Lineages of Revolt. Adam Hanieh
further consolidation of the Middle East’s neoliberal trajectory through the common mechanisms of debt, aid, and the promise of increased market access. The EU’s goals were initially codified in the Euro-Mediterranean Partnership (EMP), also known as the Barcelona Process, launched at a meeting in Barcelona in November 1995 between the EU and foreign ministers from Algeria, Cyprus, Egypt, Jordan, Israel, Lebanon, Malta, Morocco, the PA, Syria, Tunisia, and Turkey. The final communiqué of the Barcelona meeting was quite open about its intentions, highlighting “the promotion and development of the private sector . . . [and] the establishment of an appropriate institutional and regulatory framework for a market economy” as a principal aim of the new partnership. The EU admitted its longer-term objectives frankly, noting that its overall purpose was “to create open economies by the opening-up of markets . . . [and] the elimination of trade barriers.” This would require the acceleration of “Fiscal, administrative and legal reforms as well as deregulation of public services . . . in order to raise the level of foreign direct investment in the southern Mediterranean economies.”89
In line with these objectives, two major themes dominated the ongoing Euro-Mediterranean negotiations. The first of these was an attempt to establish a free trade area through a stepping-stone of individual FTAs between Mediterranean countries and the EU, with 2010 set as the target date for concluding a final region-wide agreement. The second theme was “the progressive elimination of obstacles to [EU] investment”90 through the passage of new laws aimed at privatizing state-owned firms in industry, agriculture, and banking.91 Over the next decade, these twin themes of free trade and foreign investment were consolidated in individual bilateral treaties, called Association Agreements, signed between the EU and the EMP countries.92 Association Agreements committed countries to restructuring their policy environments in return for financial incentives and promised access to EU markets. Arab partners had little room to maneuver in negotiating these agreements, given their high levels of indebtedness and the fact that the EU was the largest trading partner for most countries in the region.
In regards to trade, the Association Agreements demanded significant reductions by EMP countries in customs duties, tariffs, and taxes on imports. Regulatory change went well beyond trade in goods to affect services as well—compelling countries to open up sectors such as finance, telecommunications, transport, energy, and more to foreign companies and ownership. These reforms required dramatic revisions of government laws. To facilitate this process, two financial programs, MEDA I and MEDA II,93 were set up, with close to €5 billion earmarked for distribution between 1995 and 1999. The amount of funding that countries received was explicitly linked to how much they agreed to change their domestic laws—with the EU noting that the basic principle of the MEDA program was that it “makes economic transition and free trade the central issue of EU financial cooperation with the Mediterranean region.”94 MEDA grants were supplemented by additional loans from the European Investment Bank (EIB), with all these funding mechanisms designed to provide “incentives for economic transition and the development of open, competitive markets” and to foster “political and social reforms in the Mediterranean partners . . . as a catalyst to macroeconomic structural adjustment.”95
In the first round of MEDA funding (1995–1999), €3.435 billion in grants was distributed with another €4.808 billion provided in loans from the EIB. Around 45 percent of the MEDA funds were directly linked to structural adjustment programs, including more than €500 million in direct grants to national budgets so that countries could carry out neoliberal reforms in partnership with the IMF and World Bank, and another €1.035 billion aimed at policies to help “the creation of an environment favourable to the development of the private sector.”96 To a great extent these grants resembled little more than a bribe, with the EU noting that “national budgets of the Mediterranean partners receive a cash injection in return for the implementation of structural reforms.”97 Projects backed by MEDA in this initial round included trade liberalization (Algeria, Jordan, Tunisia), privatization of state-owned companies (Algeria, Jordan, Tunisia), and financial sector opening (Morocco and Tunisia).98 By 2003, the EU assessed that funding had achieved “significant progress . . . towards the liberalisation and the regulating of the economy, in particular in the banking system where progress towards competition has been achieved. Progress was done [sic] towards the restoration of the balance between the public and private sectors [i.e., privatization], though unequally. Evaluators noted that the liberalisation of the capital market went further than the labour market.”99
In 2003, the European Commission outlined an updated vision of the relationship with the EMP countries, which became known as the European Neighbourhood Policy (ENP). The ENP also applied to non-Mediterranean neighbors of the EU such as Armenia, Azerbaijan, Belarus, Georgia, Moldova, and Ukraine, and was intended to complement the Barcelona Process. It set up a framework for intensifying negotiations with EMP countries through a series of three-to-five-year action plans drafted by the EU, which laid out what steps countries would need to take in return for continuing European aid. The ENP differed from the EMP in that it involved a much more explicit focus on integrating Mediterranean countries into European markets, although, importantly, it ruled out the possibility of accession to EU membership.100 Moreover, it placed heavy emphasis on the goal of closer economic integration between the countries of the Mediterranean.101 The justification for this was unambiguously framed in the interests of European capital, with the EU commissioner for external relations, Chris Patten, noting that South-South integration “will create larger markets, which will serve as a strong incentive to make the region more attractive for foreign direct investment.”102 One of the mechanisms by which this was encouraged was a decision to establish so-called “rules of cumulative origin”—meaning that goods made up of a variety of inputs from different Euro-Med countries could be treated as having the same origin, provided the producing countries held trade agreements between one another.103 In this manner, the EU hoped to encourage countries in the region also to sign FTAs between one another. “Cumulative origin” would, in the words of Patten, encourage “economic operators from different countries to get together and perform the different stages of their production in the country where it produces greatest profit. It would have a significant effect on encouraging joint ventures in the region, and it would enable all to take advantage of the specific economic structure of each partner.”104
Around 2007, differences emerged within the EU regarding the best way to advance the ENP process. These differences were reflected in a proposal put forward by Nicolas Sarkozy during the French presidential campaign of 2007, in which he suggested the establishment of a Mediterranean Union (MU), modeled on the EU. Sarkozy’s proposal envisaged the MU as consisting of countries surrounding the Mediterranean, and thus excluded EU member countries such as Germany. The European Commission and German chancellor Angela Merkel came out against the MU for this reason, as did proposed members, such as Turkey, who feared the MU would be used as an alternative to full membership in the EU itself. Other EU member states such as Italy, Spain, and Greece gave their support to the suggestion. At the beginning of 2008, Sarkozy modified his suggestion to include all EU member states, not just those bordering the Mediterranean. It subsequently became part of the Barcelona Process, and was presented as a new phase of the EMP at a conference in Paris in July 2008.
By the end of the decade, the consequences of these agreements for the Middle East region were clear. Most importantly, European control over export markets was consolidated (see appendix 1). The EU was consistently the largest exporter to every Euro-Med partner country through the 2000s—for Algeria, Morocco, Tunisia, Libya, and Lebanon, the EU was supplying around half of all imports; for other EMP states, the EU share was consistently over 25 percent. These EU-produced goods were generally high value-added, technically advanced items—machinery and equipment, vehicles, and aircraft (see appendix 2). Concurrently, the various regional agreements acted to tie the productive activities of EMP countries to European markets as exporters of low-wage manufactured goods, agricultural products, and natural resources. These trade patterns were particularly stark in the case of Morocco and Tunisia, where around 75–80 percent of all exports were going to the EU through the decade—mostly textiles/garments and agricultural goods (appendixes 1 and 2). Textile and garment exports were also significant for Jordan and Egypt, although a larger proportion of these tended to go to the United States as a consequence of the various bilateral agreements noted above. The defining characteristic of this trade for many ENP countries—the