| The Maghreb populations of Algeria, Morocco, Tunisia and Libya collectively match Egypt’s, but these countries offer distinct opportunities for European investors and might soon be part of a new, French-led Mediterranean Union, says Justin Keay  If prizes were given for being misunderstood (indeed often ignored) by Europe’s business community, Algeria, Tunisia and Morocco would win gold, silver and bronze. Despite their proximity to Europe – Tangier, one of the Maghreb region’s most important cities, is less than 15 km from the Spanish mainland – for most Europeans, these countries might as well be thousands of miles away. At a pinch, Algeria might be vaguely associated with gas, but it’s probably better known for the Islamist terrorism that plagued it after the abortive 1992 elections (although much less of a threat, the Salafist Group for Preaching and Combat recently morphed into an Algerian franchise of al Qaeda). Morocco, by contrast, would be noted for its tourism and real estate potential (the main exports of phosphates and, even less competitively, textiles having little interest for most European companies), while Tunisia would also be known for tourism.
“Europe’s companies have generally viewed the region as a better risk than Africa or parts of Latin America, but without the huge potential of South-East Asia or even choice parts of Africa. There are also concerns about stagnant reform programmes and the skills base, which simply doesn’t compare to eastern Europe,” says George Joffe of Cambridge University’s Centre for International Studies. This indifference has been echoed by the EU, which despite repeated promises to make the region a priority has been more concerned with enlargement and integration – and, more recently, tackling an increasingly hostile Russia and an aggrieved Turkey. Any involvement has been aimed at reducing terrorism – a problem in Algeria and Morocco – and curbing migration, which has become a growing concern for Southern Europe.  “Europeans have been slow to realise the region’s potential, with non-French speakers wary and almost everyone confused by how to access the EU grants made available through the EU’s Barcelona Process,” says Michael Thomas, head of the Middle East Association, which leads regular trade missions from the UK.
Against the backdrop of Nicolas Sarkozy’s accession to the French presidency (see France reasserts itself, page 90), a growing desire for energy security and the promise of the region becoming an EU free trade area in 2012, however, perceptions are changing. “With Europe more interested, these countries seem to be on outreach, extolling their own virtues against those of their neighbours,” says Mohammed Shakeel of the Economist Intelligence Unit. Morocco and Tunisia remain attractive destinations for tourism and real estate developers, with favourable prices increasingly attracting investment from the Gulf States in particular; Tunisia’s more diversified economy is also likely to be a magnet for European SMEs looking for partnerships, particularly in the electronics and light manufacturing sectors.  Algeria is undoubtedly the most interesting, in part because of its immense gas wealth (reserves, at 162 trillion cubic feet, are Africa’s second-largest after Nigeria), which have attracted BP – the largest foreign investor – Norway’s Statoil, Italy’s ENI and Spain’s Repsol, all anticipating growing European demand for Algerian gas. Another factor is President Abdelaziz Bouteflika’s strategy of breaking with Algeria’s statist past: privatisation is planned in the banking, telecoms and power sectors, tourism is on the up, and the government has launched a major public works programme aimed at modernising infrastructure and reducing youth unemployment, which outside Algiers can reach 40%.
A further plus is improved neighbourliness, helped by Libya’s emergence from the diplomatic wilderness. Although the border between Algeria and Morocco remains sealed – due to Algiers’ support for the Polisario Front in the contested Western Sahara – and intra-Maghreb trade, in a typical year, is just 3% of total trade, in March the Arab Maghreb Union had its first meeting in 13 years. As well as promising to work together more closely, the five countries (Libya and Mauritania are also members) agreed to set up a new investment/ development bank to help fund intra-Maghreb projects. |