EU both brandishes and is confronted by economic muscle

Published April 27th, 2001 - 02:00 GMT

The European Union has recently been stepping up its efforts to draw the Middle East and North Africa into its economic and political sphere of influence. But, as it is discovering, the going is not always easy. 


The latest high-ranking European official to make his voice heard is the Belgian foreign minister, Louis Michel, whose country will take over the EU's rotating six-month presidency in July. Speaking in Beirut last week, he pointed out that the EU's financial contribution to countries of the Middle East is already substantial and, consequently, justifies a greater degree of political influence.  


And how does one go about doing that? Because the EU was “enormously involved” on the financial front, Michel said, it should possibly impose conditions to such assistance, thereby serving to improve the stature to its official political positions. 


The French are evidently keen to test the EU’s economic muscle. They showed their disfavor with the policies of the government of Ariel Sharon several days ago, by leaking to the press a report that there exists a working paper, which proposes that the EU call off its 10-month-old association agreement with Israel if the crisis in the Middle East escalates, and if all 15 member states agree to do so. Speaking to AFP on condition of anonymity, a European source admitted that such a course of action would be at the "extreme" end of options available. 


But the problem is that, when heavy-handed tactics become part of the game, more than one side can use them. Countries of the Gulf Cooperation Council (GCC) reportedly have been delivering threats of their own. They evidently are upset with the Europeans for spending too much time courting impoverished nations in the Middle East, while not paying enough attention to those states that are not financially dependent upon the EU. 


Reportedly, the GCC has delivered a message to the EU, stating that they may abandon a planned free-trade agreement with the Union if the negotiations process is not sped up. Making the statement was Shaikh Mohammad Bin Mubarak Al-Khalifa, Bahrain's foreign minister, whose country is the current GCC president.  


"The EU has already signed similar [free-trade] agreements with countries around the Mediterranean and others whose markets are far less attractive than those of the GCC countries," said Shaikh Mohammad, as quoted by AFP


The GCC, which includes Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates, has been pushed to conclude a trade deal with Europe since 1988. In particular, the organization has been extremely critical of high taxes paid in EU member countries on refined oil products and aluminum produced in the Gulf. At the root of the GCC’s distress is the massive trade deficit its members have with Europe. Shaikh Mohammad reported that it reached $11 billion in 1999. 


With bilateral trade estimated at €51.5 billion in 2000, up from €37 billion in 1999, the EU is the GCC's largest trading trade partner, and the countries of the Gulf represent the EU's fifth largest export market. 


But the biggest stick the GCC can brandish is its investment capacity. Currently, Gulf investments in the EU are estimated to stand at $122 billion, or 35 percent of all the region's investments abroad. 


As things appear, no EU-GCC free trade agreement is likely to be launched before the GCC implements its Gulf-wide customs union. The target date by which the GCC member countries are scheduled to have achieved a uniform customs regimen is 2005. 


A source of irritation for the GCC countries are EU’s efforts to further the free trade zone in the Mediterranean Basin-a region in which the Europeans clearly would like to be the dominant power. It was the EU that initiated the Euro-Mediterranean (Euromed) forum, which was founded in Barcelona in 1995, and brings under one umbrella the 15 European Union countries, the Arab countries of the Mediterranean—including the Palestinian Authority—and Israel. 


To further the Euromed project, the EU aims at concluding bilateral association agreements between the EU and the other nations in the group. Such agreements have already been signed with Israel, Turkey, Cyprus, Malta, Tunisia and Morocco. An agreement was initialed by Egypt in January, and Jordan has signed one but still has not implemented it. An interim agreement has been reached with the Palestinians negotiating are proceeding with Algeria, Lebanon and Syria. – (Albawaba-MEBG)

© 2001 Mena Report (

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