lives, are extremely unproductive; this weighs heavily on public revenues and expenses’. The sector has been contributing no more than 15 per cent of GDP, despite employing a sizeable percentage of the labour force. This provides another testament to the severity of the problem. This discussion alludes yet again to lack of productive diversification in Morocco; however it also brings up an issue concerning production methods in the country’s agricultural sector. According to Moroccan

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journalist Zak Ettamymy, the Kingdom falsely relied on its comparative advantage in agriculture as a vehicle to achieve growth, hoping this would translate into better outcomes. However, this ignored the fact that ‘farming practices in Morocco are archaic and can’t compete internationally’, especially with the farming sector in developed countries.31 He also noted that through industrialisation, today’s developed countries have even ended up benefitting their traditional agricultural sectors since they developed the technology and machinery that gave their agricultural sectors an edge over those in developing countries such as Morocco.32 Another reason behind the persistence of this situation is what the economist described as Morocco’s ‘brutal demographic rupture’. In urban areas, for example, a high percentage of youth is unemployed. Moreover, ‘in our country, there is an educational system that does not deliver satisfactory educational outcomes; its graduates are simply not suited to productive engagement within a modern economy’. She observed that: there have been no significant changes in the education curriculum and system from the one that existed in the colonial era, in spite of massive financial investment, significant effort, and considerable enquiry into the issue. The education system is totally rigid. The World Bank made a similar point in a special report entitled ‘The Challenge to Youth Inclusion in Morocco’, whilst adding that ‘very few’ of the country’s vocational training programmes provided valuable experience that would allow the country’s youth to integrate to the job market; the reason for that is that these programmes ‘tend to be supplydriven’ and poorly funded.33 A fourth possible reason is that Morocco: remains in a state best described as pre-industrial – in the sense that it has failed to successfully industrialise so far. The system of social and economic interaction between agents does not conform to the disinterested system that permeates modern societies; links between individuals are still based on familial and fraternal links that distort the decision-making process on the economic front. Moreover, cronyism has inhibited economic productivity

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and curbed Morocco’s developmental potential. This system of social and economic relations has cemented the pre-existing social hierarchy in Morocco – a hierarchy that has restricted social mobility. Instead, social solidarity between relatives and friends shapes the destinies of individuals, families, and constituencies. Morocco’s social structure failed to evolve since the Kingdom gained independence in the mid-1950s, and observations made by sociologists such as Waterbury (see Chapter 6) are pertinent to the contemporary situation. When asked to expand on the reasons behind the poor educational outcomes and limited social mobility in Morocco, the interviewed economist placed the onus of the blame on the fact that the educational system has not changed significantly since the mid-1950s. She offered a hypothetical example (albeit based on a real incident) to make that point: ‘If one is a teacher, one is not obliged to attend the school daily to do one’s job. Neither the families nor the authorities will castigate this behaviour’. Echoing the interviewee’s views on the poor state of the education system is a 2010 report on education and the middle class by the Amadeus Institute, an independent Moroccan think-tank, which stressed the importance of developing the educational infrastructure in rural areas to provide citizens from disadvantaged socioeconomic backgrounds the opportunity to climb the ladder and augment the size of Morocco’s middle class. The report also acknowledged the need to enhance vocational training to improve the job prospects of rural residents.34 The Moroccan economist and journalist also referred to a: survey made by La Commission Spe´ciale pour l’Education et la Formation (COSEF), which was formed by King Hassan II. The long-term survey continued under the guidance of King Mohammed VI. It targeted secondary school teachers and asked them whether they attend their respective institutions regularly to work. In brief, the surveyed individuals stated that they did not find their jobs interesting, did not earn a high living, and that there were not many tasks to perform.

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This situation contributed to the restriction of the productive capacity of the country’s education system: ‘Another survey for the highereducation (university) system produced similar results; the system is incapable of transmitting knowledge to generate respectable educational outcomes’. When asked why agriculture-related sectors continued to employ over 40 per cent of the labour force whilst contributing no more than 15 per cent of GDP, she opined that ‘the agricultural sector’s lack of productivity is the main cause’. For one thing, the average size of an agricultural plot in the countryside is only five hectares. There are no sizeable agricultural properties in Morocco. The plots are completely divided and during each generation, the plots’ owners re-divide them, and each owner ends up owning a smaller piece of land. Under such circumstances, the economist argued that ‘investors will not invest in the agricultural sector’. Additionally, Morocco experienced little rainfall, so ‘there are very few places where one can have productive agriculture naturally. For the majority of areas, one needs dams’. The gravity of the situation is compounded by the fact that educational outcomes are most miserable amongst labourers in rural areas, in spite of the state’s ‘attempts to provide subsidies for support’. She continued that the sector’s lack of productivity can be demonstrated by the fact that Morocco imports apples from Spain and grapes from as far away as Chile: ‘The fact that producers from a country as remote as Chile export large quantities of grapes to Morocco is a testament to how unproductive Morocco’s own grape production is’. From this discussion, it is clear that Morocco’s reliance on export-led growth in the agricultural sector is fraught with risks. The country is continuing to liberalise trade with different partners (for example, the EU and the US) whilst its producers lack the ability to compete with rivals from around the world due to out-dated production methods. This provides another justification for the Kingdom to industrialise and undergo a structural change of its economic basis. The economist then offered her perspectives on possible long-term solutions. For starters, she chastised:

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the presence of strong lobbyists and pressure-groups in Morocco whose activities have not necessarily coincided with the developmental interests of the country as a whole. This has put the Palace in the difficult position of continuously negotiating with these parties, and operating within its restrictive ambience without ever being able to profoundly change this ambience. These negotiations prevented the proliferation of conflict between different interest groups. She remarked that ‘Morocco has always lived with this reality’, which had forestalled better social standards. She urged the following actions: (a) The adoption of a system of social and economic interaction that is disinterested and compatible with modern economies. She recognised, however, that ‘it would require a generation at least to overcome this challenge’. (b) Reforming the education system to achieve better outcomes. (c) Reducing the weight of the rural constituency in the labour force and the economy by improving the living conditions of rural citizens in order to reduce the large flow of rural migrants to urban centres. This rural-to-urban migration places a big strain on urban constituents and the government. The relatively high cost of urban living further endangers the socioeconomic welfare of these migrants. In her opinion, this problem is acute in light of the high unemployment rates of young individuals. The second official is a social scientist and a governor of a region in Morocco. As an academic and a policymaker, he provided unique insights into the methods by which academics and officials interpret economic challenges and attempt to address them accordingly. He has been directly involved in Morocco’s Initiative Nationale de De´veloppement Humain (INDH), which has become the Kingdom’s central stratagem for enhancing living standards. He started his seminar by confirming that Morocco undertook a series of reforms over the past few decades, yet these reforms failed when it came to crucial socioeconomic matters. As a result, in 2005, the Moroccan leadership decided to introduce the INDH to address the shortcomings in

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social outcomes. An example of these failures is ‘poverty, which remains prevalent in large sections of the Moroccan populace’. He continued that until very recently, Morocco has been stuck with what he termed the ‘growth/development conventional economic wisdom’, which argued that ‘growth stimulation can by itself help the Kingdom achieve the social goals that are being sought’. Recently, however, there has been a growing consensus among leading officials that this growth/development wisdom has not delivered the desired socioeconomic progress. Not only that, this path eliminated neither the unequal distribution of wealth nor poverty. The INDH ‘provides a dimension via which to implement an alternative path to development’. The FEMISE 2010 Report on the Euro-Mediterranean Partnership shed further insight into this alternative path: the Moroccan leadership had realised that economic growth did not lead to development because the productive structure of the economy remained virtually the same. To resolve this problem, the country is attempting to reform its ‘production structure’.35 Furthermore, there is growing awareness that ‘moving up the value chain is key to increasing productivity’.36 The governor then discussed a special report, Le Rapport du Cinquantenaire, which was created by Moroccan scholars to assess the economic, social, political, cultural, and religious evolution of the country since independence. One of the report’s main findings is that there remains: a substantial rural deficit in human development indicators and de facto segregation in the urban landscape. Morocco is still unable to mollify the stagnation of social outcomes in rural areas, rural poverty, and social exclusion in urban areas. Intense urbanisation over the past two decades has brought about substantial social segregation. In his opinion, the INDH was supposed to provide another vision of development – one that is based on micro-scale participative bottom-top projects targeting the poor and the marginalised. The question is whether there is a possibility to design programmes that specifically target these groups.

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The INDH’s principal objectives were: (a) Tackling the country’s low HDI. (b) Reducing rural poverty and segregation in urban areas. In his words, ‘23 per cent of the global rural population lives below the poverty line, whilst 700,000 households in urban areas have been marginalised over the years. These households live in what resembles “shanty towns” that have no access to basic services like running water, electricity, and sewage’. (c) Helping groups with ‘special needs’, including kids living in the street, elderly citizens with no support, and mendicants in major cities. (d) Helping a wide range of vulnerable individuals who are close to falling below the poverty line. A 2010 Forum on ‘The Moroccan Experience of the National Initiative for Human Development’ reinforced the governor’s idea of the Initiative being a departure from tradition: it noted that the Initiative originated within a context in which major international organisations, in particular the United Nations, started emphasising the need for ‘equitable and sustainable human development’ in developing countries.37 There is also an emphasis on the idea of ‘economic progress’ as a means rather an end in itself – a means to improving human welfare.38 In addition to improving the socioeconomic prospects of disadvantaged groups, the INDH sought to ‘provide citizens with what are called the requirements of dignity, since poverty eats away at the dignity of these individuals’. The governor presented a link between ameliorating citizens’ socioeconomic fortunes and the Kingdom’s internal security: improving the welfare of these individuals makes them more productive and better connected to the wider society, thereby reducing their disenfranchisement. As for what the programme entailed, the governor emphasised that Morocco’s leadership wanted it to incorporate ‘direct participation and partnership with all key players, including NGOs’. The ‘poverty alleviation’ part of the programme involved: (a) Providing better infrastructure. (b) Stimulating human capital accumulation and health levels amongst the poor and marginalised.

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(c) Supporting Income-Generating Activities (IGAs) to stimulate the incomes of the poor. On IGAs, the Forum on the Moroccan Experience argued that in spite of observing ‘some negative externalities on natural resources’, these activities have become central to poor people’s ability to augment their incomes and participate in the economic and social fabric of society – a central tenet of the INDH. As an example, the INDH promoted IGAs that boosted the ‘development of social agriculture and local products’. There have also been cases where sectoral strategies, such as the Plan Maroc Vert for agriculture, drew on the experience of IGAs to build partnerships and promote common objectives.39 (d) Supporting other efforts at communal level. Moreover, the programme identified a national poverty line, and ‘all rural communes which fell below the average income have been targeted by the project. About 1,360 communes (primarily rural) have been identified as targets of this operation’. Rural women have also been targeted via projects to try to reduce the gender divide. The ‘reducing social segregation’ part of the programme identified ‘250 urban neighbourhoods that include marginalised individuals and require urgent assistance to empower them socioeconomically’. This component of the programme also targeted women in urban neighbourhoods, through the creation of ‘centres for women’s empowerment and female literacy programmes’. The ‘special needs’ groups component of the programme targeted six types of people: young people without shelter, abandoned newborn children, women who have children and live in extreme poverty, beggars, the disabled, and elderly citizens. A final part of the programme gave NGOs and all actors the opportunity to propose measures that could facilitate development; ‘this part of the programme includes about 4,000 projects’. The governor then lamented the fact that limited financial resources were devoted to the INDH: ‘Over five years the programme as a whole earmarked about US$1.25 billion’. This brings up a point mentioned by Martı´n, which is that Morocco’s socioeconomic problems are acute, and existing domestic resources simply cannot address them.40 Moreover, ODA (whether from the EU or another donor) was never meant to assume the bulk of financing Morocco’s development. So while the initiative attempted to introduce ‘a participatory

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approach’ to development that would involve non-state actors and empower disenfranchised citizens, its limited budget casts doubt on the results it could achieve.41 The governor explained that supervision of the programme’s activities occurred at communal level, through local committees including representatives of the commune, NGOs, various governmental services, and local authorities. All project proposals come from these local committees, which are then presented to the Provincial Committee for Human Development (PCHD). The PCHD follows up the proposals with a strategic committee for human development (chaired by the prime minister) to ensure that resources are allocated to these projects. Two ideas the governor stressed were that the INDH pushed for a geographically based development process targeting areas with endemic poverty and social exclusion, and that the programme has been endorsing the participation of NGOs, since ‘there are about 40,000 NGOs devoted to different causes and they can hence shed technical insights into the preconditions to achieve the initiative’s multi-faceted objectives’. According to Martı´n, however, the ‘project-based approach’ to tackle poverty and social exclusion, while capable of mitigating these problems, might not lead to an effective national development process that leads to sustainable development. In other words, merely focusing on alleviating the problems of the disadvantaged would ‘not necessarily contribute to the ‘process of expanding people’s choices’, which is the basis of human development’.42 As far as the INDH’s scope is concerned, ‘there have been about 16,000 projects in total, each costing on average about US$80,000. Hence, we are talking about small-scale projects’. Of the 16,000 projects, ‘3,031 tackled social exclusion in urban areas, and 5,000 tackled poverty and low social outcomes in rural areas’. He pointed out that: the average amount dedicated to each rural project is a third of what is dedicated to urban social exclusion projects. Meanwhile, 1,483 projects were meant to support groups with special needs,

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and since most projects entail building shelters or facilities, the average spending per project is four times that spent on rural poverty projects. The governor considered the special needs part of the INDH the best in terms of cost-effectiveness. Finally, he surmised the programme’s results: ‘Five million individuals possibly targeted, over 3,400 IGAs creating 40,000 jobs, and 5,000 participating NGOs’. He acknowledged that the INDH has had a limited impact on social outcomes; nonetheless, it helped the authorities identify more clearly the obstacles to development. He listed seven fundamental challenges: (a) ‘The illusion that the INDH can be an arena for public actions to converge at the territorial or local level did not work as expected’. (b) ‘Most of the achievements in the poverty and exclusion projects were with regards to building facilities; questions are being raised about these projects’ sustainability’. (c) ‘Many of the NGOs involved were more concerned with their ulterior agendas rather than contributing to Morocco’s developmental efforts’. (d) ‘The participative bottom-top approach was constrained by the limited capacities of the people involved in administering the projects’. (e) ‘Many of the projects in place have become redundant’. (f) ‘The poor have been targeted through territories; the programme needs to proceed towards targeting the poor within territories that would not otherwise be targeted’. (g) ‘Some of the groups targeted (the poor and the marginalised) do not have enough say in the nature of projects implemented. There were always stakeholders speaking on their behalf, and these stakeholders may have had private agendas. Building the educational capabilities of these groups should empower them to speak for themselves’. He concluded by claiming that the INDH may suffer from ‘limited financial resources, and it may have failed to have the expected

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impact, but it does represent an ambitious approach from the leadership to try something different when it comes to promoting social outcomes’. The third and fourth officials are diplomats who have a firsthand experience of the nature and evolution of EU –Moroccan relations. Regarding the Kingdom’s socioeconomic outcomes, both acknowledged that the country ‘remains in an abysmal state’. Diplomat 1 described the Kingdom as a ‘country in transition’, while Diplomat 2 opined that given its resource deficiency, the Kingdom did not have the capability to confront the monumental challenges it faced. Diplomat 1 highlighted a second challenge, which was that the programmes introduced by the Moroccan leadership have so far been unable to improve considerably the welfare of vulnerable and disadvantaged members of the population. For example, he mentioned the medical coverage sector, which: has traditionally covered the well-off and individuals employed in modern enterprise. Just recently, RAMED [an ambitious medical coverage programme] was introduced in impoverished parts of the country as a pilot scheme to decipher its effects before implementing it nationally. Yet without sufficient resources, RAMED’s ambitions will be difficult to fulfil. The challenge, after all, is to empower the poor, disenfranchised, and marginalised to improve their quality of life so that they can proficiently participate in the country’s economic and social fabric. As for education, the diplomat pinpointed two problems: (1) Inequality in educational opportunities across the population. In total, 45 per cent of the population is rural, and yet ‘women and residents of rural areas suffer from very poor educational faculty’. The organisation Gender Across Borders reported that nearly 55 per cent of all Moroccan women were illiterate, and that 90 per cent of rural females could not read or write. Moreover, it also cited ‘lack of coordination’ in policy implementation as a shortcoming in governmental efforts to combat this phenomenon (more on this issue in Chapter 5); specifically, women needed to be more involved in policy design and implementation according to the organisation.43 In the diplomat’s opinion, this reflects ‘a severe problem of inequality in

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resources, opportunities, and access to services – a problem that afflicts living standards’. (2) ‘Ensuring that the training and education systems effectively complement Morocco’s labour market’. He added that Morocco should adopt the German model, since there seems to be an effective synergy between the two in Germany.

The EU and Promotion of Development in Morocco As far as the EU’s role is concerned, the economist posited that the Union’s aim of pushing Morocco towards convergence has delivered mixed results: ‘Economically, the Kingdom has already converged to EU norms. As for sanitary conditions, the country is in the process of converging to EU regulations; the same is the case for rules concerning consumer protection’. Politically, convergence remains ‘a mere aspiration’. However, she was also critical of how the EU (and the West in general) pursued the issue of democratisation: ‘The West spreads so-called ‘universal values’, but some of these values are imperialist. At the same time, it confuses the values with the instruments that allow these values to be cemented in society’. Some studies (see Boubekur and Aghar (2006) and Malka and Alterman (2006)) have reported similar impressions amongst Moroccans about the ‘cultural imperialism’ that permeates EU efforts to promote democracy in Morocco and the NORAFS. However, Khakee et al. found no evidence of this in their interviews with representatives of Moroccan NGOs.44 To clarify this point, the interviewed economist cited the fact that ‘the French state that democracy is a value, when in fact it is a tool to bring about a more egalitarian society’. Accordingly, she wondered whether Morocco would ever acquire sufficient autonomy to assert itself and reject some of these ‘misconceptions’ in EU policies, or whether it would always be a victim of the asymmetric nature of its relationship with the Union. She acknowledged that she did not know the answer. When it comes to human rights, for example, Morocco: blindly tries to follow EU guidelines; their [Moroccan policymakers’] understanding of human rights is that a person has the right not to get beaten-up on the street! Human rights are much more than that they include the right to protest against

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the fact that in Morocco, one does not count as much as one’s neighbour. Chapter 7 will cite a study by a Moroccan sociologist, Saadia Sabah, who noted that there has been increasing mistrust in Moroccan society such that individuals do not trust their neighbours anymore, and their social circles have shrunk as a result. The same chapter will explore this issue in detail. On the subject of what the EU could do to address weaknesses in existing policies towards Morocco, the economist recognised that the EU ‘is not a charity; it has interests which it wants to protect’. Sometimes, these interests ran contrary to what Morocco needed to promote its development. Unfortunately, there is very little Morocco can do about this in light of the asymmetric nature of the relationship. It must be said that although the interviewee did not expect the EU to act altruistically, this book cited a study by Ayadi and Gadi (2011) that demonstrated that the Union was in fact ‘an altruistic donor’. The next chapter will show that in spite of the limitations concerning aid amounts and delays in disbursement, the Union committed more funds to Morocco than other donors; the ultimate responsibility for development lies with the Moroccan government. The challenge, therefore, is for Morocco to ensure that its limited resources and the ODA is channelled towards an approach that is more effective than the one adopted at the moment when it comes to promoting development. Nonetheless, she also observed that the EU’s policy towards the NORAFS has become more rigid. Countries like France and Spain have become more resistant to introducing fresh initiatives towards Morocco and the other NORAFS. She considered this change ‘a pity’. She urged the Union to help Morocco’s leadership reform the country’s justice and education systems, since Morocco has been unable to do so on its own so far: ‘It is imperative that pressure for improvements on these two fronts comes externally. Without such pressure from the Union, Morocco’s leadership is unlikely to implement the reforms’. The diplomats shed more light on EU –Moroccan relations and the Union’s efforts on the developmental front. When asked whether the Barcelona Process has helped Morocco effectively pursue socioeconomic development, Diplomat 1 mentioned that the EMP encompassed a

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developmental dimension. He emphasised that the Moroccan leadership has a developmental strategy, and the EU’s role is to ‘help Morocco realise its national developmental objectives and fulfil its aspirations, through the framework stipulated by the Barcelona Process’. Diplomat 2 added that the Kingdom’s aspiration remains ‘to reap even greater rewards from its agreements with Europe via closer association’. Diplomat 1 explained that the reasons behind Morocco’s insistence on establishing closer ties with the EU were: (1) Geographic (Morocco is only 14km away from Spain); (2) Commercial: the EU is Morocco’s main trading partner; (3) The presence of sizeable Moroccan communities in many EU countries; (4) Historical: Morocco has strong cultural and historical ties with both France and Spain; a majority of individuals in the North of the Kingdom can speak Spanish, whilst French is the language of commerce and business in the country. Diplomat 2 interjected to point out that it is important not to see the Barcelona Process as the start, but rather as an accelerator: the process of EU –Moroccan liaison began decades ago- the Barcelona Process simply provided a new and powerful thrust to further advance these relations. When asked if there have been any difficulties in executing the terms of the signed accords, Diplomat 1 replied ‘generally no, but there are a few exceptions’. For one thing, under the AA and the AP, there are various committees and sub-committees (at ministerial, parliamentary, technocratic, and bureaucratic levels) to ensure a smooth and successful execution of the terms. However, ‘there is a small constraint. During the rapprochement process, Morocco’s principal priority has been to speed up the reforms required to achieve economic convergence. This has come at a dear financial cost’. The diplomat said that he had hoped: that the EU would provide more financial assistance to help the Kingdom succeed in this endeavour. The EU has helped Morocco;

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yet our dream has been to extract the maximum amount of aid possible from the Union, and the hope has been to progress relations to an even higher level if it would help Morocco acquire greater funds. This view seems to echo the results of IEMed’s 2010 Survey: when respondents were asked about the need to introduce changes to the quantities and types of financial instruments to implement in the Mediterranean region, the majority of respondents concurred with the need for more financial instruments to support the NORAFS whilst at the same time being sceptical that such instruments would be introduced.45 Diplomat 1 hoped that the Union would match the Kingdom’s ambitions in regards to the relationship between the two parties. This reservation attains profound importance following Diplomat 2’s claim that the EU–Moroccan relationship is ‘strategic and irreversible’. As for whether the EU has been responsible for the reforms introduced by the Kingdom since 1995, Diplomat 1 was unequivocal in that: all reforms (political, economic, social, and cultural) implemented by Morocco have been the result of sovereign governmental decisions – products of the Moroccan leadership’s national vision – and there has never been an occasion in which a programme has been forcefully imposed on the Kingdom by the EU. He explained that: the medical coverage, labour market, and education reforms do not reap benefits to EU citizens – they are meant to benefit Morocco. Clearly, the government is designing and implementing these reforms to improve Moroccans’ standards of living. To Morocco, the EU is a special partner, but a partner nonetheless, much like the United States and the Gulf Cooperation Council (GCC) countries. With Morocco being resource-deficient, the support of these partners is important to accelerate the speed of reforms in order for the country to converge to the EU’s norms as per the acquis communautaire. Lately, the EU has been endorsing the

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Kingdom’s reforms and providing assistance when possible to help the country attain its objectives. Whilst the EU is indeed a partner, the Diplomat did not recognise that the Union is a more significant partner to the Kingdom’s developmental efforts than either the US or the GCC, by virtue of its greater financial assistance. Regarding the extent of EU aid, Diplomat 1 mentioned that the National Indicative Programmes are divided into two phases: ‘In the first (2007– 10), Morocco was granted e654 million, and in the second, the Kingdom was allocated e580.5 million’. The EU has also supported the Kingdom’s sectoral initiatives like the Plan Maroc Vert and Plan D’E´mergence: ‘e60 million were allocated to the Plan Maroc Vert, and e93 million were allocated to the country’s educational reforms’. Diplomat 2 then interjected to illustrate the evolution of relations between the two entities, which he described as ‘remarkable’: What started in 1969 as a trade association has evolved into a Cooperation Agreement in 1976 (putting energy, the economy, and immigrant communities in Europe on the agenda), the Barcelona Process in 1995, and Advanced Status in 2008, placing EU–Morocco relations at a level slightly higher than an association but less than integration. According to him, the Advanced Status’ importance lies in the fact that it serves as a ‘bilateral road map’ for future relations. He then identified four major axes within the joint document: (1) The political axis, which reinforces the dialogue between the two at the ministerial and parliamentary levels; (2) the economic axis, which envisages the creation of the FTA, and a common space epitomised by common regulations across economic sectors; (3) the human axis, which entails frequent exchanges between civil societies, researchers, academics, and students; (4) the agencies participation axis, through which Morocco acquires special access to agencies that are exclusive to EU countries, in order to speed up the convergence to EU norms.

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On whether Morocco will ever converge to the political, social, and economic norms of EU countries, Diplomat 2 opined that there are only two issues that have prevented complete convergence: ‘1) regulatory convergence (technical convergence within the sectors) – the Kingdom hopes to speed up existing processes to ensure convergence on this level, and 2) reforms to the public sector’. Diplomat 1, meanwhile, explained that: some of the agreements and standards that Morocco accepted are in fact international agreements. Because of globalisation, Morocco has to adhere to the international standards dictated by multilateral institutions like the UN, the World Bank, and the IMF. The country’s adherence to international agreements on aerial transportation and financial insurance serves as an example. Finally, when asked what the principal limitations of EU policies are, Diplomat 2 insisted on ‘the financial component’. He remarked that the EU needs to be more helpful on the issue of legal migration. The Union has not done enough to facilitate the provision of visas to Moroccan students and labourers. Not only will this promote convergence and understanding on the social and cultural levels, but it can also help Morocco acquire the knowledge and the capacity to develop in the long run. In a 2010 paper, Kausch echoed the sentiments of this Diplomat, stating that at a time when the Moroccan government was desperate for the EU to facilitate visa provisions for workers from the Kingdom, the Union was succumbing to its protectionist instincts.46 This point is stressed by Diplomat 1: ‘The Union needs to match the Kingdom’s level of ambition. The gap in living standards between the EU and the NORAFS is unsustainable at this stage’. In his view, ‘the area of shared prosperity that the EMP espoused did not materialise; gains have not been shared between the two shores, and have been skewed in favour of the EU’. This accounts for the flow of migrants to EU members.

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He also mentioned that the EU continuously chided Morocco ‘with cries of Democracy Democracy!’ In response, he referred to Tunisia, in that former President Ben Ali had been overthrown, and yet Tunisians continued to migrate in droves to Lampedusa, through Italy, and onwards to France. In his opinion, the EU’s insistence on democracy, human rights, and justice is simply not enough: the Kingdom and its officials tell the EU regularly that there is no objection to democracy and human rights in principle; however they must be accompanied by an equal emphasis on socioeconomic welfare. He argued that ‘the EU’s prioritisation of democracy and political reform is misguided, since one has to provide as much attention to the socioeconomic dimension’. This claim is debatable: after all, in its 1995 statement following the inauguration of the EMP, the Union made it clear that it emphasised the political, socioeconomic, and cultural dimensions of the relationship between the EU and MNC (see Chapter 1). In fact, Bicchi argued that the economic aspect of the relationship ‘monopolised’ bilateral relations between the EU and the MNC.47 He also urged the Union to: provide additional financial aid. Both Bulgaria and Romania [the most recently admitted EU members] have received sizeable EU financial assistance even though their combined population is less than 20 million. Morocco has received considerably less assistance under the National Indicative Programmes whilst having a population of over 32 million [and a higher population growth rate than either Romania or Bulgaria]. He lamented the discrepancy in aid provided to Eastern as opposed to Southern neighbours, and ‘even though Morocco is not an accession candidate like Romania and Bulgaria were, the difference in aid levels is incredible, and requires an immediate redress’. His views were shared by Diplomat 2, who stated that: the Kingdom has been profoundly influenced by events in nearby Tunisia. The Moroccan leadership has come to the realisation that

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the country’s welfare depends on promoting political reform on the one hand, and improving social and economic conditions on the other. Only through this dual approach can the Kingdom secure a better future for its people.

Concluding Remarks This chapter outlined the perspectives of ten EU and Moroccan officials regarding relations between the two parties and Morocco’s developmental aims and challenges. The next four chapters will combine the evidence presented here with additional data in order to determine whether the EU’s policy objectives are the most appropriate to deliver future enhancements to Morocco’s and NORAFS social standards and reduce the developmental gap across the Mediterranean.

CHAPTER 5 ANALYSING THE POLICY INSTRUMENTS USED BY THE EU TO FOSTER SOCIOECONOMIC DEVELOPMENT

As mentioned in the Introduction, the EU pursued four policy objectives to enhance socioeconomic outcomes in Morocco and the NORAFS: trade liberalisation, reducing the role of the state in economic management, monetary stability as exemplified by low inflation rates, and good governance. To pursue these objectives it has been utilising two key policy instruments: financial aid and technical assistance.

Describing the EU’s Policy Instruments To support the economic reform process, the Union has been providing financial aid. Before listing the different forms of financial support provided and their significance relative to the aid Morocco received from other donors such as the World Bank, it is important to discuss how the EU disburses this aid. According to the DG-AIDCO official who was interviewed for this study (see Chapter 4), the financial aid that the EU provides to a given sector in Morocco (for example, health or education) is preconditioned on the Kingdom’s fulfilment of two prerequisites: (a) The Moroccan government must have a strategy in place that sets clear targets and objectives that conform to the policy objectives

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agreed upon in the Association Agreement and the Action Plan; this was also noted in a European Commission document on support to sectoral programmes.1 As an example, if the EU were to disburse aid to Morocco’s education sector, the Kingdom has to demonstrate that the sectoral strategy in place conforms to the objectives agreed upon in the Action Plan (which in the case of education include, for example, ‘eradicating illiteracy . . . develop [ing] vocationally-oriented training . . . [and] develop[ing] private sector general education, vocational training, and higher education sectors’).2 (b) That this strategy is supported by an adequate amount of domestic funding. Generally, the Union would require that for each sector the Government of Morocco adopt a budget framework. The EU insists on this in order to ensure that the Government does not only commit to reforming the sectors, but that it also delivers by providing the necessary financing to the objectives itself. The above preconditions reveal several points. The onus of the financial commitment to economic reform is on the Moroccan government – the EU’s policy instruments are not expected to resolve the socioeconomic ills of the Kingdom, but merely to provide support to the Kingdom’s pre-existing resources. The interviewed official cautioned that the Union’s budgetary support represents only a minimal portion of the Government’s revenues (around 1 per cent of the Moroccan government’s total annual revenues). This means that when funds are disbursed to a sector strategy, EU aid is meant to represent only a portion of the strategy’s total cost. The bulk of financing for the sector reform strategy is expected to come from the Government itself, and the EU would not provide aid unless this precondition is satisfied. As a result, when assessing the significance of the Union’s policy instruments to Morocco’s development, one must evaluate that aid in an appropriate context (i.e. not by demonstrating whether it managed to transform Morocco’s socioeconomic outcomes (which is an overly ambitious target), but by establishing whether it had made a greater contribution to the country’s reform effort than other multilateral institutions, whether there were any limitations to aid implementation on the Moroccan side, and whether this aid could have been

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preconditioned on a more appropriate set of policy objectives to deliver better results). Another important point to raise is that the EU would not disburse aid to Morocco unless the Kingdom has a strategy in place that would cater for the objectives listed in the Association Agreement and the Action Plan. According to the interviewed DG-AIDCO official, prior to disbursement, the Union would check if an appropriate strategy is in place within the sector. Joint committees established following the introduction of the Action Plan are responsible for this ‘checking’. Only once the Union is satisfied with the objectives, implementation strategies, and targets incorporated by Morocco for a given sector is the aid disbursed (in fact, Chapter 4 cited an example in which the Union refused to disburse aid to a Moroccan project to reform vocational training due to the unsatisfactory nature of the strategy proposed). The disbursed aid comes in the form of ‘budget support’ (there is more detail on the issue of ‘budget support’ later on in this chapter), which means that the funds are channelled into Morocco’s Treasury and that, once it is there, the Government is free to use this aid along with domestic funds to carry out the strategy proposed for that sector. According to the interviewed official, this attests to the unique ‘relationship of trust’ that exists between the Union and Morocco; the Union trusts that the implementation of reforms on the Moroccan side would conform to the policy objectives on which access to the instruments is pre-conditioned. There are three principal financial aid instruments that the Union uses to support the reform process: (1) The MEDA Programme (1995–2006): Between 1995 and 2006 the EU dedicated around e1.5 billion of aid under MEDA I (1995–9) and MEDA II (2000–6) to Morocco. According to the European Union’s Delegation to the country, the Kingdom has been the greatest beneficiary of the MEDA Programme amongst the NORAFS; payments represented 21 per cent of total MEDA funds between 2000 and 2006.3 The programme is meant to finance a variety of activities related to Morocco’s efforts to reform and modernise economic sectors; such activities include ‘training, institution-building, information, seminars, studies, [and] projects for investment’.4 Below is a breakdown of the major sectoral social development projects in Morocco that have been financed by MEDA and the amounts allocated by the EU5 for these projects:

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(a) Reforming the health sector: e50 million (b) Training staff in tourism, textiles, and new technologies sectors: e50 million (c) Support to basic education: e40 million (d) Upgrading of technical education: e38 million (e) Water and sanitation in rural areas: e40 million (f) Support to integrated rural development: e28.4 million (g) Making Moroccan companies more competitive: e45 million The rest of the MEDA aid was allocated towards infrastructural projects, primarily to construct highways, reform the sewage and transport networks, and to support private-sector enterprise.6 (2) EIB Bank loans: These loans are meant for long-term projects related to economic infrastructure and the environment. Unlike the aid provided under MEDA and ENPI, EIB loans have to be paid back by Morocco (as is the case with the loans provided by the World Bank – more on this later). In total, the Bank loaned Morocco e3.1 billion between 1978 and 2006. Examples of projects in Morocco that received EIB loans include:7 (a) e1.1 billion loaned to finance energy projects, notably the gas pipeline linking Morocco and Spain, and a private-sector windmill park project. (b) e930 million loaned to finance transport projects (examples include highways connecting Rabat and Fes as well as Rabat and Tangier, modernising Moroccan ports, and fixing roads in rural areas). (c) e520 million loaned to help Morocco sanitise areas in Marrakech, Fes, Meknes, Oujda, and Settat. (d) e100 million loaned to establish 17 hospitals across the Kingdom and 30 training centres to train employees in the tourism and textile sectors. (3) The European Neighbourhood Partnership Instrument (ENPI) (2007– 10): Introduced as part of the ENP, this instrument has become the most influential in the administration of bilateral aid and assistance between the EU and Morocco. According to Hunt, ‘in 2007, the

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Commission introduced the ENPI to replace MEDA’,8 while CREMed revealed that ‘this instrument allows the EU to provide technical and financial assistance to partner countries with a view to advancing towards the creation of a free trade area’.9 Bilateral country programme funds represent 90 per cent10 of total ENPI funds, and in the case of Morocco these bilateral funds are divided into: (A) Country Programme funding: between 2007 and 2010, e654 million were allocated to Morocco: e531 million of them were allocated to economic modernisation and projects aimed at social development. Key projects financed by the ENPI under this category include the following (amount allocated in brackets): (a) Support for the national strategy to promote literacy and informal education (e27 million). (b) Support for health sector reform (e126 million). (c) Support for the education sector (e108 million). The balance went to infrastructural developments (transport networks, upgrading sewage networks, etc.) as well as implementation of reforms in economic sectors such as agriculture (the reforms that are agreed upon in the Action Plan).11 Moreover, e65 million went to what the EU has described as ‘institutional support’ (the Union does not elaborate further on this point), while e8 million went to good governance and human right; examples of key good governance projects financed include the promotion of good parliamentary practices (e190,000), anticorruption campaigns (e530,000), and campaigns for the protection of human rights in the judicial cadre (e154,000). Finally, a sum of e50 million was allocated to efforts towards environmental protection; key projects in this realm include improving the quality of drinking water (e7 million), protection of the environment in rural regions (e219,000), and the creation of a solar power plant in Ouarzazate (e30 million).12 (B) Governance Facility: e28 million13 was allocated to Morocco under this scheme, which have gone towards governance reforms.

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Youngs mentioned that e20 million had been allocated for the Ministry of Justice to help combat corruption in the judiciary and e8 million had been allocated for the creation of public (legal) archives.14 (C) Neighbourhood Investment Fund (NIF): A total of e42.8 million is being disbursed on projects involving the NIF in Morocco. These projects include constructing rural roads, improving educational infrastructure, and improving sanitary conditions.15 ENPI funds are disbursed in the form of budget support to the Moroccan Treasury, which then allocates the funds to the different sectors (environmental protection, education, health, etc.) as agreed upon with the EU. It is worth noting that in the case of Morocco, according to the European Commission, ‘budget support has become the preferred instrument of co-operation between Morocco and [the] European Union’.16 According to the DG-AIDCO official interviewed for this study, once the aid is disbursed to Morocco, the EU does not have any control over the funds, but that is because the aid would not have been transferred to the Kingdom’s Treasury in the first place unless the Union was satisfied with the objectives and implementation strategy proposed by Morocco for a given sector; this was verified by the European Commission’s document on budget support.17 In his study on Morocco and the EMP, Ammor noted that there were no concerns raised by officials with regards to ‘Morocco’s capacity to absorb new MEDA funds’,18 while a report on EU – Moroccan relations by the Bertelsmann Stiftung civil society foundation also mentioned the fact that ‘so far, the European Union has not voiced any concerns about [the] Moroccan government’s compliance’.19 A study on the ENPI’s implementation performance in Neighbourhood countries by Delcour confirmed the ‘tight connection’ between this instrument and the Union’s policy objectives.20 In her evaluation of the ‘ENPI’s relevance and effectiveness’, she noted ‘two weaknesses: the complexity of procedures and an uneven participation of civil society’.21 With respect to the first weakness, she observed that there were many phases between detailing the policy objectives in the Action Plans and disbursing the funds, such as the creation of Country Strategy Papers to ‘set out priority areas’ to address the policy objectives, National Indicative Programmes to fund the priority areas, and Action Programmes that highlighted the domestic projects that would be

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supported by ENPI; ‘the whole process requires approximately eighteen months . . . The main risk deriving from such a long process is a limited relevance of EU assistance in a fast-changing environment’.22 As for the second weakness, the risk of providing assistance in the form of budget support is that it limits the involvement of civil society organisations that can provide additional support to the reform process.23 On the other hand, she also acknowledged that this weakness is offset by various advantages, including budget support’s ability to provide coherence to reform strategies and its reinforcement of the partner countries’ ownership of their own developmental strategies.24 The disbursement of funds in the form of budget support means that the task of isolating the effect of specific EU funds on the outcomes of a particular sector in Morocco is virtually impossible. In his evaluation of the MEDA programme’s implemental performance in Morocco, Natorski concluded that: analysing the MEDA Programme is a challenging task, for two main reasons: first, the lack of transparent and reliable data and second, the considerable delays in the implementation of the measures and projects. Therefore, the empirical material at the disposal of the researcher is very incomplete.25 In spite of the scarcity of information concerning the implemental performance of the Union’s policy instruments, it is still possible to compare the size of EU aid levels to what was disbursed by Morocco’s other donors for social development. Such a comparison would establish a sense of perspective in terms of the magnitude of the EU’s policy instruments. World Bank data reveals that between 1996 and 2009, $138 million (roughly e107 million) were loaned by the Bank to support Morocco’s education system (to improve access to education in the country’s poorest areas) and $134 million (roughly e103.5 million) were allocated to the Kingdom’s health sector (to provide equitable access to drugs and to reduce maternal mortality by increasing care available to maternity patients).26 Between 1996 and 2010, the Bank loaned Morocco around e2.175 billion for developmental projects.27 In contrast, the European Union dedicated nearly e2.15 billion to the country under both MEDA and ENPI, and that does not include the loans provided by the EIB. This

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comparison reveals that the EU is the greatest contributor of financial aid to Morocco’s developmental efforts, a point that was also made by a 2010 report entitled ‘Morocco: Not Enough Aid and Very Slow Progress’, produced by Social Watch, a global network of civil society organisations that work on poverty and social justice issues. For example, in 2007, 23.3 per cent of the foreign aid Morocco received came from the EU, whilst 18.8 per cent of the aid came from the World Bank.28 These two organisations were and continue to be the greatest donors to development projects in the Kingdom, and their commitments are more substantial than those made by the African Development Bank, the United States (via USAID), the United Nations, and other partners.29 One thing to bear in mind when comparing EU and World Bank financial commitments to Morocco is that the latter is a bank that loans Morocco money to finance projects whilst expecting that these loans would be repaid with interest. While the EIB operates in a similar manner, the aid provided under MEDA and ENPI is a grant rather than a loan. Although MEDA and ENPI assistance is preconditioned as discussed earlier, Morocco is not expected to repay these sums. Moreover, the EU has been utilising another policy instrument besides financial aid and loans to support Morocco: logistic and technical assistance to facilitate the implementation of reforms. This instrument alludes to seminars and meetings held between EU and Moroccan technocrats, during which Union officials endeavour to transmit their expertise and know-how on issues relating to political, economic, institutional, and social reforms. One of the EU officials interviewed for this study (from DG-RELEX) referred to an example of such assistance: a seminar held by the EU on the issue of press freedom and its importance to the reform process in Morocco. This seminar shed insight into the significance of press freedom as prescribed by the Action Plans, and as a result, the Moroccan leadership opted to honour its obligations to preserve press freedom (see Chapter 4). Another example is a seminar organised between the Moroccan Ministry of Agriculture and the European Commission’s DG-Research in Rabat in March 2006 to discuss ways to share expertise in the realm of food security, agricultural productivity, and research in the biotech field between the two parties.30 During the meeting the EU provided advice to the Kingdom on how to improve food safety in order to enhance the quality of food exported by Morocco; according the EU’s Mise en Oeuvre 2010 report, the results were

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satisfactory: the Kingdom introduced a law to establish a bureau for food security, and has compounded its partnership efforts on this front with the Union.31 The culmination of these sectoral meetings and fora has been the inauguration of the EU–Morocco Joint Parliamentary Committee in 2010 (as per the 2008 ‘Advanced Status’ document between the two parties), which according to the EU Commissioner for Enlargement and Neighbourhood Policy, would provide a significant boost to previous fora by covering all issues of mutual concern (political, economic, etc.) and providing more attention to the issue of ‘cultural cooperation’ in order for ‘the people of our countries . . . [to] better understand each other’.32 The above discussion of policy instruments reveals that vis-a`-vis Morocco’s other developmental partners, the EU has provided more assistance. The Union’s aid has been dedicated to issues (examples that stand out are health and education reform) that the country needs to address if it is to climb the socioeconomic ladder. Nevertheless, Chapters 6 and 7 will demonstrate that in spite of the Union providing the biggest amount of aid to Morocco, this aid has been too small to have the intended impact on Morocco’s socioeconomic outcomes so far, which leads to the question: ‘why’? One reason is that official development assistance (ODA) levels to Morocco (whether from the EU, the World Bank, or other donors) have been inadequate; according to ‘Aid Effectiveness’, an organisation that monitors aid flows between developed and developing countries, ‘ODA [official development assistance] account[ed] for only 1per cent of [Morocco’s] GDP in 2009’. The issue of insufficient aid from donors has been frequently raised by Moroccan civil society organisations according to Social Watch.33 Another reason pertains to the severity of Morocco’s current socioeconomic situation, which means that the aid commitments that donors generally make will fall short of making a significant difference. Martı´n raised this point by noting that Morocco’s domestic resources are limited in light of the ‘enormous’ socioeconomic challenges the country faces.34 The EU already acknowledged this point by making it clear that it expected the recipient country to bear the majority of the responsibility for financing and administering developmental projects. Moreover, three of the EU officials interviewed for this project insisted that the policy instruments that the Union utilised were not meant to be ‘complete cures’ to Morocco’s plights: it is the Kingdom’s

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responsibility to create a plan and finance it. Chapter 6 will reveal that the Kingdom’s HDI performance remains unsatisfactory; a study by the Trends in International Mathematics and Sciences Study (TIMSS) revealed that 61 per cent of Moroccan schoolchildren do not fulfil the prerequisite standard for mathematics ability at school level, whilst 66 per cent do not fulfil such standard for the sciences.35 Therefore, it is important to acknowledge the severity of the problem faced by the recipient country when projecting the impact ODA would have in a country. Both factors explain why (as Chapter 7 will also reveal) the European Union’s financial instruments, whilst not exacerbating Morocco’s current socioeconomic plights, have made a limited contribution to resolving them. Courdet-Dupouy referred to a third reason in her discussion of the IEMed 2010 Survey’s results: she noted that the EU’s policy instruments were designed on the basis that convergence in macroeconomic indicators between the EU and the NORAFS would constitute a successful developmental outcome. There are two problems with this: (1) since empirical evidence on such macroeconomic indicators such as growth and inflation (which the EU uses to design and recommend developmental measures) is often unreliable in the case of the NORAFS, this means that the success of the Union’s policy instruments is unfortunately curtailed by circumstances beyond its control, and (2) survey respondents reject the idea that enhancing macroeconomic indicators (such as boosting economic growth or lowering inflation) is sufficient to transform socioeconomic realities in the NORAFS – a view that various multilateral organisations and economists share (see UNDP (2003) and Sen (1998) for examples).

Observations on Managing ODA and Policy Implementation in Morocco There is also a fourth factor that needs to be addressed when examining why ODA did not have the intended impact, and that is the issue of policy implementation in Morocco, and how effective the Kingdom has been in utilising the aid received from donors to implement policy reforms. As Natorski pointed out in his study on the implementation of MEDA aid in Morocco, empirical data on this issue is limited. Nonetheless, a few remarks can be made to provide a picture of the situation in the Kingdom.

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Diyen conducted a study of Morocco’s efforts to reform its secondary education system; in her view, failures at the secondary-school level were pronounced in the Kingdom since students at this stage were neither prepared to pursue higher education nor to enter the labour force. She lamented the fact that when one surveyed what had been written on Morocco’s efforts to reform the educational sector, one could not help but notice the lack of empirical studies on these reforms and how the Kingdom was implementing them.36 In her investigation, she cited two key limitations to educational reform; the first concerned levels of finance. In spite of devoting a substantial percentage of its GDP to education, Morocco found itself financially constrained by levels of external debt and a demographic structure in which the youth comprise a high proportion. The second limitation concerned shortcomings in implementing reforms: in this regard, Diyen particularly pointed out that the country ‘should find out the most effective way of operating as a team in order to do the necessary research. It may take many years to conduct studies on school reform’.37 This contributed to the lack of information on approaches to policy implementation. Another constraint in the government’s approach to implementing educational reforms has been its failure to liaise with ‘students and their parents’.38 This is a major issue since past experience showed that an effective approach to educational reform could only occur ‘when all those concerned by the education system have been involved’.39 Students in Morocco had been completely marginalised by policy makers, and as a result, they felt that they had no stake in their own educational attainment. By extension, this would lead to disincentives in learning, which would harm educational outcomes. In fact, policy makers had also marginalised Moroccan teachers; as a consequence, the teachers could not lend their views on the reform process. According to Jamal Elabiad, a Moroccan teacher, the Ministry of Education failed to reform the country’s education system because teachers were not consulted prior to implementing reforms: for example, teachers’ opinions were not considered when the country introduced an Emergency Plan for Education in 2009.40 Furthermore, the Ministry habitually introduced reforms without familiarising teachers with them: ‘most teachers cannot use new teaching approaches and methods unless they were trained to employ them in class. This is the reason why most Moroccan teachers are still using outdated teaching methodologies’.41

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Lack of coordination between all actors who have a stake in a sector’s reform process is a recurring feature of policy implementation in Morocco: in the health sector, for example, key problems to reform implementation included the absence of coordination between public hospitals and basic healthcare centres, ‘a mismatch between technical facilities and the human resources required to make them work’, lack of transparency in managerial decisions, and the absence of partnerships between public and private-sector medical institutions on the one hand, and ‘local communities and civil society’ on the other.42 It is important to note that the Moroccan government acknowledged the presence of these problems: it introduced an Urgency Plan for Education in 2009 to address these failures by 2015,43 and the ‘Vision Sante´ 2020’ programme for healthcare reform aspires to improve transparency and coordination between different medical facilities and the public and private sectors by 2020.44 Furthermore, the Bertelsmann Stiftung report on EU – Moroccan relations discussed institutional impediments to effective implementation of reforms. As an example, it noted that Morocco’s judicial system lacked independence and transparency (this theme was commonly mentioned by the EU officials interviewed for this study when critiquing Morocco’s performance): the system is run by and large by officials who are not ‘reform-minded’. This was encouraged by the Royal Court, which wanted to introduce reforms so long as they were ‘not considered . . . threatening to the absolutist nature of the regime’.45 The report also suggested that the king wanted to maintain a strong presence in the private sector to ensure that the economic elite did not challenge the political status quo. Chapter 8 will reference a study by Najem (2001) that detailed how and why the process of promoting private enterprise had not been effective in Morocco, and one of the major reasons is the fact that this process was managed by the Court to empower entrepreneurs who were closely affiliated to the Royal Court. Morocco also experiences problems in managing and coordinating ODA towards developmental projects. For example, Social Watch noted that Morocco still experienced problems in coordinating foreign aid with local resources. There are various agencies within Morocco that all deal with development: such agencies include the Ministry of Social Development, the Social Development Agency, and the Haut

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Commissariat au Plan.46 Moreover, ‘the international cooperation programs and projects very often overlap. All of this rebounds to the detriment of the effective implementation of aid’.47 Meanwhile, ‘Aid Effectiveness’ cited another key limitation to aid management and implementation of developmental projects in the Kingdom, which is that ‘development cooperation at the local level continues to apply an isolated project approach’.48 In other words, although aid is channelled to specific projects, these projects are not coordinated nationally to fulfil national developmental objectives. The Bertelsmann Stiftung report stressed the role of corruption and the lack of an independent and transparent judiciary as obstacles to effective utilisation of the received ODA; both factors ‘are the results of an absence of separation [of] powers and the real power holders’ lack of accountability’.49 Under such circumstances, effective utilisation of ODA is likely to be compromised; Chapters 6 and 8 will allude to two specific examples that reflect both cronyism and lack of transparency in Morocco. Nonetheless, with respect to managing ODA and implementing reform, there has been progress. According to the European Commission’s Delegation in Rabat, the pace of reform in Morocco was relatively slow and performances in policy implementation were disappointing during the 1990s but have improved substantially since 2000;50 the phasing-in of the EU – Morocco Association Agreement prompted the government to initiate reforms in key economic sectors (the DG-AIDCO official interviewed for this study concurred that over time, Morocco has become more adept at administering the aid provided by the Union – See Chapter 4). The European Delegation also went on to state that Morocco’s remarkable performance in utilising aid to implement policy reforms since 2000 led the Union to provide record financial support to the Kingdom: e217 million in 2005, e266 million in 2006, and e232 million in 2007.51 The OECD noted that Morocco has been adhering to the 2005 Paris Declaration on Aid Effectiveness, which is a Declaration agreed-upon by a group of developed and developing countries to ensure better coordination between donor and recipient countries on matters of aid implementation towards developmental projects to improve the efficacy of overseas development assistance.52 ‘Aid Effectiveness’ also mentioned that the Moroccan government has introduced mechanisms that include relevant ministries (such as the Ministry of Finance and the Economy)

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and donor countries, and noted that as part of these mechanisms, ‘annual sector reviews’ are created whose results ‘[enable] the development partners making use of the budget support modality to take common decisions relating to the disbursement of their pledged support’.53 According to Social Watch, Morocco initiated a robust response to problems of aid coordination in 2010: it created so-called ‘thematic groups’ that coordinate all funds provided by different donors to ensure that the aid is efficiently pooled towards domestic developmental projects. This is done via: (a) Creating a ‘control structure’ that suggests methods to enhance aid delivery (b) ‘Publish[ing] a good practices guide for the technical and financial partners that operate in Morocco’ (c) Providing recommendations for the Moroccan government to coordinate aid more efficiently.54 The report continued that as of now, the exact measures to be implemented and the role of the different actors (the foreign donors, Moroccan government, etc.) are not certain;55 the initiative is very recent and it is premature to pass judgements. An additional project the Moroccan government is introducing is ‘a database’ that collects ‘reliable data’ on implementation of aid on developmental projects56. ‘Aid Effectiveness’ described the creation of this database as ‘one of the major achievements of Morocco in terms of aid effectiveness’ to improve policy implementation in developmental projects because it ‘contains information on all ODA [official development assistance] received from development partners . . . [to provide] visibility and thus transparency to development partners on the allocation of aid’.57 In 2011, the government also introduced ‘focus groups’ covering seven topics (health, energy, water, environment, social development, education, and governance) that involve the Kingdom’s relevant ministries (depending on the focus group) and aid donors in order to improve the transparency of aid provision. A primary task of these focus groups is to evaluate Morocco’s progress in each domain; the organisation, however, admitted that there are no progress assessments available at the moment, no clear process by which to evaluate aid management and policy implementation in sectoral strategies, and

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‘no national or multi-donor results framework’ (which complicates the task of empirically evaluating implementation efforts).58

Concluding Remarks To sum up, the following observations can be made about the process of policy implementation and aid management in Morocco. First, the limited availability of empirical data to measure the Kingdom’s performance in implementing policy and managing the aid it receives from foreign donors makes it difficult for any researcher to reach definitive conclusions on this issue (see Notarski (2008), Diyen (2004), and Aid Effectiveness (2012)). Second, a common theme that runs across the issue of policy implementation in Morocco’s different sectors is the absence of effective coordination amongst the different stakeholders in the policy reform. Whilst there are relatively limited studies discussing this issue and why the Moroccan leadership had not consulted the different actors, this is a limitation within the Kingdom’s approach to implementing policy reforms. The leadership had only begun addressing this issue recently. The same problem has been inhibiting the country’s management of the ODA it receives from developmental partners. Until the late 2000s, Morocco had not put in place policies to coordinate the ODA it received to effectively monitor its implementation: a primary reason for this is the fact that various agencies within the Kingdom took part in administering and supervising aid projects, which adversely affected aid coordination. Since 2010, the country has been augmenting its efforts to collect reliable data on aid implementation, to increase transparency, and to ensure better coordination of developmental projects at the national level. Any assessment of the impact of EU policy instruments on Morocco would have to take into account that the outcomes of this aid are constrained by limitations in aid coordination and policy implementation on the Moroccan side; thus any shortcomings in the country’s socioeconomic outcomes cannot be completely attributed to the Union’s policy instruments. Moreover, the Union has provided more financial aid to Morocco than any other donor, and has been the most supportive of the Kingdom’s developmental agenda. A paper published in the IEMed Yearbook of 2011 by Ayadi and Gadi acknowledged that ‘the EU has

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proved to be a stable and increasingly committed donor to SMCs [the MNC]’.59 The same paper also analysed the motives behind EU financial commitments and concluded that by allocating aid to the most important sectors for development (for example, health, education, and infrastructure), the Union has shown itself to be ‘first and foremost . . . an altruistic donor’.60 On the other hand, what is interesting is that in spite of these shortcomings on the Moroccan side, the Union continued to provide aid in the form of budget support to the Kingdom; according to Koos Richelle, who was the Director General of DG-AIDCO in 2008, ‘we do not take these decisions [whether to provide aid in the form of budget support or not, and how much] lightly. Each decision . . . is made after careful evaluation of the potential risks and benefits’.61 The DG-AIDCO official interviewed for this project insisted that there is a strong relationship of trust between the two parties, and that the Union would never disburse aid to Morocco unless it were satisfied by the strategy and implementation mechanisms the country had in place for a given sector. This could lead one to wonder why the EU should continue to disburse or even increase aid to Morocco under these conditions? One reason could be deduced from Mr Richelle’s contention that even though the European Commission is aware that budget support presents risks of implemental failures in the recipient countries, the alternative (which is not to provide aid for recipients to carry on their developmental projects) is even worse. Furthermore, the Commission also reached the conclusion that the risks from providing aid in the form of budget support ‘also apply to other types of aid’.62 In a 2010 Guardian article, economist Jonathan Glennie argued that the rich world as a whole should increase aid levels in spite of the problems associated with aid delivery and utilisation. For one thing, ‘it is morally right’ in light of the destitution faced by the socioeconomically disadvantaged in poorer countries; moreover, in a globalised world, contributing to the welfare of the disadvantaged in poor countries will help redress global political and economic imbalances that are more likely to fuel tension and conflict.63 A 2007 report by Transparency International warned that while aid could exacerbate corruption in developing countries, it could also help developing countries in their anti-corruption efforts, and hence ‘additional aid resources are needed’64. It is interesting to note that

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under the ENPI, the Union’s Country allocation to Moldova, an Eastern partner, amounted to e209.7 million for the years 2007– 10;65 this is equivalent to a per-capita aid allocation of about e19.4 per person per year, in contrast to e6.6 per person per year in the Moroccan scenario. The average Moldovan received three times the aid received by the average Moroccan in spite of Moldova having a higher HDI (i.e. better socioeconomic standards) and a lower corruption and transparency index score than the Kingdom did for 2010.66 Therefore, there is a case for the EU to continue and even increase aid levels to Morocco in spite of the limitations. The reforms in aid coordination and policy implementation that Morocco has been introducing since 2010 fall beyond the scope of this book (this book examines the first fifteen years following the inauguration of the Barcelona Process). Nevertheless, they do signify that the Moroccan leadership is aware of these issues and is taking measures to make ODA more effective over the long-term. The key points to take from this discussion, hence, are the following: (1) The EU has indeed provided more aid to Morocco than the country’s other developmental partners, but this study argues that this aid has been small to have the intended impact on the country’s developmental outcomes considering the severity of the challenge the Kingdom faces. (2) In spite of the limited empirical data and studies on aid management and policy implementation on the Moroccan side, both civil society and aid organisations concur that there are problems in administering and coordinating aid to promote developmental projects (see Social Watch (2010) and Aid Effectiveness (2012)). However, Morocco did sign the Paris Declaration on Aid Effectiveness, and has since been addressing such shortcomings to buttress the efficacy of ODA provided by its partners. This means that the EU’s policy instruments alone cannot be held responsible for Morocco’s limited progress in promoting socioeconomic development. (3) When evaluating the significance of the Union’s policy instruments, it is worth bearing in mind that Morocco’s situation on the socioeconomic front is precarious (see Martı´n (2006)). Therefore, EU aid levels could not be expected to transform realities single-handedly in light of the severity of the situation; the policy instruments were

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supposed to provide assistance and steer Morocco to the right path developmentally (see Chapter 4: Interviews with DG-AIDCO, DG-RELEX, and DG-TRADE officials). While it is true that the Union’s policy instruments were more considerable in magnitude than those of Morocco’s other donors, one must also look at the policy objectives on which access to the EU’s financial instruments has been preconditioned and assess whether they have represented a departure from the approach Morocco has been adopting to develop since the 1980s, and whether these objectives are the most appropriate to promote development. This is the focus of Chapters 6– 8.

CHAPTER 6 EU POLICIES AND SOCIOECONOMIC DEVELOPMENT IN MOROCCO (I): THE SUCCESSES AND THE CHALLENGES

Introduction Chapter 4 presented information collected from interviews with EU and Moroccan officials on the Union’s policy objectives and the Kingdom’s socioeconomic situation. This chapter (along with Chapters 7 and 8) will utilise data collected from these interviews, information obtained from EU primary source documents, statistics from Moroccan and international agencies, and existing publications, to establish whether the Union’s objectives are the most appropriate for the country to realise better social outcomes from a structural change theoretical perspective. Economically, the Union advocated trade liberalisation, reducing the role of the state in economic activity, and ‘macroeconomic stability’ (i.e. low inflation rates) as policy objectives for the NORAFS, and some of its officials seemed confident that growth in income per-capita would by itself ameliorate Morocco’s socioeconomic conditions and reduce the developmental gap that exists between the Union and the Kingdom. A scrutiny of living standards in Morocco and the EU’s memberstates would reveal that the developmental gap across the Mediterranean is still wide. The first reason why the EU’s policy objectives have not been the most appropriate so far is that they have not done enough to promote export diversification, and have

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encouraged Morocco to specialise in the very sectors that do not reap a high value-added to the economy. The second reason is that the logic that good governance is a prerequisite for development ignores the fact that good governance is an outcome rather than a precursor for development. Besides, the idea that Morocco’s conservative culture inhibited development and progress (as suggested by three of the EU officials interviewed) neglected the possibility that economic development could influence cultural attributes. The subsequent section details the third reason, employing endogenous growth theory to demonstrate that in Morocco’s case, the Union’s policy objectives are unlikely to lead to long-term sustainable growth so long as the country’s inability to enhance its technological prowess and augment the quality of its human capital continues. Human capital formation remains a monumental challenge, and without improvements in technology acquisition and human capital accumulation, economic growth cannot be sustained. Combined with the ramifications of the first reason, efforts to foster human capital formation could be imperilled, which would dent long-term growth. Chapter 7 will outline the fourth reason, which is that the Union’s policy objectives (and the instruments utilised, as well as the aid provided by Morocco’s other donors) have been inadequate when it comes to reducing the Kingdom’s high income inequality. Income inequality not only dents future growth prospects, but is also likely to inhibit improvements in health and educational outcomes, lead to lack of trust and self-serving competition that afflicts society, and impede social mobility. Chapter 8 discusses the ideology behind the EU’s policy objectives to promote development in Morocco to reinforce the contention that they are not the most appropriate to secure economic development.

Features of Morocco’s Economy During the past three decades, Morocco has been creating a progressively liberal economic ambience. Since 1983, the country has been pursuing a policy that enshrines the reduction of the role of the state, economic liberalisation, and inflationary stability to modernise the economy and improve developmental prospects. World Bank data reveals that from the late 1970s until the late 2000s, GDP per-capita levels have increased

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by nearly 72 per cent over the three decades (from around $1000 in 1978 to $1718 in 2008). Chapter 3 stated that this increase was a product of various factors, from the increase in global phosphate prices to improved macroeconomic management. While there was an increase in per-capita income, this increase has not, by itself, guaranteed an improvement in social outcomes, which will be demonstrated in this chapter and Chapters 7 and 8. In addition to stimulating its per-capita GDP, the Kingdom lowered its inflation rate; Graph 6.2 uses the Consumer Price Index (CPI) to show the evolution of inflation rates in Morocco between 1978 and 2008. The reason for using the CPI instead of the GDP deflator (another inflation index) is due to the CPI’s scrutiny of prices for consumer-oriented goods and services. Inflation levels for the first eight years of this period peaked at 12 per cent on more than one occasion, but the situation changed after 1987. Going back to Chapter 3’s review of Morocco’s SAP, one of the five pillars of the World Bank-endorsed SAP was the maintenance of high interest rates as a means of subduing inflationary pressures. This policy certainly achieved its target from 1987 onwards: between 1986 and 2008, Morocco’s inflation averaged 3 per cent, as opposed to the 9 per cent GDP Per-Capita (Constant 2000 US$) 1800 1700 GDP Per-Capita

1600 1500 1400 1300 1200 1100 1000 900

19 78 19 80 19 82 19 84 19 86 19 88 19 90 19 92 19 94 19 96 19 98 20 00 20 02 20 04 20 06 20 08

800 Year

Graph 6.1 Morocco’s GDP Per-Capita (in Constant 2000 US$): 1978 – 20081

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Inflation: Consumer Prices (annual per cent) 14

Consumer Price Index

12 10 8 6 4 2

19 78 19 80 19 82 19 84 19 86 19 88 19 90 19 92 19 94 19 96 19 98 20 00 20 02 20 04 20 06 20 08

0

Graph 6.2

Year

Inflation, Consumer Prices (annual per cent): 1978 – 20082

average between 1978 and 1986. One thing to note also is the increase in inflation levels between 1990 and 1995, a period that coincided with the Second Gulf War, soaring oil prices, and an appreciation of Morocco’s real effective exchange rate. The trend does reverse, however, between 1996 and 2008, with annual inflation rates never exceeding 4 per cent. In spite of boosting per-capita GDP and keeping a tight lid on inflationary pressures, Morocco continues to exhibit many features that plague so-called dual economies. The term refers to the presence of ‘a relatively modern, capital-intensive, high-wage industrial sector . . . in the same country as a very poor traditional agricultural sector’.3 In dual economies, ‘the value of output per worker is much higher in the modern sector than in the rest of the economy’.4 In 2010, the valueadded of the services sector (which is more modern than the agricultural and light manufacturing sectors) to Morocco’s GDP is 55 per cent, as opposed to nearly 15 per cent for agriculture.5 Furthermore, ‘accompanying the high value of output per worker is a higher wage rate . . . (although their wages [in dual economies] still seem low in comparison with North America, Western Europe, or Japan)’.6 A corollary of the sectoral division in dual economies is income inequality, and Chapter 7 will reveal that inequality remains a pervasive phenomenon in Morocco. Krugman and Obstfeld also

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observed that ‘manufacturing in less-developed countries typically has much higher capital intensity than agriculture (this is not true of advanced countries, where agriculture is quite capital-intensive). In the developing world, agricultural workers often work with primitive tools’.7 Hence, the productivity of inputs (physical capital, labour, technology, etc.) is expected to be lower in developing countries. In addition, ‘trade policy is not the first-best policy to expand manufacturing employment. Ideally, government policy should target employment directly, either by eliminating the wage differential or by subsidizing firms to hire more workers’.8 Finally, Krugman and Obstfeld also observed that developing countries tend to have chronic unemployment, particularly in urban areas, where workers with low salaries tend to live alongside more affluent individuals.9 Morocco’s overall unemployment rate stood at 10 per cent in 2009, and Graph 6.3 shows the evolution of unemployment between 2000 and 2009. Graph 6.4 shows that between 1998 and 2005, most of the unemployed happened to be individuals with basic levels of education. Morocco’s Haut Commissariat au Plan (HCP) added that literate individuals struggled to find employment in 2007, observing that the ‘literacy rates of the unemployed are superior to those of the active

Unemployment Rate (%)

15 14 13 12 11 10 9 8 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Year

Graph 6.3

Evolution of Total Unemployment Rate in Morocco: 2000–910

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% Unemployed by Education Level

60 55 50 45

% Unemployed with Primary Education

40 35

% Unemployed with Secondary Education

30 25

% Unemployed with Tertiary Education

20 15 10 1998 1999 2000 2001 2002 2003 2004 2005

Year

Graph 6.4 Unemployment in Morocco by Educational Background: 1998 – 2005

participants in the labour force’.11 The World Bank remarked that ‘because of steady rural migration to cities, urban employment [in Morocco] fared worse than growth. The urban unemployment rate increased’.12 Chapter 4 revealed that the Moroccan governor identified the social exclusion of poor, low-skilled individuals in urban areas as a major problem that the country has not resolved since independence. Like many developing countries, Morocco relies on the export of labour-intensive goods and agricultural produce, all of which endanger the Kingdom’s macroeconomic health since ‘commodity prices are highly variable relative to those of manufactured goods’.13 This reality renders Morocco reliant on economic developments in the EU; growth in EU countries’ income levels would, ceteris paribus, increase demand for Moroccan exports.

Limitations within the EU’s Mediterranean Policies14 In a speech to the Moroccan research centre ‘Links’, France’s ambassador to the Kingdom, Bruno Joubert, saluted the country’s political, economic, and social reforms. In his words: the country knew how to adopt, unlike many other countries, an original path: economically it has chosen to liberalise its markets,

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politically it has chosen pluralism. It has endorsed freedom of the press, and has embraced reforms in many domains.15 Recall from Chapter 4 that the DG-RELEX official stated that the Association Agreement (AA) and the Action Plan (AP) were about introducing a long-term process to influence the strategies, ideas, and values of Moroccan society. This would be done via constant liaison with officials to help the Kingdom devise and implement policies. Economically, the Union hoped that by absorbing the acquis communautaire, Morocco would improve the quality of its products, which would then enable the Kingdom to trade and compete in a liberal economic environment. He described the AA and the AP as ‘methods to change the mentality, political, and economic structures of Morocco’. Based on the EU interviewees’ accounts and official documents, it seemed that the Union’s policy objectives have generally adopted the formulae of the World Bank, focusing on reducing the role of the state in economic development by fostering private initiative, trade liberalisation, and low inflation in return for closer relations as per the positive conditionality principle. In essence, the Union shared the World Bank’s belief that these objectives could produce sustainable socioeconomic gains. The similarity between the EU’s and the World Bank’s economic outlooks can be demonstrated by looking at Morocco’s National Indicative Programmes for 2011–13. The European Commission noted that the World Bank has devised a matrix of concordance between the ENP Action Plans and the economic assistance programmes of the Bank. This matrix promotes a more structured dialogue on cooperation between the two institutions with regards to the objectives of the Action Plans.16 While the EU officials suggested that the policies merely provide incentives rather than panaceas to Morocco’s challenges, they were confident that by adhering to the Union’s policy objectives: (1) Morocco will obtain long-run socioeconomic progress, and (2) the country will reduce its developmental gap with EU member-states. One of the arguments presented in this book is that the Union’s policy objectives do not represent a significant departure from those

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adopted by the World Bank in Morocco during the 1980s, and hence they are unlikely to promote socioeconomic development. These objectives are also unlikely to help the Kingdom reduce the developmental gap between the country and its northern neighbours. The interviewed EU officials praised Morocco’s progress, and lauded its zeal for the reforms prescribed by the Barcelona Process. The previous section disclosed some macroeconomic improvements, namely that GDP per-capita rose by about 70 per cent between 1978 and 2008. Economic growth during that period averaged 3.8 per cent annually, compared to the MENA region’s 3.4 per cent. Nonetheless, the country has been unable to adequately boost its socioeconomic welfare so as to reduce the gap in living standards between itself and EU countries. Reducing the gap in living standards would reduce the flow of migrants from the NORAFS to Europe. Tables 6.1 and 6.2 reveal that there has been no reduction in this gap: The Moroccan governor (Chapter 4) admitted that the country’s INDH initiative derived from a recent acknowledgement that the conventional growth-to-development wisdom did not lead to the attainment of the socioeconomic progress that the country has been pursuing. Table 7.1 shows that the gap in average per-capita incomes between Germany (selected as a proxy for EU members) and Morocco widened by more than $10,000 from 1980 to 2008. Table 7.2 reveals a more depressing situation, showing that between 1995 and 2008, the difference in the pupil–teacher ratios of both countries increased, reaching a staggering 14 pupils/teacher in 2008. What these statistics show is that in spite of Morocco increasing its income per-capita, the Kingdom has failed to outpace the EU when it comes to social improvements. The differences in income per-capita and the pupil– teacher ratio have widened in absolute terms, which shows

Table 6.1 GDP Per-Capita (Purchasing Power Parity at Constant 2005 International $): Germany vs. Morocco (1980 – 2008)17

Germany Morocco Difference

1980

1985

1990

1995

2000

2005

2008

20.86 2.34 18.52

22.49 2.41 20.09

25.88 2.69 23.19

27.82 2.59 25.24

30.30 2.92 27.38

31.12 3.51 27.61

33.83 3.97 29.86

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Table 6.2 Pupil –Teacher Ratio in Primary Schools: Germany vs. Morocco (1995 – 2008)

Morocco Germany Difference

1995

2000

2005

2007

2008

28 17 11

29 15 14

27 14 13

27 14 13

27 13 14

that the Union’s quest over the past fifteen years to reduce the socioeconomic gap has not achieved the desired result. The aforementioned data also call into question the efficacy of the 1983 World Bank SAP as far as this objective is concerned. As for the HDI, Table 6.3 demonstrates that the gap between Germany and Morocco only shrank slightly between 1990 and 2010. The slight reduction was a result of Morocco’s success in boosting the life expectancy (at birth) of its citizens, a phenomenon that the majority of developed and developing countries also experienced due to the dissemination of modern medical expertise and ‘the widespread diffusion of cheap preventive medicines’;18 it concealed the divergence in the index’s two other components: income and education. Also, recall the DG-AIDCO official’s delight at Morocco climbing up the HDI rankings in 2010. UNDP data reveals that Morocco’s HDI ranked 114th out of 169 countries in 2010, and that there was no improvement to this rank the following year.19 Furthermore, the Kingdom’s 2010 HDI lagged behind the average figure for Arab states (0.588),20 which implies that, in spite of enjoying a uniquely strong relationship with the EU, the country has been unable to outpace its peers socioeconomically. What this illustrates is that, so far, Morocco has been incapable of effectively reducing the gap in living standards between itself and the EU’s member-states. Another demonstration of this failure can be found Table 6.3

Germany Morocco HDI Gap

HDI Values of Germany vs. Morocco (1990 – 2010)21 1990

2010

0.795 0.435 0.360

0.903 0.567 0.336

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in a paper by the EU’s ‘DG Employment, Social Affairs, and Inclusion’, which cited Morocco as topping the list of immigrants from outside the EU to EU-27 countries in 2008, with over 150,000 Moroccan citizens migrating to Union members.22 The subsequent analysis will articulate four reasons why the Union’s policy objectives (and the World Bank’s before them) are not the most appropriate to bring about an improvement in Morocco’s developmental fortunes and a reduction in the EU – Morocco socioeconomic gap.

Reason 1: EU Policy Objectives Are Not the Most Appropriate for Promoting the Diversification of Morocco’s Exports The EU’s trade and economic liberalisation policies have not provoked a significant evolution in the composition of goods and services exported by Morocco. The Kingdom has always enjoyed a comparative advantage in the export of agri-food, phosphates, textiles and clothing, and this remains the case. Despite attempts to transition towards exporting hightech products and diversify into more sophisticated manufacturing products, the country continues to rely on exports of light manufactures and agricultural products. Trade liberalisation is likely to hinder its attempt at export diversification, and economic theory can demonstrate why this is the case. International trade theory distinguishes two forms of trade: interindustry trade (whereby countries take into account their different endowments and technology levels to attain a mutually beneficial outcome via trade), and intra-industry trade (whereby countries export similar albeit differentiated products to maximise the product variety available in each country). In most cases, two trading entities exercise both forms simultaneously, with one feature being more eminent and thus having a greater influence on trade flows. Within inter-industry trade theory, two models occupy the centre stage: the Ricardian model, devised by economist David Ricardo, and the Heckscher-Ohlin model, conceived by economists Eli Heckscher and Bertil Ohlin. The Ricardian model is based on the idea that ‘comparative advantage is solely the result of international differences in the productivity of labor’,23 while the Heckscher-Ohlin model is based on the premise that

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comparative advantage is influenced by the interaction between nations’ resources (the relative abundance of factors of production) and the technology of production (which influences the relative intensity with which different factors of production are used in the production of different goods).24 Krugman and Obstfeld conceded that by disregarding the effects of international trade on income distribution, the Ricardian model arrived at the conclusion that liberalisation will reap benefits to all involved parties. Moreover, the model did not take into account the fact that countries have differences in their endowments, which ultimately affect trade patterns.25 Still, they recognised that the ‘empirical evidence broadly supports the Ricardian model’s prediction that countries will export goods in which their labor is especially productive . . . the trade pattern is largely driven by international differences in technology rather than resources’.26 Trade flows between Morocco and the EU are shaped by both technological and resource differences between the two entities. An optimal representation of this situation, therefore, would incorporate aspects from both the Heckscher-Ohlin (H-O) and the Ricardian models. Let us assume that we have two economies, Morocco and EU, which can produce two goods: elementary products (L) and sophisticated products (S). Let us also assume that both economies have two factors of production: low-productivity inputs (a blanket term that includes capital, labour, entrepreneurship, and technology) (LO) and highproductivity inputs (HI); both HI and LO can be used (in different ratios) to produce L and S. This way the H-O model can accommodate for the technological differences that the Ricardian model stressed, and to which the empirical evidence lends support. Finally, following Krugman and Obstfeld, assume that ‘there is only one way to produce each good’.27 It is reasonable to assume that sophisticated products require relatively advanced technology as well as a highly educated workforce that possesses the formational and technical backgrounds necessary to produce these items cost-effectively; S will be HI-intensive. Meanwhile L will require less HI in its production process; hence it is LO-intensive. Following Krugman and Obstfeld,28 let us also define:

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aLOS ¼ aLOL ¼ aHIS ¼ aHIL ¼

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Units of low-productivity resource required per unit of S Units of low-productivity resource required per unit of L Units of high-productivity resource required per unit of S Units of high-productivity resource required per unit of L LO ¼ economy’s supply of LO HI ¼ economy’s supply of HI

Accordingly: aLOL/ aHIL . aLoS/ aHIS (1); L is LO-intensive, and S is HI-intensive. If Morocco is to produce MS and ML units of both S and L, it must use: aLOS*MS þ aLOL*ML units of LO

ð2Þ; and

aHIS*MS þ aHIL*ML units of HI

ð3Þ

aLOS*MS þ aLOL*ML , or ¼ LO

ð4Þ; and

aHIL*ML þ aHIS*MS , or ¼ HI

ð5Þ

Equations (4) and (5) describe Morocco’s production possibilities (i.e. what it can produce given its scarce supplies of LO and HI). Graph 6.5 depicts Morocco’s production possibilities. It ‘suggests that changes in the economy’s resources will have uneven effects on its ability to produce different goods’.29 For example, if Morocco’s supply of LO expands, production will tilt more towards L (elementary products), and the reverse holds if the HI supply expands. A country that is endowed with more HI relative to LO will be more adept at producing S than an economy that is better endowed with LO relative to HI: ‘an economy will tend to be relatively effective at producing goods that are intensive in the factors with which the country is relatively well endowed’.30 To introduce input prices, this model will necessarily assume that the price of a unit of LO (regardless of whether it is physical capital or labour) is the same, and that the same holds for HI. Therefore: PL ¼ Price of 1 unit of elementary products PS ¼ Price of 1 unit of sophisticated products r ¼ factor price for using 1 unit of LO t ¼ factor price for using 1 unit of HI

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Output (L)

L/aLOL

L/aHIL

A B

C S/aLOS

S/aHIS

Output (S)

Line ABC is Morocco’s PPF given its LO-HI endowment Graph 6.5

Morocco’s Production Possibilities Frontier (PPF)31

In a scenario featuring perfect competition: PL ¼ aLOL*r þ aHIL*t

ð6Þ

PS ¼ aLOS*r þ aHIS*t

ð7Þ

Since perfect competition is assumed, changes in PL and PS lead to equal changes in r and t. Graph 6.6 demonstrates that an increase in PL will raise r and lower t, whilst a rise in PS will do the opposite: ‘in a two-factor economy . . . changes in relative goods prices have very strong effects on income distribution’.32 If PL increases, those who make a living from selling LO inputs will experience an improvement in their purchasing power, whilst those who sell HI inputs will experience a decline.33 Consequently, what would happen should Morocco and the EU trade freely in this scenario? Assume that EU and Moroccan citizens have the same consumer preferences towards L and S. Since Morocco is LOabundant (and the EU HI-abundant), Morocco will produce more L than S for any ratio of PL to PS.34 Graph 6.7 shows that Morocco has a larger relative supply of L than S, which explains why its relative supply curve (RV) is to the right of the

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Factor Price of HI PL2/aHIL

PL1/aHIL PS/aHIS

A B

PL1/aLOL

PL2/LOL

PS/aLOS

Factor Price of LO

A rise in PL would raise the income of LO suppliers, and vice-versa

Graph 6.6

An Increase in PL and its Ramifications for Morocco35

EU’s. Since identical consumer preferences were assumed, there is one relative demand curve (RD). In an autarkic scenario, the price of L will be higher in the EU. Free trade would cause the relative price of L to rise (drop) in Morocco (the EU), and the global price will end up somewhere

PL/PS

RV (EU) A

C RV (Morocco) B

RD (QL Morocco + QL EU)/(QS Morocco + QS EU) Graph 6.7

Liberalising EU – Moroccan Trade Flows36

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between the two. The rise of L’s price in Morocco would encourage further production of L; domestic demand would drop, and Morocco would become an exporter of L and an importer of S. The reverse would happen in the EU. The rise in PL/PS will raise (lower) the income of LO (HI) suppliers. Thus the wages of Morocco’s highly skilled labourers and returns to highly productive inputs will diminish: ‘owners of a country’s abundant factors gain from trade, but owners of a country’s scarce factors lose’.37 The EU’s promotion of trade liberalisation encourages Morocco to specialise in exporting products in which it has a comparative advantage. Since Morocco is abundant in low-skilled labour and lags behind the EU in terms of technological prowess, it will continue exporting elementary items such as textiles and agricultural products – which are LO-intensive – as opposed to diversifying towards sectors that accrue a higher value-added to the economy and that demand greater technological know-how. As part of the Association Agreement, Morocco is expected to remove import and export taxes, which are barriers to liberalised trade. This measure was critiqued by the European Parliament in one of its hearings on International Trade and Development: export taxes are one of the few remaining trade policy tools at the disposal of developing countries with which to pursue development goals; [the Parliament] urges the EU to refrain from attempting to ban the use of export taxes . . . as it would limit their [developing countries] policy space to use this tool for valueaddition, diversification, [and] infant industry protection38 The FEMISE 2010 Report on the Euro-Mediterranean Partnership admitted that ‘while Morocco succeeded in terms of total growth, the country’s full potential in diversifying production is yet to be reached’.39 According to Dawson, in 2004, clothing and knitwear constituted 40.3 per cent of Morocco’s exports to the EU, whilst other elementary non-agricultural sectors (including shellfish, phosphoric acid, tinned fish, fertilisers, shoes, and fish) comprised an additional 16 per cent.40 The World Bank also observed that ‘several key indicators point to the low and slow diversification of Moroccan exports. The top 10 products account for almost 80 per cent of Moroccan exports’.41 The infant industry provisions mentioned by the DG-TRADE officials (see Chapter 4) must have been

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ineffectual, as they have not provoked a discernible change in export composition, a view also shared by Martı´n: ‘to date, the EMFTA has also not resulted in diversification of MPC [MNC] exports to the EU’.42 In one hearing, the European Parliament cited ‘inconsistencies’ in the EU’s trade agreements, since they did not provide developing countries with the opportunity to use trade barriers in order to successfully promote infant industries.43 In another hearing, the Parliament echoed structural change economists’ view that industrialisation was vital to transform developing countries’ economies and promote ‘long-term productivity growth’ whilst averting exposure to exogenous shocks that commonly affected global agricultural and commodity markets. The hearing questioned whether the financial and logistic assistance instruments provided by the Union allowed for the realisation of these outcomes.44 Lack of diversification can partially explain why labourers in the country’s agriculture-related sectors continue to account for a sizeable fraction of the total labour force.45 Thomas Riley, the US Ambassador to Morocco, revealed to TV Maroc that agriculture was one of the fastest growing export sectors in the country; furthermore, he expected the free trade agreement between the Kingdom and the United States to augment the former’s volume of agricultural exports to the latter.46 A final note relates to the previously mentioned concept of ‘intraindustry’ trade, which involves ‘the possible role of economies of scale as a cause of trade, which . . . explain the large trade flows between apparently similar nations’.47 According to Krugman and Obstfeld, ‘economies of scale (or increasing returns) make it advantageous for each country to specialize in the production of only a limited range of goods and services’.48 Inter-industry trade models ignore the possibility of increasing returns to scale, ‘so that production is more efficient the larger the scale at which it takes place’.49 While ‘inter-industry’ models posit that comparative advantage will make the EU (Morocco) solely export ‘S’ (‘L’) to Morocco (the EU), ‘intra-industry’ trade models allow for both the EU and Morocco to export S and L to each other – except that the EU’s and Morocco’s ‘L’s and ‘S’s represent differentiated products (for example, their products will vary by quality, composition, etc.). In intra-industry models, sectors are assumed to be imperfectly competitive. However, Krugman and Obstfeld showed that, even if one allowed for economies of scale and product differentiation in a scenario

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where countries have contrasting resource endowments, Morocco (in this book’s model) would remain a net exporter of L.50 Morocco may export some S to the EU because EU consumers prefer to have varieties of S to maximise their utility. However, the comparative advantage effect would still supersede the intra-industry effect; intra-industry trade would fully account for trade patterns only in situations where the trading entities had similar resource endowments and technological prowess. This is not the case in the EU–Morocco scenario; the Union’s attempts at facilitating technology transfer to Morocco’s economic sectors have not been adequate to promote export diversification so far. The IEMed Survey of 2010 confirmed this point by noting that 60 per cent of all respondents (from the EU and the MNC) either believed that there was no progress in ‘promoting innovation and technology transfer’ to the MNC, or that there was a regression on that front.51 One of the Moroccan diplomats interviewed criticised the Union for not facilitating the provision of visas to Moroccan students and labourers, which could have supported the transfer of knowledge and technology (see Chapter 4). With regards to the policy instruments detailed in Chapter 5 (financial aid and logistic assistance), the DG-TRADE officials mentioned that the meetings were meant to help Morocco acquire the technology required for its industries to become more effective. As for MEDA aid, Chapter 5 showed that e45 million were disbursed to improve the competitiveness of the Kingdom’s firms between 1996 and 2007; ENPI aid and EIB loans were meant for wide scale reforms (such as reforming the health and education sectors for example) and infrastructural projects. While the Union’s contribution on this front was more important than that of other donors (the World Bank, for example, did not provide any loans to bolster Morocco’s competitiveness between 1995 and 2010), the amount devoted is not sufficient to address the country’s need to make the manufacturing sector more competitive and structurally change the country’s economic basis. That being said, the EU did provide Morocco with a 12-year period (between 2000 and 2012) to raise custom-duties and dismantle tariffs and non-tariff barriers (these were meant to be totally phased out by 2012); however, this period is too short especially when considering how uncompetitive the Kingdom’s industries were in the first place. To illustrate this point, it is worth noting that in 1960, South Korea had

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a similar per-capita GDP to Egypt and Morocco.52 In spite of possessing a relatively well-educated labour force even back in the 1960s, South Korea needed to maintain tariff and non-tariff barriers over at least three decades in order to effectively transition from producing light manufactures to producing and exporting heavy chemicals, automobiles, and sophisticated electronics.53 The country only joined the OECD (i.e. the league of rich, developed countries) in 1996. The experience of South Korea, a successful developer that was in the same economic position as Morocco in 1960, would suggest that the 12-year period for gradual dismantlement of trade barriers enshrined in the Association Agreement is inadequate to elevate the Kingdom’s productive competitiveness and induce a structural change. When one takes into account the limited financial assistance provided to Morocco by donors, the relatively short infant industry protection measures included in the AA, and the limitations to aid utilisation and policy implementation on the Moroccan side, one would realise that this scenario would not allow the Kingdom to undergo the structural change required in order to develop. The reinforcement of the country’s comparative advantage in exporting agricultural produce and textiles would inhibit structural change. In the words of the World Bank, ‘the process of development involves moving toward higher productivity activities . . . Development involves identifying and learning to produce goods that are more like those of richer countries. That is what productive diversification is about’.54

Reason 2: The EU’s Insistence on Good Governance and its Officials’ Claims that Morocco’s Conservative Culture Inhibits Development Are Based on Unnecessary Assumptions The broad nature of the Barcelona Process was intended to widen the scope of relations between the EU and the MNC (including the NORAFS). In the context of promoting socioeconomic development, it served another purpose, as the Union hoped that through the exchange of knowledge and ideas, it could transmit its norms to Moroccan technocrats; the motive for this, according to the DG-RELEX official interviewed for this study, was to share expertise that could help Morocco develop. Through regular contact with officials and civil

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society, these values would eventually infuse Moroccan society. This was reaffirmed by the French ambassador to Morocco, who stated that ‘the EU wants to ensure that Morocco successfully converges economically, socially, and culturally to the Union’s countries’.55 The ambassador did not elaborate on the reasons for this wish. The European Parliament also endorsed the EU’s official stance that good governance is an important condition for countries to develop: ‘Important for this policy is an approach to governance which puts an emphasis on human rights, democracy and the rule of law, on fighting corruption and on the role of parliaments and civil society in holding governments accountable’.56 Besides its desire to create a ‘ring of neighbours’ who co-exist in a stable and prosperous Mediterranean region, the Union argued that convergence would help Morocco socioeconomically, because it would improve the country’s governance structure and its ability to devise what the Union considers ‘appropriate economic measures’ to foster development. It would also reinforce the drive towards liberalisation and reducing the role of the state in the economy. Earlier, it was noted that the DG-RELEX, DG-AIDCO, and DG-ECFIN officials emphasised that Morocco has become more adept at proposing and implementing strategies; their evidence was the fact that these strategies now reflect the Union’s policy objectives, notably inflationary stability, greater liberalisation, and reducing the role of the state. Some of the EU officials interviewed also argued that Morocco’s conservative culture (referred to as ‘cultural constraints’ by the interviewees in Chapter 4; the DG-AIDCO interviewee brought up the issue of the influence of the Ministry of Religious Affairs as an example while the DG-RELEX official pointed to ‘Morocco’s conservative culture’) inhibited socioeconomic progress. With this in mind, three questions arise: (1) have the EU’s attempts to promote good governance and convergence been successful?; (2) is good governance a prerequisite to development?; and (3) do Morocco’s cultural attributes necessarily inhibit development? So far, Morocco has been successfully converging to the economic objectives espoused by the Union and the World Bank before that: the role of the state has been reduced, trade has been liberalised, and inflationary pressures have been curtailed. In terms of political convergence, EU efforts have not led to convergence: poor governance remains an issue, and

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attempts at democratisation have fallen short. For example, ‘in 1997, Morocco held parliamentary elections that yielded the customary fragmented legislature and were rejected as fraudulent by the major opposition parties’;57 even though the September 2002 elections were ‘generally acknowledged to have been mostly free and fair . . . [they have] since been the subject of allegations that the results were ‘managed’ by agreement between the Royal Palace and some political parties’.58 The EU’s political convergence doctrine assumes that good governance and judicial reform facilitate development, when in fact good governance is a result rather than a determinant of socioeconomic progress. In other words, the causality runs from good governance to development. According to Khan, this logic runs contrary to the evidence provided by successful developers; history shows that good governance and reduced corruption in the political system are ‘achieved at the end of a development cycle. In other words, they are the goals of development’.59 He elaborated that ‘this view [the good governance approach] assumes that without good governance, markets will be inefficient and countries will not develop’.60 He refuted this logic by stating that historically there has never been a situation in which a country achieved high levels of democracy and anti-corruption before improving its socioeconomic situation.61 This logic also ignores the fact that ensuring good governance is an expensive endeavour. For instance, ‘where would developing countries get the resources to protect property rights before markets become productive?’62 Khan described this as a ‘chicken-andegg’ problem, and concluded that ‘the slow transition to good governance requires a degree of economic prosperity that poor countries do not have’.63 In another paper, Khan referred to a sample of Asian countries to challenge the idea that anti-corruption legislation (which is part and parcel of the EU’s political reform agenda) is a prerequisite for development. He suggested that the experience of countries that have successfully developed would show that corruption was present in many cases. He did not argue that corruption aids development, but it would be wrong to suggest that eliminating corruption helped today’s developed economies improve their socioeconomic situations.64 This is not to say that corruption in developing countries can never be harmful. Various commentators on Morocco (examples include the economist interviewed for this study, Layachi (1998), and the US consul in

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Casablanca (see Chapter 8)) are adamant that the cronyism that has been prevalent in Morocco has not supported development. Nevertheless, Khan’s analysis demonstrates the problem with basing a policy on a priori assumptions that run counter to important historical examples. Another issue that Khan investigated extensively is the role of political reform in economic development. He framed the current debate as one ‘over the extent to which democracy allows or is even necessary for economic development’.65 In general, he argued that ‘the evidence on the impact of democracy on development is inconclusive. There are enough exceptions on both sides of the argument to suggest that neither democracy nor authoritarianism is a precondition for development’.66 A more important point he made was that some studies have not considered the fact that the relationship between democracy and development is bidirectional; hence they do not consider how development affects the level of democracy in a political system.67 The EU assumed a priori that democracy would increase accountability and discourage clientelism. The evidence, however, demonstrates that ‘while democracy or authoritarianism can modify some of these characteristics, democratic and authoritarian developing countries are not significantly different in terms of these characteristics’.68 As for the EU’s pressure to incite judicial reforms, this pressure has not produced significant results, as already admitted by the DGRELEX and DG-AIDCO officials interviewed for this study (see Chapter 4). In Le Monde’s 17 March 2011 edition, journalist Florence Beauge´ interviewed Jaafar Hassoun, a former senior judge who was sacked as a magistrate after fighting for an independent Moroccan judiciary.69 He was relieved of his position as a Supreme Court judge in December 2010, and in January 2011, the king personally authorised Hassoun’s sacking from the judiciary altogether. Hassoun told Beauge´ ‘since creating the Moroccan Association for the Defence of Independence in the Magistrates (AMDIM), I have never been forgiven [by the political establishment]’.70 In 2003, he tried to defend five magistrates who were incarcerated due to their role in a drugdealing trial; he was suspended for his attempted defence. Shortly after, the Royal Palace issued a decree that specified ‘a narrow range within which magistrates can express their opinions’.71 His first major ‘offence’ occurred in 2009, when as president of Marrakech’s administrative tribunal, he annulled the election of a

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mayoral candidate of the Parti de l’Authenticite´ et de la Modernite´, a party created by the king’s closest friend, Fouad el-Himma.72 In the words of Abdelaziz Nouaydi, the founder of the organisation Adala (which fights for a more transparent and fair justice system), ‘the case of Mr Hassoun illustrates the problems in the Moroccan judiciary . . . very few magistrates are willing to resist in public like Mr Hassoun, even though they agree with him in private’.73 The official reason for Mr Hassoun’s sacking is that he leaked private information to the public; yet Rachid Meknassi, the secretary-general of the NGO Transparency Maroc, discredits this reason, and believes that Hassoun was always going to be sacked as he represented ‘an obstacle to shady practices’.74 Mr Hassoun’s story shows that, so far, there has been no convergence in Morocco’s judicial standards to those of the Union’s members. Convergence on the social front is more difficult to envisage. Layachi cited a Moroccan journalist’s view that institutions are not the only hindrance to an effective civil society in Morocco: ‘the popular culture discourages innovation and individual success, and inhibits the belief in the individual’s ability to change his/her condition’.75 Another Moroccan scholar, Abdallah Saaf, made similar observations, according to Sater: ‘the nature of Moroccan society is such that in its globality, it seems to rebel against the currents of emancipation and hinders the constitution of spaces of freedom in its place’.76 With more than 40 per cent of its labour force in agriculturerelated sectors, and 45 per cent of its population living in rural areas, Morocco failed to industrialise successfully in order to develop. Studying Japan’s development between 1880 and 1970, Mosk observed that ‘domestic investment in industry and infrastructure was the driving force behind growth in Japanese output’.77 Also, the United States, Canada, Western Europe, and Australia all achieved high living standards through industrialisation and transitioning towards ‘manufacturing and technologically sophisticated service sector activity’.78 Japan succeeded in developing because it invested heavily in industry and infrastructure, possessed the economies of scale required to boost total factor productivity growth, had the capacity to harness foreign technology, and managed to mitigate the income inequality that resulted from dualism.79

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Waterbury cited the example of French colonialists, who adopted an approach similar to the EU’s in order to transform Morocco during the protectorate era. He stated that the Moroccans who had the opportunity to receive a Western education could not use this education to introduce ‘new ways of thought and behavior’. Hence, there was little reason to expect other segments of society to embrace such change, especially since ‘even the most advanced elements of the Moroccan elite bore heavy traces of the country’s traditional political culture at the time Morocco became independent’.80 Previously, it was mentioned that the Union’s advocacy of political convergence is based on the assumption that good governance is a determinant rather than a result of development. Some of the interviewed EU officials also mentioned the idea that Morocco’s conservative culture did not help the country develop; this assumption is not necessary. Chang investigated the link between cultural attributes and socioeconomic development. He remarked that on the one hand, some people suggest that Islamic culture has certain characteristics that impede development, such as its failure to promote diversity of thought, ‘its fixation on the afterlife’, and the way in which the role of women is restricted.81 And yet, there are other aspects of Islamic culture that may be considered conducive to development: for example, commerce is encouraged, and the religion’s ‘highly developed sense of contracts . . . encourages the rule of law and justice’.82 It would seem that in the case of some of the EU officials interviewed for this study, there is a perception that Morocco’s conservative culture inhibited development (i.e. they would be more inclined to endorse Chang’s first snapshot of Muslim culture’s influence on development). O’Malley also indicated that ‘Geertz saw pious Muslim traders as an important formative element in an emergent Indonesian middle class’,83 while ‘Castles . . . found more convincing . . . reasons for worrying about pious Muslim traders than Geertz had for seeing the future in them’.84 Both Chang and O’Malley presented different features of Islamic culture and argued that they may be considered either ‘conducive’ or ‘detrimental’ to development. One can only deduce, therefore, that ‘there is no culture that is either unequivocally good or bad for economic development. Everything depends on what people do with the “raw material” of their culture. Positive elements may predominate, or negative ones’.85

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Chang argued that ‘culture-based explanations for economic development have usually been little more than ex post facto justifications’. For example, at a time when Protestant countries were successfully developing, people argued that attributes inherent within Protestantism were responsible for the progress, that is until Japan and other East Asian countries started developing. The argument then became that Japan’s form of Confucianism made development possible.86 What becomes clear is that ‘culture changes with economic development’,87 and that ‘culture is the result, as well as the cause, of economic development’.88 In other words, the causality is bidirectional, with economic development having a greater impact on cultural attributes. After all, ‘changes in economic structures change the way people live and interact with one another, which, in turn, changes the way they understand the world and behave’.89 Thus, the EU officials’ suggestion that Morocco needed to overcome ‘cultural obstacles’ is unnecessary. As for O’Malley, he concluded that the analysis of culture and development needed to ‘focus on particulars in the first instance . . . [and] handle only specific cultural elements . . . instead of, perforce, talking vaguely about culture and development as whole concepts’.90 A final point to make is that while ameliorating economic conditions is necessary to promote cultural reform, it is not sufficient. In other words, there is room for what Chang describes as ‘ideological exhortation’91 (in the EU–Morocco case, this would refer to exhortation from the EU side). Still, such ‘exhortation’ is unlikely to deliver results without ‘real changes – in economic activities, institutions, and policies’.92 So far, there has been no such institutional change in Morocco, meaning that the ‘diffusion of ideas’ strategy is likely to yield limited results. The hypothesis that Morocco’s cultural attributes hinder development: (1) runs counter to historical evidence, and (2) ignores the fact that it is economic development that has a greater influence on socalled cultural traits, even though both variables influence each other. Chang concluded that ‘in order to promote behavioural traits that are helpful for economic development, we need a combination of ideological exhortation, policy measures to promote economic development and the institutional changes that foster the desired cultural changes’.93 In the Moroccan context, Waterbury cited Berque, who made a similar deduction by referring to the French administrators’ experience during the colonial period: ‘all the resources of experience and ideas that

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emigration [of Moroccans] has gone so far to acquire, are employed to reanimate the old and imperfectable machine. In contact with the world it cannot evolve. It persists or explodes’.94

Reason 3: The EU’s Policy Objectives Are Not the Most Appropriate to Help Morocco Address its Poor Human Capital Formation, Which Will Constrain Future Growth

GDP (constant 2000 US$)

60 55 50 45 40 35 30 25 20

Graph 6.8

2008

2006

2004

2002

2000

1996

1998

1994

1992

1990

1986

1988

1984

1980

15 1982

GDP (constant 20000 US$ (Billions)

This section will specifically examine the importance of human capital accumulation to sustaining economic growth, before using Lucas’ endogenous growth model to show that trade liberalisation is not the most appropriate policy objective to help Morocco enhance its human capital formation and structurally change its economic basis, especially in light of the Kingdom’ inability to compete globally for foreign direct investment. According to Martı´n, this inability is a result of ‘negative perceptions about security and stability in this area [North Africa] and in the lack of relative comparative advantage’. He also definitively stated that the Euro-Mediterranean FTAs ‘do not make any positive contribution to improving these conditions’.95 Graphs 6.8 and 6.9 portray Morocco’s GDP and labour force between 1980 and 2009. As reported earlier, the country’s GDP has grown

Morocco’s GDP (billions US$): 1980 – 200996

Year

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177 Labour Force (total)

13000000

Labour Force (total)

12000000 11000000 10000000 9000000 8000000 7000000 6000000 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008

5000000

Graph 6.9

Year

Morocco’s Labour Force Size: 1980 – 2009

during the past generation; its labour force increased by 105 per cent over the same period. These facts raise the following question: what was responsible for economic growth during that time? To answer this question, it is useful to begin by introducing a rudimentary model of economic growth – the neoclassical model. The model ‘is built around a standard production function with constant returns to scale in capital and labor . . . it allows for steady-state growth in both labor force and productivity’.97 According to Obstfeld and Rogoff, ‘the two key engines of growth in this model are exogenous technological change and labor-force expansion’.98 At the long-run equilibrium, ‘per capita output . . . grows at the rate of technological advance’.99 One of the model’s conclusions is that changes in saving rates have an ephemeral effect on economic growth, as ‘a country willing to invest more of its output can enjoy a temporary growth spurt, but this strategy cannot raise growth indefinitely. Eventually diminishing returns to capital set in’.100 Another conclusion is that per-capita GDP is reduced by a increase in population growth; in other words, economies that have low saving and higher population growth are likely to be poorer.101 Graphs 6.10 and 6.11 present the population growth and physical capital formation rates for Morocco between 1980 and 2009. Population

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2.8

Population Growth (%)

2.6 2.4 2.2 2 1.8 1.6 1.4 1.2 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008

1

Graph 6.10 2009

Year

Morocco’s Annual Population Growth (Per Cent): 1980 –

growth rates plummeted, while physical capital formation generally increased. One can see that the combination of falling population growth and increasing physical capital helped Morocco increase its aggregate and per-capita income levels – in line with the neoclassical model’s assertions. Earlier, it was documented that the income gap between the EU and Morocco widened. Obstfeld and Rogoff asserted that theoretically, the incomes of developed and developing would converge ‘in a world of fully integrated markets for goods, capital, and ideas’. Moreover, technology transfer under this scenario would ensure that per-capita GDPs converge.102 In reality, and looking specifically at the EU– Morocco situation, there never has been a fully integrated market for goods, capital, and labour. Moreover, technological diffusion has not occurred, as revealed earlier in the chapter. Obstfeld and Rogoff argued that by looking at the post-World War II situation,103 a case for convergence between countries in the long run was valid. However, ‘in data samples covering more heterogeneous economic groupings, it is much harder to demonstrate absolute convergence at any speed’.104 They acknowledged that there was a perspective that argued that the neo-classical model did not predict

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Gross Capital Formation (constant 2000 US$)

21,000,000,000.00 Gross Capital Formation (Constant 2000 US$)

19,000,000,000.00 17,000,000,000.00 15,000,000,000.00 13,000,000,000.00 11,000,000,000.00 9,000,000,000.00 7,000,000,000.00

Graph 6.11

1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008

1980 1982 1984

5,000,000,000.00 Year

Morocco’s Gross Physical Capital Formation: 1980 – 2009

convergence since it dealt with ‘closed economies’; therefore, different saving and population growth rates account for much of the variation in per-capita GDP.105 Neither the EU nor Morocco is a closed economy, however, which means that the neoclassical model fails to fully explain the situation. The model could explain Morocco’s growth between 1980 and 2009; this growth, however, has been inadequate in reducing the EU – Morocco income gap. Obstfeld and Rogoff suggested that for open economies, convergence does occur but at a very slow rate due to the existence of ‘international capital market imperfections’.106 Referring to a model by Barro, Mankiw, and Sala-i-Martı´n, they posited that: ‘impediments to borrowing against human capital slow down the accumulation of physical capital. The reason is that the two factors are complements in the production process’. Their model revealed that when there were limits to borrowing in order to finance capital accumulation, this could curtail convergence in per-capita GDPs.107 This is not the case for Morocco, as the accumulation of physical capital has not been constrained. Autarky cannot explain the lack of convergence either, since Morocco’s economy has become more open over

Ratio of Exports and Imports to GDP

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90.00% 85.00% 80.00% 75.00% 70.00% 65.00% 60.00% 55.00% 50.00% 45.00% 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008

40.00%

Graph 6.12 2009

Year

Ratio of Exports Plus Imports to GDP in Morocco: 1980 –

the past three decades. Graph 6.12 reveals that the ratio of exports and imports to GDP has risen dramatically from the late 1990s, reinforcing an already present upward trend. Therefore, the neoclassical model does not account for the lack of convergence (in fact, the divergence) of EU –Moroccan outputs per worker. Increases in the labour force and in gross physical capital formation have boosted GDP and GDP per-capita levels, but have failed to reduce the income and socioeconomic gaps between the Kingdom and its European neighbours. The neoclassical growth model is limited in that respect; while it tells us that ‘technological progress’ is what determines per-capita GDP over time, it does not delve into the determinants of technological progress. It also does not explain the divergence in living standards between developed and developing countries.108 The neoclassical model’s limitations have led to the rise of an alternative discipline known as ‘endogenous growth theory’, and it is to this discipline that one must refer to appreciate the constraints that afflict Morocco’s contemporary efforts to promote long-run growth. This discipline revised the neoclassical model by including knowledge creation as the engine that sustains growth. This study will particularly refer to Lucas’ model of endogenous growth via human capital accumulation for three reasons: (1) Lucas

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(alongside Romer) is credited with pioneering this discipline, and his model retains a crucial standing in the endogenous growth literature, (2) Lucas’ model scrutinised the importance of knowledge creation to improving the quality of human capital – a theme that is relevant to Morocco’s situation. The earlier discussion revealed that Morocco managed to accumulate physical capital. Improving human capital accumulation, however, has been a daunting task, but Lucas’ model can shed light onto the importance of this variable, and (3) when writing his seminal paper, Lucas was particularly interested in the divergence of income levels between rich and poor countries, which is also relevant to the EU – Moroccan situation. He began by listing two reservations that he had about the neoclassical model and its representation of economic development, which were its failure to explain differences in the economic performances of developed and developing countries, and its inability to explain why trade could not equalise incomes between the two.109 He did laud one feature that neoclassical models introduce but treat as exogenous: ‘“technology” . . . seems to me to be the one factor isolated by the neoclassical model that has the potential to account for wide differences in income levels and growth rates’.110 As for what technology entails, he stated that ‘We want a formalism that leads us to think about individual decisions to acquire knowledge, and about the consequences of these decisions for productivity’.111 To address this issue, he employed the concept of ‘human capital’ as described by Shultz (1963) and Becker (1964) to represent an individual’s ‘general skill level’.112 The rationale behind this was that ‘introducing human capital into the model . . . involves spelling out both the way human capital levels affect current production and the way the current time allocation affects the accumulation of human capital’.113 Lucas’ model114 assumes that there are N workers with different skill levels (h). Each worker devotes his time to work, u(h) and human capital accumulation (1-u(h)). He then distinguished between two after-effects of human capital accumulation: one effect is ‘personal’: how human capital accumulation affects a person’s productive capacity, and the other effect is ‘communal’: the increased capital accumulation benefits the wider society and enhances ‘the productivity of all factors of production’.115 Collectively, individual human capital accumulation will generate a positive externality that will enhance the productive capacity of

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other factors of production and society as a whole. He then introduced a way to link the process of human capital accumulation to existing levels and the time allocated by individuals to acquire more skill;116 constant returns to accumulating human capital were assumed, since ‘Rosen (1976) showed that a technology . . . with . . . [constant returns to accumulation], is consistent with the evidence we have on individual earnings’.117 Essentially, ‘it is the presence of the external effect . . . that creates a divergence between the “social” valuation . . . and the private valuation’118 of human capital accumulation. Lucas found that ‘growth increases with the effectiveness . . . of investment in human capital and declines with increases in the discount rate’.119 The discount rate measures the time preference of individuals (i.e. whether they prefer to consume in the present or defer consumption to the future and save in the current period). Lucas’ model yields several powerful findings: ‘an economy beginning with low levels of human and physical capital will remain permanently below an initially better endowed economy’;120 moreover, ‘in the general case . . . wealthier countries have higher wages than poorer ones for labor of any given skill (Of course, workers in wealthy countries are typically also more skilled than workers in poor countries)’.121 He admitted that in order for his model to better represent the process of human capital accumulation, ‘learning-by-doing’ had to be introduced. He introduced this learning-by-doing dimension of the model by assuming that ‘production and skill accumulation for each good depend on the average skill level in that industry only’,122 and ‘an environment in which new goods are continually being introduced, with diminishing returns to learning on each of them separately, and with human capital specialized to old goods being ‘inherited’ in some way by new goods’.123 Lucas noted that individuals do not take into consideration the ‘external’ effect of this process, and hence ‘the equilibrium growth rate falls short of the efficient rate and yields lower welfare . . . an “industrial policy” focused on “picking winners” . . . would be called for [the winners being firms that produce high-technology goods]’.124 Obstfeld and Rogoff observed a similar outcome in other endogenous growth models, because these models bring to attention the fact that the market mechanism yields a sub-optimal equilibrium growth rate, since agents

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do not take into account the positive spillovers that accrue from knowledge creation.125 Lucas then introduced free trade to examine its effect on human capital accumulation and economic growth. He assumed a world ‘with perfectly free trade in the two final goods and with a continuum of small countries, since in that case prices in all countries will equal world prices (1, p) . . . and each country will take p as given’.126 The two goods’ production functions are determined by the inputs h1 and h2, which stand for the human capital required to produce the good (h1 being the high-level human capital). Each country has a different endowment combination of h1 and h2. Given this construction, ‘the supply of good 2 is an increasing function of p and . . . good 1 a decreasing function, so that the ratio c2/c1 of total quantities supplied increases as p increases’.127 Finally, he assumed a global demand function ‘with identical homothetic preferences’.128 Countries whose h2 endowment is higher than their h1 endowment ‘are producing only good 2, so their h1 endowments remain fixed while their h2 endowments grow’,129 and vice-versa, in that ‘each country’s (h1,h2) coordinates [endowments] are changing . . . altering the distribution of endowments that determines goods supplies over time. These movements obviously intensify the comparative advantages that led each country to specialize in the first place’.130 A key point to raise is that in equilibrium, each country’s comparative advantage determines ‘production patterns . . . Each country produces goods for which its human capital endowment suits it’. Moreover, countries’ comparative advantages are reinforced because countries end up specialising in producing goods that they are good at producing initially.131 Hence, prior to selecting an apropos trade policy that promotes development, ‘one needs to know something about the actual technological possibilities for producing different goods in different places in order to arrive at definite conclusions’.132 In an IEMed paper of 2010, Tovias admitted that in the case of a deeper Euro-Mediterranean FTA, ‘the greater contribution to employment creation by the EU in Mediterranean countries will be the import of goods and services where they [the MNC] have a comparative advantage’;133 this would prevent Morocco from undergoing an structural change towards producing and exporting more sophisticated goods.

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To sum up the model and its implications, there are ‘two kinds of capital . . . in the system: physical capital that is accumulated and utilized in production under a familiar neoclassical technology, and human capital that enhances the productivity of both labor and physical capital’.134 In a scenario that permits trade in capital goods and labour mobility, ‘everything hinges on whether the effects of human capital are internal – affecting the productivity of its “owner” only – or whether they have external benefits that spill over from one person to another’.135 In spite of its many assumptions, Lucas’ model could explain the reasons behind the development of the US economy, and could account for the gap in per-capita incomes between developed and developing countries. It could also explain the immigration trends observed since the late twentieth century.136 One of its important results is that ‘if different goods are taken to have different potentials for human capital growth, then the same considerations of comparative advantage that determine which goods get produced where will also dictate each country’s rate of human capital growth’.137 There is the example of the successful East Asian developers, or the ‘Asian Tigers’, which ended up acquiring the knowledge to export new goods through an effective ‘learning-by-doing’ process.138 Lucas certainly did not purport to provide a remedy to all the challenges that face developing countries. His model includes many assumptions that may not hold in real life. Nonetheless, his seminal paper does provide original and powerful insights that do relate to the growth and developmental challenges that Morocco confronts. Endogenous growth theory posits that a country can only sustain longrun economic growth if that growth is driven endogenously by positive spillovers in human capital formation and knowledge creation. Human capital accumulation is necessary to augment the productive capacities of all factors of production, and enhance these factors’ propensities to apply and manifest what Khan described as ‘tacit knowledge’,139 in order to advance the economy’s productive transformation process. Tacit knowledge refers to the technical expertise required in order to modernise production processes and be able to harness technological expertise towards producing more sophisticated products.140 Put in different words, Morocco’s ability to foster developmental progress hinges not only on the performance of its education and formation systems, but also on its

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labour force’s ability to absorb, master, and apply tacit knowledge in the production process via learning-by-doing. It will be of interest, then, to examine Morocco’s record in innovation and knowledge creation compared to some of the world’s eminent emerging economies. Table 6.4 makes use of two WDI proxy variables for innovation: the number of patents issued (per million people) and R&D expenditure as a percentage of GDP in Morocco and five of the world’s prominent emerging economies (all of which happened to be middle-income members of the Group of 20 (G20)) in 2006. It shows that Morocco lags behind almost all of these countries in both indicators. The difference between Morocco and the countries in Table 6.4 on the one hand, and the country’s inability to diversify exports and industrialise on the other, lend credence to the view that at the heart of the Kingdom’s developmental challenge lie the shortcomings in education and in learning-by-doing. Morocco’s poor educational outcomes, in addition to its inability to harness tacit knowledge towards enhancing the country’s productive capacity, endanger the country’s long-term growth prospects. Besides, the continuing migration in large numbers of Morocco’s skilled labour to the EU’s members reduces the pool of labourers who are best suited to promote the country’s socioeconomic development over the long-term. The ‘comparative advantage’ effect has been responsible for Morocco’s deficient record in human capital formation, and has compounded the inefficacy of the country’s education system to enhance the productive capacities of the Kingdom’s resources. By exporting mainly agricultural produce and textiles, Morocco was (to reference Lucas) exporting

Table 6.4 Number of Patents Issued Per Million People and R&D Expenditure (2006)141 Country

Patents

R&D Expenditure (% of GDP)

Morocco China India Brazil Russia South Africa

5.8 93.3 4.8 20.3 195.4 N/A

0.64 1.42 0.80 1.00 1.07 0.95

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products that suit the present state of its human capital endowment. As a result of this vicious cycle, the Kingdom found itself exporting products that did not require significant technological sophistication and formational background, thereby harming its potential for greater human capital formation and economic growth. Inability to diversify production away from agricultural products and textiles indicates that learning-by-doing did not materialise in Morocco (at least not to a point whereby the country could produce more sophisticated goods and services). The idea that via constant interaction and dialogue, and through liberalising the flow of goods and services, the Kingdom would gradually acquire the know-how to forego the export of elementary products in favour of more sophisticated ones ignores the fact that Morocco’s labour force must have the technical capacity to absorb this know-how prior to making use of it to start producing and exporting more sophisticated products. This point was substantiated by FEMISE’s 2010 Report on the Euro-Mediterranean Partnership, which cited a study by Cecchini and Lai-Tong (2008) that linked the positive impact of the technology transfer on development to the presence of a labour force with a prerequisite amount of skill; in the case of the MNC, ‘FDI has positive impacts for all Mediterranean countries with a secondary schooling rate above 55 per cent. All countries within the sample were above that threshold, with the exception of Morocco’.142 Both the poor state of human capital formation and export specialisation have complicated the country’s efforts to reform its labour force structure – 43 per cent of the labour force works in sectors related to agriculture and fisheries, whilst approximately 200,000 Moroccans (about 2 per cent of the labour force) work in textiles and clothing – the largest employers in the industrial sector.143 The IEMed Survey for 2010 reported the perspective of a Moroccan respondent who believed that free trade between the EU and the NORAFS would be mutually beneficial ‘if the countries have the same economic size or performance and have a comparative advantage in production, but southern Mediterranean countries have no technology, low knowledge, and inefficient education system[s]’.144 To appreciate the importance of human capital formation and knowledge creation to future growth and development, it would be helpful to look at an Asian Tiger for which extensive data is available for the past 35 years, in this case, South Korea. In 1975, South Korea

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Table 6.5 Patents and Trademark Applications in South Korea: 1975 – 2006 (Per Million People) Year

Patents

Trademark Applications

1975 1983 – 95 average 2006

37.6 306.8 2598.0

205.0 719.7 2185.3

applied for more than six times the number of patents and registered more trademark applications than Morocco did in 2006: As Lucas asserted, learning-by-doing and knowledge creation helped the Asian Tigers channel resources towards mastering the technology and tacit knowledge required to produce and export new and more sophisticated products, which allowed them to sustain high growth rates over a substantial period of time, thus helping them develop successfully. Table 6.6 reinforces Lucas’ view by looking at three of the four Asian Tigers and their research prowess in 2006; the contrast with the Moroccan situation is evident. Hunt also shared this view of development: ‘economic development focuses on the expansion of sectors which offer scope for sustained advances in labour productivity, both through scale economies and technological advance, including, most notably, manufacturing’.145 The SIA-EMFTA sustainability assessment contended that MNC’ exports ‘tend to specialise in labour-intensive products with average technology intensity. Investment in science and technology is low in most of the region’.146 In sum, neoclassical growth models could explain why Morocco’s income levels have grown over the past three decades – a combination of growth in physical capital formation and in the size of the labour force: ‘growth has essentially been driven by factors accumulation, with a slightly higher capital contribution’.147 Nevertheless, these models Table 6.6 (2006) South Korea Singapore Hong Kong

Number of Researchers in the Asian Tigers (Per Million People) 4187 5736 2650

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could not explain the wide income and socioeconomic gap between the EU and the Kingdom. Moreover, they did not provide an indication as to whether Morocco could sustain economic growth in the long-term. Lucas’ endogenous growth model is pertinent to the Kingdom’s situation, and shows that the country will be unable to sustain growth in the future so long as its record on human capital formation and learningby-doing remains poor. Morocco continues to experience problems in fostering innovation, knowledge creation, and learning-by-doing. A successful transfer of tacit knowledge to Morocco has not materialised, and the Kingdom continues to export primarily elementary products that do not require high levels of tacit knowledge, technological sophistication or human capital formation. This becomes all the more critical given that ‘the Moroccan economy is . . . [in a] declining longterm growth trend’.148 The World Bank also warns that ‘low human capital’149 may become a ‘potentially binding’150 constraint to the country’s economic growth in the future.

CHAPTER 7 EU POLICIES AND SOCIOECONOMIC DEVELOPMENT IN MOROCCO (II): INCOME INEQUALITY AND DEVELOPMENT

Introduction: Reason 4: The EU’s Policy Objectives and the Instruments Utilised Have So Far Lacked Relevance to Reducing Morocco’s Income Inequality In addition to the issues raised in Chapter 6, the EU’s policy objectives, and the instruments employed to realise these objectives, are not the most effective to help Morocco reduce income inequality. According to the FEMISE 2010 Report on the Euro-Mediterranean Partnership, economic growth in Morocco ‘was anti-poor . . . the reason . . . is that the redistribution effect has not allowed to proportionally compensate for growth in the incomes of the most favoured deciles’.1 Generally, the economic literature concurs that growth is a vital ingredient for the promotion of socioeconomic development: ‘accelerating growth is critical for improving living standards. The evidence is overwhelming that growth is a main determinant of employment creation and poverty reduction’.2 Morocco needs to bolster its economic growth and achieve additional gains in per-capita GDP. The argument presented in this book diverts from the orthodox logic of the World Bank and the approach adopted by the EU, however, when it comes to: (1) The assertion that growth is sufficient to translate macroeconomic

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benefits into improvements in social outcomes, and (2) The idea that by liberalising economically and reducing the role of the state in the economy, Morocco would secure socioeconomic development. In other words, in the Moroccan context, promoting economic growth without ensuring that this growth is shared across the society contributed to the country’s inability to promote standards of living. This chapter will show that the policy instruments employed by the Union to reduce health and educational outcomes, whilst being greater than those provided by Morocco’s other partners, have been too small to have the intended impact of reducing inequities. The following chapter will reveal that the policy objectives of trade liberalisation and reducing the role of the state in economic management would not reduce income inequality in the Moroccan case. It is fair to state that neoliberal (and neoclassical)3 economics has rarely considered inequality a serious problem to ‘rectify’ – in fact, some have even associated neoliberalism with growing inequality (see Navarro (1998), George (1999), and Harvey (2005)). The United Nations Research Institute for Social Development (UNRISD) described this perspective as one which argues that augmenting the wealth of the rich whilst reducing poverty should not be a problem since the rich are more likely to save and invest, and hence contribute to economic growth.4 But the UNRISD disagreed with this logic, as ‘the fact that high levels of inequality are often found in the poorest countries exposes the weakness of this argument’.5 Various studies on the experiences of both developed and developing countries, in addition to data on Morocco’s social outcomes, will show that income inequality in Morocco increased over the past thirty years, as have inequities across social outcomes such as health and education. An unequal income distribution jeopardises the country’s future economic growth, leads to a deterioration in trust levels within the community, aggravates health and educational outcomes across society, and constrains social mobility (which will in turn produce a vicious cycle that perpetuates income inequality).

Reflections on Inequality and Socioeconomic Development in Morocco According to the UNRISD, a country suffers from a high level of income inequality if its GINI Coefficient is over 40.6 The GINI Coefficient is

INCOME INEQUALITY AND DEVELOPMENT Table 7.1

Morocco’s GINI Index (1991 –2007)7

Year GINI Value

Table 7.2 Morocco8

191

1991

1999

2001

2007

39

39

41

41

Share of Income Held by the Different Income Quintiles in

Year Top 20 per cent Second 20 per cent Third 20 per cent Fourth 20 per cent Bottom 20 per cent

1991

1999

2001

2007

46 11 15 21 7

46 11 15 22 6

47 10 15 21 6

48 10 15 21 7

the most commonly used measure of the prevalence of income inequality across an entire country. Tables 7.1 and 7.2 list the evolution of the GINI Coefficient and the income shares held by the different income quintiles in Morocco over the past two decades. Both tables show that income inequality grew in the space of sixteen years, with the richest income quintile augmenting its gains at the expense of the rest of the population. As will be seen later in this chapter, EU aid dispensed to the health and education sectors, for example, could not make a significant contribution to the improvement of health and educational outcomes for disadvantaged people in Morocco. In spite of providing more aid to these sectors than the Kingdom’s other aid partners, the Union is confronted with the obstacle of aid coordination and ineffective policy implementation in Morocco (discussed in detail in Chapter 5). Moreover, given what Martı´n described as the ‘enormous’9 socioeconomic problems the country is facing, the limited amounts of financial aid provided to these sectors were unlikely to substantially redress the situation. Chapter 8, meanwhile, will show that trade liberalisation and reducing the role of the state by promoting private enterprise are policy objectives that are unlikely to reduce inequality in Morocco. Another reflection on the extent of income inequality was made by the HCP, which observed that in 2007,

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households in which the head is an enterprise director [or a high earner] . . . have spent 43,463 Dirhams per head on average . . . By contrast, households whose heads are menial workers, farmers, and fishermen have spent an amount per head that is 6.6 times less.10 In fact, ‘the ratio of spending of the top and bottom 10 per cent income quintiles rose from 12.3 in 2001 to 12.7 in 2007’.11 Morocco also suffered from pronounced inequities along gender and geographical lines. The HCP elaborated that income inequality rose within both urban and rural areas: ‘the Gini coefficient for income inequality in the urban areas rose from 39.3 to 41.1 between 2001 and 2007, and from 32 to 33.1 in the rural areas’.12 Inequities also existed across health, educational, employment, and infrastructural outcomes. Table 7.3 highlights the urban/rural inequalities in health outcomes in 2009. Fertility rates in rural areas exceeded those in urban areas. In light of their relatively more destitute socioeconomic situation, this implies that rural parents did not invest as much per child (for example, invest in the child’s education and health), which would exacerbate the urban/rural inequality in earnings and employment. Less investment in health in rural areas was reflected by the significantly higher death rate, shorter life expectancy, the higher inhabitant-to-doctor ratio, the higher percentage of babies born underweight, and the lower percentage of pregnant women receiving prenatal care. These inequities ran parallel to the income inequality that underlies the Kingdom.

Table 7.3

Urban/Rural Inequalities in Health Outcomes (2009)13

Outcome

Urban

Rural

Fertility Rate Birth Rate (per 1000 inhabitants) Death Rate (per 1000 inhabitants) Life Expectancy at Birth (years) Inhabitants per Doctor Infants Weighing , 2.5 kg (per cent) Pregnant Women Receiving Prenatal Care (per cent)

2.0 17.5 4.7 76 8,296 3.3 84.9

2.7 20.9 7.0 68 11,835 3.8 47.9

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The HCP’s data corroborated this correlation. In 2007, 60.4 per cent of households from affluent backgrounds were able to seek medical consultation from specialists as opposed to 30.3 per cent of households from disadvantaged backgrounds.14 Additionally, the average distance between a house and a medical consultation centre was 13.8 km in urban areas and 38.5 km in rural areas,15 while the ‘average annual expenditure per person on medical care was 1055 Dirhams for urban households and 488.9 Dirhams for rural households. For households from disadvantaged backgrounds, average annual spending was 199.6 Dirhams, as opposed to 1993.5 Dirhams for households from affluent backgrounds’.16 The story is similar for educational standards, as Table 8.4 shows. At the primary level, there were more rural students than urban; there were more establishments and more rural female students as well. The picture dramatically changed at the secondary level. While 54.8 per cent of Morocco’s primary school students were from rural areas, only 26.4 per cent of secondary school students were rural in 2009. The ratio of urban to rural girls was nearly 5:1, whilst the ratio of urban to rural students was nearly 3:1. The urban-rural gap widened further at the post-secondary level, as did the gap between urban and rural girls (the ratio of urban to rural post-secondary female students was over 10:1). The fact that, in 2007, 80 per cent17 of people aged 15 and above were uneducated beyond the primary level reveals the gravity of the challenge the country faces to promote human capital accumulation. Differences across geographical and gender lines are conspicuous and go hand-in-hand with unequal income distribution, which restricted the ability of rural households to devote the necessary resources to ensure that their children acquire sufficient human capital. The HCP observed that, in 2007, ‘60.3 per cent of rural residents aged 15 and above did not have any educational background, as opposed to 30.4 per cent of urban residents’.18 The report also conveyed ‘that 96.5 per cent of children aged 6–14 who belonged to households in the top 20 per cent income quintile were in education, as opposed to 74.7 per cent of children belonging in the bottom 20 per cent quintile’.19 Moreover, ‘57.8 per cent of women are uneducated compared to 27.7 per cent of men. 14.4 per cent of individuals in the top 20 per cent income quintile do not have any education, in contrast with 43.5 per cent of individuals in the bottom 20 per cent’.20 These inequities also affected employment opportunities, as Tables 7.4 and 7.5 demonstrate.

194 Table 7.4 (2009)21

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Urban/Rural and Gender Inequalities in Education Outcomes

School Level

Outcome

Urban

Rural

Primary

No. Of Establishments No. Of Students Female Students No. Of Teachers No. Of Establishments No. Of Students Female Students No. Of Teachers No. Of Establishments No. Of Students Female Students No. Of Teachers

2,720 1,590,370 766,661 52,531 922 991,283 467,311 40,549 647 708,283 359,770 33,192

4,408 1,928,383 894,693 75,292 683 356,555 126,355 14,627 185 88,232 35,344 5,391

Secondary

Post-Secondary

Table 7.5 (2009)22

Percentage of Moroccans in Employment by Level of Education

Level of Education Without Any Level of Education Primary Level Colle`ge Secondaire Superieur Other levels

% 34.8 27.4 14.3 10.1 8.5 4.9

The two tables reveal the following: . .

.

Over 60 per cent of Morocco’s labour force did not possess higher than primary level school education. About 19 per cent of the labour force had at least a secondary level education, which is a consequence of the lack of job creation in sectors that require high education and specialised skills. The majority of the unemployed and economically inactive (UEI) were urban residents aged 15–34. This affirms the primacy of the agriculture-related sectors in providing employment opportunities, as well as job creation difficulties in urban areas.

INCOME INEQUALITY AND DEVELOPMENT Table 7.6 (2009)23

195

Unemployment and Economic Inactivity (By Age and Gender)

Age Group

Gender

Urban

Rural

15– 24 yrs old

Male Female Male Female Male Female Male Female Male Female

1,202,100 1,569,683 353,645 1,340,402 122,724 1,111,171 263,355 1,210,331 531,363 750,529

568,539 1,104,825 73,843 726,593 40,217 424,717 59,536 447,011 276,019 426,466

25– 34 yrs old 35– 44 yrs old 45– 59 yrs old 60 yrs old þ

.

Women were more acutely affected by unemployment and economic inactivity: in urban areas, the ratio of UEI females aged 15–59 to UEI males in the same age range is about 3:1. In addition, urban females in this age range were twice as likely as their rural counterparts to be either unemployed or economically inactive.

Table 7.6 uses data from the HCP to show that sharp inequities along gender and geographical line also permeated the linguistic abilities of the population; language skills profoundly influenced the employment opportunities of individuals across the Kingdom. The HCP revealed that inequities experienced by pupils across gender, income, and geographical lines were responsible for the dropping out of 44.2 per cent of children between the ages of six and fourteen from school in 2007.24 Inequities in social outcomes have mainly stayed the same since the early 2000s, but for some indicators, they widened (see Table 7.7). One thing to note is that even the reduction in the urban-rural gap in female primary school enrolment has come about following a reduction in the number of urban female students enrolled in primary school in 2009 compared to 2002. In general, urban-rural gaps in life expectancy, the availability of doctors, the death rate, and high school enrolment have widened. The only instance of a gap reduction concerns secondary school enrolment for both men and women. Inequities also existed along infrastructural lines in terms of access to sanitation, transportation, and telecommunication networks. According

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Table 7.7 Proportion of the Population (10 years old þ ) Who Can Read and Write in a Given Language (By Gender and Geographical Location) (2007)25 Gender

Language

Male

Arabic French English Other Arabic French English Other Arabic French English Other

Female

Total

Urban

Rural

Total

82.2 60.1 17.5 3.8 62.4 46.9 14.1 2.9 72.2 53.4 15.8 3.3

60.6 30.8 4.7 0.8 28.3 14.0 1.5 0.3 43.4 21.8 3.0 0.6

73.2 47.8 12.1 2.5 47.2 32.1 8.4 1.8 59.7 39.7 10.2 2.1

to the HCP, ‘in 2007, 54 per cent of Moroccan households were covered by the sewage network, including 85 per cent of urban households and only 2.5 per cent of rural households’.26 Pertaining to transport, the HCP reported that ‘the probability of possessing cars is influenced by geographical location, standard of living, and the gender, age, and educational background of the household’s head’. Households who came from affluent backgrounds (the top 20 per cent income bracket) were nearly 150 times more likely to possess at least one car than those from the lowest 20 per cent bracket.27 Recall that the Moroccan governor (Chapter 4) listed the following as challenges that the country has been facing developmentally: improving women’s status, reducing poverty in rural areas, and the social exclusion of disadvantaged people in urban areas. He mentioned the country’s adherence to the ‘growth-to-development’ conventional wisdom (i.e. that growth would automatically yield improvements in socioeconomic outcomes) as a reason for this. To reference his views, ‘there is a substantial rural deficit in human development indicators and de facto segregation in the urban landscape’. With respect to rural poverty, ‘23 per cent of the global rural population was living below the poverty line’. Concerning urban segregation, ‘700,000 households in urban areas were fitting within

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Table 7.8 Inequities in Health and Education Outcomes along Gender and Geographical Lines (2002/3 vs. 2009)28 Outcome Fertility Rate

Year Urban

2003 2009 Birth Rate (per 1000 2003 inhabitants) 2009 Death Rate (per 1000 2003 inhabitants) 2009 Life Expectancy at Birth (years) 2003 2009 Habitant per Doctor 2003 2009 Infants Weighing , 2.5 kg 2002 (per cent) 2009 Primary School Students 2002 2009 Female Primary School 2002 Students 2009 Secondary School Students 2002 2009 Female Secondary School 2002 Students 2009 Post-Secondary School Students 2002 2009 Female Post-Secondary School 2002 Students 2009

2.1 2.0 18.8 17.5 4.7 4.7 73.4 76.0 8,925 8,296 3.2 3.3 1,882,031 1,590,370 907,170 766,661 889,658 991,283 414,235 467,311 496,894 708,283 238,239 359,770

Rural

Rural – Urban

3.0 2.7 22.6 20.9 6.7 7.0 67.4 68.0 9,680 11,835 3.7 3.8 2,002,607 1,928,383 22,394 24,492 208,071 356,555 66,145 126,355 33,867 88,232 11,759 35,344

0.9 0.7 3.8 3.4 2.0 2.3 26 28 755 3,539 0.5 0.5 120,576 338,013 2 884,776 2 742,169 2 681,587 2 634,728 2 348,090 2 340,956 2 463,027 2 620,051 2 226,480 2 324,426

this marginalisation category; they live in shanty towns, and have no access to necessities such as running water, electricity, and sewage’. Tables 7.9 and 7.10 introduce another dimension by which to scrutinise the harmful effect of income inequality. The first table compares Morocco’s average GINI Coefficient for 2005– 9 to: (1) The corresponding GINI Coefficients for a group of 24 other lower middle-income countries whose average 2005–9 per-capita GDPs

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ranged from $600 to $2,600 in constant 2000 US$. These ‘L24’ countries are: Albania, Armenia, Azerbaijan, Bolivia, Bosnia, China, Ecuador, Egypt, El Salvador, Georgia, Guatemala, Honduras, Indonesia, Iran, Jordan, Kazakhstan, Macedonia, Mongolia, Paraguay, Philippines, Serbia, Sri Lanka, Thailand, and Ukraine. Morocco’s average per-capita GDP in constant 2000 US$ was approximately $1660, compared to the L24’s mean per-capita GDP of $1631.43. (2) Two countries that have a lower average 2005–9 per-capita GDP than the L24 (less than $600), and yet possess more egalitarian income distributions than Morocco. These ‘C2’ countries, Kyrgyzstan and Moldova, will be used to demonstrate that higher incomes do not necessarily translate into better socioeconomic standards. The averages of available 2005– 9 GINI Coefficients provide a glimpse of the extent of inequality within each country during the late 2000s. Table 7.10 uses UNDP data on the so-called ‘inequality-adjusted HDI’. While the standard HDI combines health, education, and income indicators, the ‘inequality-adjusted HDI’ represents the HDI value adjusted for inequalities in income, health, and educational outcomes within the countries. It lists the 2010 inequality-adjusted HDI figures for Morocco, the L24, and the C2. Table 7.10 indicates that even though Kyrgyzstan and Moldova each earned less than 35 per cent of Morocco’s average 2005– 9 per-capita GDP, they performed considerably better socioeconomically. In fact, eleven of the L24 countries fared worse than Moldova socioeconomically once the HDI was adjusted for inequality across social outcomes.29 Figure 7.1 plots Morocco and the L24’s GINI Coefficients against their HDIs. The best-fit line was calculated by Microsoft Excel. The diagram portrays an inverse relationship between inequality and development for these lower middle-income countries. Meanwhile, Figure 7.2 illustrates that no particular relationship exists between income levels and the countries’ socioeconomic standards. Subsequent analysis will articulate the case that there is a causal relationship running from inequality to social outcomes. The chief point to make is that glaring inequities in social outcomes across different dimensions are symptoms of Morocco’s highly unequal income distribution. Recent data revealed that the problem persists.

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Table 7.9 GINI Index Value: Morocco vs. the L24 and the C2 (2005 –9 Averages)30 Country

GINI

GDP per-capita (constant 2000 US$)

Morocco Egypt Armenia Indonesia Albania Serbia Georgia Philippines Sri Lanka Guatemala Bolivia Ecuador Honduras Paraguay Mongolia Ukraine Macedonia Bosnia Iran China Azerbaijan Kazakhstan Jordan El Salvador Thailand Moldova Kyrgyzstan

40.9 32.1 30.6 37.9 33.8 28.2 41.1 44.0 40.3 53.7 57.7 52.3 56.6 53.0 34.8 27.9 43.5 36.2 38.3 41.5 33.7 30.9 37.7 48.3 53.6 37.7 33.4

1659.36 1694.37 1321.82 1037.27 1708.86 1168.57 1149.79 1177.72 1130.89 1840.54 1150.31 1691.49 1374.05 1431.71 669.26 1053.20 2052.56 2063.11 2079.38 1841.60 1827.21 2246.53 2349.82 2559.56 2534.83 545.45 352.88

The EU officials interviewed for this study argued that since Morocco has experienced economic growth and has kept inflation low (see interview with DG-ECFIN economist), this put the Kingdom in the right position to realise greater social outcomes. Nevertheless, it is important to bear in mind the impact of income inequality on social standards, and the following sections will articulate the link between high inequality and a variety of socioeconomic outcomes that are pertinent to Morocco.

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Table 7.10 HDI and Inequality-Adjusted HDI: Morocco vs. the L24 and the C2 (2010)31 Country

HDI (2010)

HDI Rank (out of 169)

Inequality-adjusted HDI (2010)

Morocco Egypt Armenia Indonesia Albania Serbia Georgia Philippines Sri Lanka Guatemala Bolivia Ecuador Honduras Paraguay Mongolia Ukraine Macedonia Bosnia Iran China Azerbaijan Kazakhstan Jordan El Salvador Thailand Kyrgyzstan Moldova

0.567 0.620 0.695 0.600 0.719 0.735 0.698 0.638 0.658 0.560 0.643 0.695 0.604 0.640 0.622 0.710 0.701 0.710 0.702 0.663 0.713 0.714 0.681 0.659 0.654 0.598 0.623

114 101 76 108 64 60 74 97 91 116 95 77 106 96 100 69 71 68 70 89 67 66 82 90 92 109 99

0.407 0.449 0.619 0.494 0.627 0.656 0.579 0.518 0.546 0.372 0.398 0.554 0.419 0.482 0.527 0.652 0.584 0.565 N/A 0.511 0.614 0.617 0.550 0.477 0.516 0.508 0.539

Income Inequality and Economic Growth The literature on the relationship between inequality and growth is vast and contentious; notable contributions made to this literature include Barro (2000), Deininger and Squire (1998), and Castello and Domenech (2002). Voitchovsky provided a review of investigations surrounding

0.800

HDI

0.700

0.600 GINI / HDI

Morocco 0.500

0.400

20 25 30 35 40 45 50 55 60 65 70 GINI Coefficient

Figure 7.1 Income Inequality vs. HDI in Morocco and the L24 (2005 –9 Averages)32

PER-CAPITA GDP / HDI 0.800

HDI

0.700

0.600 Morocco 0.500

0.400 500

1000

1500

2000

2500

3000

percapita GDP

Figure 7.2 Per-Capita GDP vs. HDI in Morocco and the L24 (2005 –9 Averages)33

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this topic. She argued that ‘most of the detrimental effects of inequality on growth are associated with inequality at the bottom end of the distribution (poverty), or with extreme overall inequality’. She did suggest possible positive influences of inequality if ‘a strong middle class’ is present.34 In the case of Morocco, a lower middle-income developing country with high overall inequality, the detrimental effects would outweigh the so-called ‘beneficial’ effects. Voitchovsky cited two mechanisms that link inequality to economic growth: the behavioural differences of people from different socioeconomic backgrounds, and the impact of differences in income levels on relations between members of different socioeconomic classes.35 For example, socioeconomically disadvantaged individuals would be unable to efficiently contribute to economic activity by virtue of their position; the propagation of socioeconomic destitution from one generation to the next would lead to a long-term ‘sub-optimal production level’.36 Imperfect credit markets in developing countries mean that the poor would find it difficult to borrow in order to invest in physical and human capital to improve their socioeconomic position. Galor suggested that credit market imperfections, when combined with inequality, could impinge on development through its effect on human capital.37 This is particularly relevant to Morocco – a country in which a sizeable fraction of the labour force has a limited educational background. Pertinent to the Moroccan situation as well is the property crime mechanism described by Voitchovsky; according to her, the opportunity cost from committing crime decreased when the wage levels of poor people were reduced, making crime a more attractive option. In addition, when inequality increases, the rich get richer, which means that the reward from committing property crime also increases. Poor people are more likely to pursue illegal activity under such circumstances to improve their fortunes, ‘with an adverse effect on investment and individual human capital accumulation’.38 Table 7.11 incorporates data from the United Nations Development Programme (UNDP) to compare robbery rates in Morocco, the C2, and seventeen of the L24 countries, in 2008. The table shows that Morocco experienced a significantly higher rate of robbery than most of the other countries; the difference in rates between Morocco on the one hand, and Egypt and Albania on the other (two countries with similar per-capita GDPs to Morocco’s) is particularly

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Table 7.11 Robbery Rates (Per 100,000 People): Morocco, the L24, and the C2 (2008)39 Morocco Egypt Armenia Albania Serbia Georgia Philippines Ecuador Paraguay Mongolia Ukraine Macedonia Bosnia Azerbaijan Kazakhstan Jordan El Salvador Thailand Moldova Kyrgyzstan

74 1 11 5 37 62 10 399 31 31 59 25 20 7 72 14 92 107 25 43

revealing. The findings reinforce Fajnzylber et al.’s conclusions that a relationship exists between inequality and robbery.40 Chapter 8 will refer to studies on Morocco that revealed that the policy objectives on which access to the Union’s policy instruments were preconditioned are not the most appropriate to reduce the country’s high income inequality. Meanwhile, later on in this Chapter, it will be demonstrated that while the Union’s financial aid instruments (MEDA and ENPI) have not perpetuated inequities across health and educational outcomes, they did not reduce them either: the reasons for this include the limited nature of this financial aid (even though the Union has been more financially supportive of Morocco’s reform effort than its other partners), and limitations to policy implementation on the Moroccan side. It is important to recognise that Voitchovsky cited an investigation by Kelly that found that inequality causes violent crime rather than

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property crime, which in turn is linked to poverty.41 Nevertheless, there are other studies that have reported a significant positive correlation between inequality and robbery,42 and the UNDP data lends support to the idea of a vicious cycle in which inequality reduces the opportunity cost of property crime, which in turn incites individuals to rob and forego human capital investment, which will in turn curtail social mobility and accentuate the existing inequality. There also exists a ‘fertility mechanism’: poorer households are more likely to have bigger families and more children, who are seen as potential income providers for their households. However, by having more children, these households tend to invest less per child (i.e. invest on the child’s health, education, etc.). On aggregate, the ratio of unskilled to skilled workers would also rise due to the lower educational attainment of children from poor households, which would lead to lower wages for the unskilled and greater inequality.43 Although it has been decreasing over the past three decades, Morocco’s fertility rate remains high. While it is difficult to project future rates, the main point is that higher fertility rates are generally observed in poorer households. This in turn reduces the levels of physical and human capital investment per child, endangering future growth. Utilising a political economy approach to the question of inequality and growth, Alesina and Rodrik developed a model in which ‘individuals differ in their relative factor endowments’. Assuming two inputs, capital and labour, capital accumulation determines growth rates, and taxes are incorporated in the model which are then used to pay for public services.44 They concluded that ‘the more equitable is distribution in the economy, the better endowed is the median voter with capital. Consequently, the lower is the equilibrium level of capital taxation, and the higher is the economy’s growth’.45 While they assumed a democratic political system with a median voter, they insisted that their model would hold in situations involving a non-democratic political system, since ‘even a dictator cannot completely ignore social demands, for fear of being overthrown’.46 Arguments that regard inequality as conducive to economic growth emphasise that ‘the rich do save (relatively) more . . . [since] large investments are more productive, some income or wealth concentration may encourage faster growth . . . the wealth accumulated by the rich may benefit the rest of the economy through trickle-down effects’.47 This

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contention, however, is based on the assumption that growth and equity are mutually exclusive. The social scientist Philip Nel, however, mentioned that endogenous growth theory has challenged this growth/equity trade-off orthodoxy because ‘the key to economic growth lies as much in the quality of society as it is in the quality and quantity of the factors of production . . . initial inequality . . . depresses subsequent growth’.48 Sundrum also attacked the trade-off theory. In response to the argument that inequality can generate growth due to the rich’s increased marginal propensity to save, he remarked that ‘the rate of growth does not depend only on such supply factors as investment, but also on demand factors. Under some conditions, it may be a more equal distribution which generates the demand stimulus for rapid growth’.49 Besides, economic theory notes that ‘high inequality and weak institutions are . . . likely to perpetuate one another’.50 The inequality/ weak institutions scenario applies to Morocco. The presence of what Layachi regarded as self-centred ‘clientelism’51 reinforces the idea that the economic decisions of the well-off may not necessarily be aligned to the developmental interests of society as a whole (Chapter 8 will elaborate further on this point). Furthermore, Wilkinson and Pickett criticised the notion that ‘invention and innovation go with inequality’.52 Using data from OECD countries, they show that ‘more equal societies tend to be more creative . . . there is a tendency for more patents to be granted per head of population in more equal societies than in less equal ones’.53 Table 7.12 charts the average GINI Coefficients for 2005– 9 against the average number of patents per-capita issued in Morocco and fourteen of the L24 countries during that same period; generally, the more egalitarian countries tend to be more innovative. The research on how inequality impacts on growth has also been contentious. Both Voitchovsky and Nel acknowledged that the different regression techniques used in various studies are responsible for the variation in results and conclusions. Nevertheless, in the context of developing countries, Nel deduced that inequality leads to a situation in which property rights are not safeguarded and political and civil unrest ensues; that is because the opportunity cost of crime decreases, making it more difficult to enforce property rights. In addition to undermining markets and society (through the increased

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Table 7.12

Income Inequality and Innovation (2005 – 9 Averages)54

Country Ukraine Serbia Armenia Kazakhstan Azerbaijan Mongolia Bosnia Jordan Indonesia Sri Lanka Morocco Macedonia Philippines Ecuador Guatemala

WITH

NORTH AFRICA

GINI Coefficient

Patents Per-Capita

27.9 28.2 30.6 30.9 33.7 34.8 36.2 37.7 37.9 40.3 40.9 43.5 44.0 52.3 53.7

0.0000675 0.0000516 0.0000602 0.0000650 0.0000295 0.0000396 0.0000159 0.0000110 0.0000012 0.0000082 0.0000052 0.0000167 0.0000025 0.0000008 0.0000009

cost of protecting society against political unrest), inequality also prevents members of disadvantaged socioeconomic groups from participating in the political process (due to the excessive concentration of economic power amongst the political elite) and from receiving the required education to climb the social ladder.55 Barro examined the effect of inequality on growth in rich as well as poor countries. Using data for the years 1965 –95, he deduced ‘that inequality retards growth in poor countries but encourages growth in richer places’.56 Voitchovsky wrote that Castello and Domenech discovered a ‘more robust – negative effect – of HC [human capital] inequality [rather] than income inequality’,57 and ‘HC inequality is also found to reduce physical capital investment’.58 Furthermore, she herself argued that there are ‘opposite effects of inequality from [the] top and bottom ends of the distribution’.59 Meanwhile, Rehme concluded that economic growth over the long-term is more likely to occur in countries where there is greater spending on education, greater ‘public education technology’, and lower income inequality; this deduction is qualified by the fact that he controlled for initial income and fertility levels in the countries examined.60

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One must also consider the implications of current policies for sustainable development in Morocco. The literature already cited the paradox between stimulating economic growth on the one hand, and safeguarding the environment on the other.61 The logic goes that development and growth lead to increased production, urbanisation, resource wastefulness, and, ergo, environmental damage. Graph 7.1 reveals a 125 per cent increase in waste in Morocco over the 30-year period, which is a likely consequence of an increase in growth, urbanisation, and limited environmental protection. Graphs 7.2 and 7.3 disclose increasing trends towards urbanisation and greenhouse gas emissions since 1978. Morocco’s stimulation of economic growth and per-capita GDP has come at the expense of environmental considerations. According to the European Parliament, the EU’s current policy measures have not accorded environmental concerns enough attention: ‘there seems to be little systematic evaluation of the efforts undertaken on integrating adaptation and DRR [disaster risk reduction] into development cooperation’.62 Economic growth remains imperative (yet insufficient by itself) for Morocco to secure better socioeconomic prospects. This chapter already revealed that inequality is more likely to harm long-term growth prospects in developing countries. A more egalitarian distribution

500 450 400 350 300 250 200 19 78 19 80 19 82 19 84 19 86 19 88 19 90 19 92 19 94 19 96 19 9 20 8 00 20 02 20 04 20 06

Combustible Renewables and Waste

Combustible Renewables and Waste (MT of Oil Equivalent)

Year

Graph 7.1 Combustible Renewables and Waste (MT of Oil Equivalent): 1978 – 200863

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20000000

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18000000 16000000 14000000 12000000 10000000 8000000

Graph 7.2

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6000000 Year

Urbanisation in Morocco: 1978 –200864 Carbon Dioxide Emissions (KT)

Carbon Dioxide Emissions

50000 45000 40000 35000 30000 25000 20000 15000

Graph 7.3

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Carbon Dioxide Emissions: 1978 –200865

would not only facilitate long-term growth, but would also help Morocco prevent further environmental damage. To understand this point, UNDP data has been used to compare Morocco’s ecological footprint of consumption and CO2 emissions percapita to those of the L24 and the C2. The ecological footprint and carbon emissions per-capita are generally used by the UNDP and the World Wildlife Fund (WWF) to study sustainable development.

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The UNDP describes the Global Footprint Network’s definition of ecological footprint consumption as follows: ‘the amount of biologically productive land and sea area that a country requires to produce the resources it consumes and to absorb the waste it generates, expressed in hectares per capita’.66 Table 7.13 shows that Kyrgyzstan, Egypt, Sri Lanka, Moldova, and Armenia, five countries that are more equal than Morocco, have achieved higher socioeconomic standards than the Kingdom with similar or smaller ecological footprints; improving socioeconomic outcomes need not come at the expense of environmental damage. In addition, Armenia, Indonesia, Albania, Georgia, Sri Lanka, and Kyrgyzstan have achieved higher socioeconomic development at similar or lower levels of CO2 emissions than Morocco, and all six countries possess more equitable income distributions. Wilkinson and Pickett referred to the WWF’s 2006 report, and noted that in spite of its much lower GDP per-capita, Cuba’s ‘life expectancy and infant mortality rates are almost identical to those in the United States’;67 remarkably, it has approximately one-fifth the United States’ ecological footprint per-capita. In the context of developing countries such as Morocco, future growth is constrained by high inequality, and the World Bank made a similar deduction based on the developmental experience of East Asian countries (the aforementioned Asian Tigers). According to Wilkinson and Pickett, ‘in the early 1990s a World Bank report pointed out that rapid economic growth in a number of East Asian countries was underpinned by growing equality’.68 Rodrik also made this observation about the Tigers. He contended that what distinguished them from other developing countries was that they enjoyed better ‘initial conditions’69 for socioeconomic development. In particular, they ‘were considerably better positioned with regard to schooling and educational attainment (and, by implication, had a significantly more skilled labor force). Secondly, the degree of inequality . . . was uncommonly low’.70 He deduced that ‘the initial level of equality is an important determinant of subsequent growth’.71 In addition, ‘high levels of education and low inequality at the outset are associated with high investment and low population growth’.72 Statistically, ‘primary school enrolment and equality’ could explain 90 per cent of growth in Korea, Taiwan, Malaysia, and Thailand.73

Table 7.13 Sustainability and Socioeconomic Development: Morocco vs. the L24 and the C274

Country

GINI Value (2005 – 9 Average)

Sustainability (Ecological footprint in hectares per-capita) (2009)

Sustainability (CO2 Emissions per-capita) (2009)

HDI Value (2009)

Morocco Egypt Armenia Indonesia Albania Serbia Georgia Philippines Sri Lanka Guatemala Bolivia Ecuador Honduras Paraguay Mongolia Ukraine Macedonia Bosnia Iran China Azerbaijan Kazakhstan Jordan El Salvador Thailand Kyrgyzstan Moldova

40.9 32.1 30.9 36.8 34.5 28.2 41.3 44.0 40.3 53.7 57.3 49.0 57.7 52.0 36.5 27.5 44.2 36.2 38.3 41.5 33.7 30.9 37.7 46.9 53.6 33.4 38.0

1.3 1.4 1.6 N/A 2.6 N/A N/A N/A 0.9 1.7 2.4 1.9 2.2 3.4 N/A 2.7 N/A 3.4 2.7 1.8 2.3 4.4 2.0 N/A 1.7 1.3 1.7

1.5 2.2 1.5 1.5 1.4 N/A 1.2 0.8 0.6 0.9 1.2 2.4 1.0 0.7 3.6 6.9 5.3 7.0 6.6 4.6 4.2 12.6 3.6 1.0 4.3 1.1 2.0

0.562 0.614 0.693 0.593 0.716 0.733 0.695 0.635 0.653 0.556 0.637 0.692 0.601 0.634 0.616 0.706 0.697 0.709 0.697 0.655 0.710 0.711 0.677 0.655 0.648 0.594 0.620

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The detrimental ramifications of inequality are much more likely to supersede the beneficial ones in the Moroccan scenario, since weak institutions, the absence of mechanisms required for the trickle-down process, and high robbery and fertility rates mean that the persistence of inequality will hamper the country’s efforts to boost economic growth in the future. Bruno et al. advised that ‘reducing inequality . . . through securing wide access to basic education and health, benefits both the poor immediately and everyone through higher growth’.75 Voitchovsky concluded that ‘the overall level of inequality in a country, together with the strength of its institutions’,76 would determine whether inequality would promote or stifle economic growth. In the case of Morocco, neither variable promotes a positive influence.

Income Inequality and Community Relations Income inequality reduces trust between members of a society. Nel stated that ‘a review of the existing literature and the data at hand can lead only to one conclusion: The high level of wealth and income inequality is one of the main reasons for the relative absence of social cohesion in developing societies’.77 Wilkinson and Pickett reached similar conclusions based on data from OECD countries: after all, human beings are one and the same, and their behaviour is not dictated by geography, citizenship, gender or ethnicity. The assertion that ‘our position in the social hierarchy affects who we see as part of the in-group and who as out-group’78 matches several remarks on Moroccan society (see the account of the Moroccan governor – Chapter 4 (cited below) and Sabah (1987) for examples). In his seminar, the governor (Chapter 4) acknowledged the problem of social exclusion, and how urbanisation has led to social segregation, as rural migrants to urban areas found themselves socioeconomically secluded. Nel purported that, in spite of developing countries’ diverse demographic structures, ‘it is nevertheless possible to discern a distinct effect of income inequality on the degree to which people are included or excluded from both the market and public-forum institutions on which social reciprocity and cohesion depends’.79 Mechanisms via which inequality harms social cohesion include, for example, ‘deny[ing] those at the lower end of the distribution the opportunity to acquire and use credit and insurance’.80

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In his discussion of Moroccan civic society and economic reform, Ben Ali observed that civil society organisations have generally been excluded from political decisions, and on occasions seen as rivals to the political decision makers. As a result, the political elite generally attempted to neutralise these organisations by either ‘co-opting’ or ‘marginalising’ them.81 This reinforces the notion that competition and lack of trust continue to permeate the contours of Moroccan society. Furthermore, Waterbury explained that in Morocco, ‘acute competition’ is the norm on the political and economic front.82 Even though they were made decades ago, Waterbury’s observations retain additional significance and relevance to today’s Morocco. Nel also remarked that ‘with increased inequality, there is a strong incentive for the wealthy and powerful to resist and undermine the rule of law, administrative fairness, and redistributive efficiency in the funding and provision of public services’.83 The pervasiveness of inequality combined with self-serving cronyism (see Chapter 8) in Morocco is likely to undermine social cohesion and lead to an unhealthy intensification of competition amongst individuals. Using data from the OECD and US states, Wilkinson and Pickett showed that levels of trust were lower in countries and states with higher income inequality.84 They then tried to establish whether the causality runs from inequality to trust or vice-versa, and noted that while Putnam asserted that both affect each other, Uslaner argued that inequality affects trust, whilst showing that the reverse causal channel (from trust to inequality) did not hold: ‘With greater inequality, people are less caring of one another, there is less mutuality in relationships, people have to fend for themselves and get what they can – so, inevitably, there is less trust’.85 Table 7.14 uses statistics collected from a dataset created by the World Values Survey to disclose trust levels within 23 emerging and developing countries. The data reveals that on the whole, mistrust tends to increase as income inequality rises. Surprisingly, trust levels in Ethiopia, a country with only one-ninth the per-capita GDP of Morocco in 2009, were considerably higher than the Kingdom’s. The Moroccan economist touched on this issue, implying that in the Kingdom, a person did not feel as if he/she counted as much as his/her neighbour. This impression (that society accords more attention and

INCOME INEQUALITY AND DEVELOPMENT Table 7.14 Mistrust86

213

Percentage of Respondents from Each Country Who Disclosed

Country

Percentage

Year of Trust % Figure

GINI Coefficient (2005 – 9 Average)

Mexico Argentina Brazil Chile India Turkey Ukraine Russia Peru Uruguay Ghana Moldova Georgia Colombia Serbia Egypt Morocco Iran Jordan Malaysia Ethiopia Mali Rwanda

84.4 82.4 90.6 87.4 76.7 95.1 72.5 73.8 93.7 71.6 91.5 82.1 81.9 85.5 84.7 81.5 87.0 89.4 69.1 91.2 75.6 82.5 95.1

2005 2006 2006 2006 2006 2007 2006 2006 2006 2006 2007 2006 2008 2005 2006 2008 2007 2005 2007 2006 2007 2007 2007

49.9 48.2 55.3 52.0 36.8 41.4 27.9 41.2 50.0 45.2 42.8 37.7 41.1 58.5 28.2 32.1 40.9 38.3 37.7 46.2 29.8 39.0 53.1

resources to the neighbour than to oneself) is likely to generate resentment towards the wider society and a lack of trust amongst its members. Layachi made a similar point but in a different manner, observing that ‘the economic difficulties of the last two decades [late 1970s to late 1990s] . . . stimulated the proliferation of urban associations intent on looking after the interests of their members’.87 Moreover, it seems that the poor were more likely to feel that their living standards were getting worse over time; in 2007, 34.2 per cent of heads of Moroccan households from the lowest income quintile reported an

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aggravation of their living standards, as opposed to 24.3 per cent of heads of households from the highest quintile.88 The consequences to social and economic relations are significant. Socially, when there is more trust between individuals, there is greater security across the community, and people do not view each other as rivals but as collaborative units within society.89 On a topic that is relevant to Morocco and the NORAFS, ‘researchers at Harvard University showed that women’s status was linked to state-level income inequality’.90 In countries with high levels of inequality, women are more likely to find themselves with lower educational attainment and lower levels of political and economic participation. The reason this is relevant to Morocco is that it could probably explain the continued disenfranchisement of Moroccan women in the education system, which is restricting their economic contribution to society. Economically, lack of trust could hamper relations between different economic agents (for example, high-earning entrepreneurs and lowearning labourers), which could dent the productive capacity of the economy on an aggregate scale. Lack of trust will harm social relations and encourage unhealthy competition between people whereby the end result is a self-centred society. The possibility that the Kingdom’s citizens would engage in self-serving behaviour to climb the socioeconomic ladder and protect their gains from being reduced by others is made possible by the frail state of Morocco’s post-independence community relations. In her reflections on these relations, Sabah noted that after Morocco’s independence, and ‘within a relatively short span of time, major transformations and power shifts took place in the society as a whole’.91 For example, ‘the stratification system is more complex now [than before]’;92 in addition, ‘neighborhood relations are nonexistent or highly selective. The neighbor is perceived negatively and intimate relations confined to kin and a few trusted friends’.93 These observations attested to the infirmity of community relations – a phenomenon that is aggravated by inequality. One final point to mention is that high inequality is also likely to exacerbate public trust in the government: ‘one of the likely costs of greater inequality is increased corruption in government and society more widely’.94 In the Moroccan scenario, inequality exacerbated the lack of trust between societal groups, and continues to threaten future socioeconomic welfare by impairing social and economic relations.

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Income Inequality and Health Outcomes

Immunisation against measles (% of children ages 12–23 months) 105 95 85 75 65 55 45 35 25 15 19 82 19 84 19 86 19 88 19 90 19 92 19 94 19 96 19 98 20 00 20 02 20 04 20 06 20 08

Immunisation against measles

The evolution of Morocco’s health outcomes reveals a mixed picture: according to World Bank data, the Kingdom raised the life expectancy at birth of its citizens, reduced fertility rates, and provided more immunisation against measles to its children. These three indicators are commonly used by both the World Bank (hence their inclusion in the database) and the World Health Organisation (WHO95). Graphs 7.4, 7.5 and 7.6 illustrate the data. Recall that the EU’s 2006 progress report on Morocco’s implementation of the ENP stated that with regards to health, the Union’s mission has been primarily to ensure ‘better access to care, especially for the poor . . . enhancing quality, reorganising and decentralising the system and strengthening administrative and financial capacities’.96 While fertility rates have decreased, demographic trends are still worrying. Birth rates remain high, which along with the decrease in death rates is likely to complicate the state’s ability to provide social support to its citizens. The interviewed Moroccan economist succinctly described the demographic situation as a ‘brutal rupture’. To enhance Morocco’s health outcomes, the EU has been utilising financial aid (as per the MEDA programme and later the ENPI), which is transferred in the form of budget support to Morocco’s national

Graph 7.497 200898

Year

Moroccan Children Immunised against Measles: 1982 –

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Life Expectancy (in years)

75 70

Life Expectancy at Birth, female (years) Life Expectancy at Birth, male (years) Life Expectancy at Birth, total (years)

65 60

55

1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008

50 Year

Graph 7.5 Life Expectancy at Birth for Males, Females, and Total: 1978 – 200899

Rates (per 1,000 people)

40 35 30 Birth Rate, crude (per 1,000 people) Death rate, crude (per 1,000 people)

25 20 15

Difference (per 1,000 people)

10 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008

5

Graph 7.6

Year

Birth and Death Rates (per 1,000 people): 1978 –2008100

treasury and then pooled with local domestic resources into projects that promote universal access to healthcare (an example being the RAMED programme mentioned by one of the Moroccan diplomats interviewed – see Chapter 4). Chapter 5 revealed that the EU allocated e50 million to Morocco’s health sector under the MEDA programme, as well as a total of e126 million under the ENPI programme. The importance of this assistance

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becomes noticeable when compared to the amounts provided by other donors to the health system: the World Bank, for example, loaned the Kingdom e103.5 million between 1996 and 2009 (see Chapter 5), whilst in 2008 the African Development Bank, Morocco’s third largest ODA-providing organisation after the EU and the World Bank,101 loaned the Kingdom e70 million to support Morocco’s Medical Insurance programme for the years 2009 and 2010.102 The question, then, is why has this aid been not had the intended impact on the reduction of health inequities in the Kingdom? One reason relates to implemental problems in Morocco’s health sector. The Ministry of Health has been unable to substantially improve access to health services in rural areas due to its inability to improve transport infrastructure in remote rural areas: for example, ‘43 per cent of the rural population lives at least 6 kilometres away from a healthcare centre, and 25 per cent of people live more than 10 kilometres from one’.103 Efforts to introduce mobile medical units, according to a World Health Organisation report, have not been successful.104 A Moroccan parliamentarian, Abdelhamid Saadaoui, blamed the government for not training enough doctors and for not improving infrastructure in rural areas.105 The reason for this failure to improve rural infrastructure, according to Khalid Lahlou, a health ministry official, is that while ‘the 2008–10 period saw an improvement in terms of infrastructure and equipment, service provision, the supply of medicines and the boosting of human resources’, there has been limited coordination and partnership between healthcare providers to provide a cohesive effort to improve health outcomes in rural areas.106 This reinforces the point made in Chapter 5 with regards to limited coordination of development projects and aid utilisation. Another problem in implementation, according to a World Bank report on Morocco, is that ‘a large share of all social programs (education, health, social insurance, etc.) is mainly urban biased and designed to benefit the higher– middle income [class] and the rich’.107 There could be various reasons for this: first, it is easier for doctors to work in the city than to travel to remote rural areas with poor transport coverage. Another reason could be that while the rural constituency wielded considerable political power post-independence, it began to lose some of that leverage due to increased urbanisation, which had prompted the monarchy to focus more of its attention on courting the burgeoning

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urban constituency; the result was the creation of a ‘state-dependent urban socio-economic elite’ that benefited from the economic liberalisation process.108 Still, even if one controls for the implemental shortcomings on the Moroccan side (whether due to limited infrastructural development or the urban bias), the amount of aid provided by the donors is limited when compared to the enormous effort needed to alleviate urban/rural inequality in health outcomes. For example, the total ODA provided by the EU between 1996 and 2010 (e176 million) represented about 6 per cent of the Kingdom’s budget for health expenditure in 2006.109 Given Morocco’s fast-growing population, it is difficult to imagine how this limited funding could significantly facilitate the extension of medical coverage across a population of over 32 million people and generate greater equity in health outcomes. Furthermore, according to DG AIDCO, the amount of financial support destined for social policies and economic modernisation in Morocco will drop from e531 million between 2007 and 2010 to e174.15 million between 2011 and 2013, without elaborating on the reasons.110 The limited ability of these funds to improve access to healthcare amongst Morocco’s poor was discussed by the European Parliament in one of its hearings: ‘The EU should dedicate at least 20 per cent of all assistance to basic social services, as defined by the OECD, with a special focus on free access to primary health and basic education’.111 This was a repeat of similar calls made in previous hearings.112 In fact, the SIA-EMFTA Sustainability Impact Assessment acknowledged that ‘in those MPCs [MNC] where there is a significant loss of government revenues [due to the reduction of the state’s size in the economy] there could be a significant adverse effect [from the EMFTA] on health and education programmes unless mitigated by raising revenues from other sources’.113 In sum, Morocco has been unable to address health inequities for various reasons: (a) its inability to mitigate income inequality, which would have provided rural residents with the income required to travel and access facilities that are unavailable in rural areas, (b) its inability to substantially improve transport infrastructure in rural areas, (c) lack of coordination in policy implementation (discussed in Chapter 5), (d) the presence of an urban bias in service provision due to the urban constituency’s growing political and economic clout as a result of urbanisation, and (e) limited

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domestic resources and ODA contributions especially when the severity of Morocco’s unequal health outcomes is taken into account. While EU aid does not by itself perpetuate the presence of health inequities in Morocco, it has not had the effect of rectifying the situation. Morocco’s prioritisation of private initiative and reducing the state’s role in the health sector began in the early 1980s,114 prior to the inauguration of the Barcelona Process; nevertheless, the policy objectives on which the Union preconditioned access to its policy instruments do not represent a significant departure from that approach; in fact, as Chapter 6 stated, the EU and the World Bank cooperate on coordinating the policy objectives enshrined in the Action Plan. Chapter 8 will show that by preconditioning access to its financial instruments on policy objectives that include economic liberalisation and reducing the role of the state in sectoral activity, the EU has not adopted the most appropriate strategy to help Morocco reduce inequality (see Najem (2001) and Nathanson et al. (2009) on the effects of reduced state involvement and trade liberalisation on inequality in Morocco). This section argues that income inequality not only leads to inequities in health outcomes within a population, but also worsens a country’s health standards overall. Leigh et al. (2009) posited that there are three proposed ways in which inequality can affect health: the first looks at how an increase in a person’s income affects the marginal benefit from health services, the second looks at the effect of ‘relative deprivation’, and the third examines the effect of inequality on the health of society as a whole.115 After reviewing the literature, they deduced that for rich countries, the ‘empirical evidence for . . . a relationship [between the two] . . . is weak’.116 Nevertheless, they concurred that these findings are not firm due to constraints in available datasets. In addition, social epidemiologists disagree with them, whilst acknowledging that in the case of poor countries, both absolute and relative poverty are likely to be negatively correlated to health.117 As for how inequality can affect health outcomes, the convention holds that this can occur via three mechanisms: (1) The marginal utility derived from health services as a result of additional income decreases, and hence by transferring income from the rich to the poor, the marginal benefit to the poor will exceed the marginal loss to the rich.118

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(2) People compare their income with that of other individuals in society, and hence if someone belongs to a disadvantaged socioeconomic background, he is likely to feel more stressed and depressed when comparing him or herself to other members of society.119 (3) Income inequality reduces levels of social capital, which in turn increases mortality rates. ‘Kawachi et al. (1997) find negative crosssectional relationships both between inequality and social capital and between social capital and mortality. Other studies have also found that people in more unequal places tend to be less trusting’.120 Wilkinson and Pickett definitively demonstrated that inequality worsens health outcomes. They referred to the UK’s long-term Whitehall studies to show that ‘low social status has a clear impact on physical health, and not just for people at the very bottom of the social hierarchy . . . There is a social gradient in health running right across society, and where we are placed in relation to other people matters’.121 In addition, they referred to a British Medical Journal study’s conclusion that ‘the big idea is that what matters in determining mortality and health in a society is less the overall wealth of that society and more how evenly wealth is distributed. The more equally wealth is distributed the better the health of that society’.122 Moreover, Sen attributed the increase in life expectancy and the reduction of undernourishment in Britain during the two World Wars to greater ‘social sharing . . . and the sharp increases in public support for social services’.123 In an economic ambience characterised by structural unemployment (especially in urban areas), a wide discrepancy in the living standards of rich and poor individuals, acute competition to secure political and economic gains, and lack of trust, the average Moroccan is likely to suffer from chronic stress and pressure. The causes of stress in Morocco and other developing countries with high inequality may differ from those in the developed countries examined by Wilkinson and Pickett, but their ramifications are similar. The idea that the pressures of adverse experiences in early life (caused by Moroccans’ desire to secure better prospects in a country that has experienced chronic problems with job creation), low social status, and a relative lack of community cohesion would inflict palpable damage to the health outcomes of Moroccan citizens is not farfetched.

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Therefore, an examination of the social realities afflicting Morocco, as well as previous studies on the relationship between inequality and health, give an indication that the former is likely to aggravate the latter. In fact, Nel listed another way via which inequality can impair health outcomes in developing countries: ‘in highly unequal societies the providers of health and asset insurance have strong incentives to provide exclusively for the wealthy, as the latter group faces lesser health risks than the poor’.124 Therefore, the detrimental influence of income inequality on health outcomes pertains to both developed and developing countries such as Morocco. The stress the average Moroccan citizen experiences as he/she attempts to secure employment and better prospects for his/her children in an environment epitomised by lack of trust and intense competition is likely to affect his/her health. Wilkinson and Pickett referred to an instance involving an emerging country, Russia, which ‘has experienced dramatic decreases in life expectancy since the early 1990s, as it moved from a centrally planned to a market economy, accompanied by a rapid rise in income inequality’.125

Income Inequality and Educational Standards Another problem Morocco confronts is realising better educational outcomes. Graph 7.7 portrays Morocco’s pupil– teacher ratio in primary schools between the late 1970s and late 2000s. The graph reveals that this ratio has been fluctuating between 27 and 29 pupils per teacher, without any significant progress, since the early 1990s. Table 7.15 reveals that since 1992, the percentage of primary school students who progress to secondary school has stayed at about 80 per cent. The same could be said about the percentage of repeaters in secondary school (which has been 12 per cent since 1992). The indicators verify the interviewed Moroccan economist’s views on the poor state of the educational system (see Chapter 4); the country has been unable to produce solid improvements across fundamental educational indicators. As is the case for the health sector, the EU has been disbursing financial aid (provided under MEDA and ENPI) to support reforms in Morocco’s education sector. Chapter 5 revealed that the Union allocated e78 million to both basic and technical education under the MEDA programme, and e135 million to support literacy efforts, the education

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WITH

NORTH AFRICA Pupil–Teacher Ratio, Primary Schools

40 38 36 34 32 30 28 26 24

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Graph 7.7

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Table 7.15 Percentage of Students Who Progress to Secondary Schools in Morocco127 1992 78

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sector, and informal education under the ENPI. To illustrate the significance of these aid allocations, it is worth noting that the World Bank loaned Morocco e107 million to help improve access to education in Morocco between 1996 and 2009, while the African Development Bank loaned the Kingdom approximately e81 million between 2001 and 2007128 to support its basic and technical education sectors. Yet again, the Union’s financial assistance is the most significant of all Morocco’s partners. However, the efficacy of this assistance is curtailed by the following limitations: (a) Reducing the state’s role in providing pre-school education: the problems in aid utilisation and policy coordination on the Moroccan side that have been discussed in the context of the other sectors also afflict the educational sector. In addition, the Amadeus Institute argued that the Kingdom’s government impeded progress in educational outcomes by not addressing the increased role of the private sector in providing preschool education. Preschool

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education is essential since it represents the platform on which eventual educational attainment is based: Moroccan children who attended preschool were less likely to drop out of school later on. Without enhancing preschool access, the prospect of increasing the proportion of people belonging to Morocco’s middle-class is unlikely because social mobility would be curtailed (the next section deals more with the issue of social mobility).129 In an effort to reduce its role in the economy, the state promoted private providers of preschool education and put them in charge of providing preschool education. This led to high prices being charged for admission to preschool, and without an effective subsidy programme to alleviate the financial burden on disadvantaged families, middle-class and poorer families found themselves incapable of providing such education to their children. The think-tank encouraged the government to reverse this trend of promoting the private sector in providing preschool education, and to assume a prominent role in providing preschool education as well as investing in educational infrastructure in rural areas.130 (b) Failure to improve infrastructure in rural areas and to coordinate the actions of different actors: as discussed earlier, inability to improve transport infrastructure and facilities provided in rural area led to greater inequities across social outcomes, including health and education. According to a 2009 HCP report, poverty, remoteness of rural areas, difficulties in transport, and ‘the quantity and quality of infrastructure in rural areas’ are major policy implementation problems that Morocco still encounters as it attempts to improve educational outcomes.131 Reasons for this include the state’s commitment to reducing its role in education to abide by its commitments to international donors and to prevent an increase in its budget deficit, urban bias in the provision of services (see the previous section), and failure to ensure collaboration between different actors (the state, the private sector, and civil society organisations) to effectively utilise financial aid and implement policy reforms (see Chapter 5).132 In addition to the limitations on the Moroccan side, the amount of aid provided by donors is not sufficient to enhance educational outcomes in Morocco. For example, if one looks at the levels of assistance provided by

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the EU, Morocco’s most influential developmental partner, one would see that under the ENPI, the Union devoted e110 million to Morocco’s education sector between 2007 and 2010.133 Contrast this with the Kingdom’s total education expenditure budget in 2004, which was e3.7 billion.134 Of the near e43 million disbursed to Morocco under the ENPI’s NIF (see Chapter 5), e15 million went towards supporting the Kingdom’s e1.9 billion urgency plan to reduce inequality in educational outcomes across gender, geographic and income lines. Of the e110 million disbursed under the Country Programme, only e17 million are devoted to combatting illiteracy, which disproportionately affects the impoverished sectors of the population. In other words, these funds are unlikely to considerably enhance literacy and educational outcomes for the poor and disenfranchised in a country that faces a considerable challenge on this front. Therefore, the Kingdom’s inability to reduce inequities in the educational sector is a result of: (a) income inequality, which has prevented the rise of a robust middle class, the latter being necessary for economic growth.135 (b) reducing the role of the state in providing preschool education, (c) poor infrastructure in rural areas due to limited state involvement and the presence of an urban bias, (d) limited domestic resources as the state withdraws from economic activity to avoid running a deficit and to honour its commitments to aid donors, and (e) the limited nature of ODA provided given the severity of the challenge confronting Morocco’s education sector. With regards to the EU’s financial instruments, as in the health sector, while they do not perpetuate the presence of educational inequities in Morocco, they have had little effect in rectifying the situation (in spite of being significant compared to the amounts donated by other partners). One reason is the severity of the challenge confronting Morocco’s educational sector: according to an African Development Bank report, the government found itself overwhelmed by ‘strong population growth’ that, along with the reduction in public spending required by the structural adjustment programmes of the 1980s, meant that the Ministry of Education could not effectively reform the system, improve teaching techniques, and find the necessary resources to tackle what has been a major challenge.136 The Amadeus report, however, considered the state’s withdrawal from providing preschool education a shortcoming. This latter point suggests that other

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things being equal (i.e. taking into account the implemental issues on the Moroccan side), had the Union not preconditioned access to its instruments on reducing the role of the state and favouring private initiative, Morocco could have adopted an alternative strategy that would have mitigated the problem. So what are the potential links between inequality and educational outcomes? Machin argued that ‘inequality in the cognitive and noncognitive skills of individuals can be tracked to the early years . . . Significant gaps in cognitive and non-cognitive skills arise early on, even before school, and these gaps are strongly linked to social disadvantage and income inequalities’.137 He affirmed the existence of substantial evidence to attest to the link between income inequality, dropping out of school, and poorer educational outcomes.138 This is precisely the situation experienced by disenfranchised Moroccans. Nel also believed that ‘one of the main effects of the stark inequalities of wealth in developing countries thus is to exclude large numbers of children from the opportunity to undergo formal schooling, through the mechanisms traced by imperfect credit and insurance markets in these societies’.139 He referenced existing data on inequality and educational outcomes, which: ‘illustrates the very powerful social exclusionary effect of household income inequality working through the distribution of education opportunities’.140 The HCP’s report revealed that in Morocco, the educational background of the head of a household was a strong determinant of the children’s educational levels, because the head of a household who had limited education was less likely to send his/her children to school.141 These children were instead likely to have lower participation and completion rates, which would in turn perpetuate the vicious cycle of underachievement and inequality. Galor and Moav discovered that an egalitarian income distribution enhanced the process of human capital accumulation during transition, which could buttress future growth prospects. In their words: ‘human capital is inherently embodied in humans and the existence of physiological constraints subjects its accumulation at the individual level to diminishing returns.’142 A fundamental reason behind the presence of diminishing returns to human capital accumulation in developing countries is the presence of imperfect credit market conditions that prevent disadvantaged people from borrowing to enhance their

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human capital stock. However, a more egalitarian income distribution would mitigate the effect of these credit constraints as less people would find it necessary to borrow money in order to finance education.143 Meanwhile, Easterly concurred that ‘structural inequality predicts development outcomes’.144 He concluded that ‘inequality hinders development’145 via its impact on ‘institutions and schooling’.146 Furthermore, ‘high structural inequality . . . [is] a large and statistically significant hindrance to developing the mechanisms by which economic development is achieved . . . inequality does cause underdevelopment’.147 Another important point to raise is the presence of positive externalities from educational attainment. In other words, improvements in education lead to improvements in other social outcomes, leading to better overall health outcomes, less crime, and greater social cohesion.148 It is not implausible, then, to consider improvements in educational outcomes a catalyst for improvements across other socioeconomic outcomes in Morocco. Ibrouk and Amaghouss conducted a study on educational inequalities in the MENA region. They used the ‘Gini coefficient of education’ to look at inequalities in access to educational services across fifteen MENA countries (including Morocco, Algeria, Tunisia, and Libya) over a forty year period stretching from 1970 to 2010. They concluded that of all the fifteen countries in the sample, Morocco was the country where inequality in access to educational services was the greatest; more importantly, they also deduced that ‘this outcome is easily understood when we take into consideration the fact that in Morocco we can find the highest illiteracy rates and the lowest average number of schooling years of the sample’.149 Another conclusion they arrived at is the presence of a positive correlation between the Gini index and illiteracy rates across the sample used; this means that in order to reduce educational inequalities, improving literacy rates amongst the poor is a necessary step – an issue that Morocco continues to struggle with. The findings of Ibrouk and Amaghouss are similar to the ones arrived at by commentators such as Machin (2009) and Nel (2008). The existence of externalities from education means that overall educational outcomes within a country can have wide-ranging consequences on the living standards of both rich and poor citizens, while inequality constrains the educational potential of society. Therefore, Morocco’s unequal income distribution put long-term economic growth at risk,

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fostered the presence of a mistrustful and fractious society, curtailed the country’s ability to achieve better health outcomes, and stymied its educational outcomes.

Income Inequality and Social Mobility Another adverse effect of income inequality concerns social mobility. Nel asserted that the nature of inequality in developing countries is such that it is extremely difficult for the socioeconomically disadvantaged to improve their fortunes since ‘persistent inequality imposes poverty traps on successive generations.150 It is difficult to obtain statistical data on social mobility in Morocco, as it would require long-run time-series data of many households (in order to compare children’s incomes with those of their parents). Nevertheless, several observations have been made that shed insight on the lack of social mobility in the Kingdom. According to the HCP: ‘disparities in living standards can be explained by differences in the literacy and educational backgrounds of the heads of the households’.151 Not only that, but Roque noted that ‘privatisation . . . tend[s] to allow the local elites to impose their claims on the management of the state, which [the state] constructs new structures to control [the Kingdom’s] civil society’.152 This served as another impediment to social mobility within the country, since individuals found themselves constrained by the governance structures imposed by the elites. Layachi blamed the elite’s ‘fear [of] the birth and development of autonomous social formations with the independent ability to mobilize societal interests’153 for Morocco’s feeble civil society. He concurred that the country’s ‘elite identifies with the state and thrives on clientelism’.154 The self-serving nature of this clientelism, as well as the exclusivity of the Kingdom’s elite, has not helped Moroccan society as a whole, and Chapter 8 will allude to an example that highlights the detrimental nature of cronyism in contemporary Morocco. Another demonstration of the lack of social mobility in the Kingdom is the fact that the educational backgrounds of family heads (for example, parents), continue to shape profoundly children’s educational prospects at present. The HCP’s survey of living conditions, for example, conceded that literacy rates in Morocco were determined by how educated the head of a household is.155

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Nel also observed that for developing countries in the process of rapid urbanisation (such as Morocco), ‘expectations of social mobility will be higher . . . If these expectations are thwarted by impediments to mobility related to inequality . . . it is more likely that politically relevant grievances will arise’.156 Education is a variable that strongly correlates with social mobility. Wilkinson and Pickett argued that a link exists between government spending on the educational sector and income inequality. In more egalitarian countries, the government is likely to provide the bulk of financing for the educational sector. For example, ‘In Norway [a country that is egalitarian] . . . almost all (97.8 per cent) spending on school education is public expenditure. In contrast, in the [unequal] USA . . . only about two-thirds (68.2 per cent) of the spending on school education is public money’.157 In comparison, only 59.1 per cent of Morocco’s spending on school education in 2004 was public expenditure.158 In that same year, the Kingdom’s total spending on education comprised 9.3 per cent of its GDP, compared to the US’s 7.2 per cent, France’s 6.1 per cent and Japan’s 4.7 per cent.159 This reaffirms the point made by the interviewed Moroccan economist that the Kingdom’s educational malaise is not due to scarce financial investment; the Moroccan diplomats interviewed argued that inequality in access to education amongst females and residents of rural areas undermined the overall state of educational outcomes in the Kingdom. The earlier section presented a case for the effect of income inequality on educational outcomes across a society, and listed several limitations that have inhibited the realisation of greater outcomes. There has also been inequality in the distribution of funds to Morocco’s public and private education providers: the public sector received only 47 per cent of total funds meant to finance pre-primary and primary school education.160 Given that the majority of dropouts in the country withdraw after completing primary school, this could be an indication that the private sector’s eminence in the provision of elementary-level education makes it an expensive endeavour to many Moroccans, a point that was raised by the Amadeus Institute’s Report (see the earlier section). The ramifications for social mobility are significant. The extent of social immobility in Morocco is revealed upon scrutinising the disturbing phenomenon of school dropouts. The HCP revealed that in 2007, 26.1 per cent of children between the ages of

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6 and 14 dropped out of high school to pursue employment, assist their parents in their professional endeavours or because of their families’ economic situation.161 Another symptom of social immobility is how ‘greater social distances become translated into greater geographical segregation between rich and poor in more unequal societies’,162 as epitomised by the proliferation of ‘shanty towns’ or bidonvilles (as they are known in Morocco) surrounding urban areas such as Rabat.163 These bidonvilles mainly house poorly educated, disenfranchised Moroccans who are struggling to lead prosperous lives. Their misery is compounded by the fact that job opportunities are already grim in urban areas; thus they remain unemployed and unable to climb the social ladder. Besides: the concentration of poor people in poor areas increases all kinds of stress, deprivation and difficulty – from increased commuting times for those who have to leave deprived communities to find work elsewhere, to . . . worse schools, poor levels of services, exposure to gang violence, pollution and so on.164 Social immobility is exacerbated by failures in job creation and in productive diversification. There is also a vicious cycle between inequality, education, and immobility, since children from poor households are more likely to drop out of school and work, in order to supplement their parents’ limited incomes. In a society such as Morocco’s, where lack of community trust has been an issue (see Sabah (1987)), it is probable that inequality has been fuelling the self-serving instincts of individuals, inducing the socioeconomically privileged to dominate rather than empathise with their less privileged compatriots. This lends credence to the contention that ‘in more unequal societies, more people are oriented towards dominance; in more egalitarian societies, more people are oriented towards inclusiveness and empathy’.165 In sum, Morocco espouses a fractious society in which segmented factions engage in self-serving competition to acquire political and socioeconomic privilege, whilst protecting their gains from others. The Kingdom’s inequitable income distribution aggravates the situation by preventing the emergence of a more socially mobile Morocco. As Wilkinson and Pickett observed, ‘bigger income differences seem to solidify the social structure and decrease the chances of upward mobility.

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Where there are greater inequalities of outcome, equal opportunity is a significantly more distant prospect’.166

Final Thoughts Below is a summary of the main points presented in the previous sections: (a) In terms of financial assistance provided to Morocco’s health and educational sectors, the EU has been the most supportive and generous provider, demonstrating the Union’s commitment to helping the Kingdom realise better socioeconomic outcomes. (b) Morocco’s attempts to realise better socioeconomic outcomes have been derailed by constraints in policy implementation due to the government’s limited financial resources, lack of policy coordination, the presence of an urban bias in service provision, failure to improve transport infrastructure in rural areas, and the limited nature of the ODA provided by international donors. (c) The EU preconditioned access to its policy instruments on Morocco’s adherence to policy objectives that are not the most appropriate to reducing inequality, a point that will be elaborated on in the following chapter. The promotion of private enterprise and the reduction of the role of the state signalled a continuation of strategies that Morocco has been adopting since the 1980s as part of the World Bank’s structural adjustment programme, whose efficacy in promoting social standards has been questioned. (d) Income inequality is deleterious to the realisation of better socioeconomic outcomes in developing countries. In a 2011 Hearing on increasing the impact of EU development policy, the European Parliament provided an implicit admission that the Union’s policy instruments were preconditioned on objectives that were not the most appropriate for the reduction of income inequality (Chapter 8 will cite studies on Morocco that reached this conclusion about the policy objectives). The Parliament ‘acknowledges . . . that the impact of growth on poverty eradication will be much higher if inequality is reduced . . . [the Parliament] stresses that EU policies should facilitate growth in areas of the economy where the poor earn

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their livelihoods’.167 The same Hearing urged the European Commission and member-states to incorporate strategies that would help the disadvantaged acquire more assets in order to climb the socioeconomic ladder. The Hearing also referred to a 2011 Green Paper produced by the European Commission to outline its developmental measures: ‘although the Green Paper mentions that higher inequality sharply reduces the pace of poverty reduction and has considerable adverse effects on economic growth, this is not sufficiently reflected in the measures proposed’.168 As a developing country, Morocco still needs to promote its economic growth in order to attain higher per-capita GDP levels. This does not mean, however, that the Kingdom (and other developing countries) should accept higher levels of inequality. Wilkinson and Pickett contended that equality is still important for poor countries, and ‘in poorer societies . . . a more equal distribution of resources will mean fewer people will be living in shanty towns, with dirty water and food insecurity, or trying to scrape a living from inadequate land-holdings’.169 What this chapter demonstrated is that growth by itself is insufficient to guarantee the realisation of better social standards. For example, the C2 countries have per-capita incomes that do not exceed 40 per cent of Morocco’s and yet they outperform the Kingdom in terms of socioeconomic development. A principal impediment to obtaining greater gains in Morocco is income inequality; the country experienced economic growth since the early 1980s and yet its social standards remain poor. During that same period, however, income inequality rose. Inequality contributed to Morocco’s lower health and educational outcomes, fuelled the fractious and mistrustful nature of its society, and impeded social mobility. Moreover, it has been shown that inequality will hamper the Kingdom’s efforts to maintain economic growth over the long-term. Nel argued that inequality in developing countries is an even more pressing concern than in developed countries due to differences in ‘their respective institutional capacities to address economic inequality. For one, developing countries face a number of fiscal weaknesses that high-income countries do not’.170 In addition, ‘developing countries are characterized by a chronic positive correlation between the concentration

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of wealth and income on the one hand, and the concentration of political power on the other’.171 It is important to remember that developing countries suffer from market failures that prohibit poorer individuals from accessing credit, and thereby prevent them from financing the services they require to lead better lives. The poor suffer from this because of the low nature of their income and also by virtue of their income being relatively less than that of rich people.172 This chapter has revealed that even though the Union’s financial aid was appropriately directed towards Morocco’s health and education sectors, and was more significant than the aid provided by other donors, this aid was nonetheless limited when compared to Morocco’s overall budgets for these sectors and the ‘enormity’ of the socioeconomic challenge confronting the Kingdom (to reference Martı´n – see Martı´n (2006)). According to Wilkinson and Pickett, the Soviet Union’s failed experiment prevented the emergence of alternatives to the capitalist model: the Soviet experiment failed because it merely tried to solve the concentration of power in private hands by transferring all of it to the state.173 This point demonstrates that regime change is not a precondition to economic progress – there are means by which an existing regime can implement developmental reforms to enhance the socioeconomic welfare of its citizens without substantially altering the character of the regime; the modern-day People’s Republic of China serves as an example of a country that has not significantly transformed its political structure and yet has managed to reform its approach to economic development and improve the living standards of its people. The most important point to make, therefore, is that the existence of a wide range of methods by which a country can organise its economic structure to the benefit of its society provides a glimmer of hope that more egalitarian policies can be adopted by Morocco to improve the living conditions of its citizens. It is important to cite Nel’s warning concerning the inevitability of rising inequality in developing countries, especially for those undergoing economic transition. Nonetheless: ‘there are steps that can be taken not only to contain this inevitable rise [in inequality] but also eventually to turn the rising tide around’.174 Unfortunately, ‘the rise of neo-liberal political and economic thinking in the 1980s and 1990s meant that egalitarian ideas disappeared from

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public debate’.175 By preconditioning access to its instruments on trade liberalisation, reducing the role of the state, and the preservation of macroeconomic stability by maintaining low inflation, the EU has by and large followed the approach adopted by the World Bank during the 1980s to reform Morocco’s economy. Chapter 8 will show that policy objectives that derive from this approach are unlikely to reduce inequality and promote structural change in Morocco’s economy.

CHAPTER 8 EU POLICIES AND SOCIOECONOMIC DEVELOPMENT IN MOROCCO (III): THE IDEOLOGY BEHIND THE APPROACH

Introduction Broadly speaking, the EU’s policy objectives to promote development in Morocco and the NORAFS centred on trade liberalisation, reducing the role of the state in economic management and within the sectors, and macroeconomic stability. Politically, they have emphasised judicial reforms, democratisation, better governance, respect for human rights, and freedom of expression. According to Hunt, ‘the approach adopted by the EU in formulating the substance of the policy reforms which it promoted in partner states represented the application of neoliberalism to advance desired outcomes’.1 The EU officials interviewed for this study remain convinced that Morocco would eventually progress socioeconomically by following this approach. This has not so far been the case, so this chapter will place the spotlight on the limitations that mar the approach’s foundations.

The Main Arguments for Neoliberal Development Policy Haque cited King and Toye’s description of neoliberalism as an ideology that stresses the importance of ‘free market and open competition’ to

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enhance a society’s aggregate welfare.2 He listed neoliberal objectives as follows: ‘to expand market forces, facilitate open competition, enhance mass production, reduce the state’s anti-poverty programs, attract foreign investment, and maximize consumption’.3 At its core is the belief that through an individual’s ability to maximise his/her utility within a laissez-faire economic ambience, a society’s aggregate income would rise, as would standards of living. Pattnaik observed that ‘globalisation as the instrument of this philosophy espouses the diffusion of knowledge and technology stretching de-territorialised economic growth’;4 put differently, the ideology assumes that technology transfer is the medium via which development can be disseminated. It is the unshakeable faith in the market mechanism, according to Haque, that prompted neoliberal advocates such as Deepak Lal (see below) and Anne Kreuger to suggest substituting ‘the interventionist developmental state . . . [with] a more non-interventionist state, and [encourage] the expansion of market forces’.5 Markets were more likely to distribute resources and generate products efficiently, and thus reducing the role of the state was advocated. Pattnaik also contended that ‘neo-liberal development based on the foundations of free market, free trade, and integration building policies envisages a world order glowing with growth and prosperity’.6 On this basis, free trade is an opportunity for countries to expand their economic activity, whilst regional integration expands the economic influence and market size of nation states. In Kay’s words, ‘the slogan of the neoliberals is that outward-oriented development policies were, are, and continue to be superior to inward-oriented development policies’.7 Haque mentioned Colclough and King’s view that ‘neo-liberals tend to place an overwhelming emphasis on economic growth, in some instances even endorsing inequality as a prerequisite for growth’.8 This view stems from the assumptions that: (1) wealthy individuals invest a greater fraction of their income than poorer individuals, and (2) investment is what determines long-term growth. Another objective that the neoliberals endorse to stimulate investment is so-called ‘fiscal and monetary stability’, which refers to the maintenance of high interest rates to control inflation, foster stability, and thereby create a favourable environment for investment.

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With regards to social outcomes, the fundamental assumption neoliberals make is that the market mechanism is optimally situated to ensure that aggregate increases in income trickle down to individuals, gradually translating into better social outcomes. Neoliberalism adheres to what Todaro described as a traditional conceptualisation of development that gives ‘casual reference to noneconomic social indicators’.9 Todaro defined trickle-down as: the notion that development is purely an economic phenomenon in which rapid gains from the overall growth of . . . income per capita would automatically bring benefits . . . to the masses in the form of jobs and other economic opportunities. The main preoccupation is therefore to get the growth job done while problems of poverty, unemployment, and income distribution are perceived to be of secondary importance.10 In his defence of neoliberalism, Shearmur opined that the state rarely contributed favourably to economic progress, and was more likely to be detrimental. He also raised the issue of whether it was moral to give up one’s liberty even if the result would be an increase in income and living standards.11 The primacy of individual liberty dictates the economic doctrine of neoliberalism, lying at the heart of its rejection of any state intervention beyond the ‘night-watchman’ role; further intervention would be immoral. Referring to the Central and East-European states, Shearmur asserted that there was no reason to assume that the state in these countries would be effective.12 As a result, Shearmur and other neoliberals tend to encourage the delimitation of the state to ‘encourage the provision of many goods and services on a pluralistic basispluralistic because it is fully voluntary’.13 Another apostle of neoliberal economics, Deepak Lal, attacked what he labelled the ‘dirigisme dogma’ – an ideology that espouses that ‘the price mechanism . . . needs to be supplanted (and not merely supplemented) by various forms of direct government control, both national and international, to promote economic development’.14 He questioned the theoretical and empirical standpoint of dirigisme, critiquing the idea that ‘developing countries are “unequal partners” in the current world trading and payments system, and that the rules of the game of the liberal international economic order must be changed to serve their interests’.15

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To Lal, free trade is the preferred instrument for development, since ‘the obstacles to the growth of developing countries’ exports are largely internal, not external; economic agents in these countries have reacted to the distorting incentives created by protectionist re´gimes’.16 Furthermore, Lal defended the ‘trickle-down’ notion and rejected state intervention to achieve a more equitable income distribution. In line with mainstream neoliberal thought, he also accorded importance to ‘liberty’ as a value that is ‘overlooked’ by dirigistes when designing their policies; in his words, the ‘coercive re-distribution of incomes and assets . . . would infringe [on] other moral ends, such as “liberty”, which are equally valued’.17 He concluded that the postwar experience does not lend enough support to the ‘dirigisme’ approach, since it is his view that the problems of developing countries are the result of excessive state intervention as opposed to market imperfections.18 These are the main tenets on which neoliberal development policy is structured, and it fundamentally rejects ‘the belief that neo-classical economics is particularly unsuitable for analysing dynamic processes in developing (as contrasted with developed) countries’.19 Morocco has been following this approach since the early 1980s, as part of a World Bank designed structural adjustment programme. The EU’s policy objectives, on the other hand, do not represent a significant departure from this approach, and the following section looks at whether there is a good case for reducing the role of the state in economic management to promote socioeconomic development in Morocco.

Assessing the Case for Reducing the Role of the State in Socioeconomic Development Strategies The official from DG-ECFIN stated that Morocco’s public sector was ‘hyper-extended’, and that reducing the role of the state was required (from the Union’s point of view) for the ‘trickling-down’ of macroeconomic gains to individuals (i.e. to social outcomes). This is in line with the World Bank’s approach to Morocco and developing countries since the early 1980s, an approach emphasising ‘growth’ conditionality which is ‘focussed on giving free hand and incentives to the private sector of the economy, including “privatisation” of government-owned enterprises (the World Bank terminology for public enterprises) as much as possible’.20

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According to Hunt: the agreements [between the EU and Morocco and between the EU and Tunisia] have given a significant push towards deregulation and privatization. While both weaknesses in available data and methodological problems prohibit precise quantitative assessment of macro-economic impacts, it is possible to make some tentative comments on outcomes to date.21 While the 2005 EU – Morocco Action Plan does not specifically urge the transfer of ownership of public enterprises to the private sector, the 1996 Association Agreement does talk of ‘a suitable framework for the development of a partnership based on private initiative’;22 it also speaks of ‘foster[ing] an environment which favours private initiative’.23 A 2007 report by UNCTAD (the United Nations Conference on Trade and Development) also argued (like Hunt (2011)) that by promoting private initiative, the Association Agreements provided an impetus for privatisation.24 When this is combined with the account provided by the DG-ECFIN official interviewed, it would seem that the espoused policy objectives favoured that the private sector had the prominent role in development efforts, which would lead to a diminished role for the state in the economy, as per the guidelines of the Washington Consensus.25 However, Morocco has been implementing privatisation (i.e. the transfer of enterprise ownership from the public to the private sector) as part of the World Bank’s SAP. Based on the account of the DGECFIN official and the quotes from the Association Agreement, one would not expect the Union to object to this; in fact, most of the privatisation in Morocco occurred after the year 2000 (i.e. after the Association Agreement came into effect).26 In a case study that examined the reduction of the state’s role in Morocco’s industrial sectors, Najem deduced that this process has not yielded the expected benefits. He listed the following as objectives of the process: (1) reducing state expenditure . . . through a general contraction of the public sector; (2) improving efficiency of resource allocation by doing away with state bureaucracies . . .

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(3) providing capital . . . (4) stimulating growth in the private sector; and (5) initiating a partial redistribution of wealth in society [i.e. reducing inequality].27 He mentioned that the Kingdom faced difficulty during the entire process: the state found it especially difficult to sell public companies to the private sector, as there were not many buyers who could assume ownership. The process was also complicated by power struggles within the Moroccan leadership on how to shape the process and the Moroccan public’s hostility to it (based on worries that employees in state-owned enterprises will lose their jobs).28 In terms of the process’ impact on reducing spending by the state, it was not successful in Morocco: of the 75 companies initially targeted for private-sector ownership, only 13 were incurring losses, and the rest were able to generate economic profit. Hence the evidence did not support the idea that the promotion of private enterprise was pursued in order to reduce the size of public expenditure on loss-incurring companies. Najem suggested three reasons why the government continued with the process anyway: gaining foreign investors’ confidence by showing that the government is keen on privatising even profitable companies (i.e. commitment to the process), using the sell-offs ‘as a form of patronage to secure and extend their already strong links with the Moroccan private sector’, and the fact that due to Morocco’s large deficit, the state needed to raise revenue from selling industries off.29 As for reducing the role of the state to allow the market mechanism to improve resource allocation in Morocco, this has not occurred: in fact, ‘a substantial number of the state holdings that Morocco included in its initial list of privatizable holdings’ were already performing efficiently under state control.30 Moreover, in contrast to processes that involve auctioning industries and open sales, the transfer of ownership to the private sector in Morocco largely takes place via private negotiations between the leadership and entrepreneurs with strong links to the Makhzen (Royal Court). As for the process’ ability to improve the functioning of private enterprise in Morocco, this also did not materialise, and Najem cited income inequality as the reason, since only the most privileged class (i.e. the Moroccan upper echelons) had the resources to take over and manage the publicly owned industries. Once one considers the fact that the

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leadership preferred to sell the industries to entrepreneurs who were connected to the Court, this ‘undercut[s] any potential impact the stock market might otherwise have made in terms of facilitating a more open and competitive bidding process’.31 Public enterprises that were sold to private-sector entrepreneurs well-connected to the regime continued to enjoy various forms of protection (by the state) that allowed the entrepreneurs to extract profits at the expense of generating a socially optimal level of output; the state, by extension, benefited by receiving greater rent from these enterprises. The case study also referred to the idea that while Western donors (notably the World Bank, according to Najem) expected the promotion of private enterprise to help the middle-class in Morocco share in the ownership of formerly public enterprises and therefore initiate a wealth redistribution process in the Kingdom. This did not occur. Instead, those who benefited from the process tended to be wealthy investors with powerful political connections, and the majority of Moroccans do not have enough wealth or income to invest in these newly formed companies. In other words, the process neither buttressed the middleclass nor reduced inequality. Therefore, while the Moroccan experience was one in which the government managed to raise ‘more than $2.5 billion’32 as it attempted to promote private enterprises, the process did not transfer loss-making public enterprises to the private sector, did not improve the allocation of resources in the Moroccan economy (i.e. enhancing the competitiveness of the formerly public industries), did not enhance the functioning of private enterprise, and did not reduce income inequality. Najem’s study of the Moroccan scenario bears witness to the dangers of reducing the role of the state in economic activity in developing countries. Risks include selling a publicly owned company to privatesector individuals who do not advance the activities of the company forward or act in the social interest. Layachi cited ‘demands for privatization coming from big private businesses [in Morocco]’.33 Cronyism in Morocco has not been conducive to development, and sources revealed by WikiLeaks show it to be a serious problem. In its 3rd December 2010 edition, El Paı´s published an expose´ from WikiLeaks citing an example whereby cronyism was self-serving. According to the cables, a commercial advisor in the US consulate in Casablanca reported ‘palpable commercial influence by the king and a few of his advisors in

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each major real-estate project in the country’.34 He described the behaviour of the king’s close associates as ‘shamefully avaricious’35 (the Moroccan economist also criticised the self-serving behaviour of lobbyists (see Chapter 4)). Decisions on major investments were effectively taken by only three individuals – the king and his two most loyal confidantes: Fouad el-Himma and Mounir Majidi. The cables revealed that according to a prominent Moroccan executive, ‘talking to anyone else [other than these three individuals] is a waste of time’.36 The US put the Royal Palace on the summit of corrupt practices in Morocco, especially in the real-estate sector. The cables alluded to the example of an American investor who led a consortium and wanted to invest US$ 220 million in a Moroccan real-estate project. Shortly after obtaining permission from the governor of the region, the Palace (representing a society with strong links to it) pressured the investor to incorporate the society in the project. After refusing to do so, the consortium ‘was forced to experience months of paralysis in the project’.37 Eventually, a compromise was reached in which the royally connected society would hold 5 per cent of shares in the project by virtue of its position.38 A commercial advice company warned that institutional procedures were used by the Palace to obtain bribes (from investors) in the realestate sector. Also, while corrupt practices featured under Hassan II, they have acquired a more institutional character under Mohammed VI.39 This example echoes the observations made by Najem in his case study, and shows that in a country where self-serving cronyism continues to undermine institutional practices, regulation is significantly weak. In such scenarios, reducing the role the state in favour of the private sector could lead to these enterprises being owned by individuals purely on the basis of their strong political or economic connections, even if they had neither the ability nor the incentive to ensure that socially optimal levels of production were achieved. Craig and Porter contended that ‘too often, radical downsizing of the state had failed to produce a more efficient or effective set of institutions that could support market growth’.40 Besides, Chang provided a powerful rebuttal to the argument that the ‘hyperextension’ of the state has been detrimental to developing countries. He alluded to the fact that ‘between the 1950s and the mid1990s, US federal government funding accounted for 50– 70 per cent of

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the country’s total R&D funding’,41 which shows that wide-scale public financing (and not private-sector innovation and competition) is chiefly responsible for the US’s technological superiority. Hence, the assumption that reducing the role of the state in economic management will boost innovation due to the promotion of private enterprise is unnecessary, as this example from a country that did manage to develop successfully shows. Several of the EU officials interviewed for this study opined that the size of the public sector is generating productive inefficiencies in Morocco. The DG-ECFIN economist believed that the state curbed the private sector’s ability to assume the lead in reforming Morocco’s economy, resulting in productive inefficiencies. Yet this ignores the fact that promoting the private sector entails numerous cumbersome challenges for developing countries to overcome. For example, ‘many PEs [public enterprises] [in developing countries] operate in industries with low profitability . . . PEs are often those private firms which have been nationalised due to their bad performance’.42 Furthermore, Krugman and Obstfeld contended that ‘successful privatization . . . may depend on capital inflows from abroad’.43 Dawson showed that between 1995 and 2004, Morocco, the NORAFS, and Mediterranean-adjacent Arab states have received less than one-fifth the amount of net FDI and capital inflows (from the EU) that the CEEC received.44 Also, recall that one of the interviewed Moroccan diplomats chided the EU for allotting considerably less financial aid per-capita to the Kingdom than that offered to Bulgaria and Romania prior to accession, while Chapter 5 revealed that Moldova, an EU Eastern neighbour (though not yet an accession candidate) received three times the amount of aid per-capita that Morocco received between 2007 and 2010 in spite of enjoying higher living standards. The World Bank also admitted that reducing the role of the state might not be the answer, stating that ‘in developing economies that specialize in traditional commodities, the ability to break into nontraditional, high-productivity activities is the key driver of economic growth’.45 After examining the cases of Taiwan, Korea, and Chile, it concurred that ‘in each case, active intervention was needed from the state to promote exports and encourage savings and investment. Productive diversification was rarely a purely market-driven process in these experiences’.46 This refers to the structural change theory that

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forms the theoretical framework of this study: productive diversification (i.e. transitioning from exporting agricultural commodities and basic manufactures to more sophisticated products with a higher added value) is the key to development, and reducing the role of the state would prohibit the state from actively managing this process in Morocco as was the case in Taiwan, Korea, and Chile (Chile, as it happens, is a middleincome country like Morocco, whilst Korea and Taiwan shared similar socioeconomic outcomes to the Kingdom in the late 1950s and early 1960s, but both successfully developed into rich countries). Finally, reducing the role of the state is unlikely to reduce income inequality in Morocco, as Najem’s study demonstrated. This point was reaffirmed by FEMISE’s 2011 Report on the Euro-Mediterranean Partnership, which revealed that ‘crony capitalism’ was a feature of the NORAFS, and hence withdrawing the state from industrial production in favour of the private sector augmented the concentration of political and economic power within a tiny elite, to the detriment of creating a more politically and economically egalitarian society.47 Using the post-Cold War experiences of East European (EE) and Former Soviet Union (FSU) countries, Ivaschenko concluded that: ‘economic liberalization and structural adjustments are associated with rising income inequality’.48 Simai also conceded that ‘different dimensions of the transformation process [in the EE and FSU countries] . . . have resulted in growing inequality, de-industrialization, de-modernization, and widespread impoverishment’.49 Morocco’s social outcomes are more likely to improve if inequality is reduced, and reducing the role of the state in economic management makes this task more difficult.

Assessing the Case for Trade Liberalisation in Socioeconomic Development Strategies Another policy objective that is promoted by the EU to support development is the liberalisation of flows of goods, services, and resources between the Union and Morocco, leading towards the future establishment of a deep and comprehensive FTA. According to Martı´n, ‘there is hardly any controversy anymore over trade liberalization as a component of the development model [espoused by the Union]’.50 Chapter 6 referred to two models, the Heckscher-Ohlin model and Lucas’ model of endogenous growth, to reveal that trade liberalisation is

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likely to intensify Morocco’s specialisation in certain exports, inhibit diversification, and prevent structural change in the Kingdom. Evidence on trade liberalisation’s effect on the country verifies this point: according to Augier et al., the idea that increased trade liberalisation would lead to productivity gains due to technology transfer from developed to developing countries did not materialise in Morocco.51 Free trade proponents (see Dawson (2009)) suggested that the flow of goods and services (combined with regular advice and contact at the technocratic level between EU and Moroccan officials) would gradually imbue Morocco with the technological know-how to facilitate the diversification of production. Looking at the Kingdom’s manufacturing sector over the period 1990– 2002, Augier et al. tested for the impact of export promotion and import penetration (increase in imports as a result of liberalisation) on the total factor productivity growth of manufacturing firms in Morocco. The effects of both export liberalisation and import penetration on productivity were ‘insignificant’. Moreover, in contrast to the hypothesis ‘that increased openness should lead to increases in productivity’, and that openness leads to technology transfer and increased competitiveness of Moroccan manufacturing, they discovered that using trade barriers (particularly tariffs) boosted the total factor productivity of smaller firms in Morocco’s manufacturing sector (i.e. firms that did not enjoy substantial economies of scale).52 While Augier et al. demonstrated the limitations of trade liberalisation to productivity growth, technology transfer, and structural change in the Moroccan context, this section reveals that this case is not an exception – the free trade ideology itself raises questions that require addressing. Krugman and Obstfeld, for example, noted that the evidence on technology transfer by multinational corporations from developed countries is mixed, in that it helped Taiwan and Singapore develop, but made no contribution to development in South Korea and Hong Kong.53 Chang mentioned that neoliberals ‘claim that developing country producers need to be exposed to as much competition as possible right now, so that they have the incentive to raise their productivity in order to survive’. This logic, however, ignores that developing countries need to acquire the advanced technology and capability to compete internationally, which they would not do if exposed to global market forces prematurely.54

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He pointed out that Ricardo’s comparative advantage model is simply invalid in the case of developing countries that wanted to enhance their technological prowess, in order to elevate their socioeconomic fortunes: ‘his theory [Ricardo] correctly says that, accepting their current levels of technology as given, it is better for countries to specialize in things that they are relatively better at’.55 Hamour conducted a study of the effect of trade and economic liberalisation on the Moroccan economy. One of the major findings of his study verified a theme that was discussed in Chapter 6 – the fact that the Kingdom failed to transition away from producing and exporting elementary products (agricultural products and textiles): ‘[the] analysis . . . provides no clear evidence of a major structural transformation taking place in Morocco’.56 Another study on trade liberalisation and productivity in manufacturing process in the Kingdom revealed that contrary to the view that trade liberalisation and the resulting increase in imports would allow Morocco to boost the productive capacities of its industries to compete more effectively, there had been no such effect, and that greater competition from trade liberalisation did not enhance productivity in Morocco’s economic sectors (see Haddad, deMelo, and Horton (1996)). Chang also identified another problem with free trade theory: its emphasis on ‘efficiency in the short-run use of given resources, and not about increasing available resources through economic development in the long run . . . [the theory] does not tell us that free trade is good for economic development’.57 Even Lal admitted that the successful East Asian developers ‘retain dirigiste spots in their trade policies [except for Hong Kong], and few have seriously attempted the full-scale liberalisation that is required’.58 In addition, the EU’s (and multilateral institutions such as the WTO) insistence on protecting intellectual property rights (see Chapter 4) is unlikely to reduce the productivity gap between the Union’s countries and Morocco, endangering the Kingdom’s prospects of ‘catching up’ technologically and socioeconomically. The World Bank admitted that the emphasis on recognising ideas as ‘an item of property needing protection’ meant that developing countries have been deprived of a convenient method of ‘learning-by-doing’ by copying technologies and ideas used in developed countries. The Bank also suggested that the rules on protecting intellectual property rights, which have been endorsed by

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multilateral organisations and developed countries, ‘were designed in ignorance of their negative consequences’ on developing countries’ attempts to upgrade their technological capacities and structurally change their economies.59 Given the above analysis, some may be inclined to jump to the conclusion that import-substitution policies should be readopted in order to nurture infant industries. Such a deduction is reckless. Chapter 3 recounted how King Hassan II’s import-substitution policies partially contributed to the crisis that prompted the Kingdom’s acceptance of the World Bank’s SAP in the early 1980s. However, by continuing along the lines of the World Bank’s SAP policies towards Morocco and advocating trade liberalisation, reducing the role of the state in favour of private-sector initiative, and macroeconomic stability, EU policies are unlikely to be the most appropriate for Morocco to develop. Wade, for example, observed that ‘the most successful developers of the second half of the twentieth century practiced vigorous, government-led import replacement . . . side by side with growing, government-encouraged trade’.60 The fact that some instances of import substitution have failed to deliver success did not discredit the strategy altogether. Wade’s conclusion was therefore that, ‘the policy response should be to do import replacement better, not less; and to get multilateral and bilateral development agencies to help governments acquire the skill and commitment to do so’.61 Chapter 6 remarked that while the Union provided Morocco with a 12-year adjustment schedule for gradual liberalisation under the Association Agreements, this timeframe is inadequate for Morocco to structurally change its economy in light of the severity of the country’s socioeconomic plights. Furthermore, as Augier et al. showed, technology transfer did not occur in Morocco, and this dented the country’s efforts to withstand trade liberalisation. The SIA-EMFTA sustainability assessment briefly touched on this issue and concurred that whatever dynamic benefits may accrue to the MNC cannot be a direct result of trade liberalisation.62 In another study of trade liberalisation and Morocco’s manufacturing sector, Achy and Sekkat concluded that the performance of the manufacturing sector has not improved ‘since the late eighties’,63 in spite of the trade liberalisation pursued since the 1980s. In their view, the reduction in tariff barriers that protected Moroccan manufacturing

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firms did not augment the sector’s contribution to the Kingdom’s GDP; in addition, there has been no transition towards more sophisticated manufacturing items (as opposed to textiles, which continue to dominate Morocco’s manufacturing sector) that would generate greater added value.64 In sum, ‘there is a huge difference between saying that trade is essential for economic development and saying that free trade is best (or, at least, that freer trade is better) for economic development’.65 It is also worth noting that trade policies rarely target the collective welfare of individuals across a society: in reality, trade policy is unlikely to reflect the national interest since vested interests are likely to influence the government’s direction in terms of trade policy.66 According to Wade, Krugman’s argument that intervention could end up merely serving specific groups ignores the possibility that ‘if vested interests are strong enough to defeat sensible selective interventions, they will . . . also be strong enough to distort markets and defeat free trade’.67 The UNDP also deduced that ‘trade liberalization policies should not be viewed as a reliable mechanism for generating selfsustaining growth and reducing poverty, let alone achieving other positive human development outcomes’.68 Finally, trade liberalisation is unlikely to help Morocco mitigate its income inequality. In a 2009 FEMISE paper that looked at income inequality and poverty after trade liberalisation in the MENA countries including Morocco, Nathanson et al. discovered that for the MENA region (Morocco was included in the sample), trade liberalisation reduced the incomes of socioeconomically disadvantaged people.69 Moreover, the paper echoed the Lucas model’s emphasis on human capital accumulation (through staff training and learning-by-doing) to promote firms’ productivity in the case of Morocco. However, such a task must be delegated to the state as opposed to the private sector ‘since investment in human capital may be subject to market failures’.70 That being said, there is another study by FEMISE which argued that trade liberalisation between the EU and the MNC would reduce income inequality in the latter, since liberalisation would lead to greater job creation, which would offset the negative effects.71 This argument assumes the following: (1) trade liberalisation would generate economic growth, and (2) the gains from liberalisation would be skewed in favour of the poor households, thereby reducing income differences. The first assumption belies the existing evidence: the UNDP concluded that

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‘there is no convincing evidence that trade liberalization is always associated with economic growth. Thus there is no evidence that trade liberalization is inevitably good for human development’.72 It also went on to assert that ‘evidence for the 1990s indicates a positive (but statistically insignificant) relationship between tariffs and economic growth.73 As for the second assumption, Chapter 2 cited a study by Ravallion and Lokshin that showed that trade liberalisation could exacerbate inequality in Morocco as rural agricultural producers lose while urban households gain. The same chapter also referred to a paper by Radwan and Reiffers that concluded that liberalisation would benefit urban consumers, the industrial sector, and big agricultural producers whilst harming rural consumers and small agricultural producers in the NORAFS. These papers, along with Nathanson et al., pointed to an exacerbation of income inequality following trade liberalisation. The SIA-EMFTA Sustainability Impact Assessment also admitted that there would be an ‘adverse effect on social equity’ from trade liberalisation in the short run because liberalisation would reduce governments’ revenues from tariffs.74 The idea that trade liberalisation could buttress the wealth of the rich at the expense of the rest of society was reiterated in a 2011 European Parliament hearing, which criticised the free trade agreement between the EU and Morocco on the grounds that this policy objective ‘will allow a handful of large companies and investment funds to reap the benefits of the fertile land and valuable natural resources . . . Morocco’s smallholder farmers will be forced to become hired help on miserable salaries [i.e. inequality will not be reduced]’.75 Krugman admitted that, with regards to the relationship between trade liberalisation and inequality, the ‘expectations that trade liberalization would reduce inequality were contradicted by experience’,76 and referred to a study by Behrman et al., who ‘find that an index that combines all five indicators of liberalization is clearly associated with rising inequality’.77

Assessing the Case for Low Inflation Rates in Socioeconomic Development Strategies A third area that EU policies (and the World Bank SAPs before them) prioritised has been Morocco’s macroeconomic stability. GDP grew

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(as did GDP per-capita), inflation rates have been low since the late 1980s, and debt levels have stabilised. In Morocco’s case, the average GDP per-capita growth rate between 1995 and 2009 was 2.61 per cent, which was higher than the 1.4 per cent average per-capita growth rate between 1980 and 1994. Nevertheless, a case can be made that via adopting a so-called ‘prudent monetary and fiscal policy’, the country has done more harm to its socioeconomic developmental prospects. By urging the Kingdom to attain ‘internal and external financial stability’,78 Morocco, to borrow Chang’s phrase, has been encouraged to ‘live within . . . [its] means’,79 without being able to run a deficit in order to invest for the future. Fundamentally, ‘living beyond one’s means may or may not be right; it all depends on the stage of development that the country is in and the use to which the borrowed money is put’.80 The case made against inflation is that it imposes a tax on people’s earnings (reducing the purchasing power of their incomes), and it repels investment. Chang argued that because of their dislike of hyperinflation, neoliberals end up forcing developing countries to substantially lower inflation; yet ‘there is a big logical jump between acknowledging the destructive nature of hyperinflation and arguing that the lower the rate of inflation, the better’.81 Economic theory does concur that inflation imposes a monetary ‘tax’ on society as a whole by reducing the purchasing power of a given currency. Nevertheless, restrictive monetary policies that elevate the interest rate to reduce inflation levels can lead to lower medium-to-long-run economic growth and higher unemployment. Even if present income is ‘protected’, the future income stream is reduced via these measures. Moreover, ‘between 1960 and ’73 . . . when all of today’s rich nations achieved high investment and rapid growth, the average real interest rates were 2.6 per cent in Germany, 1.8 per cent in France, 1.5 per cent in the USA, 1.4 per cent in Sweden, and 1.0 per cent in Switzerland’.82 Contrast these figures with the real interest rates in Morocco from 1994 to 2005 (i.e. after the SAP and the inauguration of the Barcelona Process), which averaged 9.6 per cent. In other words, the developed countries (including EU countries) that preach these policies to Morocco and other countries today have in the past adopted the opposite approach (fiscal and monetary expansion) to stimulate growth and job creation. In fact, it is tight monetary and fiscal policies that curb investment and harm future growth. Such policies do not take into account the fact that a developing country like Morocco is at a different

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Real Interest Rates in Morocco: 1994 – 200583

1994

1995

1996

1997

1998

1999

2000

2001

2002

8.31

3.11

10.62

9.60

1.20

12.58

14.00

12.37

11.88

2003

2004

2005

11.75

10.38

9.89

phase in its developmental journey (compared to developed countries), and hence the Kingdom (which happens to experience a structural unemployment problem and a job creation dilemma as mentioned in Chapter 6) requires looser fiscal and monetary policies, even at the expense of current deficits – after all, these deficits will be reduced once Morocco achieves a higher income stream in the future. These restrictive policies partially explain why the Kingdom struggled to resolve the chronic problems of job creation (especially in non-agricultural sectors) and unemployment reduction (in particular youth unemployment).

Concluding Remarks on EU Policies and Socioeconomic Development in Morocco One of the key enquiries of this study is whether the EU’s Mediterranean policy objectives (since the launch of the Barcelona Process) signalled a significant departure from the neoliberal approach to development, or whether the Union’s policy objectives continued along the same approach to help the country promote its social outcomes and reduce the developmental gap between the Union’s member-states and the Kingdom. Economically, Morocco has been successfully converging to the Union’s policy objectives of trade liberalisation, reducing the role of the state, and maintaining macroeconomic stability – the country boasts a liberal economy that is open to international trade, and where the spirit of private-sector initiative lingers within the corridors of its economic policy making. The Union has preconditioned access to its policy instruments (as discussed in Chapter 5) on the Kingdom’s acceptance of these objectives as outlined in the Association Agreement and the Action Plan.

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The question, then, is whether this formula has begun to substantially improve the country’s social outcomes. This book makes the assertion that this formula is not the most appropriate because it is structured on principles that have not been found always to promote development. Various studies (see Hamour (1998) and Augier et al. (2010)) pointed out that trade liberalisation and reducing the role of the state did not allow the Kingdom to structurally transform its economic basis and transition away from producing mainly agricultural products and textiles towards more sophisticated manufactures and products that reap a higher economic value added. Moreover, Morocco could not improve its record in human capital accumulation and acquire the technological capacity required to undergo such a structural change (see Achy and Sekkat (2004)). In the case of Morocco, the country has continued to suffer from a weak education system and lack of job creation in sectors that would accrue a high value-added to the economy. Improvements across some macroeconomic indicators have been offset by a growing income gap between the EU’s members and Morocco, a lack of improvement in the outcomes of the education system, structural unemployment, and an inability to diversify towards more sophisticated exports that accrue higher aggregate income. In addition, the policy objectives espoused are unlikely to help the Kingdom reduce its high levels of income inequality, which Chapter 7 argued would harm the country’s future economic growth and inhibit the procurement of better social outcomes. This chapter referred to studies (see Nathanson et al. (2009), Najem (2001), and FEMISE’s 2011 Report on the Euro-Mediterranean Partnership) that argued that reducing the role of the state in economic management and trade liberalisation were unlikely to reduce inequality in Morocco. In 2009, the European Commission administered an evaluation of one of its major financial aid instruments under the Barcelona Process: the MEDA programme. In terms of its effect on socioeconomic development, the Commission acknowledged that it ‘did not target its interventions on specific poor population groups [under MEDA] but rather on enhancement of the managerial performance of institutions’.84 That being said, Chapters 5 and 7 pointed out that in spite of shortcomings in the EU’s policy objectives, its policy instruments have been the most significant (of all of Morocco’s developmental partners) to

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the country’s reform effort. As Ayadi and Gadi (2011) argued, the EU is a donor with altruistic intentions. However, the effect of its policy instruments on the sectoral reform effort has been constrained not only by the limited nature of the aid and the policy objectives on which access to the instruments was preconditioned, but also by problems in policy implementation on the Moroccan side, which include inability to coordinate the aid received towards projects implemented in each sector, the presence of an urban bias in service provision due to the growing clout of the urban constituency as a result of urbanisation, and lack of transparency in policy implementation. These factors collectively produced a scenario in which Morocco ranked low in the HDI, as Chapter 6 revealed. Politically, while the Union’s insistence on judicial reforms and good governance may have been well intentioned, its efforts have yielded limited results. Efforts on this front are based on the assumption that good governance is a precondition rather than an outcome of development. Some of the interviewed EU officials also argued that Morocco’s conservative culture was an impediment to reform and progress. This logic, however, ignores the fact that socioeconomic development also has a strong influence on cultural attributes. The overall verdict on the EU’s approach towards Morocco and the NORAFS in general is succinctly summed-up by Martı´n: the economic model prevailing since the 1980s, based on limiting the role of the State, economic liberalization, the opening up of trade and macroeconomic orthodoxy, seems to be showing its limits, leading some countries to consider alternatives in economic policy. The economic dependence of many of the partner countries in the region with respect to the EU negatively affects their perspectives for growth or recovery.85

CONCLUSIONS EU—MOROCCAN AND EU—NORTH AFRICAN RELATIONS IN A NEW, FAST-EVOLVING REGIONAL CONTEXT

In an interview with journalist Ignacio Cembrero, Prince Mulay Hicham, who is King Mohammed VI’s cousin and third-in-line to the throne, remarked that Tunisia’s January 2011 revolution represented ‘the collapse of a wall of fear that existed in the mind of every Arab citizen – a wall that made uprisings previously impossible’.1 He warned his cousin that ‘Morocco will not be an exception . . . [and that] it would be better to liberalise politically than wait for the fierce protests’.2 Mulay Hicham’s words came against the backdrop of the so-called Arab Spring – a series of popular uprisings principally provoked by the abject political and socioeconomic situation in the Arab World. When asked whether Morocco could experience something similar to the Tunisian revolution, Hicham decried the ‘wide gulf between social classes, which has undermined the legitimacy of the political and economic system in Morocco’.3 In his view, ‘the pervasiveness of favouritism and cronyism is threatening the state’s survival’.4 The prince’s words corroborated the notion that a paramount challenge to Morocco’s developmental prospects is its pronounced income inequality. Chapter 7 argued that income inequality generated social and economic inequities across gender and geographical lines, restricted

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the Kingdom’s ability to observe greater health and educational outcomes on a national level, aggravated community relations, constrained social mobility, and endangered its long-term growth prospects. Chapters 5 and 7 demonstrated that of all of Morocco’s developmental partners and donors, the EU has been the most generous and supportive of the Kingdom’s reform effort. It also offered the most diversified form of assistance (which includes grants under MEDA and ENPI, loans through the EIB, and logistic assistance through meetings and fora). Nonetheless, this aid has been limited in nature considering the monumental challenge facing the Kingdom as it tries to improve its socioeconomic outcomes. Problems in policy implementation on the Moroccan side have aggravated the situation; nevertheless, as pointed in Chapter 5, the head of DG-AIDCO in 2008 pointed out that in spite of implemental problems in recipient countries, the alternative, which is not to provide aid, is worse. The argument made in this book is that the policy objectives pursued by the EU (and on which access to the policy instruments has been preconditioned) have not proven to be the most appropriate for development in Morocco. This study has sought to establish whether the EU’s Mediterranean policies between 1995 and 2010 represented a departure from the neoliberal approach to socioeconomic development, or whether they have continued along the same approach. It has argued that this approach has not been the most appropriate to promote socioeconomic development in Morocco, and effectively reduce the economic gaps between the Kingdom and the Union. Fundamentally, the Union’s policy objectives are similar to those adopted by the World Bank, and their performance in promoting social standards in the Kingdom has been limited so far. Endogenous growth theory conditions sustained economic growth on a country’s capacity to innovate and create knowledge. This necessitates human capital formation and a labour force capable of harnessing knowledge to diversify production into sectors with a higher value-added to the economy. On this point, the IEMed 2011 Survey noted that the majority of respondents wanted education in the MNC as a whole to be prioritised in future Euro-Mediterranean initiatives, especially female and youth education.5 One of the European Commission officials interviews for this study defended the principle that macroeconomic improvements (economic

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growth, rising income levels, low inflation, and low levels of public debt) would gradually translate into improvements across social outcomes. This principle does not stand up to the actuality of the situation in Morocco. GDP per-capita increased by over 70 per cent since the early 1980s, inflation levels were less than 5 per cent by the mid1990s, and average annual economic growth over the past three decades exceeded the MENA region’s average. Nevertheless, Morocco continues to suffer from relatively low HDI levels. Chapter 6 also revealed that the EU– Morocco income gap has widened. By endorsing the reduction of the state’s role in economic management, trade liberalisation, and macroeconomic stability (i.e. low inflation), the EU’s policy objectives have so far been unable to help Morocco develop, since the country needs to structurally transform its economy via industrialisation. Chapter 8 referred to Chang’s observation that development is a process during which a country acquires the prerequisite technological capacity to redirect its economic activities, as well as to enhance the socioeconomic welfare of its citizens via strategic state intervention. EU policy objectives have largely continued along the lines of the World Bank’s policy formula in the 1980s, and Chapter 6 revealed that link by directly citing the Union’s National Indicative Programme for Morocco. Regionally, the main events that could influence the future direction of EU –Moroccan and EU – North African relations are the uprisings that comprise the so-called Arab Spring. As far as the repercussions of these uprisings to Morocco are concerned, it seems that King Mohammed VI decided to heed Mulay Hicham’s advice, and pre-empt the intensification of unrest within the Kingdom. Following the deposition of former President Ben-Ali in Tunisia, Morocco witnessed a series of protests over several months, as thousands of people across the country demanded constitutional reforms and greater political and judicial transparency. Organisers of these protests were members of the so-called ‘February 20th movement’. A me´lange of leftists, Islamists, and liberals disenchanted by the monarchy, this movement’s name alludes to the date of the first major protest to take place. After nearly four months, the king decided to present a series of constitutional reforms that would delimit the monarchy’s authority. According to the New York Times’ Steven Erlanger, these reforms include the transmission of legislative powers to the prime minister, who ‘would

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be able to appoint government officials and ministers and would have the power to dissolve Parliament’.6 The Guardian’s Giles Tremlett reported that ‘the new constitution explicitly states that the king will now have to pick the country’s prime minister from the party that wins elections to what, up until now, has been a largely rubber-stamp parliament’.7 He also quoted King Mohammed VI as saying that ‘the constitution “criminalizes torture, enforced disappearance, arbitrary detention and all forms of discrimination and inhuman, degrading practices” while also upholding “freedom of the press and of expression and opinion”’.8 Nonetheless, the king retains power over the army and over religious affairs, ‘presides over the body that regulates the judiciary’,9 and his reforms did not guarantee a transition towards a full-fledged democracy, as the February 20th movement has been demanding. Tremlett specifically alluded to the scepticism of Najib Chawki, a movement activist, who stated that ‘the constitutional reform draft “does not respond to the essence of our demands which is establishing a parliamentary monarchy. We are basically moving from a de facto absolute monarchy to a constitutional monarchy”’.10 In spite of February 20th’s objections, the reforms were resoundingly approved by a referendum conducted on 1st July 2011. Reuter’s Souhail Karam reported that ‘preliminary results showed 98.5 percent of voters approved the text, Interior Minister Taib Cherkaoui said in a statement read out on state media, citing the count from 94 percent of polling booths . . . with a turnout put at nearly 73 percent’,11 while El Paı´s’ Cembrero noted that ‘no less than 60.03% of the 13.1 million Moroccans registered in the census have fulfilled what state media described as a “national obligation”’12. International reactions to the reforms have generally been positive. King Juan Carlos congratulated the Moroccan king on 18 June following the latter’s announcement of the proposed reforms13. Cembrero also reported that French President Nicolas Sarkozy described the reforms as ‘an exemplary initiative’,14 while the French Socialist opposition ‘celebrated the democratic advance’.15 UN Secretary-General Ban Ki-Moon ‘welcomed the reforms’,16 and both Catherine Ashton (the EU’s High Representative) and Stefan Fule (EU Commissioner for Enlargement and the European Neighbourhood Policy) ‘welcome[d] the positive outcome of the referendum on the new Constitution in Morocco and commend[ed] the

CONCLUSIONS

257

peaceful and democratic spirit surrounding the vote’;17 both also pledged that ‘the European Union is ready to fully support Morocco in this endeavour [undertaking the reforms]’.18 What must be said, however, is that these constitutional reforms were introduced by the king to prevent a scenario akin to what had transpired in Tunisia, Libya, and Egypt. These proposals were an attempt to forestall further political and socioeconomic unrest, which could, in turn, induce a wide-scale revolution. It was the Arab Spring, and the fact that the February 20th movement’s protests were modelled after those in Tunisia and Egypt, that prompted the king to amend the constitution. These reforms are unlikely to harm EU – Moroccan relations, and neither are they likely to prompt a reconfiguration in the strategies adopted under the auspices of the Barcelona Process. The reason is that EU officials see the reforms as ‘a step in the right direction’. Since being taken aback by the events of the Arab Spring, the Union has been keen to praise any NORAFS that initiates even the slightest move towards democratic governance to assuage public anger. Ms Ashton and Mr Fule’s statement made it clear that they fully endorsed the king’s steps, which they regarded as ‘consistent with Morocco’s ‘Advanced Status’ with the EU’.19 As a result, these reforms are much more likely to deepen EU– Moroccan ties on the basis of the existing platform, which in turn could lead to Morocco receiving additional ‘rewards’ – in line with the positive conditionality principle enshrined by the ENP. However, Fathallah Oualalou, a former Moroccan finance minister, did not agree that the EU’s current approach would put the NORAFS in general on the right path politically and economically. He considered the Arab Spring ‘a great opportunity to re-launch Euro-Mediterranean relations along a new perspective that stresses renovation and progress’.20 He argued that the Arab Spring could influence EuroMediterranean relations in four ways: (1) Democratic transition in the NORAFS ‘will yield significant changes in matters of economic governance, providing an impulse to productive diversification, more transparency, and less corruption’.21 (2) Political reform will replace the NORAFS tendency towards undermining the territorial integrity and security of their neighbours with a tendency for greater synergy and south-south cooperation.22

258

EUROPE'S RELATIONS

WITH

NORTH AFRICA

(3) The advent of democracy will help create an agenda of ‘joint development’ and ‘interdependence’ based on pluralistic actions and trans-Mediterranean solidarity, which would replace the existing Euro-Mediterranean strategy. In his opinion, fashioning this new agenda will require an effective process of technology and capital transfer from the EU to the NORAFS. The Union also needs to replace its present views on migration with a ‘strategy of collaboration that respects the dignity of immigrants and supports interdependence [between the Union and the NORAFS]’.23 (4) Democracy in the NORAFS and the wider Middle East will facilitate the ‘emergence of conditions necessary to implement a just and lasting peace in the Middle East . . . Resolving this question is vital to consolidate the advancement of the Arab World towards democracy and create the conditions for stability in the Mediterranean’.24 By embracing ‘joint development’ as described by Oualalou, the Union would appreciate that its current policy objectives for delivering socioeconomic welfare to Morocco and the NORAFS are not the most appropriate for development. In fact, one of the EU officials interviewed for this study referred to Tunisia’s developmental situation as ‘a success’, just two months prior to the country’s 2011 revolution, which was largely provoked by socioeconomic failures. Politically, Moulay Hicham urged the Union ‘to wake up, stop supporting unviable dictators, and start supporting movements that aspire to pluralism and political change. The Union needs to stop supporting dictatorships out of fear of radical Islam’.25 Time will tell whether Morocco and the other NORAFS will democratise, and whether the EU will respond by reshaping its modus operandi. From a socioeconomic point of view, the aspiration that macroeconomic benefits would translate into gains across social outcomes did not materialise, and Morocco has been unable to diversify exports, mitigate income inequality, and reduce the developmental gap with EU member-states. In this regard, the call for reform from supporters of the Arab Spring continues to attain profound significance.

NOTES

Introduction European –North African Relations under the Spotlight 1. Michael Grant (1996), The Roman Emperors: A Biographical Guide to the Rulers of Imperial Rome 31 BC – AD 476. London: Weidenfeld and Nicolson, p. 152. 2. Ibid. 3. Ibid., p. 155. 4. Paul E. Walker (2002), Exploring an Islamic Empire: Fatimid History and its Sources. London: I.B.Tauris in association with The Institute of Ismaili Studies, p. 35. 5. Walker (2002), p. 36. 6. Grant (1996), p. 152. 7. D.D. De Lacy O’Leary (1923), A Short History of the Fatimid Caliphate. London: Kegan Paul, Trench, Trubner & Co., Ltd., pp. 98, 99. 8. The European Commission’s The Barcelona Process (2010) [Web]. 9. See Barcelona Declaration (1995). 10. Elements of the discussion in Section 1.3 are borrowed from Fawaz Yusuf (2014), ‘A Structural Change Analysis of EU-Moroccan Trade Liberalisation and Economic Development between 1995 and 2010’. The Journal of North African Studies, Vol. 19, No. 3, pp. 413– 32. 11. United Nations (2006), World Economic and Social Survey. New York: United Nations Publications, p. 30. 12. Justin Lin (2009), Economic Development and Structural Change. Lecture at Cairo University, Cairo, Egypt, pp. 4, 5. 13. See Library of Economics and Liberty (2013), ‘Keynesian Economics’ [Web]. 14. Michael Todaro and Stephen Smith (2008), Economic Development. 10th edn. USA: Addison Wesley Publishing Ltd., p. 112. 15. W.W. Rostow (1960), The Stages of Economic Growth: A Non-Communist Manifesto. Cambridge: Cambridge University Press, 1960, Chapter 2.

260 16. 17. 18. 19. 20. 21. 22. 23. 24. 25. 26.

27. 28. 29.

30. 31. 32.

33. 34. 35. 36. 37. 38. 39. 40. 41.

NOTES

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8 –19

Ibid. Todaro and Smith (2008), p. 116. Ibid., p. 123. Young Namkoong (1999), ‘Dependency Theory: Concepts, Classifications, and Criticisms’, International Area Studies Review, Vol. 2, No. 1, p. 144. Todaro and Smith (2008), p. 128. Ibid., p. 131. Ibid., p. 119. Ibid., p. 122. Ibid., p. 116. Ibid., p. 123. Cristo´bal Kay and Robert Gwynne (2000), ‘Relevance of Structuralist and Dependency Theories in the Neoliberal Period: A Latin American Perspective’, Journal of Developing Societies, Vol. 16, Issue 1, p. 63. Kay and Gwynne (2000), p. 62. Diana Hunt (2011), ‘The UfM and Development Prospects in the Mediterranean: Making a Real Difference?’, Mediterranean Politics, 16 (1), p. 171. Linda Mayoux (2006), ‘Quantitative, Qualitative or Participatory? Which Method, for What and When?’, in Desai, Vandana and Potter, Robert B. (eds), Doing Development Research. London: SAGE Publications Ltd, pp. 116, 118. Ibid., pp. 120, 121. Ibid. David Hulme (2007), ‘Integrating Quantitative and Qualitative Research for Country Case Studies for Development’. Global Poverty Research Group GPRGWPS-063, p.15. Ibid., p. 14. Ibid. Ibid. Ibid. Ibid., p. 13. Ibid., pp. 3, 4. Katie Willis (2006), ‘Interviewing’, in Desai, Vandana and Potter, Robert B. (eds), Doing Development Research. London: SAGE Publications Ltd., p. 145. Ibid., p. 146. Jennifer Mason (2002), Qualitative Researching. 2nd edn. London: SAGE Publications Ltd., p. 65.

Chapter 1 EMP, ENP, and UfM: Propelling Euro-Mediterranean and European – North African Relations Forward 1. Paul Halsall (December 1997), Fordham University’s Medieval Source Book: Urban II (1088-1099): Speech at Council of Clermont, 1095 [Web].

NOTES

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20 –25

261

2. The UfM will be included since it was introduced in 2008. However, Chapter 2 will show that in the context of this study and its emphasis on socioeconomic development, the EMP Association Agreements and ENP Action Plans constitute the primary foci of analysis. 3. Ricardo Gomez (2003), Negotiating the Euro-Mediterranean Partnership: Strategic Action in EU Foreign Policy?, Hampshire: Ashgate Publishing Ltd., p. 26. 4. Ibid. 5. The European Commission’s CEC Bulletin Supplement 2 (1995), p. 21. 6. Gomez (2003), p. 34. 7. The European Commission’s CEC Bulletin Supplement 2 (1995), p. 21. 8. Ibid., p. 10. 9. Ibid., p. 12. 10. Ibid., p. 11. 11. EuroMeSCo (2005), Towards a Euro-Mediterranean Community of Democratic States: A EuroMeSCo Report. Portugal: EuroMeSCo Secretariat, p. 15. 12. Fluvio Attina (2003), ‘The Euro-Mediterranean Partnership Assessed: The Realist and Liberal Views’, European Foreign Affairs Review, 8 (2), p. 185. 13. EuroMeSCo (2005), p. 15. 14. The European Commission’s CEC Bulletin Supplement 2 (1995), p. 11. 15. Haizam Amirah Fernandez and Richard Youngs (2005), ‘Introduction’, in Amirah Fernandez, Haizam and Youngs, Richard (eds), The EuroMediterranean Partnership: Assessing the First Decade. Madrid: Real Instituto Elcano and Fride, p. 15. 16. Ibid., p. 16. 17. The European Commission’s CEC Bulletin Supplement 2 (1995), p. 5. 18. Ibid. 19. Ibid. 20. Elizabeth Nash (1995), Mediterranean Trade Deal Clinched’. The Independent [Web]. 21. Mouna Naim (1995), ‘Pays Europe´ens et Me´diterrane´ens Tentent de Rede´finir Leurs Relations’. Le Monde, 28 November. NOTE: throughout the book, French and Spanish material has been translated by the author. 22. John Hooper (1995), ‘Club-med sets seal on a brave new era’, The Guardian, 29th November, p. 9. 23. The European Commission’s The Barcelona Process (2010) [Web]. 24. The European Commission’s Barcelona Declaration (1995), p. 2. 25. The European Commission’s CEC Bulletin Supplement 2 (1995), p. 8. 26. Ibid., p. 11. 27. Ibid., p. 12. 28. The European Commission’s The Barcelona Process (2010) [Web]. 29. The European Commission’s Barcelona Declaration (1995), p. 2. 30. Ibid. 31. The European Commission’s CEC Bulletin Supplement 2 (1995), p. 8. 32. Ibid.

262

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25 –29

33. Ibid. 34. Roberto Aliboni et al. (2008), Union for the Mediterranean: Building on the Barcelona Acquis. Paris: The European Union Institute for Security Studies, p. 8. 35. The European Commission’s Barcelona Declaration (1995), p. 9. 36. The European Commission’s CEC Bulletin Supplement 2 (1995), p. 5. 37. Elena Baracani (2005), From the EMP to the ENP: A New European Pressure for Democratization? The Case of Morocco. Israel: The Centre for the Study of European Politics and Security, p. 5. 38. Ibid., p. 8. 39. The European Commission’s CEC Bulletin Supplement 2 (1995), p. 11. 40. Alexander Geiger and Ernst Stetter (2008), Barcelona Process Union for the Mediterranean: Readjusting the Euro-Mediterranean Partnership. Brussels: Friedrich Ebert Stiftung, p. 2. 41. Ibid. 42. Ibid. 43. Raffaella Del Sarto and Tobias Schumacher (2005), ‘From EMP to ENP: What’s at Stake with the European Neighbourhood Policy towards the Southern Mediterranean?’, European Foreign Affairs Review, 10 (1), p. 17. 44. Eberhard Kienle (2005), ‘Political Reform through Economic Reform? The Southern Mediterranean States Ten Years after Barcelona’, in Amirah Fernandez, Haizam and Youngs, Richard (eds), The Euro-Mediterranean Partnership: Assessing the First Decade. Madrid: Real Instituto Elcano and Fride, p. 24. 45. Aliboni (2005), p. 48. 46. Attina (2003), p. 182. 47. Bichara Khader (2005), ‘Immigration and the Euro-Mediterranean Partnership’, in Amirah and Youngs, The Euro-Mediterranean Partnership: Assessing the First Decade, p. 84. 48. Richard Youngs (2001), Is the European Union Supporting Democracy in its Neighbourhood?. Madrid: FRIDE in association with the European Council on Foreign Relations, p. 81; taken from Rosa Balfour and Antonio Missiroli (2007) Reassessing the European Neighbourhood Policy. Rome: European Policy Centre Issue Paper Number, p. 13. 49. Attina (2003), pp. 198, 199. 50. The European Commission’s The European Neighbourhood Policy (2010) [Web]. 51. Del Sarto and Schumacher (2005), p. 18. 52. The European Commission’s The European Neighbourhood Policy (2010) [Web]. 53. The European Commission’s ENP Strategy Paper (2004), p. 8. 54. The European Commission’s Wider Europe-Neighbourhood (2003), p. 3. 55. The European Commission’s ENP Strategy Paper (2004), p. 3. 56. Ibid. 57. Ibid.

NOTES 58. 59. 60. 61. 62. 63. 64. 65.

66.

67.

68. 69. 70. 71. 72. 73. 74.

75. 76. 77. 78. 79. 80. 81. 82. 83. 84. 85.

TO PAGES

29 –33

263

Ibid., p. 22. Ibid. The European Commission’s Wider Europe-Neighbourhood (2003), p. 15. The European Commission’s ENP Strategy Paper (2004), p. 7. The European Commission’s ENP: How it Works (2010) [Web]. Del Sarto and Schumacher (2005), p. 23. Michael Emerson (2004) The Wider Europe Matrix. Brussels: Centre for European Policy Studies, pp. 69 – 75. Manuela Moschella (2007), ‘An International Political Economy Approach to the Neighbourhood Policy. The ENP from the Enlargement and the Mediterranean Perspectives’, European Political Economy Review, Issue 7, p. 167. Gwendolyn Sasse (2007), The ENP Process and the EU’s Eastern Neighbours: ‘Conditionality-Lite’, Socialisation, and ‘Procedural Entrapment’. Nottingham: The University of Nottingham, p. 4. Peter Van Elsuwege (2011) ‘An Assessment of the First Phase of the European Neighbourhood Policy: Perspectives and Revision’. Barcelona: IEMed Yearbook 2011, p. 142. Sasse (2007), p. 9. The European Commission’s A Strong ENP (2007), p. 2. Emerson et al. (2007), p. 1. Balfour and Missiroli (2007), p. 6. Ibid. Heather Grabbe (2004), How the EU Should Help its Neighbours. London: Centre for European Reform Policy Brief, p. 1. Rosa Rossi (2004), ‘The European Neighbourhood Policy in Perspective’, in Attina, Fluvio and Rossi, Rosa (eds), European Neighbourhood Policy: Political, Economic, and Social Issues. Catania: The University of Catania, p. 12. See Moschella (2007). The European Commission’s A Strong ENP (2007), p. 2. Ibid. Quote by H.E. Nicolas Sarkozy, President of France. Source: Le Monde et al. (2008). Renata Goldirova (2007), ‘France Muddies Waters with “Mediterranean Union” Idea’ [Web]. Richard Gillespie (2008), ‘A “Union for the Mediterranean” . . . or for the EU?’, Mediterranean Politics, 13 (2), pp. 278, 279. Aliboni et al. (2008), p. 13. Stefan Steinberg (2008), ‘France Bids to Extend its Influence through Founding of Mediterranean Union’ [Web]. Spiegel Online (2007), ‘Berlin Rejects EU “Corrosion”: Merkel Slams Sarkozy’s “Club Med” Plans’ [Web]. Florensa (2010), p. 61. Elitsa Vucheva (2008), ‘France says it has no preferred EU president candidate’. Brussels: EU Observer [Web].

264

NOTES

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33 – 39

86. Ibid. 87. Rosa Balfour (2009), ‘The Transformation of the Union for the Mediterranean’, Mediterranean Politics, 14 (1), p. 100. 88. The European Commission’s The Euro-Mediterranean Partnership (2010) [Web]. 89. Gillespie (2008), p. 278. 90. Balfour (2009), p. 101. 91. Gillespie (2008), p. 278. 92. Balfour (2009), p. 102. 93. The European Commission’s The Euro-Mediterranean Partnership (2010) [Web]. 94. Robert Aliboni and Fouad Ammor (2009), Under the Shadow of ‘Barcelona’: From the EMP to the Union for the Mediterranean. EuroMeSCo Paper 77, p. 6. 95. Ibid., p. 7. 96. Ibid. 97. Balfour (2009), pp. 99, 100. 98. IEMed Survey (2010), p. 27. 99. Ibid., p. 28. 100. Aliboni and Ammor (2009), p. 13. 101. Ibid. 102. Gillespie (2008), p. 277. 103. Ibid., p. 284. 104. Balfour (2009), p. 104. 105. Gillespie (2008), p. 278. 106. Ibid., pp. 281, 282. 107. Balfour (2009), p. 101. 108. Ibid., p. 102. 109. Ibid., p. 103. 110. Gillespie (2008), p. 283. 111. Aliboni et al. (2008), p. 12. 112. IEMed Survey (2010), p. 36. 113. Ibid., p. 35. 114. Aliboni and Ammor (2009), p. 18. 115. Gillespie (2008), p. 281. 116. Andreu Bassols (2010), ‘Euro-Mediterranean Economic Integration’. Barcelona: IEMed Yearbook, p. 91. 117. Ibid. 118. The European Commission’s A Strong ENP (2007), p. 3. 119. Gillespie (2008), p. 277. 120. Ibid., p. 280. 121. Aliboni et al. (2008), p. 14. 122. Aliboni and Ammor (2009), p. 13. The Reiffers Report was drawn up by the Institut de la Mediterranee, Rapport du Groupe d’experts reuni par l’Institut de la Mediterranee sur le projet d’Union Mediterraneene, Marseilles, October 2007). The quotations are from paragraphs 27 and 33 of the Report.

NOTES

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39 –51

265

123. Balfour (2009), p. 105. 124. Volker Perthes (1998), ‘Germany Gradually Becoming a Mediterranean State’, EuroMeSCo Publications [Web]. 125. Gomez (2003), p. 31. 126. The European Council (2011) [Web]. 127. Carl Dawson (2009), EU Integration with North Africa: Trade Negotiations and Democracy Deficits in Morocco. New York: Tauris Academic Studies, p. 102. 128. See Julia Choucair (2006), ‘Illusive Reform’, Carnegie Papers Middle East Series, No. 76.

Chapter 2 EMP, ENP, and Economic Progress in North Africa & the Southern Mediterranean: A Mission that Remains in Progress 1. Jacob Viner (1927), ‘Adam Smith and Laissez Faire’, The Journal of Political Economy, 35 (2), p. 200. 2. Ibid., p. 199. 3. Ibid. 4. Ibid. 5. Pascal Fontaine (2000) The Schuman Declaration: May 9th 1950 [Web], p. 12. 6. The European Commission’s CEC Bulletin Supplement 2 (1995), p. 22. 7. Ibid. 8. Ibid. 9. Ibid., pp. 22 and 23. 10. Ibid., p. 13. 11. Ibid. 12. Ibid. 13. Ibid., p. 14. 14. Ibid., p. 34. 15. Ibid., pp. 34, 35. 16. Ibid., p. 35. 17. Ibid. 18. Ibid. 19. Ibid., p. 36. 20. Ibid. 21. Ibid., p. 15. 22. Ibid. 23. Ibid., p. 14. 24. Ibid., p. 39. 25. The European Commission’s EMP Economic and Financial Cooperation (2010) [Web]. 26. The discussion of the three mechanisms can be referenced in ibid. 27. Ibid.

266 28. 29. 30. 31. 32. 33. 34. 35. 36. 37.

38.

39. 40. 41. 42. 43. 44.

45. 46. 47. 48. 49. 50. 51. 52.

NOTES

TO PAGES

51 –55

Ibid. Ibid. Ibid. See The European Commission’s Environment: Mediterranean Neighbours (2010) [Web]. See The Commission’s Confe´rence Ministerielle Euro-Me´diterrane´enne Sur Les Transports (2005). See The European Commission’s Enterprise and Industry: Industrial Competitiveness (2010) [Web]. The European Commission’s Europa Summaries of EU Legislation: MEDA Programme (2007) [Web]. Ibid. Ibid. Heba Handoussa and Jean-Louis Reiffers (2001), Economic Transition Process and the Implementation of the Euro-Mediterranean Partnership. FEMISE Report, p. 1. Ivan Martı´n and Erwan Lannon (2010), ‘Euromed Survey of Experts and Actors 2009: What Does It Tell Us About the Present and Future of the EuroMediterranean Partnership?’, IEMed Yearbook 2010, p. 126. Ibid., p. 127. Ibid., pp. 127, 128. Luc De Wulf et al. (2009), Economic Integration in the Euro-Mediterranean Region. Brussels: Centre for European Policy Studies, p. 166. Ibid., p. 167. Ibid., p. 170. Malgorzata Jakubiak and Wojciech Paczynski (2007), The New EU Frontier: Perspectives on Enhanced Economic Integration. Warsaw: Centre for Social and Economic Research Report Number 71, p. 70. Alfred Tovias (2002), The Political Economy of the Partnership in Comparative Perspective. Israel: The Hebrew University of Jerusalem [Web], p. 4. Tovias (2004), Economic Liberalism between Theory and Practice. California: Institute of European Studies, UC Berkeley, p. 4. Brigid Gavin (2005), The Euro-Mediterranean Partnership. An Experiment in North-South-South Integration. Belgium: Intereconomics, p. 360. Samir Radwan and Jean-Louis Reiffers (2006), FEMISE Report on the EuroMediterranean Partnership. FEMISE Report, p. 1. Ibid., p. 8. EuroMeSCo (2005), Towards a Euro-Mediterranean Community of Democratic States: A EuroMeSCo Report. Portugal: EuroMeSCo Secretariat, p. 21. Ibid., p. 22. George Joffe´ (2005), ‘The Euro-Mediterranean Partnership and Foreign Investment’, in Amirah Fernandez, Haizam and Youngs, Richard (eds), The Euro-Mediterranean Partnership: Assessing the First Decade. Madrid: Real Instituto Elcano and Fride, p. 36.

NOTES

TO PAGES

55 –60

267

53. Saleh Nsouli (2006), The Euro-Mediterranean Partnership Ten Years On: Reassessing Readiness and Prospects. Monaco: International Monetary Fund at Crans-Montana Forum [Web]. 54. Ibid. 55. Ibid. 56. Robert Aliboni and Fouad Ammor (2009), Under the Shadow of ‘Barcelona’: From the EMP to the Union for the Mediterranean. EuroMeSCo Paper 77, p. 16. 57. SIA-EMFTA Consortium (2007), Sustainability Impact Assessment of the EuroMediterranean Free Trade Area. Manchester: University of Manchester Impact Assessment Research Centre, Institute for Development Policy and Management, p. 15. 58. Ibid. 59. The European Commission’s CEC Bulletin Supplement 2 (1995), p. 15. 60. Aliboni and Ammor (2009), p. 17. 61. The European Commission’s ENP Strategy Paper (2004), p. 14. 62. Ibid. 63. Ibid. 64. Ibid., p. 15. 65. Ibid. 66. Ibid. 67. Ibid. 68. Ibid., p. 16. 69. Ibid. 70. Ibid. 71. Ibid., p. 24 72. Ibid., p. 25. 73. Ibid. 74. The European Commission’s A Strong ENP (2007), pp. 4– 10. 75. Marco Fantini and Michaela Dodini (2005), ‘The Economic Effects of the European Neighbourhood Policy’, in Mayhew, Alan and Copsey, Nathaniel (eds) The European Neighbourhood Policy and Ukraine. Sussex: Sussex European Institute, University of Sussex, p. 73. 76. Ibid. 77. Saleem Haddad and Sandra Pogodda (2006), The European Neighbourhood Policy A View from the South. GO-EuroMed Working Paper No. 0614, p. 17. 78. Ibid., p. 19. 79. Kataryna Wolczuk (2009), ‘Implementation without Coordination: The Impact of EU Conditionality on Ukraine under the European Neighbourhood Policy’, Europe-Asia Studies, 61 (2), p. 188. 80. Ibid., p. 208. 81. Jakubiak and Paczynski (2007), pp. 69, 70. 82. Ibid., p. 72. 83. Ibid., p. 76. 84. Ibid., p. 85.

268 85. 86. 87. 88.

89. 90. 91. 92. 93.

94.

95. 96. 97. 98. 99. 100. 101. 102.

103. 104. 105. 106. 107. 108. 109. 110.

111. 112.

NOTES

TO PAGES

60 – 68

Ibid. Ibid., p. 89. Ibid., p. 90. Sieglinde Gstohl (2008), A Neighbourhood Economic Community – finalite´ economique for the ENP? Brussels: Department of EU International Relations and Diplomacy Studies Diplomacy Papers 3, p. 3. Ibid., p. 5. Ibid., p. 6. The European Commission’s The Barcelona Process (2010) [Web]. The European Commission’s The ENP: How it Works (2010) [Web]. See Richard Brinkmann (1995), ‘Economic Growth versus Economic Development: Toward a Conceptual Clarification’, Journal of Economic Issues, Vol. 29, No. 4, for a more detailed discussion of this issue. Ivan Martı´n (2004), ‘The Social Impact of Euro-Mediterranean Free Trade Areas: A First Approach with Special Reference to the Case of Morocco’, Mediterranean Politicsk, Vol. 9, Issue 3, p. 425. Ibid., p. 430. Ibid. Ibid., pp. 431, 432. Ibid. Ibid., p. 435. Ibid., p. 437. Ibid., p. 438. Ivan Martı´n (2007), ‘In Search of Development along the Southern Border: The Economic Models Underlying the Euro-Mediterranean Partnership and the European Neighbourhood Policy’, in Ferragina, Anna Maria (ed.), Bridging the Gap: the Role of Trade and FDI in the Mediterranean. Napoli: Consiglio Nazionale delle Ricerche-Instituto di Studi sulle Societa del Mediterraneo, p. 129. Ibid., p. 131. Michael Gasiorek et al. (2012), ‘The Business Environment and Moroccan Firm Productivity’, Economics of Transition, Vol. 20, Issue 2, p. 14. Ibid., p. 15. Ibid., p. 16. Ibid., p. 17. Carl Dawson (2009), EU Integration with North Africa: Trade Negotiations and Democracy Deficits in Morocco. New York: Tauris Academic Studies, p. 38. Ibid., p. 39. Ali Hemal (2004), ‘Enhancing Neighbourhood Policy through FDI’, in Attina, Fluvio and Rossi, Rosa (eds), European Neighbourhood Policy: Political, Economic, and Social Issues. Catania: The University of Catania, p. 68. Ibid., p. 71. See Mona Haddad and Ann Harrison (1993), ‘Are There Positive Spillovers from Direct Foreign Investment? Evidence from Panel Data for Morocco’, Journal of Development Economics, 42 (1), pp. 51 – 74.

NOTES TO PAGES 68 –75

269

113. Martin Ravallion and Michael Lokshin (2004), Gainers and Losers from Trade Reform in Morocco. New York: World Bank Development Research Group Working Paper Number 3368, p. 1. 114. Ibid. 115. Ibid., p. 12. 116. Ibid. 117. Radwan and Reiffers (2003), p. 17. 118. Ibid. 119. Ibid., p. 19. 120. Ibid. 121. Diana Hunt (2011), ‘The UfM and Development Prospects in the Mediterranean: Making a Real Difference?’, Mediterranean Politics, 16 (1), p. 186.

Chapter 3

The EU and Morocco: A Growing Symbiosis Defies a Chequered History

1. Elements of the history overview in this Chapter are borrowed from Fawaz Yusuf (2014), ‘A Structural Change Analysis of EU-Moroccan Trade Liberalisation and Economic Development between 1995 and 2010’, The Journal of North African Studies, Vol. 19, No. 3. 2. Ricardo Gomez (2003), Negotiating the Euro-Mediterranean Partnership: Strategic Action in EU Foreign Policy?. Hampshire: Ashgate Publishing Ltd., p. 26. 3. Ibid. 4. Ibid., pp. 26, 27. 5. Ibid., p. 28. 6. Ibid. 7. Ibid., p. 30. 8. Ibid., p. 32. 9. Ibid., p. 33. 10. Ibid. 11. MEDEA (2013) [Web]. 12. Gomez (2003), p. 34. 13. Ibid. 14. Carl Dawson (2009), EU Integration with North Africa: Trade Negotiations and Democracy Deficits in Morocco. New York: Tauris Academic Studies, p. 25. 15. Gomez (2003), p. 35. 16. Dawson (2009), p. 25. 17. Gomez (2003), p. 36. 18. Ibid. 19. Ibid., pp. 35, 36. 20. Ibid., pp. 36, 37.

270

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75 –79

21. Ibid., p. 37. 22. Ibid. 23. Sarah Wolff (2012), The Mediterranean Dimension of the European Union’s Internal Security. USA: Palgrave Macmillan, p. 89. 24. Dawson (2009), p. 54. 25. Ibid. 26. Ibid., p. 54. 27. Ibid., p. 55. 28. Ibid., p. 32. 29. Ibid., p. 55. 30. Ibid., p. 56. 31. Ibid. 32. Ibid. 33. I. William Zartman (1987), ‘King Hassan’s New Morocco’, in Zartman, I. William (ed.), The Political Economy of Morocco. New York: Praeger Publishers, p. 5. 34. Ibid. 35. Ahmed, Rhazaoui (1987), ‘Recent Economic Trends: Managing the Indebtedness’, in Zartman, I. William (ed.), The Political Economy of Morocco. New York: Praeger Publishers, p. 144. 36. Guilain Denoeux and Abdeslam Maghraoui (1998), ‘The Political Economy of Structural Adjustment in Morocco’, in Layachi, Azzedine (ed.), Economic Crisis and Political Change in North Africa. Connecticut: Praeger, p. 56. 37. Ibid. 38. Ibid. 39. Ibid., p. 57. 40. Ibid. 41. Rhazaoui (1987), p. 154. 42. Ibid., p. 155. 43. Ibid. 44. Ibid., p. 153. 45. Ibid. 46. Ibid., p. 156. 47. Denoeux and Maghraoui (1998), p. 62. 48. Ibid., p. 63. 49. Ibid., p. 64. 50. Ibid. 51. Ibid., pp. 66, 67. 52. Diana Davis (2006), Neoliberalism, Environmentalism, and Agricultural Restructuring in Morocco. Texas: Department of Geography and the Environment, University of Texas at Austin, p. 88. Davis’ quote is based on a 2001 World Bank report: The Kingdom of Morocco Country Assistance Strategy, Public Information Notice. 53. Ibid., p. 89. 54. The World Bank’s Independent Evaluation Group [Web].

NOTES 55. 56. 57. 58. 59. 60. 61. 62. 63. 64. 65. 66. 67. 68. 69. 70. 71. 72. 73. 74. 75. 76. 77.

78. 79. 80. 81. 82. 83. 84. 85. 86. 87. 88. 89. 90.

TO PAGES

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271

Ibid. Ibid. EU – Morocco Association Agreement (1996), p. 12. Ibid. See Dawson (2009), p. 26. EU – Morocco Association Agreement (1996), p. 4. Dawson (2009), p. 36. EU – Morocco Association Agreement (1996), p. 4. Ibid., p. 7. Ibid., p. 14. Ibid., p. 12. Ibid., p. 13. Ibid. Ibid., p. 14. Ibid. Dawson (2009), p. 57. Ibid., p. 58. Ibid. Ibid., p. 60. Ibid. Ibid., p. 41. ENPI Strategy Paper 2007– 13, pp. 3, 4 [Web]. Larabi Jaidi (2009), ‘The Morocco/EU Advanced Status: What Value does it Add to the European Neighbourhood Policy?,’ in Institut Europeu de la Mediterrania (ed.), Med.2009 Mediterranean Yearbook. Barcelona: Institut Europeu de la Mediterrania, p. 149. EU – Morocco Grenada Summit Joint Statement (2010), p. 1. Ibid., pp. 2 – 6. Ibid., p. 8. Ibid., pp. 8, 9. EU – Morocco Action Plan (2005), p. 9. Ibid. Ibid. Ibid., p. 9, 10. Ibid., pp. 25, 26. Ibid., p. 11. Ibid., p. 12. Ibid., p. 13. Ibid., pp. 9 – 11.

Chapter 4 The Testimonies of EU and Moroccan Officials 1. For this chapter, words placed between quotation marks signify ideas and expressions communicated by the interviewee unless otherwise stated.

272

NOTES

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88 –109

2. The European Commission’s Communication on Strengthening the ENP (2006), p. 13. 3. The European Commission’s Mise En Oeuvre de la PEV (2010), p. 20. 4. Ibid. 5. The European Commission’s Communication on Strengthening the ENP (2006), p. 13. 6. Ibid. 7. Ibid. 8. Morocco-EU Action Plan (2005), p. 31. 9. Mark Curtis (2005), 17 Ways the European Commission is Pushing Trade Liberalization on Poor Countries. Christian Aid for the European Movement for Trade Justice November Report, pp. 7, 17. 10. Royal Institute for Strategic Studies (2008), p. 2. 11. See Oxfam (2006), ‘Kicking the Habit: How the World Bank and the IMF are Still Addicted to Attaching Economic Policy Conditions to Aid’, 96 Oxfam Briefing Paper. 12. Ivan Martı´n (2009), ‘EU–Moroccan Relations: How Advanced is the “Advanced Status?”,’ Mediterranean Politics, Vol. 14, No. 2, p. 244. 13. The European Commission’s Mise en Oeuvre de la PEV (2010), p. 10. 14. Ibid. 15. Ibid., p. 11. 16. Ibid., p. 13. 17. Peter Mandelson (2005), ‘Speech at the ‘Confe´deration Ge´ne´rale des Enterprises du Maroc’, p. 2. 18. OECD Report on Public Finance Management in the MENA Region (2010), p. 104. 19. Martı´n (2009), p. 244. 20. Nicholas Minot et al. (2010), Trade Liberalization and Poverty in the Middle East and North Africa. Washington: International Food Policy Research Institute, p. 177. 21. IEMed Survey (2010), p. 58. 22. OECD Report on Public Finance Management in the MENA Region (2010), p. 106. 23. UNESCO (2013), ‘Innovative Literacy and Post-Literacy Project: Means of Socio-economic Empowerment and Integration for Women in Morocco’ [Web]. 24. Taipei Times (2012), ‘Moroccan Judges Protest for Independent Judiciary’ [Web]. 25. The European Commission’s Mise en Oeuvre de la PEV (2010), p. 20. 26. Ibid. 27. Annie Cordet-Dupouy (2010), ‘Transition in the Southern Mediterranean: Opportunity for Improved Cooperation between the Two Shores?’. Barcelona: IEMed Survey, p. 2. 28. Patrick Holden (2004), ‘Strategic Intervention or Showcase? EU Aid (MEDA) as a Force for Change in Morocco,’ in Xuereb, Peter (ed.), The European Union and the Mediterranean. Malta: University of Malta, p. 562.

NOTES

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273

29. Fouad Ammor (2005), ‘Morocco’s Perspectives towards the EMP’, in Amirah Fernandez, Haizam and Youngs, Richard (eds), The Euro-Mediterranean Partnership: Assessing the First Decade. Madrid: Real Instituto Elcano and Fride, p. 153. 30. IEMed Survey (2010), p. 53. 31. Zak Ettamymy (2009), Agriculture in Morocco: Time for a New Plan [Web]. 32. Ibid. 33. World Bank, ‘The Challenge to Youth Inclusion in Morocco’ (2013) [Web]. 34. Amadeus Institute (2010), p. 54. 35. FEMISE, Report on the Euro-Mediterranean Partnership (2010), p. 183. 36. Ibid., p. 194. 37. Forum on ‘The Moroccan Experience of the National Initiative for Human Development’ (2010), p. 4. 38. Ibid, p. 5. 39. Ibid., p. 20. 40. Ivan Martı´n (2006), Morocco: The Bases for a New Development Model? (I): the National Initiative for Human Development. Madrid: Real Instituto Elcano, p. 3. 41. Ibid. 42. Ibid., p. 5. 43. Gender Across Borders (2011), Women and Education in Morocco [Web]. 44. Anna Khakee et al. (2008), ‘Pragmatism Rather than Backlash: Moroccan Perceptions of Western Democracy Promotion’, EuroMeSCo Paper 73, p. 19. 45. IEMed Survey (2010), p. 41. 46. Kristina Kausch (2010), ‘Morocco’s “Advanced Status”: Model or Muddle?’. Madrid: FRIDE Policy Brief No 43, p. 4. 47. Federica Bicchi (2002), ‘From Security to Economy and Back? EuroMediterranean Relations in Perspective’, p. 6 [Web].

Chapter 5 Analysing the Policy Instruments used by the EU to Foster Socioeconomic Development 1. The European Commission’s Guidelines for EC Support to Sector Programmes (2007), p. 69. 2. The European Commission (2005), The EU-Morocco Action Plan, p. 31. 3. European Union Delegation to Morocco (2012) [Web]. 4. MEDA Programme Website (2013) [Web]. 5. See EuropeAid Archives (2013) [Web]. 6. Ibid. 7. EIB (2007) [Web]. 8. Diana Hunt (2011), ‘The UfM and Development Prospects in the Mediterranean: Making a Real Difference?’, Mediterranean Politics, 16 (1), p. 176. 9. CREMed (2010), p. 107.

274 10. 11. 12. 13.

14. 15. 16. 17. 18.

19. 20.

21. 22. 23. 24. 25. 26. 27. 28. 29. 30. 31. 32. 33. 34. 35. 36. 37. 38. 39. 40. 41.

NOTES

TO PAGES

138 –144

ENPI Website [Web]. European Union Delegation to Morocco (2012) [Web]. European Commission’s DG-AIDCO [Web]. Richard Youngs (2008), Is the European Union Supporting Democracy in its Neighbourhood?. Madrid: FRIDE in association with the European Council on Foreign Relations, p. 20. Ibid., p. 26. European Commission’s DG-AIDCO NIF [Web]. Ibid. The European Commission’s Guidelines for EC Support to Sector Programmes (2007), p. 51. Fouad Ammor (2005), ‘Morocco’s Perspectives towards the EMP’, in Amirah Fernandez, Haizam and Youngs, Richard (eds), The Euro-Mediterranean Partnership: Assessing the First Decade. Madrid: Real Instituto Elcano and Fride, p. 153. Bertelsmann Stiftung (2013), Morocco [Web]. Laure Delcour (2012), Improving the EU’s Aid to its Neighbours: Lessons Learned from the ENPI, Recommendations for the ENI. Brussels: DG-RELEX Briefing Paper, p. 8. Ibid., p. 14. Ibid., pp. 14, 15. Ibid., p. 17. Ibid., p. 16. Michal Natorski (2008), The MEDA Programme in Morocco 12 Years On: Results, Experiences and Trends. Barcelona: Fundacio´ CIDOB, p. 44. World Bank: Projects in Morocco (2013) [Web]. Ibid. Social Watch (2010) [Web]. Ibid. CIHEAM.org (2013), Rabat Seminar – March 2006 [Web]. The European Commission’s Mise En Oeuvre de la PEV (2010), p. 11. EU-Morocco Joint Parliamentary Committee (2010), p. 3. See Aid Effectiveness in Morocco (2012) and Social Watch (2010) [Web]. See Ivan Martı´n (2006), Morocco: The Bases for a New Development Model? (I): the National Initiative for Human Development. Madrid: Real Instituto Elcano. Social Watch (2010) [Web]. Hayat Diyen (2004), ‘Reform of Secondary Education in Morocco: Challenges and Prospects’, Prospects, Vol. 34, No. 2, p. 3. Ibid., p. 10. Ibid., p. 11. Ibid. Jamal ElAbiad (2010), ‘What Moroccan and Djiboutian Education Have in Common?’ [Web]. Ibid.

NOTES

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275

42. Hassan Semlali (2010), Morocco Case Study: Health Care Environments in Morocco. International Council of Nurses et al. p. 22. 43. UN Report on Morocco (2011), p. 24. 44. Vision Sante´ 2020 (2007), p. 34. 45. Bertelsmann Stiftung (2013) [Web]. 46. Social Watch (2010) [Web]. 47. Ibid. 48. Ibid. 49. Bertelsmann Stiftung (2013) [Web]. 50. European Delegation to Rabat (2012) [Web]. 51. Ibid. 52. OECD (2013), Paris Declaration on Aid Effectiveness [Web]. 53. Aid Effectiveness in Morocco (2012) [Web]. 54. Social Watch (2010) [Web]. 55. Ibid. 56. Ibid. 57. Aid Effectiveness in Morocco (2012) [Web]. 58. Ibid. 59. Rym Ayadi and Salim Gadi (2011), ‘EU Development Funding in the Southern Mediterranean: Diagnosis and Prospects’. Barcelona: IEMed Yearbook, p. 244. 60. Ibid., p. 245. 61. DG-AIDCO Document on Budget Support (2008), p. 3. 62. Ibid. 63. Jonathan Glennie (2010), ‘Rich Countries should be Increasing, not Reducing, Aid’ [Web]. 64. Transparency International (2007) [Web]. 65. EAP Community (2013) [Web]. 66. Transparency International Corruption Perceptions Index (2010) [Web].

Chapter 6 EU Policies and Socioeconomic Development in Morocco (I): The Successes and the Challenges 1. Data Source: World Bank WDI online database. 2. Ibid. 3. Paul Krugman and Maurice Obstfeld (1994), International Economics: Theory and Policy. 3rd edn. New York: HarperCollins Publishers, p. 264. 4. Ibid. 5. World Bank’s WDI [Web]. 6. Krugman and Obstfeld (1994), p. 264. 7. Ibid., p. 265. 8. Ibid., pp. 266, 267. 9. Ibid., p. 265. 10. Data Source (Graphs 6.3 and 6.4): The World Bank’s WDI online database.

276 11. 12. 13. 14.

15. 16. 17. 18. 19. 20. 21. 22. 23. 24. 25. 26. 27. 28. 29. 30. 31. 32. 33. 34. 35. 36. 37. 38. 39. 40. 41. 42.

NOTES

TO PAGES

157 –167

HCP, Enqueˆte Nationale de Vie des Me´nages (2007), p. 17. The World Bank (2006), p. 3. Krugman and Obstfeld (1994), p. 677. Elements of the discussion in Sections 7.3 and 7.4 are borrowed from Fawaz Yusuf (2014), ‘A Structural Change Analysis of EU-Moroccan Trade Liberalisation and Economic Development between 1995 and 2010’, The Journal of North African Studies, Vol. 19, No. 3. L’Economiste (2011), ‘Union Pour La Me´diterrane´e: Le Processus est Irreversible’. Casablanca: L’Economiste, p. 16. The European Commission’s Mid-Term Review of Morocco Strategy Paper and National Indicative Programme 2011 –13 (2010), p. 30. Data Source (Tables 7.2– 7.4): The World Bank’s WDI online database. Philip Nel (2008), The Politics of Economic Inequality in Developing Countries. Hampshire: Palgrave MacMillan, p. 141. See United Nations Development Programme (UNDP) online database [Web]. United Nations Human Development Report (2010), p. 151. Data Source: The United Nations Development Programme (UNDP) online database. The European Commission’s DG Employment, Social Affairs, and Inclusion (2011), p. 44. Krugman and Obstfeld (1994), p. 11. Ibid., p. 64. Ibid., p. 28. Ibid., pp. 78, 79. Ibid., p. 65. This model is derived from the description of the H-O model in ibid., Chapter 4. Ibid., p. 66. Ibid., p. 67. Graph modelled on ibid., Figure 4.1, p. 67. Ibid., p. 69. Ibid., pp. 69, 70. Ibid., p. 72. Graph modelled on ibid., Figure 4.4, p. 70. Graph modelled on ibid., Figure 4.7, p. 73. Ibid., p. 74. European Parliament Hearing on Trade and Investment Barriers (2011), p. 3. FEMISE, Report on the Euro-Mediterranean Partnership (2010), p. 175. Carl Dawson (2009), EU Integration with North Africa: Trade Negotiations and Democracy Deficits in Morocco. New York: Tauris Academic Studies, p. 53. The World Bank (2006), p. 27. Ivan Martı´n (2010), ‘Economic Integration in the Mediterranean: Beyond the 2010 Free Trade Area’. IEMed Yearbook 2010, p. 74.

NOTES

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167 –173

277

43. European Parliament Hearing on Policy Coherence for Development (2012), p. 5. 44. European Parliament Hearing on Increasing the Impact of EU Development Policy (2011), p. 11. 45. According to the World Bank’s WDI, in 2008, these labourers represented over 41 per cent of the labour force. 46. TV Maroc Online Channel (2008), Morocco’s Boosting Economy [Web]. 47. Krugman and Obstfeld (1994), p. 28. 48. Ibid., p. 113. 49. Ibid., p. 114. 50. Ibid., p. 129. 51. IEMed Survey (2010), p. 75. 52. Marcus Noland and Howard Pack (2007), The Arab Economies in a Changing World. Washington: Peterson Institute for International Economics, p. 39. 53. Wade (1990), p. 308. 54. The World Bank (2006), p. 25. 55. L’Economiste (2011), p. 16. 56. European Parliament Hearing on Increasing the Impact of EU Development Policy (2011), p. 9. 57. Dawson (2009), p. 59. 58. Ibid., p. 60. 59. Mushtaq Khan (2008a), ‘SOAS Mo Ibrahim Foundation Lecture Series: Mushtaq Khan- Governance Lecture Parts 1 – 4’. London: SOAS Media, December 2008 [Web]. 60. Ibid. 61. Ibid. 62. Ibid. 63. Ibid. 64. Mushtaq Khan (2001), ‘The New Political Economy of Corruption’, in Fine, Ben, Lapavitsas, Costas, and Pincus, Jonathan (eds), Development Policy in the Twenty-First Century: Beyond the Post-Washington Consensus. London: Routledge, p. 115. 65. Mushtaq Khan (2005), ‘Markets, States, and Democracy: Patron-Client Networks and the Case for Democracy in Developing Countries’, Democratization, 12 (5), p. 704. 66. Ibid., p. 705. 67. Ibid. 68. Ibid., p. 712. 69. Florence Beauge´ (2011), ‘Au Maroc, la Re´volte d’un Juge’. Paris: Le Monde, p. 3. 70. Ibid. 71. Ibid. 72. Ibid. 73. Ibid.

278

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173 –178

74. Ibid. 75. Azzendine Layachi (1998), ‘State-Society Relations and Change in Morocco’, in Layachi, Azzedine (ed.), Economic Crisis and Political Change in North Africa. Connecticut: Praeger, p. 101. 76. James N. Sater (2007), Civil Society and Political Change in Morocco. New York: Routledge, Taylor & Francis Group, p. 20. 77. Carl Mosk (2010), Japanese Industrialization and Economic Growth [Web]. 78. Ibid. 79. Ibid. 80. John Waterbury (1970), Commander of the Faithful: the Moroccan Political Elitea Study in Segmented Politics. London: Weidenfeld and Nicolson, p. 317. 81. Ha-Joon Chang (2007), Bad Samaritans: Rich Nations, Poor Policies, and the Threat to the Developing World. London: Random House Business Books, p. 192. 82. Ibid. 83. William J. O’Malley (1988), ‘Culture and Industrialization’, in Hughes, Helen (ed.), Achieving Industrialization in East Asia. Cambridge: Cambridge University Press, p. 342. 84. Ibid., p. 343. 85. Chang (2007), p. 193. 86. Ibid. 87. Ibid., p. 196. 88. Ibid. 89. Ibid., p. 201. 90. O’Malley (1988), p. 343. 91. Chang (2007), p. 198. 92. Ibid., pp. 199, 200. 93. Ibid., p. 201. 94. Waterbury (1970), p. 165. 95. Martı´n (2004), ‘The Social Impact of Euro-Mediterranean Free Trade Areas: A First Approach with Special Reference to the Case of Morocco’, Mediterranean Politics, Vol. 9, Issue 3, p. 436. 96. Data Source (Graphs 6.8– 6.12): The World Bank’s WDI Online Database. 97. Maurice Obstfeld and Kenneth Rogoff (1996) Foundations of International Macroeconomics. Massachusetts: MIT Press, p. 430. 98. Ibid., p. 431. 99. Ibid., p. 433. 100. Ibid. 101. Ibid., pp. 433 and 434. The observation is also supported by N. Gregory Mankiw et al. (1992), ‘A Contribution to the Empirics of Economic Growth’, The Quarterly Journal of Economics, 107 (2). 102. Obstfeld and Rogoff (1996), pp. 454, 455. 103. Ibid., p. 455. 104. Ibid.

NOTES 105. 106. 107. 108. 109. 110. 111. 112. 113. 114. 115. 116. 117. 118. 119. 120. 121. 122. 123. 124. 125. 126. 127. 128. 129. 130. 131. 132. 133.

134. 135. 136. 137. 138. 139.

140. 141.

TO PAGES

179 –185

279

Ibid., p. 456. Ibid., p. 461. Ibid., p. 467. Ibid., p. 473. Robert Lucas (1988), ‘On the Mechanics of Economic Development’, Journal of Monetary Economics, 22 (1), p. 17. Ibid., p. 15. Ibid. Ibid., p. 17. Ibid. The following discussion goes over the details of Lucas’ model, and is taken from ibid., pp. 17– 40. Ibid., p. 18. Ibid. Ibid., p. 19. Ibid., p. 21. Ibid., p. 23. Ibid., p. 25. Ibid. Ibid., p. 28. Ibid. Ibid., p. 31. See Obstfeld and Rogoff (1996), p. 478. Lucas (1988), p. 31. Ibid. Ibid. Ibid. Ibid., p. 32. Ibid., p. 33. Ibid., p. 34. Alfred Tovias (2010), Free Trade in Agricultural Products and Services in the Context of the Barcelona Process. Barcelona: IEMed Papers for Barcelona 2010, p. 14. Lucas (1988), p. 39. Ibid., p. 40. Ibid. Ibid. Ibid., p. 41. See Mushtaq Khan (2008b), ‘Governance and Development: The Perspective of Growth-Enhancing Governance’, in Diversity and Complementarity in Development Aid: East Asian Lessons for African Growth. Tokyo: GRIPS Development Forum/National Graduate Institute for Policy Studies. Ibid., p. 126. Data Source (Tables 7.5– 8.1): World Bank WDI online database.

280 142. 143. 144. 145. 146.

147. 148. 149. 150.

NOTES

TO PAGES

186 –195

FEMISE, Report on the Euro-Mediterranean Partnership (2010), p. 190. Morocco Business News [Web]. IEMed Survey (2010), p. 46. Diana Hunt (2011), ‘The UfM and Development Prospects in the Mediterranean: Making a Real Difference?’, Mediterranean Politics, 16 (1), p. 185. SIA-EMFTA (2007), Sustainability Impact Assessment of the Euro-Mediterranean Free Trade Area. Manchester: University of Manchester Impact Assessment Research Centre, Institute for Development Policy and Management, p. 10. The World Bank (2006), p. 12. Ibid., p. 6. Ibid., p. 26. Ibid.

Chapter 7 EU Policies and Socioeconomic Development in Morocco (II): Income Inequality and Development 1. FEMISE, Report on the Euro-Mediterranean Partnership (2010), p. 76. 2. The World Bank (2006), p. 4. 3. See Re´my Herrera (2006), The Neoliberal ‘Rebirth’ of Development Economics. Paris: Centre d’Economie de la Sorbonne Cahiers de la MSE Nume´ro R06031 on the merger between neoclassical economics and neoliberal developmental policies. 4. UNRISD (2010), p. 59. 5. Ibid. 6. Ibid., p. 65. 7. Data Source: World Bank WDI online database. 8. Ibid. 9. Ivan Martı´n (2006), Morocco: The Bases for a New Development Model? (I): The National Initiative for Human Development. Madrid: Real Instituto Elcano, p. 3. 10. HCP, Enqueˆte Nationale de Vie des Me´nages (2007), p. 47. 11. Ibid., p. 49. 12. Ibid. 13. Data Source: La Ministe`re de la Sante´ du Maroc (2009), pp. 10, 11. 14. HCP, Enqueˆte Nationale de Vie des Me´nages (2007), p. 38. 15. Ibid., p. 39. 16. Ibid., p. 40. 17. Ibid., p. 22. 18. Ibid. 19. Ibid., p. 21. 20. Ibid., pp. 22, 23. 21. Data Source: La Ministe`re De l’Education: Recueil Statistique De L’Education (2010). 22. Data Source: HCP Enqueˆte: Activite´, Emploi, et Choˆmage (2009), p. 26. 23. Ibid., pp. 12, 13.

NOTES 24. 25. 26. 27. 28. 29.

30. 31. 32. 33. 34.

35. 36. 37. 38. 39. 40.

41. 42. 43. 44. 45. 46. 47. 48. 49. 50. 51.

TO PAGES

195 –205

281

HCP, Enqueˆte Nationale de Vie des Me´nages (2007), pp. 21, 22. Data Source: HCP Enqueˆte Nationale de Vie des Me´nages (2007), p. 18. HCP, Enqueˆte Nationale de Vie des Me´nages (2007), p. 29. Ibid., p. 33. Data Sources: La Ministe`re de la Sante´ (2004 and 2009); and La Ministe`re De l’Education du Maroc (2010). Sen also deduces that ‘the quality of life can be vastly raised, despite low incomes, through an adequate program of social services’. See Amartya Sen (1999), Development as Freedom. Oxford: Oxford University Press, p. 49. Data Source: World Bank WDI Online Database. Data Source: United Nations Development Programme (UNDP) online database. Data Source: GINI Coefficient: WDI online database. HDI: UNDP online database. GINI Coefficient measured on a scale of 0 – 100. Data Source: Per-capita GDP: WDI online database. HDI: UNDP online database. Per-capita GDP figures are in constant 2000 US$. Sarah Voitchovsky (2009), ‘Inequality and Economic Growth’, in Salverda, Wiemar et al. (eds), The Oxford Handbook of Economic Inequality. Oxford: Oxford University Press, p. 550. Ibid., p. 551. Ibid., p. 552. Oded Galor (2009), Inequality and Economic Development: The Modern Perspective. Cheltenham: Edward Elgar Publishing Limited, p. xii. Voitchovsky (2009), p. 554. Data Source: UNDP online database. See Pablo Fajnzylber et al. (2002), ‘Inequality and Violent Crime’, Journal of Law and Economics, 45 (1); and Andrew Leigh et al. (2009), ‘Health and Economic Inequality’, in Salverda, Wiemar et al. (eds), The Oxford Handbook of Economic Inequality. Oxford: Oxford University Press. Voitchovsky (2009), p. 554. Ibid. Ibid., pp. 554, 555. Alberto Alesina and Dani Rodrik (1994), ‘Distributive Politics and Economic Growth’, Quarterly Journal of Economics, 109 (2), p. 465. Ibid., p. 466. Ibid. Voitchovsky (2009), p. 557. Philip Nel (2008), The Politics of Economic Inequality in Developing Countries. Hampshire: Palgrave MacMillan, pp. 143, 144. R.M. Sundrum (1990), Income Distribution in Less Developed Countries. London: Routledge, p. 271. Voitchovsky (2009), p. 557. Azzedine Layachi (1998), ‘State-Society Relations and Change in Morocco’, in Layachi, Azzedine (ed.), Economic Crisis and Political Change in North Africa. Connecticut: Praeger, p. 92.

282

NOTES

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205 –211

52. Richard Wilkinson and Kate Pickett (2010), The Spirit Level: Why Equality is Better for Everyone. London: Penguin Books Ltd., p. 225. 53. Ibid. Boushey and Weller (2007) make the same point. See Heather Boushey and Christian E. Weller (2007), ‘Unequal Fortunes, Unstable Households: Has Rising Inequality Contributed to Economic Troubles for Households?’, in Jomo, K.S. and Baudot, Jacques (eds), Flat World, Big Gaps: Economic Liberalization, Globalization, Poverty, & Inequality. London: Zed Books, p. 211. 54. Data Source: World Bank WDI online database. 55. Nel (2008), p. 142. 56. Robert Barro (2000), ‘Inequality and Growth in a Panel of Countries’, Journal of Economic Growth, 5 (1), p. 29. 57. Voitchovsky (2009), p. 562. 58. Ibid. 59. Ibid., p. 563. 60. Gunther Rehme (2003), ‘Redistribution of Personal Incomes, Education, and Economic Performance across Countries’, in Eicher, Theo and Turnovsky, Stephen (eds) Inequality and Growth: Theory and Policy Implications. Massachusetts: MIT Press, p. 219. 61. See Diana Davis (2006), Neoliberalism, Environmentalism, and Agricultural Restructuring in Morocco. Texas: Department of Geography and the Environment, University of Texas at Austin. 62. European Parliament Hearing on Increasing the Impact of EU Development Policy (2011), p. 12. 63. Data Source: World Bank WDI online database. 64. Ibid. 65. Ibid. 66. UNDP online database [Web]. 67. Wilkinson and Pickett (2010), p. 220. 68. Ibid., p. 241. 69. Dani Rodrik (1994), ‘King Kong Meets Godzilla: The World Bank and the East Asian Miracle’, CEPR Discussion Paper no. 944. London, Centre for Economic Policy Research, p. 4. 70. Ibid. 71. Ibid., p. 6. 72. Ibid., pp. 7, 8. 73. Ibid., p. 8. 74. Data Source: the UNDP online database. 75. Michael Bruno et al. (2000), ‘Equity and Growth in Developing Countries: Old and New Perspectives on the Policy Issues’, in Solimano, Andre´s et al. (eds), Distributive Justice and Economic Development: The Case of Chile and Developing Countries. Michigan: University of Michigan Press, p. 38. 76. Voitchovsky (2009), p. 569. 77. Nel (2008), p. 119. 78. Wilkinson and Pickett (2010), p. 51.

NOTES

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283

79. Nel (2008), p. 124. 80. Ibid. 81. Dris Ben Ali (2005), Civil Society and Economic Reform in Morocco. Bonn: ZEF Centre for Development Research, pp. 4, 5. 82. John Waterbury (1970), Commander of the Faithful: the Moroccan Political Elite – a Study in Segmented Politics. London: Weidenfeld and Nicolson, p. 68. 83. Nel (2008), p. 130. 84. Wilkinson and Pickett (2010), pp. 52, 53. 85. Ibid., p. 55, 56. 86. Data Source: The World Values Survey online database. 87. Layachi (1998), p. 102. 88. HCP, Enqueˆte Nationale de Vie des Me´nages (2007), p. 58. 89. Wilkinson and Pickett (2010), pp. 56, 57. 90. Ibid., pp. 58, 59. 91. Saadia Sabah (1987), ‘The Interface between Family and State’, in Zartman, I. William (ed.), The Political Economy of Morocco. New York: Praeger Publishers, p. 121. 92. Ibid., p. 122. 93. Ibid. 94. Wilkinson and Pickett (2010), p. 295. 95. See WHO (2013) [Web]. 96. The European Commission’s Communication on Strengthening the ENP (2006), p. 13. 97. Data Source: World Bank WDI online database. 98. Data unavailable for the years 1978– 81. 99. Data Source: World Bank WDI online database. 100. Ibid. 101. HCP (2010), p. 53. 102. African Development Bank (2008), ‘Bank Group Approves e70 Million Loan to Finance Medical Coverage Reforms in Morocco’ [Web]. 103. Siham Ali (2011), ‘Rural Healthcare in Morocco Focus of Antipoverty Effort’ [Web]. 104. WHO (2006), p. 31. 105. Ali (2011) [Web]. 106. Ibid. 107. World Bank Morocco: Poverty Analysis (2001) [Web]. 108. See James N. Sater (2007), Civil Society and Political Change in Morocco. New York: Routledge, Taylor & Francis Group, p. 37; and James N. Sater (2010), Morocco: Challenges to Tradition and Modernity. New York: Routledge, Taylor & Francis Group, pp. 9, 10. 109. Comptes Nationaux de la Sante´ au Maroc (2006), p. 21. 110. The European Commission’s DG-AIDCO [Web]. 111. EU Parliament Hearing on Increasing the Impact of EU Development Policy (2011), p. 10.

284

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112. See EU Parliament Hearing on Poverty Reduction and Job Creation in Developing Countries (2010). 113. SIA-EMFTA (2007), p. 18. 114. WHO (2006), p. 13. 115. Leigh et al. (2009), pp. 384, 385. 116. Ibid., p. 386. 117. Ibid., pp. 385, 400. 118. Ibid., p. 386. 119. Ibid., p. 388. 120. Ibid., p. 390. 121. Wilkinson and Pickett (2010), pp. 75, 76. 122. Ibid. 123. Sen (1999), p. 51. 124. Nel (2008), p. 125. 125. Wilkinson and Pickett (2010), p. 87. 126. Data Source: World Bank WDI online database. 127. Ibid. 128. African Development Bank (2005), p. 8. 129. Amadeus Institute (2010), pp. 18, 19. 130. Ibid., pp. 19, 20. 131. HCP (2009), p. 23. 132. See Silvia Colombo (2011), ‘Morocco at the Crossroads: Seizing the Window of Opportunity for Sustainable Development’, MEDPRO Technical Report No. 2, p. 6. 133. See EU– Morocco National Indicative Programmes (2007 – 10). 134. Comptes Nationaux de l’Education au Maroc (2006), p. 39. 135. Amadeus Institute (2010), p. 15. 136. See African Development Bank (2005) and African Development Bank (2008). 137. Stephen Machin (2009), ‘Education and Inequality’, in Salverda, Wiemar et al. (eds), The Oxford Handbook of Economic Inequality. Oxford: Oxford University Press, p. 408. 138. Ibid. 139. Nel (2008), pp. 125, 126. 140. Ibid., p. 126. 141. HCP, Enqueˆte Nationale de Vie des Me´nages (2007), p. 20. 142. Oded Galor and Omer Moav (2004), ‘From Physical to Human Capital Accumulation: Inequality and the Process of Development’, Review of Economic Studies, 71 (4), p. 1002. 143. Ibid., p. 1004. 144. William Easterly (2007), ‘Inequality Does Cause Underdevelopment: Insights from a New Instrument’, Journal of Development Economics, 84 (2), p. 773. 145. Ibid. 146. Ibid.

NOTES TO PAGES 226 –235

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147. Ibid. 148. Machin (2009), pp. 418, 419. 149. Aomar Ibrouk and Jabrane Amaghouss (2012) ‘Measuring Educational Inequalities: Concentration and Dispersion-Based Approach: Lessons from Kuznets Curve in MENA Region’, World Journal of Education, Vol. 2, No. 6, p. 54. 150. Nel (2008), p. 3. 151. HCP, Enqueˆte Nationale de Vie des Me´nages (2007), pp. 46, 47. 152. Maria-Angels Roque (2004), La socie´te´ civile au Maroc: L’e´mergence de nouveaux acteurs de de´veloppement. Barcelona: Editions Publisud/Sochepress Institut Europe´en de la Me´diterrane´e, pp. 43, 44. 153. Layachi (1998), p. 101. 154. Ibid., p. 102. 155. HCP, Enqueˆte Nationale de Vie des Me´nages (2007), p. 17. 156. Nel (2008), pp. 135, 136. 157. Wilkinson and Pickett (2010), p. 161. 158. Comptes Nationaux de l’Education au Maroc (2006), p. 77. 159. Ibid., pp. 77 – 9. 160. Ibid., p. 46. 161. HCP, Enqueˆte Nationale de Vie des Me´nages (2007), p. 21. 162. Wilkinson and Pickett (2010), p. 162. 163. See Chapter 4; and Al Jazeera English (2007) [Web]. 164. Wilkinson and Pickett (2010), p. 163. 165. Ibid., p. 168. 166. Ibid., p. 169. 167. European Parliament Hearing on Increasing the Impact of EU Development Policy (2011), p. 5. 168. Ibid., p. 11. 169. Wilkinson and Pickett (2010), p. 30. 170. Nel (2008), p. 5. 171. Ibid. 172. Ibid., p. 8. 173. Wilkinson and Pickett (2010), p. 252. 174. Nel (2008), p. 11. 175. Wilkinson and Pickett (2010), p. 298.

Chapter 8 EU Policies and Socioeconomic Development in Morocco (III): The Ideology behind the Approach 1. Diana Hunt (2011), ‘The UfM and Development Prospects in the Mediterranean: Making a Real Difference?’, Mediterranean Politics, 16 (1), p. 174. The same point was made by Holden (2002). 2. M. Shamsul Haque (1999), ‘The Fate of Sustainable Development Under Neoliberal Regimes in Developing Countries’, International Political Science Review, 20 (2), p. 203.

286

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3. Ibid., p. 199. 4. Jajati K. Pattnaik (2008), A Critique of Neo-liberal Development and Alternatives [Web]. 5. Haque (1999), p. 203. 6. Pattnaik (2008) [Web]. 7. Cristo´bal Kay (1993) ‘For a renewal of development studies: Latin American theories and neoliberalism in the era of structural adjustment’, Third World Quarterly, 14 (4), p. 694. 8. Haque (1999), p. 204. 9. Michael Todaro (2000), Economic Development. New York: Addison Wesley Longman, Inc., p. 14. 10. Ibid., p. 768. 11. Jeremy Shearmur (1992), ‘In Defence of Neoliberalism’, Journal of Democracy, Vol. 3, No. 3, p. 77. 12. Ibid., p. 78. 13. Ibid., p. 80. 14. Deepak Lal (1997), The Poverty of ‘Development Economics’ Second Edition: Revised and Expanded. London: The Institute of Economic Affairs, p. 5. 15. Ibid., p. 7. 16. Ibid., p. 32. 17. Ibid., p. 89. 18. Ibid., p. 103. 19. Ibid., p. 106. 20. Ha-Joon Chang (2003), Globalisation, Economic Development, and the Role of the State. London: Zed Books Ltd, p. 199. 21. Hunt (2011), p. 176. 22. EU – Morocco Association Agreement, p. 3. 23. Ibid., p. 13. 24. UNCTAD (2007), p. 41. 25. WHO (2013) [Web]. 26. Mhamed Biygautane and Mohammed Lahouel (2011), ‘The Political Economy of Privatization in the Maghreb Region’, Dubai School of Government Working Paper Series, No. 11 – 05, p. 8. 27. Tom Najem (2001), ‘Privatization and the State in Morocco: Nominal Objectives and Problematic Realities’, Mediterranean Politics, Vol. 6, No. 2, pp. 54, 55. 28. Ibid., p. 55. 29. Ibid., pp. 59, 60. 30. Ibid., p. 61. 31. Ibid., p. 63. 32. Ibid., p. 66. 33. Azzendine Layachi (1998), ‘State-Society Relations and Change in Morocco’, in Layachi, Azzedine (ed.), Economic Crisis and Political Change in North Africa. Connecticut: Praeger, p. 102.

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287

34. El Paı´s Internacional and WikiLeaks (2010), ‘Marruecos: Corrupcio´n en Palacio’. Madrid: El Paı´s, p. 2. 35. Ibid., p. 3. 36. Account taken directly from ibid., pp. 1 – 3. 37. Ibid., p. 2. 38. Ibid., p. 3. 39. Ibid. 40. David Craig and Doug Porter (2006), Development Beyond Neoliberalism? Governance, Poverty Reduction and Political Economy. New York: Routledge, Taylor & Francis, p. 2. 41. Ha-Joon Chang (2007), Bad Samaritans: Rich Nations, Poor Policies, and the Threat to the Developing World. London: Random House Business Books, p. 55. 42. Chang (2003), p. 229. 43. Paul Krugman and Maurice Obstfeld (1994), International Economics: Theory and Policy. 3rd edn. New York: HarperCollins Publishers, p. 673. 44. Carl Dawson (2009), EU Integration with North Africa: Trade Negotiations and Democracy Deficits in Morocco. New York: Tauris Academic Studies, p. 26. 45. The World Bank (2006), p. 75. 46. Ibid. 47. FEMISE, Report on the Euro-Mediterranean Partnership (2011), p. 48. 48. Oleksiy Ivaschenko (2003), ‘Growth and Inequality: Evidence from Transitional Economies in the 1990s’, in Eicher, Theo and Turnosky, Stephen (eds) Inequality and Growth: Theory and Policy Implications. Massachusetts: MIT Press, p. 185. 49. Mihaly Simai (2007), ‘Poverty and Inequality in Eastern Europe and the CIS Transition Economies’, in Jomo, K.S. and Baudot, Jacques (eds), Flat World, Big Gaps: Economic Liberalization, Globalization, Poverty, & Inequality. London: Zed Books, p. 238. 50. Ivan Martı´n (2010), ‘Economic Integration in the Mediterranean: Beyond the 2010 Free Trade Area’. IEMed Yearbook 2010, p. 73. 51. Patricia Augier et al. (2009), ‘Paradoxes of Productivity: Trade Liberalisation and Morocco’, CARIS Working Paper, p. 24. 52. Ibid. 53. Krugman and Obstfeld (1994), p. 271. 54. Chang (2007), p. 66. 55. Ibid., p. 47. 56. El-Waleed Hamour (1998), ‘Economic Reforms and Liberalisation and Economic Performance: The Moroccan Experience’, Journal of Economic Cooperation among Islamic Countries, Vol. 19, No. 4, p. 181. 57. Chang (2007), p. 73. 58. Lal (1997), p. 32. 59. The World Bank (2006), p. 40. 60. Robert Wade (2004), Governing the Market: Economic Theory and the Role of Government in East Asian Industrialization. 2nd paperback edn. New Jersey: Princeton University Press, p. xlix.

288

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246 –254

61. Ibid. 62. See SIA-EMFTA (2007), p. 15. 63. Lahcen Achy and Khalid Sekkat (2004), ‘Trade Liberalization and Employment in the Moroccan Manufacturing Sector: Firm-level Analysis’ [Web], p. 27. 64. Ibid., p. 7. 65. Chang (2007), pp. 81, 82. 66. Krugman and Obstfeld (1994), p. 236. 67. Wade (2004), p. 378. 68. UNDP (2003), p. 41. 69. Roby Nathanson et al. (2009), ‘Income Inequality and Poverty after Trade Liberalization in MENA countries’ [Web]. 70. Ibid. 71. FEMISE, Report on the Euro-Mediterranean Partnership (2010), p. 81. 72. UNDP (2003), p. 28. 73. Ibid., p. 29. 74. SIA-EMFTA (2007), p. 18. 75. Coordinato Europeo Via Campesina (2011), p. 1. 76. Paul Krugman (2008) ‘Inequality and Growth’, in Serra, Nancy and Stiglitz, Joseph (eds), The Washington Consensus Reconsidered. Oxford: Oxford University Press, p. 36. 77. Ibid., p. 39. 78. African Development Bank (1999), p. 1. 79. Chang (2007), p. 147. 80. Ibid., p. 159. 81. Ibid., p. 150. 82. Ibid., p. 153. 83. Data Source: World Bank WDI online database. 84. European Commission’s Evaluation of the Council Regulation (MEDA II) and its Implementation (2009), p. 93. 85. Martı´n (2010), p. 77.

Conclusions EU– Moroccan and EU–North African Relations in a New, Fast-Evolving Regional Context 1. Ignacio Cembrero (2011a), ‘Prı´ncipe Mulay Hicham, Tercero en la Lı´nea de Sucesio´n: Marruecos No Sera´ La Excepcio´n’. Madrid: El Paı´s, 31st January, p. 6. 2. Ibid. 3. Ibid. 4. Ibid. 5. Erwan Lannon (2011), ‘The Responses of the European Union to the Changes in its Neighbourhood’. Barcelona: IEMed Survey 2011, p. 129.

NOTES TO PAGES 256 –258

289

6. Steven Erlanger (2011), ‘Morocco’s King Proposes Limited Steps to Democracy’, New York Times, 17 June [Web]. 7. Giles Tremlett (2011), ‘Morocco’s King Bows to Pressure and Allows Reform’, The Guardian, 18 June [Web]. 8. Ibid. 9. Ignacio Cembrero (2011c), ‘La Constitucio´n de Mohamed VI Logra Un Sı´ Masivo’. Madrid: El Paı´s, 2 July, p. 6. 10. Tremlett (2011) [Web]. 11. Souhail Karam (2011), ‘Moroccan King Triumphs in Reform Vote’. Rabat: Reuters, 1 July [Web]. 12. Cembrero (2011c), p. 6. 13. Ignacio Cembrero (2011b), ‘La Constitucio´n de Mohamed VI Logra Un Sı´ Masivo’. Madrid: El Paı´s, 2 July, p. 4. 14. Ibid. 15. Ibid. 16. PR Newswire (2011), ‘Moroccans Get Ready for Landmark Vote as Constitutional Reforms Win More Praise – from UN, Arab League, and Policy Experts’. Washington: PR Newswire, 24 June [Web]. 17. Catherine Ashton and Stefan Fule (2011), Joint Statement by EU High Representative Catherine Ashton and Commissioner Stefan Fule on the Referendum on the New Constitution in Morocco [Web]. 18. Ibid. 19. Ibid. 20. Fathallah Oualalou (2011), ‘La Primavera A´rabe y El Sur de Europea’. Madrid: El Paı´s, 10 June, p. 27. 21. Ibid. 22. Ibid., p. 28. 23. Ibid. 24. Ibid. 25. Cembrero (2011a), p. 6.

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INDEX

Graphs and tables are indicated by the use of italics. AAs (Association Agreements), 79 – 81 and APs, 89, 114, 128, 136, 158 economic features, 79 – 81 and economic growth, 68 impact of, 94 negotiation of, 25, 51 and privatisation, 238 trade liberalisation, 53 – 4, 63 Achy, Lahcen, 246–7 acquis communautaire, 25, 42, 58, 89, 93 – 5, 98, 105 ‘Advanced Status’, 66, 83, 86, 89, 94, 130 African Development Bank, 141, 217, 222, 224 Agadir Agreement, 51, 107 agricultural markets, 27, 40, 42, 44, 57, 59, 73 – 5 agriculture and fisheries sector, 80, 84, 91, 108, 115– 16, 118 Alesina, Alberto, 204 Algeria, 44, 75, 80, 97 Aliboni, Roberto, 25, 27, 33, 35 – 9, 55 Amadeus Institute Report, 117, 224– 5 Amirah Fernandez, Haizam, 23 Ammor, Fouad, 35 – 9, 55, 112, 139 ANIMA investment network, 51

APs (Action Plans), 28 – 31, 82 – 5, 94– 6, 99 – 100 and AAs, 89, 114, 128, 136, 158 Arab Spring, 253, 257– 8 Ashton, Catherine, 256– 7 Asia, 22, 171, 175 Asian Tigers, 11, 184, 186, 187, 188, 209 Attina, Fluvio, 22, 27 Augier, Patricia, 244 Ayadi, Rym, 127, 148– 9 Balfour, Rosa, 27, 31, 36 – 7, 39 Baracani, Elena, 26 Barcelona Declaration, 23 – 5, 27, 36, 55 Barcelona Process amalgamated components, 38 – 9, 45 and economies, 48 – 9, 128, 169 inauguration, 3– 5, 19 – 20 re-launch of, 33 – 4 Barro, Robert, 179, 206 Bassols, Andreu, 38 Beauge´, Florence, 172 Ben Ali, Zine El Abidine, 132, 212, 255 Bertelsmann Stiftung report, 139, 145–6

308

EUROPE'S RELATIONS

Bicchi, Federica, 132 Bologna Process, 88 Bruno, Michael, 211 Bulgaria, 132 CA (Cooperation Agreements), 73, 81, 130 Carlos, King Juan, 256 Castello, Amparo, 200, 206 CEC Bulletin, 21 – 2, 24, 26, 31, 49, 51 CEEC (Central and East-European Countries), 22, 242, 243 Cembrero, Ignacio, 253, 256 Central Bank (Morocco), 100 Central Europe, 22, 236 ‘Challenge to Youth Inclusion in Morocco, The’ (World Bank report), 116 Chang, Ha-Joon, 174– 5, 241, 244– 5, 249 Chawki, Najib, 256 Cherkaoui, Taib, 256 Chile, 118, 242– 3 China, 114, 232 Christian Aid, 90 Clinton, Bill, 23 COE (Euro-Mediterranean Charter for Enterprise), 93, 104 ‘Confe´de´ration ge´ne´rale des entreprises du Maroc’, 96 Consumer Price Index (CPI), 154, 155 Cordet-Dupouy, Annie, 108, 143 corruption, 81 – 2, 240– 1 COSEF (La Commission Spe´ciale pour l’Education et la Formation), 117 Council of Ministers, 42, 75 – 6 Country Programme funding, 138 Craig, David, 241 cronyism, 240–1, 243 Cuba, 209 cultural values, 111, 113, 126, 169– 76 Davis, Diana, 79 Dawson, Carl, 68, 75–6, 81–2, 166, 242

WITH

NORTH AFRICA

DCFTAs (Deep and Comprehensive Free Trade Agreements), 58, 60, 89, 95 –6, 243 de Wulf, Luc, 53 – 4 Del Sarto, Raffaella, 27 –8, 30 Delcour, Laure, 139– 40 Denoeux, Guilain, 77 – 8 DG-AIDCO and EU policies, 98 and financial aid, 139, 218 on strategies, 87 – 8, 102, 105– 6 and trust, 149 DG-ECFIN, 109– 12 and EU policies, 91, 99 – 100 on financial markets, 104 reflecting on strategies, 106 on role of the state, 237, 242 on social outcomes, 254– 5 DG-ENTERPRISE, 92, 104, 106, 112 DG-RELEX, 93 – 4, 100–1, 104–6, 113, 141, 158, 169– 70 DG-TRADE, 95 – 7, 101– 2, 106– 7, 113–14 diversification, export, 13, 48, 152, 161–9 Diyen, Hayat, 144 Dodini, Michaela, 58 Dome´nech, Rafael, 206 domestic considerations, 41 – 2, 43, 67 domestic strategies, 102–5 dual economies, definition of, 155– 6 Eastern Europe, 22, 30, 41 EC (European Commission), 17, 28, 32, 39– 44, 48, 83, 231 economic development theories, 8– 10 economic growth models, 176– 84, 204, 243 economic liberalisation, 21, 46 – 8, 53– 4, 61, 161, 218 economy features, 153– 7

INDEX ECSC (European Coal and Steel Community), 47 education sector financial aid, 221, 224 inequalities, 125, 194 pupil –teacher ratios, 160, 222 reform of, 88 –9, 144 standards in, 102, 105, 143, 193, 209 system in, 80, 108, 116– 18, 125, 222 EEA (European Economic Area), 60 EEC (European Economic Community), 19 – 21, 23 – 4, 73 – 5 Egypt, 2, 27, 169, 202, 257 EIB (European Investment Bank) loans, 50, 52, 57, 137, 141 Elabiad, Jamal, 144 Elbehri, Aziz, 101 elections, 26, 32 – 3, 76, 81, 171– 3, 256 Emerson, Michael, 31 EMFTA (Euro-Mediterranean Free Trade Agreement), 51, 55, 63 – 4, 70, 167, 183 EMP (Euro-Mediterranean Partnership), 19, 20, 23 – 7, 48 – 56, 70, 132 endogenous growth models, 12, 176, 180– 4, 188, 243 ENP (European Neighbourhood Policy), 20, 28 – 32, 40, 42, 56 – 61, 70 ENPI (European Neighbourhood and Partnership Instrument), 30, 84, 137– 40, 141, 216– 17 enterprise, 92 – 3, 104, 106, 112, 242 Erlanger, Steven, 255 ERM (Exchange-Rate Mechanism), 22 Ethiopia, 212 Ettamymy, Zak, 116 EU Commissioner for Enlargement and Neighbourhood Policy, 142 EU (European Union), 43, 87 – 105, 107– 14, 134– 48, 157– 88

309

EU-meds (Mediterranean-adjacent EU countries), 40 – 1 EU – Moroccan relations, 16, 72 – 6, 94, 127–33, 142, 145, 255– 7 Euro-Mediterranean relations, 19 – 23, 39– 44 EuroMeSCo reports, 22, 26, 55 European Parliament, 166– 7, 170, 230–1, 248 exports, 73 – 4, 84, 103, 141– 2, 161–9, 180, 185–6 Fantini, Marco, 58 FDI (Foreign Direct Investment), 68 February 20th movement, 255– 7 FEMIP (Facility for Euro-Mediterranean Investment and Partnership), 51 FEMISE (Forum Eurome´diterrane´en des Instituts de Sciences E´conomiques), 51, 111, 120, 166, 186, 243, 247–8 fertility rates, 204 financial aid, 57 – 8, 89 – 90, 128– 30, 136–41 financial crisis (2008), 91, 103– 4, 110 ‘fiscal homogeneity’, definition of, 67 Florensa, Sene´n, 33 food security, 141, 231 foreign policies, European, 21, 36, 38– 44 Former Soviet Union (FSU) countries, 243 France education spending, 228 and EU members, 33 – 4, 43, 47 interest rates, 249 and Morocco, 74, 128 and NORAFS, 73, 127 and UfM, 36, 40 –1 voters, 32 free trade, 24, 47, 55, 58, 65 free trade theory, 244– 5 FTA (Free Trade Area), 25, 49, 52 –3, 59, 80, 96 Fule, Stefan, 256– 7

310

EUROPE'S RELATIONS

G-Med summits, 35 Gadi, Salim, 127, 148– 9 Galor, Oded, 202 Gasiorek, Michael, 66 – 7 Gavin, Brigid, 54 GDP (Gross Domestic Product) agriculture and, 115 exports ratio to, 180 growth of, 77 – 8, 106, 176 inflation levels, 153– 5 per-capita, 154, 159, 177, 198, 249, 255 vs. Human Development Index (HDI), 201 Geiger, Alexander, 26 – 7 Germany, 33, 40 – 1, 43, 47, 159– 60, 249 Gillespie, Richard, 33 – 4, 37, 38 GINI (Gini Coefficient) index, 191– 2, 197– 8, 199, 205, 206, 210 Glennie, Jonathan, 149 GMP (Global Mediterranean Policy), 21, 74 Gomez, Ricardo, 21, 42, 73, 75 Governance Facility (funding), 138– 9 governance, good, 113, 169– 76 Grabbe, Heather, 31 Grant, Michael, 1 growth models, 12, 176– 84, 187– 8, 204, 243 Gstohl, Sieglinde, 60 Gwynne, Robert, 11 Haddad, Saleem, 58 Hamour, El-Waleed, 245 Handoussa, Heba, 52 Haque, M. Shamsul, 234– 5 Hassan II, King, 72, 76 –8, 117, 241 Hassoun, Jaafar, 172– 3 HCP (Haut Commissariat au Plan), 156– 7, 191– 3, 223, 228– 9 HDI (Human Development Index), 105– 6, 160, 198, 200– 1 health sector, 88, 102, 140, 145, 192– 3

WITH

NORTH AFRICA

Heckscher, Eli, 161 Heckscher-Ohlin model, 161– 2, 243 Hemal, Ali, 68 Hertel, Thomas, 101 Hicham, Prince Mulay, 253, 258 el-Himma, Fouad, 241 Holden, Patrick, 109 Hong Kong, 187, 244 Hulme, David, 14 – 15 human capital, 206 human capital formation, 153, 176–88, 179 human rights, 75, 106, 113, 126– 7 Hunt, Diana, 12, 137–8, 187, 238 IEG (Independent Evaluation Group), 79 IEMed Surveys 2009, 53 2010, 35–7, 108, 114, 129, 143, 168 2011, 30, 148 –9, 254 IGAs (Income-Generating Activities), 122, 124 IMF (International Monetary Fund), 55, 70, 77 imports, 118, 167, 180, 244 income inequality, 189– 230 INDH (’Initiative Nationale pour le De´veloppement Humain’), 64, 90– 1, 95, 119– 25, 159 industrial sector, 81, 91, 107, 116– 17, 244 inequality, 122, 125, 174, 198, 200– 1, 214, 220– 31 inflation rates, 154– 5, 248– 50, 255 infrastructure, 84, 121, 173, 195, 217, 223 ‘Initiative Nationale pour le De´veloppement Humain’ see INDH intellectual property rights, 96, 245–6 ‘inter-industry’ models, 167– 8 interest rates, 52, 54, 78, 154, 235, 249, 250 international-dependence theory, 8 – 9

INDEX Italy, 22, 33, 41, 43 Ivaschenko, Oleksiy, 243 Jaidi, Larabi, 83 Jakubiak, Malgorzata, 54, 59 Japan, 173, 175, 228 Jawhar, 2 Joubert, Bruno, 157–8 Jouyet, Jean-Pierre, 33 justice system, 91, 107, 113, 139, 145, 172– 3 Karam, Souhail, 256 Kausch, Kristina, 131 Kay, Cristo´bal, 11, 235 Kebabdjian, Ge´rard, 68 Khader, Bichara, 27 Khakee, Anna, 126 Khan, Mushtaq, 171–2 Ki-Moon, Ban, 256 Kienle, Eberhard, 27 Kolesnichenko, Anna, 59 – 60 Korea, 242–3 Kreuger, Anne, 235 Krugman, Paul, 156, 162, 167– 8, 242, 244, 247– 8 Kyrgyzstan, 198, 199, 203, 210, 231 L24 countries, 198, 199– 201, 203, 210 labour force, 115, 169, 176– 7, 180, 184– 5, 254 Lahlou, Khalid, 217 Lal, Deepak, 236–7, 245 Lannon, Erwan, 53 Layachi, Azzedine, 171–3, 205, 213, 227, 240 Leigh, Andrew, 219– 21 Lin, Justin, 7, 9 – 10 Lisbon Treaty, 112 literacy 196, 221, 224 logistic assistance, 92 – 4, 168 Lokshin, Michael, 68, 97 Lucas, Robert, 176, 180– 4

311

Maghraoui, Abdeslam, 77 – 8 Maghreb, 21, 73 –4, 83, 114 Majidi, Mounir, 241 Maliszewska, Maryla, 53 – 4 Mankiw, N. Gregory, 179 ‘Maroc Export Plus’, 103 Marshall Plan, 8 Martı´n, Ivan on Advanced Status, 94 on Euro-Med policies, 63 – 5 on financial aid, 191 on foreign direct investment, 176 on INDH, 123 on Morocco, 101, 142, 167 on NORAFS, 252 on trade liberalisation, 243 Mason, Jennifer, 15 Mayoux, Linda, 14 MEDA (Mediterranean Economic Development Assistance), 23, 52, 79– 80, 112, 136–7, 140–1, 216–17 medical coverage sector, 125, 129, 218 Meknassi, Rachid, 173 MENA region (Middle East/North Africa region), 21, 23, 25, 247 Merkel, Angela, 33 Middle East peace process, 20, 23, 50 migration, 20, 60, 82, 131– 2, 161, 185 Millennium Development Goals (UN), 88 Minot, Nicholas, 101 Mise en Oeuvre de la Politique Europe´enne de Voisinage (EC 2010 Report), 88, 95, 108 Missiroli, Antonio, 27, 31 MNC (Mediterranean Neighbour Countries), 21, 24 – 6, 29, 32, 42, 48– 60, 183 Mohammed V, King, 76 Mohammed VI, King, 81, 117, 240– 1, 255–6

312

EUROPE'S RELATIONS

Moldova, 150, 198, 199, 203, 210, 231 Moroccan diplomats, 125– 33, 168, 170, 242 Moroccan economists, 115– 19, 126–7, 212 ‘Moroccan Experience of the National Initiative for Human Development, The’ (2010 Forum), 121–2 Moroccan governor, 119– 24, 159, 196, 211 Moschella, Manuela, 30 – 1 Mosk, Carl, 173 MPCs (Mediterranean Partner Countries), 55, 63 – 4, 167, 218 MU (Mediterranean Union), 32, 41 al-Muizz, Fatimid Caliph, 2 Najem, Tom, 145, 238– 9, 241 Nathanson, Roby, 248 National Indicative Programmes, 132, 158 Natorski, Michal, 140, 143 NEC (Neighbourhood Economic Community), 60 Nel, Philip, 205, 211– 12, 221, 227–8, 231– 2 neoclassical growth models, 177– 81, 187– 8 neoliberalism, 9 – 10, 79, 190, 232– 7, 244, 249 NGO (Non-Governmental Organisation), 121– 4, 126, 173 NIF (Neighbourhood Investment Fund), 139 Non-meds (northern EU countries), 40 – 1, 44 NORAFS (North African states), 39 – 45 and Arab Spring, 257– 8 conflicts between, 20 cronyism, 243 education systems, 88 and EMP, 54, 61

WITH

NORTH AFRICA

and ENP, 29, 61 and EU, 62, 65, 127, 143, 152 improvements in, 56 political reform, 27 trade liberalisation, 97 North America, 22, 155 Norway, 228 Nouaydi, Abdelaziz, 173 Obstfeld, Maurice, 156, 162, 167– 8, 177–9, 242, 244 ODA (Official Development Aid), 108, 122, 127, 142– 8, 218 OECD (Organisation for Economic Cooperation and Development), 98, 146, 205 Ohlin, Bertil, 161 O’Malley, William J., 174– 5 Oslo Peace Accords (1993), 23 Oualalou, Fathallah, 257– 8 Paczynski, Wojciech, 54, 59 –60 Paris Declaration on Aid Effectiveness (2005), 146 patents, 185, 187, 205, 206 Pattnaik, Jajati K., 235 PCHD (Provincial Committee for Human Development), 123 ‘Perejil-Layla Islands’ dispute, 82 Perrault, Gilles, 75 Philippus, Marcus, 1 – 2 Pickett, Kate, 205, 209, 211– 12, 220–1, 228– 32 Plan Maroc Vert, 103, 108, 122 Pogodda, Sandra, 58 policy instruments, 12, 51, 84 – 5, 94, 134–48, 252 Polisario movement, 44 political reform, 172 population growth, 109, 132, 177– 8 Porter, Doug, 241 Portugal, 21 – 2, 75 PPF (Production Possibilities Frontier) 164–5

INDEX press freedom, 100–1, 141 private sector, 49, 84 – 5, 109– 10, 145, 237– 40, 242 protests, 107, 255, 257 public finances, 98, 102– 3, 105 public sector, 109–10, 145, 237–8, 240 qualitative methods, 14 – 17 quantitative methods, 16, 17 R&D expenditure, 185, 241– 2 Radwan, Samir, 54, 69 RAMED (Moroccan Medical Coverage Programme), 125, 216– 17 Rapport du Cinquantenaire, Le, 120 Ravallion, Martin, 68, 97 regionalism, 22, 42, 43, 253– 8 Rehme, Gunther, 206 Reiffers, Jean-Louis, 52, 54, 69 Reiffers Report, 38 – 9 Reinhard, Janine, 101 renewables and waste, combustible, 207 Rhazaoui, Ahmed, 78 Ricardian model, 161– 2 Ricardo, David, 47, 161, 245 Richelle, Koos, 149 Riley, Thomas, 167 Rodrik, Dani, 204, 209 Rogoff, Kenneth, 177– 9 role of the state, in socioeconomic development strategies, 237– 43 Romania, 132 Roque, Maria-Angels, 227 Rossi, Rosa, 31 Royal Court, 76 – 8, 145, 239– 40 Royal Institute for Strategic Studies (Morocco), 91 rural constituencies, 115, 119, 121– 5, 192– 4, 217 Russia, 221 Saadaoui, Abdelhamid, 217 Saaf, Abdallah, 173 Sabah, Saadia, 127

313

Sala-i-Martı´n, Xavier, 179 SAP (Structural Adjustment Programme), 66, 70, 72, 76 – 9, 86, 154, 238 Sarkozy, Nicolas, 32 – 3, 41, 45, 256 Sasse, Gwendolyn, 30 Schumacher, Tobias, 27, 28, 30 Schuman, Robert, 47 security considerations, 73, 82, 121, 214, 257 Sekkat, Khalid, 246– 7 Sen, Amartya, 220 Shearmur, Jeremy, 236 SIA (Sustainability Impact Assessment), 55, 218, 246, 248 Simai, Mihaly, 243 Singapore, 187, 244 Smith, Adam, 46– 7 social outcomes, 62 – 3, 65, 106, 113, 254–5 social programmes, 217 Social Watch, 141– 2, 145, 147 socioeconomic development strategies, 237–50 socioeconomic outcomes and challenges to future progress, 115– 26 socioeconomic realities, 49 – 50 Solana, Javier, 23 South Korea, 168– 9, 186– 7, 244 Southern Mediterranean countries, 20, 29, 33, 37, 55, 58 Spain and EEC, 21 – 2, 75 and EMP, 23 and EU members, 33, 41, 43 and Morocco, 75, 118, 128 and NORAFS, 127 ‘special needs’ groups, 121– 2 Stetter, Ernst, 26 structural change theory, 7 – 8, 10– 11 Sundrum, R.M., 205 sustainability, 85, 121, 153, 207, 210

314

EUROPE'S RELATIONS

Sweden, 249 Switzerland, 249 TACIS (Technical Assistance for the Commonwealth of Independent States), 57 TAIEX (Technical Assistance Information Exchange Office), 57 Taiwan, 242– 4 tariffs, 168– 9, 247 taxation, 57, 63 – 4, 67, 166, 204, 249 technological sophistication, 13, 186, 188 technology transfer, 168, 178, 186, 235, 244, 246 textile manufacturing, 93, 96, 107, 186, 247 TFP (total factor productivity), 66 – 7 theoretical framework, 7 – 17 TIMSS (Trends in International Mathematics and Sciences Study), 143 Todaro, Michael, 236 Tovias, Alfred, 54, 183 trade flows, 26, 51, 53, 162, 165 trade liberalisation, 53 –5, 63 – 4, 89 – 90, 95 – 7, 101– 2, 113– 14, 243– 8 trademark applications, 187 transparency, 113, 149, 173 Treaty of Rome (1957), 21 Tremlett, Giles, 256 ‘trickle-down’ notion, 84, 236–7 trust levels, and community relations, 190, 211– 14 Tunisia, 75, 107, 132, 238, 253, 258 Turkey, 32, 34 UfM (Union for the Mediterranean), 20, 32–8, 40–2 UK, 22, 41, 43, 220 Ukraine, 59

WITH

NORTH AFRICA

UN (United Nations), 88, 121, 141 UNCTAD (United Nations Conference on Trade and Development), 238 UNDP (United Nations Development Programme), 202, 203, 208–9, 247 unemployment levels, 63, 107– 8, 116, 156, 194– 5, 250 UNESCO (United Nations Educational, Scientific and Cultural Organization), 105 United Nations World Economic and Social Survey (2006), 7 University of Manchester, 55 UNRISD (United Nations Research Institute for Social Development), 190–1 Urban II, Pope, 19 urbanisation, 120, 207, 208, 211, 218, 228 USA, 47, 82, 114, 228, 241, 249 Van Elsuwege, Peter, 30 Viner, Jacob, 46 Voitchovsky, Sarah, 200– 6, 211 Wade, Robert, 246– 7 Walker, Paul E., 2 Waterbury, John, 174, 212 Western– Islamic relations, 32, 82 WHO (World Health Organisation), 215–16 WikiLeaks, 240 Wilkinson, Richard, 205, 209, 211–12, 220–1, 228–32 Willis, Katie, 15 Wolczuk, Kataryna, 59 women education, 80, 193, 214 health outcomes, 192 inequality, 122, 125, 174, 214 unemployment, 195 World Bank and health outcomes, 215– 16

INDEX intellectual property rights, 245– 6 loans to Morocco, 140– 1, 158, 168, 222 Moroccan exports, 166 role of the state, 242

315

World Values Survey, 212, 213 WWF (World Wildlife Fund), 209 Youngs, Richard, 23, 27, 139 Zartman, I. William, 76