May 25, 2008
Pondering the MENA Economies
Well, my return seems to have been prematurely announced, although Greg Djerian of Belgravia Dispatch had a note up that almost could be directly plagiarized by myself at least.
This aside, on this end the oil / hydrocarbons price run up - combined with the run up in food prices (not unrelated to b sure) has created some serious near-term tensions, although also ultimately opportunity for positive change I think. If the tension between the oil economies (Gulf essentially) and the non-oil (or essentially semi-self-sufficient) economies such as Morocco, Jordan, Tunisia, etc. can be managed.
I am spending rather a lot of time trying to keep up with this, and figure out what aress are going to work best - renewables? Biofuels (thank go I won the argument last year against the initial proposition that someone made to look at Palm oils....)? Before moving on, let me highlight an excellent new news source covering the Maghreb and the rest of Africa: Les Afriques, which as the link will let you know has an English version as well as a French version (the English seems to lag about 1-2 weeks and be incomplete).
But beyond the private opportunities that are certainly going to need to be invested in to address for the region the challenges, there are near term policy issues. First, I am worried liberalisation may be halted (although certainly the underinvestment in Energy in places like RSA and Morocco due almost entirely to bad government policy and controls should make clear argument for liberalisation, emotive politics rarely works that way).
A particular worry is liberalisation in the Ag sector which would really solve a number of issues for the Maghreb region (I see the Machreq as more or less fucked)... but involves a careful balancing insofar as rural exodus into cities is a dangerous mix. Of course the historical practice of keeping the quaint rural traditionals in place to amuse the tourists and provide an easily manipulable political base (Egypt, Morocco esp) has clearly run up against the absolute limits of the actual physical economies' ability to sustain even proper subsistence.
Posted by The Lounsbury at May 25, 2008 11:34 AM
Filed Under: Biz - Private in MENA
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It rather does seem that the logic and emotion are being propelled in opposite directions by the food crisis, and emotion will certainly win, at least in the short-term.
The food crisis *could* remove the big stumbling block of the Doha round, i.e. the industrialized countries' refusal to open their agricultural sectors. The EU is already starting to cut down on their ag supports, which could lead to multilateral agreements with MENA. But really, it seems that the crisis has put food into the "national security" realm which means I don't see any self-respecting MENA strongman relinquishing any control over his ag sector anytime soon. They will push for *more* controls, restrictions, etc., not fewer.
Posted by: Djuha at May 25, 2008 01:51 PM
Lotta stupid questions: How would the Maghreb liberalise agriculture if the EU doesn't? I've wondered for a long time how those dynamics play out; does the EU dump its tomatoes on a North Africa that is powerless to put up barriers against clearly unfair trade? Because I for one wouldn't hesitate taking EU to the WTO court.
And with the rising prices, does this mean the agricultural sector is booming now? And how big is the agicultural sector in the Maghreb anyway? Subsidised?
Well, first, there is domestic liberalisation as well as international trade liberalisation.
Internal market liberalisation strikes me as important - no make that more important than trade liberalisation on the moment.
As for Ag price boom - well, more money is going into Ag, has been since about a year. There are subsidies, but stunningly inefficient and counterproductive.
Posted by: The Lounsbury at May 25, 2008 03:25 PM
Regarding DOHA, it definitely appears that the rising food prises do not - as one might rationally conclude - mean that subsidies are going away. On the contrary, subsidies remain in place or are even added to. I believe Germany - along with France, naturally - have already announced its opposition to what you were talking about, Djuha.
There seems to be some primal instinct at work here, some fear of running out of food that makes this possible. Emotive politics, as L put it. Perhaps if food prices remain level for a few years something could be done. The EU CAP is to be renegotiated in 2013, perhaps then, but farmers have an unnaturally strong hand in politics all over the world.
Posted by: Klaus at May 25, 2008 08:24 PM