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The Middle East: Europe's Mexico

Will economic ties to the EU help create stability and prosperity in the Middle East?

September 25, 2003

Will economic ties to the EU help create stability and prosperity in the Middle East?

Little known though it is, the EU has already formed its own version of the North American Free Trade Agreement in the Middle East — in the form of the Euro-Mediterranean Partnership.

The EMP was launched in Barcelona, Spain, in 1995 and aims to bring 12 Mediterranean countries — including the Palestinian Authority and Israel — into a free-trade zone by 2010.

Two of those countries, Cyprus and Malta, are due to become EU members in 2004. Furthermore, the EU has committed $5 billion to its developing partners to encourage them to liberalize their economies. That ambitious effort by the EU created bilateral trade accords with several Arab countries — and pressed them to encourage free trade in the Middle East.

Significantly, the EMP has become the only forum of its kind to have Israel and the Arab countries sitting around the same table.

The EU also established cooperative economic arrangements with the six states of the Gulf Cooperation Council in 1989 — and concluded a common external tariff arrangement this year.

Figures published by the European Commission in 2003 point to the growing level of trade integration between the 12 Mediterranean countries and the 15 EU members since 1980. In 2001, 53 % of exports from Mediterranean economies went to the EU — and 62.9% of those economies' imports came from the EU.

At the same time, all the Mediterranean countries, with the exception of Syria, have bilateral trade agreements with the EU.

It is interesting to note that, notwithstanding the accusations that Europe is "anti-Israeli," EU-Israeli trade in the last decade alone, has seen a threefold increase.

This confirms the EU as Israel's major trading partner and the number-one market for Israel's imports — surpassing even the United States in volume.

The process of trade liberalization has not been perfect. European markets have remained closed to some of the Mediterranean countries' main products, especially agricultural goods. And the initiative was severely undermined as the Israeli-Palestinian peace process faltered.

But the level of economic ties between the EU and the Mediterranean countries, including the growing dependency of Israel on trade with the EU, provides the Europeans with an opportunity to assert their diplomatic status in the region. Preferably, as part of a cooperative strategy with the United States.

To accelerate the process, the European leaders should remove the obstacles to the prompt entry of Turkey into the EU. That act, combined with the entry of Cyprus and Malta, will confirm the EU's status as both an Eastern Mediterranean and a Middle Eastern power.

An even more ambitious approach would be for the EU to announce its readiness to open negotiations with a free and democratic Iraq, as well as with Israel and an independent Palestinian state.

That could lead to the Palestinian state's gradual accession to the EU — a goal that would admittedly take many years to achieve.

By adopting a strategy of constructive engagement in the Middle East, the EU could try — through the use of both diplomatic and economic resources — to achieve the kind of goals that the Bush Administration is trying to advance through the use of its military power: Challenging the status quo in the Middle East, while advancing the cause of peace and political and economic reform.

Indeed, it is time for the Europeans to conclude that they cannot secure their interests in the region with which they maintain strategic business, and demographic ties by burnishing their ties to corrupt political elites.

That policy may have helped to protect short-term economic interests, while redirecting the hostility of the "Arab street" against the United States. However, perpetuating the rule of Arab autocrats has only helped to turn the strategic and economic periphery of Europe into one of the least advanced and most unstable parts of the global economy.

The Middle East exports not only oil to the EU, but hundreds of thousands of poor and angry immigrants as well. Some Europeans look upon them as a demographic time bomb.

But there is another critical truth the EU has to contend with: As long as both the Israelis and the Palestinians regard Washington as central to any resolution of their conflict, the EU will remain marginalized in the peace process.

That is true despite the fact that Europe is the largest provider of aid to the Palestinian Authority and is Israel's most important trade partner. The EU has so far failed to translate that economic leverage into diplomatic influence.

Signaling to the Israelis and the Palestinians that a peaceful resolution to their conflict could be a ticket for admission to the EU would be more than just enticing them with economic rewards.

Conditioning Israel's entry into the EU on its agreement to withdraw from the occupied territories and dismantle the Jewish settlements there would strengthen the hands of those Israelis who envision their state not as a militarized Jewish ghetto, but as a Westernized liberal community.

The tragic fate of European Jewry served as the driving force for the creation of Israel, and welcoming the Jewish state into the European Community makes historical and moral sense.

The prospect of joining the EU could even help launch a process of economic and political liberalization in an independent Palestine and an Iraqi federation.

The establishment of NAFTA produced pressure for democratic reform in Mexico. In the same way, the evolution of trade and institutional ties between the EU, Palestine and Iraq — and eventually Jordan, Syria and Lebanon — could lay the foundations for a movement toward democracy in the entire Levant.

Hopes for EU membership have already played a critical role in accelerating democratic change in Turkey, leading to the collapse of the old political order and the election of a reform-minded democratic party.

Putting Turkey's EU membership on hold only gives a boost to those in the military and nationalist Islamic groups who want to reorient Ankara's foreign policy from the West toward Iran and Russia.

If anything, the recent tensions between Washington and Ankara over Iraq and the Kurds only demonstrate that anchoring Turkey in the EU is in the interest of both the Americans and the Europeans — and could also help stabilize post-Saddam Iraq.

Indeed, notwithstanding the recent rift between the EU and America over Iraq, it is possible to envision these two players working together to achieve some of their common goals in the Middle East.

These include integrating Turkey into the West, resolving the Israeli-Palestinian conflict — and working together to liberalize the economic and political systems in the region.

America should certainly provide incentives for the Europeans to devote more of their resources to creating a stable and prosperous Middle East, which would have a direct effect on European interests.

At the end of the tunnel, the presently much-maligned Europe could end up providing the economic and diplomatic resources needed to help create a New Middle East.