Morocco, Algeria and Tunisia have a common culture and cuisine, an oversupply of educated young people, and an undersupply of capital investment. Together, they would prosper, but their governments don’t see it that way

Anyone visiting the eastern Moroccan city of Oujda encounters a bizarre sight: the nearby crossing point into Algeria, which should be bustling, is oddly calm, with only a few policemen wandering around and construction works blocking the road. The silence of the closed border reflects the generation-long enmity between Rabat and Algiers.

The failure of the Maghreb (Morocco, Algeria and Tunisia) to create a common market has cost the region dearly in energy, banking, transport, agribusiness, education, culture and tourism. Trade between North African countries is only 1.3% of their foreign exchange, the lowest rate for a region in the world. Two conferences on “The cost to the North African Tiger of the lack of economic integration” (1) and a report by the Peterson Institute (2) have demonstrated the benefits that open borders would have for people there. Most North African business leaders say they would like nothing more than to be able to operate freely across frontiers. Both rich and poor suffer from the inability of the region’s political leaders to work together. The Maghreb showed little enthusiasm for the Barcelona Process (3), and it is doubtful it will be any more proactive with its successor, the Union for the Mediterranean (4).

The Maghreb has many natural resources: oil, gas, phosphates, agricultural land (although it suffers from a worsening shortage of grain); a beautiful landscape that attracts millions of foreign visitors; and a youthful population that has become much better qualified since the countries gained independence. The problem is that with so many young people entering the job market, half are now unemployed. The region would need a higher growth rate than China over the next two decades to accommodate them – and not trading with its neighbours costs each Maghreb country two percentage points of growth.

Every year thousands of migrants drown in the Mediterranean trying to reach Europe. Graduates leave because there are so few opportunities at home, where the best jobs are given to family members of the elite. Eight billion dollars of private capital leaves the region every year, adding to an estimated total of $200bn already gone. As the former governor of the Bank of Algeria, Abderrahmane Hadj Nacer, put it, North Africa’s middle class is being formed outside its borders.

Ever since Carthage was founded in the 7th century BC, North Africa has taken advantage of its strategic position: the ships that sailed from the ports of Salé, Algiers and Tunis in the 17th century were renowned, there were more English people living in Morocco and Algeria in 1660 than in the colonies of the New World, and European heads of state treated North African leaders as equals (5). Now the Maghreb is isolated not only from Europe but the rest of the world.

Politics gets in the way

The lack of economic integration in the Maghreb has a major impact on the energy sector. Algeria is the third-largest provider of gas to Europe, after Russia and Norway. Morocco has almost half the world’s reserves of phosphate but to turn it into fertiliser, it needs energy, sulphur and ammonia: three things Algeria has in abundance, and at competitive prices. Morocco’s huge phosphate company, OCP, exports most of its fertiliser to India, Brazil and China. A partnership between OCP and the Algerian state-owned oil company Sonatrach could turn the Maghreb into the most competitive centre of fertiliser production in the world, attracting foreign investment, supporting subcontractors and creating a huge number of jobs. But the only cooperation that exists between the countries is the Maghreb-Europe gas pipeline that crosses Morocco from Algeria to Spain – and even that will soon be replaced by a new pipeline, Medgaz, which will link Algeria and Spain directly.

It is a similar story with the car industry. Renault has invested in a new car plant near Tangiers to produce 400,000 vehicles a year by 2012. But it would never occur to the Algerian leadership to negotiate with Morocco to be part of that venture, or to set up a sovereign wealth fund to invest in Renault, or in another multinational company, so that it could get much needed new technology. Algeria’s leadership lacks the vision to make strategic investments of this kind. It is also unwilling to give up absolute control of the country’s resources and take part in any transaction that would require transparency and the application of internationally recognised rules. Morocco’s leadership is making no effort for greater cooperation either.

The cost of this lack of economic integration can also be seen in the agribusiness sector. For a long time the Common Agricultural Policy (CAP) restricted the export of citrus fruits and tomatoes from North Africa to Europe. But various factors have combined to revolutionise this situation: the lifting of these restrictions, changes in eating habits among North Africans, new strategies by agribusiness multinationals, the ending of western subsidies for grain exports, and the emergence in the Maghreb of a new generation of ambitious private entrepreneurs.

Trade within an industrial sector such as agribusiness can contribute substantially to economic growth. Such trade would be ideal for the Maghreb, especially since agribusiness uses a lot of manpower. The extraordinary growth in the export of Tunisian olive oil, and the partnership between Tunisian and Spanish businesses in this sector, along with the revival of long abandoned vineyards in the region, demonstrate the benefits of creating links between private companies in the Maghreb and Europe in terms of the transfer of technology, markets and wealth.

Without opening its borders, how can this region make the most of its assets, protect its fishing and agricultural resources, manage its water resources and become less dependent on grain imports? Globalisation has created a world of uncertainty, with genetically modified organisms, climate change, the rising cost of energy, and pandemics. As a net importer of grain, the Maghreb is vulnerable to the rise in food prices. It must take advantage of the opportunities provided by globalisation while avoiding its negative effects, if it is to help its rural poor – any progress in the agricultural sector would reduce the economic gulf between the town and the countryside. Morocco and Tunisia export food to Europe and beyond, and in Algeria, private investment in this area is growing rapidly. But this contrasts sharply with a very low volume of agricultural trade within the region (unless we include cannabis). Most North African businessmen are desperate to build partnerships both within the region and internationally, but have huge obstacles to overcome.

Talent wasted

If the countries of the Maghreb do not improve their relations, Morocco and Tunisia will continue to go their own way, exporting abroad, and many of the challenges facing the region will remain. This inability to work together is all the more ironic, considering that the Maghreb shares a cuisine that is becoming more appreciated internationally. The region has a common history and culture, but it cannot benefit from this, in investment, production and employment, unless businesses are set up across the Maghreb, and in cooperation with multinationals already active in the region.

In contrast with China and India, North Africa makes little use of the talent within its large diaspora in Europe, the United States and the Middle East. Remittances sent home by Moroccans abroad are worth twice as much as direct foreign investment: $8.8bn deposited in Moroccan bank accounts every year, 38% of the total. These young people could act as bridges to the rest of the world. When will Morocco, Algeria and Tunisia ask their diaspora to be ambassadors for the modernisation of their home countries? When will the Maghreb have an equivalent to the Indus Entrepreneurs (6), an Indian network set up in 1992 in Silicon Valley, bringing together 12,000 people from 12 countries?

Europe is reluctant to offer its southern neighbours ambitious partnership projects, and its leaders and media too often cultivate a fear of the other, linked to Islamophobia. Europe has brought in a Kafkaesque visa policy, which even restricts the movements of North Africa’s elite. It refuses to believe North Africa could be part of the solution to its own problems, such as an ageing population and the growing strength of China.