Middle East & North Africa

On December 1, the EastWest Institute (EWI) and the Center for Applied Research in Partnership with the Orient (CARPO) hosted the ninth “Brussels MENA Briefing”—a series of after-work briefings on the Middle East and North Africa (MENA) region—on “Kuwait and the post-Sheikh Sabah Era.” 

Speakers included Vice Admiral (ret.) Ahmad Al-Mulla, advisor to the Kuwaiti Ministry of Defense, and Dr. Courtney Freer, assistant professorial research fellow at the Middle East Center of the London School of Economics. Well-known experts on the Persian Gulf region and members of the European policy community virtually attended this briefing, which was held under the Chatham House Rule.

Speakers began by highlighting the main accomplishments of Kuwait’s late Sheikh Sabah Al-Ahmad Al-Jaber Al-Shabah. Among them, his efforts towards women empowerment, strategic development policies and a neutral foreign policy aimed at protecting Kuwait from conflicts in its immediate neighborhood stood out for the speakers—in particular, Kuwait’s neutrality as a country located in the “triangle of danger” between Saudi Arabia, Iraq and Iran. Many top officials perceived Sheikh Sabah as a “humanitarian leader” with Kuwait being on the forefront of financial aid and the coordination of donor conferences for countries in conflict. 

Both speakers held that the legacy Sheikh Sabah leaves behind cannot be filled by his successor and half-brother Sheikh Nawaf Al-Ahmad Al-Jaber Al-Sabah alone; the entire Kuwaiti political establishment must invest in continuing the path outlined by the late Sheikh Sabah. Speakers noted that Sheikh Nawaf has left the Kuwaiti cabinet untouched—an important indicator for demonstrating his commitment to ensuring continuity.

Among the most important challenges ahead, speakers emphasized the need to tackle comprehensively endemic corruption in both the private and public sectors . The economic transformations in light of the country’s demography, the changing geopolitics of energy and the severe impact of the COVID-19 pandemic on Kuwait’s various business sectors require strategic and long-lasting readjustment policies.  

One speaker observed that Kuwait’s parliament is representative of the ethnic and sectarian diversity of the nation, a unique characteristic that ought  to be safeguarded. Participants held that this domestic pluralism entails a pluralistic foreign policy approach, which seeks to balance conflicting interests. This diversity is illustrated in the country’s tolerance of the political presense of the Muslim Brotherhood, as well as its leniency towards  a powerful Shia parliamentary faction. Both experts argued that these disparate  political fractions impact the country’s foreign policy—for instance, in its overall pan-Arab outlook, as well as its continued support for the Palestinian cause. 

Considering the country’s efforts to “nationalize” the Kuwait private and public sector, one speaker pointed out that it remains to be seen whether this process will change public political attitudes, impacting the future composition of the parliament. Given the importance of this process, both speakers held that Sheikh Nawaf will be well-advised to not view his reign as a one-man show, but to seek the involvement of Kuwait’s entire political class.

Dates for upcoming Brussels MENA Briefings:

Tuesday, February 2, 2021: Topic to be confirmed

Event Reports from Previous Briefings:

The Biden Administration’s Middle East Policy and Transatlantic Relations

The Economic Dimension of the Conflict in Yemen 

Jordanian Foreign Policy in Light of Regional Geopolitical Shifts

How to Rescue Sudan’s Transition Process?

A New Iraqi Government in Place: Challenges and Opportunities for Iraq in its Neighborhood

The Status Quo of the Libyan Conflict: Is the Berlin Process Obsolete? 

Post-Sultan Qaboos Oman: Transition Opportunities and Challenges

Iran After Parliamentary Elections

On November 30, the EastWest Institute (EWI), together with its partners at the German Chambers of Commerce in Algiers and Casablanca (AHKs), held a webinar entitled “The Startup Industry: Challenges and Opportunities for Cooperation”—the fifth in a series of virtual meetings as part of EWI’s ongoing Algeria-Morocco Business Dialogue. The webinar brought together six entrepreneurs, three Algerian and three Moroccan, to take part in a cross-border business dialogue aiming to promote greater economic connectivity between the two countries in the startup sector.

The Startup Industry

Startup initiatives are a relatively new phenomenon within the Maghreb, with regional countries varying their measures to cultivate a thriving ecosystem for young businesses. Numerous startups have sprung up throughout the region recently, especially the three main countries of Algeria, Morocco and Tunisia, as innovative leaders pursue sustainable and inclusive approaches to their respective country’s development. As a new generation of workers begin to graduate from university, the region is experiencing a growing trend of fresh graduates increasingly seeking opportunities in the private sector instead of applying to safer governmental jobs in the public sector—a characteristic of previous generations. This growing entrepreneurial spirit not only needs to be harnessed, but must be actively encouraged so regional states can diversify their markets and explore new streams of revenue.  

The respective startup ecosystems in Algeria and Morocco are experiencing disparate levels of success. In Algeria, there remains plenty of room for government intervention in terms of promoting innovation and seeking means to attract investments. Local investors are familiar with bureaucratic hurdles to conducting business in the country, resulting in the negative conviction that the local startup ecosystem lacks the capacity to scale up. Morocco, on the other hand, boasts a more vibrant startup ecosystem with the country increasing its Global Entrepreneurship Index (GEM) from 5.6 to 8.8 percent between 2017 and 2018. Nevertheless, this is offset by the fact the country failed to continue this trajectory into 2019 as a lack of promotion and a culture of risk-aversion hindered the country’s burgeoning startup industry. 

Local Experience

The webinar assembled startup entrepreneurs from across a wide spectrum of business interests, including renewable energies, logistics management, communications and IT and digital solutions. Each of the startups represented differed in their business life span, ranging from eight years to only one month. This enabled EWI and its partners at the AHKs to ask a range of questions pertaining to the different stages of development required for founding a new business in the region, as well as the trials and tribulations which inevitably accompany such an endeavor in the world’s least economically integrated region. 

Consistent with previous webinars under the framework of  the Algeria-Morocco Business Dialogue, participant testimonies affirm that opportunities for business collaboration across the border are rare. All the entrepreneurs present discussed their various projects in Europe, sub-Saharan Africa and North America, yet not one participant had any current avenues of business in the respective neighboring country. From an economic perspective, the current state of affairs is immensely counterproductive given the proximity, similarities in culture, shared desire of young graduates to develop startups, and market complementarity between the two countries. 

It must be noted however, that this dearth of bilateral trade is not a result of lack of trying from the perspective of business leaders on the ground. During the webinar and in previous project meetings, participants attested to a distinct lack of knowledge and trust in the respective markets on each side of the border. With this in mind, EWI, the AHKs and the participants of the webinar composed the following policy recommendations to help identify means to kickstart better commercial relations. 

Recommendations

Pool resources: A major concern for one of the participants who worked in digital solutions for the transport sector was the incurred cost due to a lack of synchronization between companies in the same industry. Companies on either side of the border possess the capacities to make operations more cost-efficient and environmental. However, to move beyond this current state of affairs, Algerian and Moroccan organizations need to pool resources to overcome this fragmentation.

Foster a more cooperative culture: In order to pool resources and develop more efficient and environmentally friendly operational practices, local companies must address the lack of trust, which currently hinders the region unlocking its economic potential. Fostering a culture of cooperation requires the sharing of information so organizations on either side of the border understand each other’s markets and learn how to navigate administrative bottlenecks and bureaucratic hurdles. 

Build on current successes: Despite the dire analyses of multiple international institutions regarding regional integration, there are some cooperation success stories in the Maghreb. The energy sector presents one of the flagship cooperation sectors in the region. This should act as a launching pad to explore new avenues of cooperation, such as joint regulation or an interconnected network of production lines. Startups could offer local assistance in developing these initiatives. 

Learn from the Tunisian model: Both Algerian and Moroccan participants praised Tunisian initiatives in the startup industry, which could act as a successful regional model in their respective countries to develop a healthier ecosystem for upcoming enterprises. Tunisian startups formed an association to harness their collective bargaining power to lobby the government in granting them economic subsidies and advantages. To date, there is no such Moroccan or Algerian union for startups to lobby for their collective needs. 

Encourage market access: The inability of both Algerian and Moroccan startups to found their own collective associations means young organizations often have to navigate their respective markets without any discernible structure or local administration. Private and governmental mistrust towards startups is a consequence of the lack of understanding in how startups operate. Market access can be encouraged by providing startups with financing and regulations tailored towards their particular needs. 

About the Algeria-Morocco Business Dialogue

Despite its vast potential, the Maghreb region is often cited as being one of the least economically integrated regions in the world. The Algeria-Morocco Business Dialogue project seeks to bring together Algerian and Moroccan business leaders from multiple business sectors with the aim of overcoming obstacles to bilateral trade between the two neighbors.

The dialogues center on topics vital to successful entrepreneurship in Algeria and Morocco such as food security, agriculture, healthcare, the impact of digitalization and new technologies and energy—with a particular focus on how to attract quality investment, ensure environmental protection and empower businesswomen.

COVID-19 has unfortunately had a detrimental effect on the overall operation and schedule of the project. Each meeting was envisioned as an in-person conference such as the first event on the agricultural industry, which took place as a two-day delegation to Berlin to attend the city’s Green Week—one of the world’s largest international agriculture trade affairs. Nevertheless, EWI has moved the project online in order to maintain the good momentum of the project generated in Berlin. Although this means the discussions between participants are less interactive, they proved no less intensive nor productive as the following policy recommendations attest.

Click here to read a French translation of this event report. 

Click here to read an Arabic translation of this event report.

Links to Reports of Previous Briefings:

Cooperation in the Automobile Industry

Women’s Empowerment and Entrepreneurship: Challenges and Opportunities

The Agricultural and Food Manufacturing Sector

The discussion, chaired by CRC's Dr. Ranj Alaaldin, will focus on the main challenges to stabilization and reconstruction, the future of democracy promotion in the region, reconciliation and peace-building and the role that international actors like the United States and Europe can play to constrain the fallout from conflicts and their second-order effects. 

Participants include EWI Vice President of the MENA Program Kawa Hassan, Frances Brown from the Carnegie Endowment for International Peace, Jomana Qaddour from Atlantic Council and Emad Badi from the Geneva Centre for Security Sector Governance.

Click here to learn more and register.

Read Hassan's remarks from the lecture, below.

Today, I will talk about the root causes that produced ISIS and other terrorist organizations in post-2003 Iraq and the outlook ahead.

I would like to begin my lecture with a very basic but nonetheless crucial question: how could a brutal, apocalyptical menace like ISIS succeed in occupying large swaths of Syria and Iraq during its heyday (from 2014 to 2017), impose its will on millions of people and make sextual slavery the norm in the twenty-first century?

The answer or answers are not as straightforward and simple as the question itself. Too many structural reasons—internal and external—could be identified for the rise and surge of ISIS:

• On a macro-political level, the post-colonial state in Iraq—and as a matter of fact, in Syria and other countries in the Middle East—dismally failed to produce a polity that is inclusive and respects basic human rights. The barbarism of ISIS leader and henchman, Abu Bakr al-Baghdadi, does not originate within a vacuum: it builds on and is the logical conclusion of decades of unimaginable brutality and human rights violations committed by Saddam Hussein, Hafez and Bashar al-Assad, Gaddafi and other dictators. ISIS is an authoritarian byproduct—a consequence, not a cause of the current catastrophe in the Middle East. The violent political culture in these states and prisons were, and still are, top universities for the graduation of the leaders and the rank and file of ISIS and other extremist groups. The only difference between ISIS and dictators is that ISIS meticulously documents and broadcasts its barbarism with pride;
• Sectarian, political and economic exclusion and marginalization of Sunnis by the post-Saddam political order;
• Systemic corruption of the post-Saddam ruling kleptocracy and the subsequent lack of good governance, rule of law, transparency and accountability;
• Intolerant and exclusivist educational curriculum pre- and post-2003;
• Political and military miscalculations and overreach by the U.S in the early years of the occupation; and
• Geopolitical jockeying by regional and international powers for influence that exploited the political vacuum and state failure after 2003.

With massive military, political and financial support from the global coalition against ISIS, the Iraqis managed to liberate Mosul and other areas previously occupied by ISIS. Militarily, ISIS has been significantly weakened, but not completely defeated. ISIS ideology is still very much alive and kicking.

The reconstruction of ISIS liberated areas and return of internally displaced persons (IDPs) pose daunting challenges. Recently, the Iraqi Ministry of Migration and Displacement announced that all IDP camps will be closed and their residents relocated by the beginning of 2021. Aid agencies warn that hasty closure of the camps will render 100,000 people homeless. 400,000 “ISIS families” face the danger of exclusion from reintegration efforts, and hence, stigmatization for the rest of their life. To date, there are no serious indications how Iraqi authorities will deal with 50,000 undocumented “ISIS children.” Lack of strategic, long-term and coordinated reconstruction planning hampers the return and reintegration of IDPs. All in all, these problems, in particular, the lack of policy for dealing with “ISIS families and children,” create a ticking time bomb scenario for Iraq and the international community.      

The hard-won “post-ISIS” stability and reconstruction opportunities in Iraq have been systematically undermined by the ubiquitous and endemic corruption of the post-2003 ruling elites. Iraq’s real problem is not ISIS, nor is it the Iran-U.S. regional rivalry and proxy conflict. Iraq’s key challenge is internal—the politically sanctioned corruption of the post-2003 ruling elites has whittled away the state from within to the extent that it is poised to crumble. The October Uprising of 2019 shook the system to its core. The youth-led protest movement has shown resilience in the face of brute violence by government and paramilitaries, but it also faces daunting internal and external challenges to change the system. 

The international attention given to Sudan’s normalisation with Israel has shown the country’s importance as a geostrategic site subject to regional rivalries in the Horn of Africa. But increased regional pressure on Sudan is endangering its transition towards an inclusive, civilian government following the peaceful popular revolution that led to the ousting of long-ruling president Omar Al-Bashir on 11 April 2019. This article will describe how regional interference in Sudan could destabilise the transitional process, with a specific focus on the rivalry between the ‘Arab Troika’ and the Qatar-Turkey alliance.

The Sudanese Revolution and Political Shifts

Following the ousting of Bashir in 2019, military and civilian leaders signed a power-sharing agreement which initiated a transition towards a democratic government, under the guidance of Prime Minister Abdalla Hamdok and Chairman of Sudan’s ruling Transitional Military Council, Lieutenant-General Abdel Fattah al-Burhan. This transition signified a shift in Sudan’s foreign policy.

During Bashir’s 30-year rule, Sudan enjoyed close relationships with Turkey and Qatar. This included a deal between Turkey and Sudan that gave Ankara control over the Suakin Island in the Red Sea, a deal which has since been suspended. However, this did not prevent Bashir from moving closer to the UAE and Saudi Arabia from 2014 onwards, in the hopes of bettering relations with the US and securing financial gains from the Gulf. When the Qatar diplomatic crisis erupted in 2017, Bashir decided to remain neutral, a move that accelerated Sudan’s eventual economic collapse.

Click here to read the full article on the LSE Middle East Centre Blog.

Click here to read an Arabic translation of the article.

Other speakers included EU Ambassador to Iraq, Martin Huth; Netherlands Ambassador to Iraq, Michel Rentenaar; Middle East Institute Non-Resident Scholar, Hafsa Halawa; and MENA Special Advisor at the Center for Humanitarian Dialogue, Maria Fantappie, who moderated the discussion.

Click here to watch the full webinar. Hassan’s comments occur during the time interval 35:49-45:42 and begin again at 1:09:01. Click here to read an Arabic translation of Hassan's comments. Read excerpts from his comments, below.

I will talk about one, specific dimension of the EU's Iraq strategy, namely supporting Iraq’s good relations with its neighbors. On January twenty second 2018, almost three years ago, the EU adopted a new Iraq strategy. One of the objectives of this strategy is to support regional dialogue, help Iraq to foster diplomatic engagement with neighboring countries, and encourage Iraq’s neighbors to play a constructive role, to sustain and increase their support to Iraq. Three years on, this strategic objective is more than ever relevant for Iraq and the EU, but it may need to be updated and operationalized to reflect internal, Iraqi and external, regional developments. 

Given systemic corruption and mismanagement, coronavirus pandemic and low oil prices, post-2003 Iraq is on the verge of economic collapse. Without real reforms, Iraq is on the brink of the transition from a fragile state to a failed state. This transformation, should it occur, will be disastrous for Iraq and its neighborhood, and will negatively impact the interests of the EU and its member states as it will undoubtedly unleash waves of migration in the region and towards the EU, will provide ISIS with a new lease of life, and further deteriorate regional security.

In light of these developments, the EU is uniquely well positioned to help Iraq become more independent from external actors especially Iran and the US by developing balanced, win-win political and economic relations with its neighbors. One of the key takeaways of our joint project at EastWest Institute with our partner organization CARPO entitled “Iraq and Its Neighbors,” and supported by EEAS is that across the board in Iraq and the region the EU is considered and perceived as a neutral player without a negative agenda or problematic track record. In the current polarized and fragmented middle east, this neutrality is a unique, strategic asset that assists the EU to pursue its strategic goal of fostering bilateral and regional dialogue focused on the future of Iraq as an independent state. 

In the 1980s during the Iraq Iran war, Saddam Hussein portrayed Iraq as a strategic buffer against Iran, or in Saddam’s terminology Iraq was “Albawaba Alsharqya” or the Eastern Gate [against Iran]. Since 2003, Iraq has become a strategic battleground for proxy and direct conflicts between Iran and the US. History has shown that both regional roles have proved to be disastrous for Iraq and beyond.

Therefore, there is a need for the development of a third way. The EU can help Iraq become a prosperous, positive actor, a meeting, neutral point between and for regional rivals, or what we can call a positive, strategic balancer as opposed to a strategic playground between Iran and the US, and a strategic buffer against Iran.

To translate this analytical concept into a practical policy, the EU can implement a two-prong strategy. Internally, It can engage and encourage key, powerful Iraqi players on official and unofficial levels to achieve a minimum internal consensus that should aim at supporting Iraqi government’s goal of developing balanced relations with neighboring countries in particular Iran and Saudi Arabia. Externally, the EU can engage the key Iraqi neighbors to develop balanced economic and political relations with Iraq, instead of simply seeing Iraq as a market for their products and hence correct the current imbalance trade ties with Iraq, and secondly to stop using Iraq as a theater to settle scores with their rivals.

On November 17, the EastWest Institute (EWI) and Center for Applied Research in Partnership with the Orient (CARPO) hosted their eighth “Brussels MENA Briefing”—a series of after-work briefings on the Middle East and North Africa (MENA) region—on the recent election of Joe Biden as U.S. president-elect and the changes his administration could bring to both the United States’ own Middle East policy, as well as its transatlantic relations with the European Union (EU) vis-à-vis the Middle East. 

Speakers included Cameron Munter, former U.S. ambassador and former president of the EastWest Institute, and James Moran, associate senior fellow at the Center for European Policy Studies (CEPS). The discussion was moderated by Wael Abdul-Shafi, EWI MENA program associate. 

Biden’s election was received with a huge sigh of relief by the international community, including in Europe. The speakers stated that a Biden administration will likely make efforts to re-establish relations with traditional allies, while rebuilding the damage done under Trump’s “America First” policy. 

As the experts noted, Biden’s strategy in the Middle East will probably be restorative rather than innovative. Preoccupation with national issues, such as the COVID-19 pandemic, as well as an unwillingness by the American public to support strong military interventions in the Middle East, will most probably lead to a decreased role abroad for the U.S. military. Instead, Biden will likely emphasize his support for a multilateral approach to the region, one speaker suggested. It is therefore expected that one of his priorities will be reinstalling the Joint Comprehensive Plan of Action (JCPOA). Although, as pointed to by one speaker, the question of Iran’s willingness to rejoin remains to be seen.  

The speakers mentioned that the most daunting challenge facing Biden’s administration is to reevaluate and determine U.S. foreign policy towards Israel and Turkey. Although the discussants elaborated that while Israel will remain a strong ally of the U.S., Biden will also be willing to deal with the UAE and Bahrain—likely giving more attention to the Palestinian case, for example, by reviving U.S. aid to Palestinians in the West Bank and Gaza. Considering Turkey, both speakers foresee the need for a delicate balancing act and close coordination between the EU and the U.S., as Turkey plays an important role in the EU’s migration policy, and the Eastern Mediterranean crises remains unresolved.

During the briefing, Biden was also predicted to take on a tougher stance towards specific Gulf countries, emphasizing a concern for the protection of human rights and democracy. This focus would also affect Egypt, one of the experts explained, where President Sisi could be encouraged to give more space to civil society. One speaker suggested that the U.S. might be able to play an important role in Yemen, where, by working together with the EU within the context of the UN-led peace efforts, it could achieve some sort of breakthrough without upsetting other major players on the international scene, such as Russia. 

Although the Biden administration was received with much optimism in the EU, a word of caution is in order according to one discussant, as a democratic administration will need some time to develop and move ahead with its initiatives. Therefore, it is important for the EU to develop a degree of strategic autonomy. One speaker added that the U.S. will need to adapt to a European continent that has changed. With Britain having left the EU, the U.S. can no longer rely on its traditional ally. Rather, it will need to invest in relations with member states such as France and Germany, who have their own views on the Middle East. 

That being said, the EU will see some familiar faces in the new administration from the Obama presidency. The two speakers concluded on a hopeful note, stating that this offers the possibility of fruitful cooperation in the Middle East in the four years to come. 

About the Brussels MENA Briefings

The Brussels MENA Briefings are in-depth round-table discussions on topics of current significance in the MENA region hosted by EWI and CARPO bimonthly, the first week of every second month. As in-person-briefings are impossible due to COVID-19, EWI and CARPO have temporarily turned this series into a monthly webinar. Please note that attendance is by invitation only.

Should you be interested in being considered for the invitation list, kindly send an email to Desirée Custers mentioning your name, affiliation and geographical or thematic area of interest and expertise in the Middle East.

Dates for upcoming Brussels MENA Briefings:

Tuesday, December 1, 2020: Kuwait

Event Reports from Previous Briefings:

The Economic Dimension of the Conflict in Yemen 

Jordanian Foreign Policy in Light of Regional Geopolitical Shifts

How to Rescue Sudan’s Transition Process?

A New Iraqi Government in Place: Challenges and Opportunities for Iraq in its Neighborhood

The Status Quo of the Libyan Conflict: Is the Berlin Process Obsolete? 

Post-Sultan Qaboos Oman: Transition Opportunities and Challenges

Iran After Parliamentary Elections

On November 10, the EastWest Institute (EWI), together with its partners at the German Chambers of Commerce in Algiers and Casablanca, held a webinar entitled “The Health and Care Industry: Challenges and Opportunities”— the fourth in a series of virtual meetings as part of EWI’s ongoing Algeria-Morocco Business Dialogue. The webinar brought together seven business leaders, three Algerian and four Moroccan, to take part in a cross-border business dialogue aiming to promote greater economic connectivity between the two countries in the healthcare sector. 

The Healthcare Sector

From an outside perspective, the respective healthcare industries in Algeria and Morocco present an attractive investment opportunity. As the two largest populations in the Maghreb region, both countries offer large markets with little competition. According to the latest figures of the Observatory of Economic Complexity (2018), Algeria’s pharmaceutical exports totaled just 6.4 million USD while it imported a whopping 1.77 billion USD. Although nowhere near as stark a difference, Morocco’s trade in pharmaceuticals is similarly heavily imbalanced towards imports with the country importing 662 million USD of products and exporting only 110 million USD. However, despite these vast opportunities for large players in the healthcare industry, the two countries offer completely different experiences in terms of breaking into the market. 

Despite 4.3 billion USD of public spending per year and serving as a unique example of universal healthcare in North Africa, the Algerian system is regularly described as defunct and distinctly lacking in proper medical equipment. A major underlying issue is the numerous bureaucratic, registration and international certification hurdles outside investors must navigate in order to get a foothold in the country. Nevertheless, despite these difficulties, Algeria is growing in relevance for large international private sector players as the government diversifies its economy, which many believe will lead to the inevitable opening of the country to international markets. Morocco, on the other hand, is often described as a much more open and friendly environment to do business, boasting a growing middle class and lower international certification requirements. 

The attractiveness of each country’s respective health care sector has yet to register with governmental officials on either side of the border. Only 1.2 million USD of Morocco’s total pharmaceutical exports made it across the border, accounting for just 0.068 percent of Algeria's total imports in this commodity. Unfortunately, these paltry figures are of little surprise within the context of Algeria-Moroccan trade relations given they echo the same story of missed opportunities across multiple sectors. 

Local Experience and Solutions

Webinar participants came from a variety of businesses across the healthcare sector. From representatives of medical and laboratory equipment manufacturers to pharmaceutical, cosmetic and food supplement producers, the participants represented a wide variety of interests across the entire scope of the industry. Yet, despite their distinct areas of focus, all participants shared frustration at their inability to conduct trade with their counterparts in the neighboring country. However, it was noted that this is certainly not due to a lack of trying. Representatives from businesses on both sides of the border confirmed their willingness to find partners and markets in Algeria and Morocco but testified to their experience of either running into bureaucratic difficulties, facing open discouragement, or in the case of one participant, discounting cross partnership as a viable option.

One of the more structural problems to bilateral trade in this sector is the lack of trust in the capacity and brand of the other country. This has been one of the overarching themes of the entire project to date, with participants across multiple sectors affirming that products from outside the region, such as Europe, are generally more trusted and better received than those originating from the region. The preference for European-made products discourages Algerian or Moroccan businesses from trying to enter the market across the border, since this general attitude among consumers makes it immensely difficult to market products effectively. 

Recommendations 

Made in Maghreb: To address the lack of confidence in locally made products, businesses in the region need to foster an environment where the local market is more forthcoming towards products emanating from the Maghreb. One possible solution could be joint business ventures with the stages of manufacturing taking place on either side of the border. In light of the COVID-19 pandemic, this idea also offers a means to reduce reliance on large supply chains from places like China.

Knowledge Platform: The German-Algerian Chamber of Commerce and Industry (AHK) has already launched an internet platform for Algerian and Tunisian businesses to share information and best practices, but this should be extended to Morocco. This platform would serve as a viable means for business leaders to establish partnerships with their counterparts and identify means to navigate bureaucratic obstacles on either side of the border. 

Joint Risk Management: To date, the COVID-19 pandemic has not ushered a fresh impetus in either capital to cooperate with their respective neighbor in overcoming shared issues; this is despite the fact both countries are two of the worst hit on the African continent. Businesses from multiple industries in both countries have lost markets as a result of the ongoing situation. Nevertheless, the pandemic offers an opportunity for companies to integrate different elements of their crisis management, so they may come out of the other side of future health crises in a healthier and more stable position. 

Training and scientific webinars: Given the economic complementarity between the two countries, knowledge and expertise exchanges offer an immediate and practical means for cooperation. In addition, considering the current lack of interaction between the business communities in Algeria and Morocco, developing education services offers a more viable starting point for the potential development of Maghrebi products in the future. 

Continue the process: Participants to the webinar attested to the importance of holding future meetings and continuing the current process. The lack of opportunities for Algerian and Moroccan business leaders to meet and discuss ideas only highlights the necessity for EWI to continue to establish channels of communication for future trade relations. Developing more sub-sector specific webinars offers a legitimate means to continue and build upon the achievements of the initiative. Regarding the healthcare sector, this could take the form of a series of webinars concerning the pharmaceutical or medical equipment manufacturing industries 

About the Algeria Morocco Business Dialogue

Despite its vast potential, the Maghreb region is often cited as being one of the least economically integrated regions in the world. The Algeria-Morocco Business Dialogue project seeks to bring together Algerian and Moroccan business leaders from multiple business sectors with the aim of overcoming obstacles to bilateral trade between the two neighbors.

The dialogues center on topics vital to successful entrepreneurship in Algeria and Morocco such as food security, agriculture, healthcare, the impact of digitalization and new technologies and energy—with a particular focus on how to attract quality investment, ensure environmental protection and empower businesswomen.

COVID-19 has unfortunately had a detrimental effect on the overall operation and schedule of the project. Each meeting was envisioned as a two-day conference such as the first event on the agricultural industry, which took place as a two-day delegation to Berlin to attend the city’s Green Week—one of the world’s largest international agriculture trade affairs. Nevertheless, EWI has moved the project online in order to maintain the good momentum of the project generated in Berlin. Although this means the discussions between participants are less interactive, they proved no less intensive nor productive as the following policy recommendations attest.

Click here to read a French translation of this event report. 

Click here to read an Arabic translation of this event report.

Links to Reports of Previous Briefings:

Cooperation in the Automobile Industry

Women’s Empowerment and Entrepreneurship: Challenges and Opportunities

The Agricultural and Food Manufacturing Sector

On October 21, the EastWest Institute (EWI), together with its partners at the German Chambers of Commerce in Algiers and Casablanca, held a webinar entitled “The Automobile Industry: Challenges and Opportunities”—the third in a series of virtual meetings as part of EWI’s ongoing Algeria-Morocco Business Dialogue. The webinar brought together six business leaders, three each from Algeria and Morocco, to take part in a cross-border business dialogue aiming to promote greater economic connectivity between the two countries in the automobile sector.

Automobile Industry

In recent years, the governments in both Algiers and Rabat have promised and pushed to establish a more prominent export-focused automobile industry. Under former President Abdulaziz Bouteflika, Algeria sought to found a local car industry in order to reduce imports. So far, these ambitions have largely failed to materialize, with Volkswagen and Kia both shutting down plants recently. Contrastingly, in Morocco, over the past decade the government has successfully signed several free-trade agreements with the U.S. and the EU, helping establish a healthy export-driven auto industry worth 6.19 billion USD. Despite varying successes in the automobile industry, these shared ambitions should precipitate both countries to seek opportunities to collaborate and trade more frequently. However, automotive and transport related trade between the two countries remains small to almost non-existent. 

According to the latest figures from the Observatory of Economic Complexity (2018), Morocco exported only 51,200 USD worth of transport and automotive related goods, including spare parts, to Algeria; less than 0.5 percent of the country’s total exports in this industry. This, almost insignificant, sum is all the more surprising when contrasted with the fact that in the same year, Algeria imported goods worth 5.09 billion USD. These figures are unfortunately consistent with the trade policies of each country towards the other, with both Algiers and Rabat focusing their attention towards the European markets. Nevertheless, the space for complementarity between both countries in the industry remains evident. 

Local Experience and Solutions 

During the webinar, participants shared testimonies of their experiences attempting to conduct trade across the border in the neighboring country, providing some insight as to why the above figures are so low. For instance, one of the Moroccan participants explained that in order to send a shipment to Algeria, the whole process can take up to three months. Upon sending a request, the initial domiciliation period can take up to a month, as funds are frozen before being shipped, which then takes up to an additional two months for their arrival. Other Moroccan participants attested to this, stating that the biggest impediment to trade in Algeria was significant delays in transit. True to the objectives of the project however, the Algerian participants were quick to offer solutions to such problems by suggesting  their Moroccan counterparts should opt to use a pro-forma invoice that enables them to decide how their products are shipped step by step. 

In other testimonies, participants discussed previous experiences in conducting business with counterparts across the border in third countries, such as Tunisia, because of the difficulties in doing business directly. It was stressed, however, that this business practice is far from ideal. The practicality of such a method is only applicable when shipping large quantities, as the transport costs incurred during the transaction are then passed on to the consumer, which in turn makes them less competitive in the respective market. With this in mind, the following recommendations, gathered from industry professionals on the ground in both countries, are intended to address structural obstacles that prevent the automobile industry from fulfilling its potential in the region.

Recommendations

Develop a Regional Brand Strategy: Business leaders should collaborate in jointly formulating a “Maghrebi” or “Arab” brand. Both countries currently focus their attention on European markets, overlooking the potential on their own doorsteps. A long-term strategy and vision is required to overcome this economic tunnel vision, especially given that both local automotive industries specialize in manufacturing spare parts for European automobile giants. 

Leave Politics for Politicians, Continue Economic Cooperation: The political problems between Algiers and Rabat are well documented. Nevertheless, local business leaders should seek and continue to collaborate with one another in order to demonstrate to political leaders in both capitals that there are more benefits to cooperation than in maintaining the current status quo. Participants at the webinar agreed they should work hand-in-hand to develop commercial relations across the border, thereby encouraging politicians to lift the current bureaucratic hurdles preventing greater economic gains. 

Organize Trade Shows: A major part of continuing economic cooperation between both countries could be the organization of more country or trade-specific fairs and exhibitions. Both countries host their own trade fairs, which admittedly have little or no representation from the neighboring country. Addressing this issue would represent a big step in addressing the lack of cooperation between business leaders in both countries and could also take the form of a two-pronged approach whereby the aforementioned brands of each country and the region are built over a period of time to increase the flow of trade between the two countries and outside the region.

Encourage Educational and Training Exchanges: There are multiple means by which the automobile sectors in each country can benefit from training and knowledge exchanges. Webinar participants noted the industrial specialties of each country and how they stand to benefit from collaborating and sharing knowledge. Online webinars are an option to address this issue during the ongoing coronavirus pandemic. Equally, business trips and seminars between similar or complementary organizations offer a more practical solution when the global situation is more conducive to international travel.  

About the Algeria-Morocco Business Dialogue

Despite its vast potential, the Maghreb region is often cited as being one of the least economically integrated regions in the world. The Algeria-Morocco Business Dialogue project seeks to bring together Algerian and Moroccan business leaders from multiple business sectors with the aim of overcoming obstacles to bilateral trade between the two neighbors.

The dialogues center on topics vital to successful entrepreneurship in Algeria and Morocco such as food security, agriculture, healthcare, the impact of digitalization and new technologies and energy—with a particular focus on how to attract quality investment, ensure environmental protection and empower businesswomen.

COVID-19 has unfortunately had a detrimental effect on the overall operation and schedule of the project. Each meeting was envisioned as a two-day conference such as the first event on the agricultural industry, which took place as a two-day delegation to Berlin to attend the city’s Green Week—one of the world’s largest international agriculture trade affairs. Nevertheless, EWI has moved the project online in order to maintain the good momentum of the project generated in Berlin. Although this means the discussions between participants are less interactive, they proved no less intensive nor productive as the following policy recommendations attest.

Click here to read a French translation of this event report. 

Click here to read an Arabic translation of this event report.

Links to Reports of Previous Briefings:

Women’s Empowerment and Entrepreneurship: Challenges and Opportunities

The Agricultural and Food Manufacturing Sector