Regional integration in the MENA region: a call to action

The MENA countries are on the cusp of important regional integration initiatives that will deliver much-needed gains in efficiency, diversification, confidence-building, and green growth.

The Middle East and North Africa (MENA) is a region of abundant human and natural resources, shared culture and languages, and a well-established heritage of skills in trade. With a total population close to that of the European Union, the MENA region is, however, the least economically integrated in the world. As they strive to create more jobs, attract more investment, boost growth, and recover from the pandemic, countries in the MENA region today have a strong economic incentive to accelerate their regional integration efforts.

The MENA region has been at the crossroads of regional trade throughout history. Countries have previously established a series of multilateral, regional and bilateral trade agreements, with limited tangible results. The benefits of regional integration include growth spillovers, larger markets, and economies of scale of production. These are well recognized by MENA economists, traders, and farmers alike. What is lacking is not a logic or capacity for integration, but a sense of urgency to prioritize and advance integration.

Opportunities for regional integration include energy and water and certain geographic regions within MENA. These would benefit from advanced dialogue, fundamental technical work and the promise of a strong and almost immediate positive economic impact.

With the exception of the Gulf Cooperation Council (GCC) countries, the energy sector in MENA is interconnected but not integrated. This means that only two percent of the electricity produced in the MENA region is traded between countries each year. Recognizing the benefits, the Arab Electricity Ministerial Councils (AMCE), dependent on the League of Arab States (LAS), have prioritized the establishment of a Pan-Arab Electricity Market (PAEM). The World Bank participates in this initiative and has been offering technical assistance and advice. In fact, PAEM has an ambitious goal of increasing cross-border electricity trade from the current two percent to 40 percent by 2035. This will equip the MENA region with one of the largest multinational integrated systems in the world: it will produce total generation . capacity of more than 600 gigawatts by 2035.

In North Africa, the existing regional energy extension with the Mediterranean countries of Europe should also be expanded. In my recent meeting with Arab governors during the annual World Bank Group meetings, I emphasized the need to sustain and accelerate these critical regional energy initiatives and prioritize actions that will help alleviate supply and demand imbalances in many countries of the MENA region.

The fact that most of the water in the MENA region is shared also presents an opportunity to accelerate regional integration efforts. In the MENA region, all major river basins, tributaries and underground aquifers are considered shared waters. As pressure increases due to climate change, population growth and development, it will become increasingly important to develop adequate frameworks to promote regional cooperation. There is a wide range of global examples that show the power of water as a catalyst for cooperation. As a result, strengthening transboundary water cooperation can be a powerful tool not only to improve water security in the countries of the region, but also to promote economic prosperity and greater cooperation.

Finally, and as described in the recent update of the World Bank Group’s approach to Regional Integration in Africa, it is essential to strengthen and enable the strong historical and socio-economic links that exist between the Maghreb countries and those of sub-Saharan Africa. In anticipation of the African Continental Free Trade Agreement (AfCFTA), now is the time to expand and deepen existing platforms for regional cooperation, including in the agricultural and digital sectors, where progress is most needed, and to explore additional opportunities for regional integration between North Africa. and Sub-Saharan Africa.

While the challenges of establishing and maintaining regional trade, infrastructure, and institutions are significant, MENA countries are at the cusp of important regional integration initiatives that will deliver gains in efficiency, diversification, confidence-building, and green growth. much needed, all of which will play a catalytic role in economic growth and poverty reduction in MENA. The World Bank Group stands ready to participate in promoting this future-oriented agenda.

The opinions expressed in this article are the author’s own and do not necessarily reflect the editorial position of Al Jazeera.

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