France’s presidential elections impacting Algeria

by | May 9, 2017

And the prospects of mutual cooperation . . .

The two countries  confronted to their specific challenges ought to have a common vision in order to contribute to a prosperous future as based on genuine co-development and not on obscuring the memory of a shared past for long lasting relationships. The recent France’s presidential elections impacting Algeria, are looked at here as positively as they could be in so many years.
The 187 odd years of very close relationship between the two countries will certainly be in the agendas of each as the renewed French leadership confronted to challenges from all around is settling down shortly for business anew.    
It is about preparing the future through mutual respect; a point that I always made during my various meetings with political and economic personalities, and maintained that Algeria should not be considered as a market only. It is in this context that a co-partnership between Algeria and France, far from prejudice and spirit of domination must be inscribed.
We must be aware that the new international relations are no more based on relationships between heads of State, but on custom networks and on decentralized organizations through the involvement of notably business and civil society cooperation, dialogue of cultures, tolerance and the symbiosis of the contributions of the East and the West.

Because it might be unproductive to be and remain locked in distant positions as the latest events should rather make us think of to how avoid antagonising each other beliefs be it religious.  After all Islam, Christianity or Judaism did contribute to the development of civilization.

Future relations between Algeria and France must also concern the Maghreb-Europe space and more generally the Mediterranean-Europe area. Our two countries can be dynamic agents, because southern Europe and the Maghreb cannot escape adaptation to the current global changes (the present crisis already causing upheaval in both socio-economic and geo-strategic) and more generally throughout the Mediterranean region.

Because it is necessary to go beyond narrow chauvinist nationalism insofar as real nationalism will be defined in the future as the ability to together expand the standard of living of our people by our contribution to the global value.

Today’s world is characterized by interdependence. This does not mean the end of the role of the State but a separation of politics and economics which cannot be the vagaries of the economic climate, the State dedicated to its natural role as regulator of macroeconomic and macro-social life.  I firmly believe and after analysis that the intensification of the cooperation between  Algeria and France not forgetting all other cooperation between Algeria and the USA, all emerging countries such as China, Japan, India, the Brazil, Turkey, South Korea and Russia etc…

And in a more comprehensive way between the Maghreb and Europe as based on a genuine co-development, partnership, the introduction of direct investment would upset the bureaucratic behaviour conservative annuitants and enrol them in a dynamic perspective that is beneficial to the peoples of the region thus helping to  turn the Mediterranean into a lake of peace and prosperity.  The Mediterranean can be that place of rational networking to communicate with distant cultures, encouraging the symbiosis of contributions of the East and the West.

This network should facilitate communication links, freedom insofar as the excesses of the collective voluntarism inhibit any spirit of creativity. It is that the Maghreb and Europe are two geographic areas with an opening on the Latinity millennial experience and the Arab world with natural links and overall culture and Anglo-Saxon influences…

It is essential that Europe developed all actions that can be implemented to achieve a desirable balance within this set. In fact the formation of weak regional economic areas is a step of structural adjustment within the globalized economy with for a goal to promote political democracy, – a humanized, competitive market economy – promotion of ideas through social and cultural debates so as to combat extremism and racism – the implementation of common business whilst never forgetting that these are driven by the logic of profit and not emotions.

Thus, it is necessary to pay special attention to the educational action because human thinking and creation should in the future be the beneficiary and the leading actor in the development process. That’s why I would advocate the creation of a Euro-Maghrebine University as a cultural center as well as a central Euro Mediterranean bank as a facilitator for all Exchange.

It is in this context that a realistic approach must be apprehended so as to the co-partnership between Algeria and France taking into account all potentialities.  At the global level, we are witnessing the evolution of a built-up passed based on a purely material vision, characterized by hierarchical rigid organizations, to a new mode of accumulation based on the mastery of knowledge, of new technologies and flexible organizations as networking around the world, with globally segmented supply chains of production where investment in comparative advantages takes place in sub-segments of these channels.

As rightly noted by Jean-Louis Guigou, President of IPEMED (Institute of Prospective Economic of the Mediterranean world, in Paris), it should be that, in the interest of both of the Algerians and of the French, and more generally of the Maghreb and the Europeans as well as all South-Mediterranean populations, the boundaries of the common market of the future, the borders of Schengen in the future, the borders of social protection in the future the borders of the environmental requirements of tomorrow, must be South of the Morocco, the Tunisia and Algeria, South and East of the Lebanon, Syria, of the Jordan and the Turkey, through a lasting peace in the Middle East, Arab and Jewish populations with a thousand-year history of peaceful coexistence.

Specifically, Algeria and France have economically other strengths and potential for the promotion of diverse activities and this experience can be an example of this global partnership becoming the privileged axis of the re-balancing of the South of Europe by amplification and the tightening of links and exchanges in different forms. Per the official foreign trade balance of Algeria in 2016, the countries of the European Union are still its main partners, with the respective proportions of 47.47% and 57.95% of exports and imports.  Italy is the main customer and France the main supplier.

Between France and Algeria, trade can be intensified in all areas, i.e.: agriculture, industry, services, tourism, education, not to mention cooperation in the military field, where Algeria can be an active player, as shown by its efforts to bring stability to the region.

Also, let’s not forget the diaspora with residents of Algerian origin in France that would exceed 4 million, including more than 2 million bi-nationals. This regardless of the numbers is an essential element of reconciliation between Algeria and France, because it holds significant intellectual, economic and financial potential. The promotion of the relations between Algeria and its emigrant community should be mobilized in various stages of intervention initiatives of all the parties concerned, namely the Government, diplomatic missions, universities, entrepreneurs and civil society.

Hence, any intensification of this cooperation won’t possible – whilst not forgetting the duty of memory – if Algeria and France have a realistic approach to the co-partnership for a win-win partnership away from any mercantilism and spirit of domination. The two countries must have a common vision of their future.

Algeria can overcome its current difficulties but the success of national and international industrial partnerships is not feasible without a total renovation of all central and local governance systems with a coherent vision based on both political, social, economic structural reforms including financial market, land and property market, labour and especially reform of the socio-educational system, at the dawn of the fourth technological revolution.

The objective for Algeria is to commit for structural reform, whilst assuming a broad internal mobilization of the social front, tolerating the different sensitivities, in the face of the many challenges in order to allow Algeria to emerge, in the medium and long term.  For this, the dominance of the bureaucratic approach must give way to economic operational approach, with positive social and economic impacts. Also, in the face of the new global changes, Algeria undergoing this transition towards a productive economy closely tied to its energy transition, needs an accumulation of technological and management expertise with assistance from its foreign partners.

In short, Algeria and France are key actors for the stability of the region, and that any destabilization of Algeria would have negative geo-strategic repercussions throughout the Mediterranean and African region, as I pointed out in my interview on December 28, 2016, the American Herald Tribune (3).

And of course, subject to Algeria furthering into the rule of law, democratization of society and that it’s reorienting its economic policy in order to achieve sustainable development. The current tensions between Algeria and France are only temporary, as per information gathered with friends of mine in France.

It is only in this context that cooperation must return for a win-win partnership far from all prejudice and in mutual respect.

Notes : See recent contributions and international interviews of Professor Abderrahmane Mebtoul

  1. -«Wahl in Algerien Der Graben ist tief – wer stimmt ab?» – www.tagesschau.de –ARD-  04/05/2017
  2. -« Après Glavany et Macron… « Dépassionner les relations entre l’Algérie et la France » quotidien financier  français la Tribune .Fr 19 février 2017 – (“After Glavany and Macron…» “Take the heat out the relationship between Algeria and France” by French financial daily la Tribune.fr  19 February 2017)
  3.  – American Herald Tribune 28/12/2016 «  Prof. Abderrahmane Mebtoul: Any Destabilization of Algeria would have Geo-strategic Repercussions on all the Mediterranean and African Space
  4.  -Interviews with the weekly Point Afrique (Paris-24/03/2016) and the Express (07/04/2016, Paris) on the prospects for co-operation Algeria-France.
  5.  -This theme was developed by Prof. Abderrahmane Mebtoul, on 7 April 2016 in Marseille at the Mediterranean Villa

 

Return to protectionism, in this day and age, is it feasible ?

by | Jan 19, 2017 |

Return to protectionism, in this day and age, is it feasible ?

Let’s ponder October 1929 and October 2008

For the Chinese president, Xi Jinping, who during the World Economic Forum in Davos, paradoxically seeming to be defending Free Trade, threw at the new American president, Donald Trump on January 17th, 2017 that no one would emerge as the winner of a trade war, or as he put it, a Return to protectionism, in this day and age, is it feasible ?

“It doesn’t help to blame globalization. Any attempt to stop trade in capital, technology, and products between countries is impossible and contrary to history. We must remain committed to the development of free trade and investment (transnational), and say no to protectionism. We got to ‘rebalance’ globalization, and make it stronger, more inclusive and more sustainable”. In this context it is useful to recall the fundamentals of the crisis of 1929 and 2008.

The 1929 Crisis.

The 1929 crash is caused by a speculative bubble, whose genesis dates back to 1927. It was a new system of credit purchase of shares based on investors buying securities with 10% coverage that started it all. It was ‘Black Thursday’ October 24th, 1929 that the famous crisis broke out in the United States.

le krach boursier de Wall street plongeant l’économie américaine et l’économie mondiale, dans la tourmente et ce malgré l’apparente santé de l’économie américaine dont les bases de sa croissance étaient pourtant faibles.

The stock crash of Wall Street plunged the American and the global economy in turmoil, and this despite the apparent health of the U.S. economy of which bases of its growth, were however weak.

October 2008

There are many similarities between the crisis of October 1929 and October 2008. Economic boom prior to the crisis, rising debt and divorce between the real and financial impact on the real economy with the fall of technology stocks.

But in contrast with 1929, it is the interconnection of economies with stronger global regulation where the developed countries economies being in deflation (low inflation, unemployment, negative growth) and not stagflation (inflation and unemployment decline) that characterised 2008.

As evidenced by the socialization of losses of some banks, the rapid response of the central banks of the US Fed., the European Central Bank, the Bank of England, Japanese, Russian, and even Chinese and Indian banks in coordination so as to break the vicious circle in the lack of confidence and the blocked interbank lending that is the lifeblood of the functioning of the global economy.

All economic and reliable financial system is based on trust. With repeated bankruptcies, interbank credit source of the expansion of the global economy has tended to dry out especially at the investment banks that have experienced an unparalleled expansion in the contemporary period.

However, unlike a universal bank, a Merchant Bank has not the possibility, in case of difficult market conditions, to rely on deposits of individuals to raise money for the short term, although they continue to issue short-term debt to finance their business.

However, more financial institutions from which investment banking sourced finance do refuse in times of crisis to lend for lack of confidence in the ability of repayment of these banks. Generally the essence of the crisis of both 1929 as of 2008 are a distortion of the Foundation of capitalism as describing by the founders of political economy based on the enterprising creators of wealth, Karl Marx did not write about Socialism but the Capital.

This crisis is therefore related to the increasing financialisation in disconnection with the real economy and not in symbiosis of any economic and social dynamics forgetting that labour is certainly a price but also creator of value and growth through consumption. Indeed, with this increasing financialisation, we have two types of shares ownership.

The direct holding (those who own directly) and the indirect holding (those who own through an intermediary such as management, life insurance companies, pension funds, etc.). The new fact is changing fast and important type of shares held by households. The direct holding of shares becomes a minority whereas the indirect holding grew strong.

It is the pension funds that control Wall Street whilst managing more than one third of the market capitalization of the USA today. These malfunctions have been materialised with the mortgage crisis of the Subprime in August 2007; a crisis that has spread across the global stock markets with great losses which I summarize in five steps:

  1. The banks made mortgages available to insolvent households or with few guarantees, at high interest rates;
  2. Dissemination of bad debt in the market: to evacuate the risks, banks “securitised” their debts, meaning that they cut their debt in financial products to resell them on the market. Globalisation did the rest, by disseminating these risky securities in the portfolios of investors from all over the world. Hedge funds have been big buyers of Subprimes, often on credit to boost their yields (up to 30% per year), and played the leverage effect, hedge funds borrow up to 90% of the sums required;
  3. Reversal of the U.S. real estate market: towards the end of 2005, U.S. interest rates began to rise while the financial market has faltered. Thousands of households have been unable to honour their payments causing losses for banks and investors who bought bonds saw their value collapse:
  4. Confidence crisis: the banks found themselves in a situation where as in a poker game, they know what they have on their balance sheet, but not what is in that of others because these bad mortgages were bought everywhere in the world and we don’t know what is the distribution of risk where a serious crisis of confidence and since July 2007, this situation causes the exchanges to fall and paralyzes the interbank market; banks are paying more or very little fearing that their counterparts are in a red line;
  5. Intervention of central banks: facing the paralysis in the market, the Central Banks intervened massively in early August 2007 by injecting hundreds of billions of Dollars and Euros in cash.

November 15th, 2008 : G20 crisis meeting in Washington, USA.

Elle s’est articulée autour de  cinq objectifs dont  le renforcement du système de régulation qui ne saurait signifier protectionnisme. Premièrement de dégager une réponse commune à la crise financière-deuxièmement ouvrir les pistes d’une réforme en profondeur du système financier international -troisièmement prendre de nouvelles initiatives pour parer à d’éventuelles faillites bancaires et imposer aux banques de nouvelles normes comptables -quatrièmement des règles plus strictes sur les agences de notation, la titrisation et les parachutes dorés

This meeting focused on five objectives, including the strengthening of the system of regulation which does not mean protectionism.

  • First to identify a common response to the financial crisis;
  • Second to open tracks for a reform of the international financial system;
  • Third to take new initiatives to counter possible bank failures and impose on the banks of new accounting standards;
  • Fourth to adopt stricter rules on credit rating agencies, securitisation and the Golden parachutes;
  • Finally, in fifth to increase public spending through coordinated budget deficits, but for the benefit of energy savings for the building and infrastructure development and clean auto technology, questioning the European stability pact (3% of GDP and spending on / GDP less than 60%.)

But it is clear that in this month of January 2017, the global economy is still characterized by turbulence with protectionist options but in a framework of unbridled internal liberalization wanting back in vogue Adam Smith’s invisible hand of the market, which is likely to repeat the scenario of the 1929.  However, the strategic goal is to rethink the current global economic system that promotes bipolarisation North / South, poverty detrimental to the future of humanity, which is also accelerated by the most questionable governance on behalf of most of the leaders of the South.

In short, the return to global protectionism is a chimera and realism will prevail in the end.

In the meantime, let us meditate the crisis of October 1929 and that of October 2008. The large deficit of the American balance of payments, which will be accentuated with the new spending program announced by the new president (with the risk of a loss in value of the Dollar), is currently offset by the large flows of capital from outside the US. . Let us for the sake for humanity, put aside all nationalism, chauvinism that are source of tensions, hatred and war and meditate this quote that is sometimes attributed to French president Charles de Gaulle, under the title “Patriotism is loving his country, Nationalism, is hate of others’” and sometimes to Romain Garyn in his book “European Education” published in 1945 under the title “Patriotism is the love of one’s kin Nationalism is hatred of others”.    ademmebtoul@gmail.com

Algeria’s accession to the World Trade Organisation

by | Jan 18, 2017 |

Algeria’s accession to the World Trade Organisation

Algeria’s accession to the World Trade Organisation (WTO) in the face of domestic and international constraints

Per the official Algerian Customs statistics, in 2016, China is the leading provider of Algeria, with a market share of close to 18% and US$8.396 billion.  France comes second with $4.744 billion and a share of 10%, followed by Italy with $4.642 billion and 9.93%. Spain and Germany are respectively in the 4thand 5th position in this ranking, with $3.595 and $3.009 billion.  In the top 10, there are also Turkey (7th), Brazil (9th) and South Korea (10th).

If China is the big beneficiary of the explosion of the Algerian import bill, the deficit in trade between the two countries is huge between 2007 and 2016 all while official reviews were still focusing on Europe. Indeed, customers of Algeria are Italy with $4.779 billion and a market share of 16.55% of exports of the country. Spain comes second with $3.562 billion, followed by the United States ($3.227 billion) and France ($3.192 billion). Tunisia is 12th with $610 million, Morocco 13th with $589, Singapore 14th with $542 million and India 15th with $511 million closes this ranking.  For the 2016 official figures, exports declined to $28.88 against $34,66 billion in 2015, or a drop of 16.7%, non-oil exports fell to $2.063 billion in 2016 against $2.582 billion in 2015 (-20,1%).

Imports have also declined but at a lower rate to $46.72 billion in 2016 from $51.7 billion in 2015, down 9.62% giving a deficit in the balance of trade of about $18 billion, amount to which services and legal capital transfers are to be added; the balance of payments is the unique reference with between 2014 and 2016 as key partners of Algeria the countries of the European Union.  Also, as pointed out in my contributions and notably in my conference at the invitation of the European Parliament, and after some concern of the international community over the possible abandonment of the Agreement, Algerian officials were clear.  There is no question of breaking the Association Agreement which binds it to Europe.  Europe however, should consider Algeria not only from the point of view of a market.

Now with regards to the WTO, and according to the Algerian Press Service (APS), the Uruguayan Gustavo Miguel Vanerio Balbela has been appointed as of January 14, 2017, new Chairman of the Working Group for the accession of Algeria to the WTO in replacement of Alberto D’Alotto of Argentina, as per the last WTO newsletter.  Mr. Balbela was immediately invited from the Algerian Trade Minister, to visit Algiers and discuss the next steps of the Working Group, which had not met since March 2014.

We must remember that for more than 15 years, dozens of meetings took place and commissions created for Algeria’s accession to the WTO. All of the Algerian major economic players such as workers’ unions, employers’ federations, government representatives, and many experts were conveyed but so far in vain.

Algeria has since 1987 an observant status within the WTO organization and has been negotiating for more than 20 years thus achieving a world record. Looking at developing countries, such as heavyweight of Africa, Nigeria and South Africa, or small countries like Chad, Niger, Togo, Angola, Benin, Gabon, Ivory Coast, Ghana, countries of the Maghreb, Morocco and Tunisia, the majority of the Arab oil countries of which the latest being Saudi Arabia not to mention the majority of the countries of South America including Brazil, Venezuela, Chile, Bolivia, Peru, Mexico, Cuba, in Asia with India, Indonesia, Malaysia, Viet Nam, South Korea, and China, the latter having joined the WTO in 2001, without forgetting Turkey and Russia which joined the WTO in December 15, 2011.

With the WTO agreements, which are part of a global space concern only the economic component, are broadly outlined by the agreement linking Algeria since September 1, 2005 to Europe, as anchored in the Barcelona process, which is part of a regional space but do include political and cultural components.  These agreements have strategic implications for both economy and society: prohibition of the use of the “duality of prices” for natural resources; general elimination of quantitative restrictions on import and export trade; quality and health standards; environmental protection in the use of oil energy, environmental agreements conceived, outside the WTO but lately incorporated to the WTO when felt to be hampering the development of trade; measures concerning the freedom of movement of capital.  Intellectual property protection is an essential condition in order to fight against piracy and therefore the integration of the dominant informal sphere in Algeria which controls 40% of the money supply and more than 65% of the basic necessities.  In General, Algeria’s accession to the WTO would require opening of its borders and the increased specialization as prompted by globalization.  Indeed, both association to the European Union and that of accession to the WTO are based on the development of trade by putting in place the conditions for the gradual liberalisation of trade in goods, services and capital.  It then will be followed by Algeria proceeding with the dismantling of customs duties and taxes for industrial and manufactured products over a period of transition.

All State monopolies must be progressively adjusted in a way that there is no discrimination regarding the conditions of supply and marketing goods between nationals of the Member States. These agreements should turn the Algerian industries from the status of protected industries to industries completely open to international competition with the total removal of tariff and non-tariff obstacles. If Algeria’s WTO entry may have little impact on the oil market, already inserted in a global or regional logic (gas), it is different for all oil products that will be subject to international competition.

Thus, the duality of prices – measure by which a Government could keep domestic prices at levels lower than those determined by the international market forces and the export restrictions – can no longer be valid in a context of trade liberalization. One of the stumbling blocks in the negotiations, in addition to the importance of the informal sphere, is the duality of the gas price for units for export, which would distort international competition. In case of accession, oil products, mainly fuels, will no longer benefit from crude prices lower than the international price upstream. The Agreement emphasizes the opening to competition of the market for energy services as far as it concerns all activities, from exploration to the provision of the product to the consumer through the production and transport.

The environment is a prime area of cooperation, the aim being the preservation of the ecological balance, requiring to implement more and more stringent quality standards; Algeria would be committing to gradually implement the various recommendations of the charters on energy and the environment.  Being in a situation of mono-exporter does not warrant any acceptance; the main OPEC already being WTO member countries. So much more than Doha agreements, a transition period to avoid the wild tariff dismantling that could adversely affect the Algerian infant Industries would be necessary. Indeed, it has made clear that the main resolutions of the fourth Ministerial Conference, held in Doha in November 2001, examined the problems facing developing countries to implement the current WTO agreements, i.e. the agreements of the Uruguay Round of negotiations. The decision on implementation has focused on the following: exception in respect of the balance of payments and clarification of the less stringent conditions set out in the GATT.

This is applicable to developing countries if they restrict their imports to protect their balance of payments. Then a commitment in terms of access to markets, longer periods are granted to developing countries to enable them to adapt to new SPS in other countries. Then technical assistance to those countries least developed and review of technical assistance, including the transfer of technology to least developed countries would be provided. The terms of a special provision concerning developing countries, which recognizes that developed countries must take specifically into account the situation of developing countries when considering to apply anti-dumping measures; the extension of the deadline for developing countries to implement the agreement; development of a method to determine which developing countries fulfil the criterion according to which their GNP per capita must be less than $1.000 so they can grant subsidies contingent upon export.

New rules allowing developing countries to provide grants under programs that aim “legitimate development objectives”, but without giving rise to a countervailing action; and finally, the review of the provisions on investigations countervailing.

Not wanting to unnecessarily dwell on the notion of license according to the rules of the WTO to avoid sterile debates, I would in this context, like to request an answer as to what came about that decision of the Council of Ministers dated December 30, 2014 and thereafter the law passed for the return import licenses in Algeria?

The answer will be that these licenses should fit in the context of respect for all international commitments of Algeria.  The information I gathered however from the Algerian Government, provide the following details :

The freedom of trade and industry is the foundation of economic and trade policy of the Government of Algeria, consecrated by all the provisions of Algerian law.

In this context, this legislation as provided by several countries with open economy in Europe and elsewhere, the possibility of using in specific and predefined cases, a certain transition period, in order to upgrade their productive apparatuses, to import or export licenses neutral in application and administered in a fair and equitable way, so as to handle exceptions to this freedom to trade and this in accordance with the rules of the WTO.

It is in this context that the law that was passed, should first reaffirm the freedom of import and export of products, without prejudice to the rules relating to public morality, security and public order, the protection of the health of the people, as well as to the preservation of the environment and the historical and cultural heritage.

The reasons for implementation of licenses of import or export of which, those with the only objective to limit the trade of certain exhaustible natural resources, the guarantee for the national availability of locally produced raw material processing industry, the supply of the market in products on which would be felt a shortage, as well as backup outside the country financial equilibria.

It is in this framework that the Government introduced a 03-04 amendment of July 19, 2003 to the general rules applicable to operations of import and export of goods, the amendments aimed to upgrade the legislation in accordance with the rules of an open economy. In contrast to the restrictive licensing regime previously applied to imports, these licenses are defined as administrative procedures in the rules of the WTO and are aimed to ensure better quality and product safety as well as secure human, animal and plant health.

Reference to the WTO rules, texts of which clearly state that import licences are administrative procedures requiring, as a condition to the importation of goods, the presentation to the administrative body of a request that is separate from the documents required for customs purposes; the Government states that this kind of license does not mean restriction or distortion of imports.

Control undertaken by the administration is concerned only by those aspects of quality and compliance and not by the commercial aspects, to ensure fairness in commercial transactions, including between the community of traders themselves or between the retailer and the consumer whereas the former regime had for purpose the distribution in the amount of foreign currency to importers.

Also, it has never been said that Algeria would not adhere to the WTO as adopted by the successive governments since 1995, but that accession cannot be at the expense of the interests of Algeria’s which would be seeking to benefit from the Doha agreements that provide for a transitional period for countries such as Algeria.

Also, Algeria, per our sources, whilst safeguarding its interests as any country, intends to comply with international agreements, notably that agreement of association with Europe, the negotiations with the WTO, which it is not to call into question, is no issue to discredit the image of Algeria at the international level, unlike certain tendentious statements.

From my point of view the debate is elsewhere and is about how, with the fall in the prices of hydrocarbons, to deepen all structural reforms for a strategy leading out of the rentier type economy and how can we put aside any tensions between Europe and Algeria relating to the association agreement.

Agreement signed in full sovereignty by the Government and with fundamental implications. Certainly, the concerns being legitimate because tariff cuts are a shortfall ranging between $1.5 and $2 billion annually for Algeria.

Invoking the situation of a mono-exporter would not help, for there will not be any specificity for Algeria alone and per our information from the EU, no renegotiations of the basic clauses with Europe from 2020 onwards.  An extension of time limits for certain products per the terms of the agreement.  Similarly, there will not be any specificity also for accession to the WTO.

Membership or not to the WTO would greatly depend on internal political forces rapport and especially a real desire for clarification of the future path of the controlled liberalisation of the Algerian economy not only for its efficiency that should be coupled with a deep social justice through a better and equitable spread of the national income and therefore put up an effective fight against corruption.

This is not a question about legislation but rather of social practice referring to the urgency of a renewed governance model. All these constraints imposed by both the association and accession to WTO agreements, could not they secure the Algerian economy into the world economy and act as an important pull factor in economic development and social progress?

Legal instability and the lack of visibility in the socio-economic policy, the dominance of the informal sphere and a financial system that is totally disconnected from the international financial system tend to worsen the growing pessimism about a political opening in fact real economic and political reforms which explains the successive downgrades between 2007/2014 of many international organizations.

Is it that the new Algerian economic policy must better articulate the market forces and the action of the State as a regulator in its role of macroeconomic management and macro social within a space balanced and solidarity, the challenge being the massive arrival on the job market of millions of young people within the next two decades.

The question that arises then is the possibility of change in growth to achieve a double objective, today apparently contradictory: on the one hand, create the necessary jobs, on the other hand, improve international competitiveness while distributing more revenue, including through the productivity of factors.

The current productive structure makes growth volatile and subject to external shocks, the financial resources, the importance of foreign reserves is not synonymous with development. The external position of Algeria remains dominated by the weakness inherent to its specialization in hydrocarbons, (weak production and non-hydrocarbon exports less than 4% of the total so marginal and within these 4% semi-finished ferrous and semi-ferrous representing more than 60%), having no control over its own external accounts, which depend only on the price oil/gas and the exchange rate of the Dollar, GDP per capita moving chaotically.

Having a natural wealth that is ephemeral, Algeria must at the same time preserve this resource for future generations and gradually find different revenue sources. It follows that the levels of growth necessary to result in a significant improvement in the situation, estimated at 8 / 9% per year until 2017/2020/2025, seem difficult to achieve in the short term.  In the meantime, its association agreement of free trade with the European Union (EU), Algeria incurred a shortfall in customs duties that was valued for year 2016, at $1.27 billion and in 2015 at $1.09 billion.

To benefit from the positive effects of the agreement with Europe to a possible WTO membership, would require us to undertake first some cleaning in the Algerian economy and that they are obstacles to the comprehensive reform of the result of displacement of the segments to be able to which explains the dieback of the productive fabric that any operational analysis will have to connect the advanced or the brake reforms by analysing the different social forces, public policy strategies located fluttered between two conflicting social forces, rentier logic supported by proponents of importation (of the monopolists and not shopkeepers, actually only 100 controlling more than 80% of the total) and unfortunately dominant informal sphere, and minority entrepreneurial logic.

This explains, Algeria is in this interminable transition since 1986, not a market economy, nor an economy administered, explaining the difficulties of regulations, the progress of reforms being inversely proportional over the oil and the value of the Dollar, the reforms since 1986 being blocked or timidly with inconsistency when the price rises.

In summary, Algeria’s accession to the World Trade Organization is irreversible if it wants to avoid its marginalization, benefitting from both the Doha agreements and from the success stories of Russia and Saudi Arabia whose economies mainly dependent on hydrocarbons.  The security aspect having been improved, Algeria must create favourable conditions for the development by raising the environmental constraints to enhance the vitality of local and international enterprise as sole source of permanent wealth creation, and its foundation on promoting knowledge and the adaptation of its economic strategy to the fourth economic revolution that is looming between 2020 and 2030.

Read more on the WTO website.

Human Capital as the most valuable Resource

 

It has been said that Human Capital as the most valuable Resource that any organisation be it in the  political, economical and / or social domains would require for purposes of progress, growth and development  generally. These organisations to succeed and eventually prosper, or perhaps simply stand their grounds, do need leadership of one type or another.  There is plenty of literature on this very topic but the following essay of McKinsey would not pass unnoticed.   In our series on leadership, refer to Leadership Priorities in Year 2017, we did not cover this aspect of the business of tracking, selecting and ultimately contracting in quality personnel.  This is possibly the most perilous but also the most rewarding operation of selection of an employee, an expert and / or a president of a country.  Excerpts of the McKinsey’s Finding Hidden Leaders are reproduced here.

Finding hidden leaders

By Kevin Lane, Alexia Larmaraud, and Emily Yueh

 

Persistent challenges

The first explanation is size: in large organizations, it’s easy for hidden talent to stay hidden or be drowned out by the noise of complex organizational processes. They could be in a business unit far from the corporate center or in a backroom job away from the action. They might be quiet and reluctant to push themselves forward, eclipsed by more forceful personalities. Yet they may perform exceptionally well in their jobs, collaborate effectively with colleagues, have extensive networks across the organization, or carry informal influence among their peers. In short, they are showing signs of leadership potential, but it remains untapped because they are shielded from senior managers.

Another reason why promising future leaders go unnoticed is bias in the selection process. As Sylvia Ann Hewlett, Carolyn Buck Luce, and Cornel West have shown, bias can be consciously or unconsciously based on race, ethnicity, or gender, or on age, when older employees are seen as past their prime. A language “deficit,” or even a strong accent, has been known to cause people in global organizations to be penalized, as has a failure to fit conventional cultural norms. Sometimes it might be merely a one-off bad experience on a project that taints a high-potential employee’s reputation. Or it could happen to someone who steps off the conventional path for personal reasons—for example, to have a child or care for an ill family member. Managers in most organizations, notwithstanding efforts to encourage diversity and inclusion, still tend to recognize, reward, and promote people who look and behave like them and who have followed similar paths, while neglecting others whose leadership potential may be equally impressive.

Finally, there is the problem of the narrow top-down lens that senior leaders often use when looking for leadership talent. Underlying this is the mistaken assumption that only those at the top of the organization know what great leadership looks like, or a narrow focus on leadership contexts specific to the organization and the particular role. This can crowd out other perspectives, such as what individuals have achieved outside the company or what people lower down in the organization see as examples of effective leadership. A narrow lens can also interact in subtle ways with bias, as was the case for the executive at a large technology company who found it difficult to understand why a female manager wasn’t seizing more opportunities to “demo” the company’s products at major events as he and other senior leaders had done during their rise up the ranks.

Disappointing harvests

Overcoming the obstacles of size, bias, and narrow lens is a management challenge of the first order. In our experience, the most common means of finding leaders in large organizations—what we call harvesting—is not up to the task. Harvesting assumes that the best, often with some help, will organically rise to prominence and can then be plucked and placed into leadership roles. There are many varieties of harvesting, but it essentially involves planting talented “seeds”—new hires—in the organization, giving them increasingly demanding tasks, providing training and support as they develop, allowing them opportunities to demonstrate their abilities, and choosing the best performers for the senior roles. Managers who do this best invest a large amount of time and energy in cultivation activities. There is a lot of value in this, and harvesting should remain a vital part of developing and selecting. But it does little to unearth hidden talent, because hidden talent, by its nature, includes individuals who for some reason are not on the standard advancement path and thus remain invisible to those relying on conventional processes.

How to spot your hidden leaders

Finding employees with the qualities to be tomorrow’s leaders requires more than harvesting talent and should include what we call “hunting,” “fishing,” and “trawling” (exhibit). These approaches are more proactive and involve, for example, turning over more stones than usual, encouraging leaders to identify themselves, and finding new ways to tap into the environments where people live and work.

Exhibit

human-capital-hunting-tracking-and

 

 

 

 

Real Leaders need to make Globalization work for all

 

As we head into 2017, and further to our previous contribution Leadership Priorities in Year 2017 we would like to give this opportunity to our readers to go through this article written by Rawan Al-Butairi, Financial analyst of Saudi Aramco and published on Monday 2 January 2017 on the WEF website.  The author questions leaderships attributes but within the specific Arab context of the MENA countries.  Experience tells us that practitioners love to see what is happening in their domain and for one reason or another do generalise it to all by asserting that Real leaders need to make globalization work for all .

The above image is of REUTERS/Victor Ruiz Garcia

 

What does leadership really mean? Two things

 

 

 

A young person could almost be forgiven for feeling despair and hopelessness today. Everywhere they look, there is escalating inequality and a lack of opportunity.

In certain regions and countries, the problem is more acute; from hyperinflation and a collapsed economy in Venezuela to an Arab Spring in Egypt which toppled a government but ultimately has yet to improve the lives of ordinary Egyptians. In fact, with a recently de-pegged currency and an IMF bailout, it will ostensibly get much worse there before it starts to get better.

At the time, many pundits argued that the 2011 Arab Spring was about people in the region demanding greater democracy and liberal freedom. However, I think this misses the heart of the problem. At that time, Egypt was still suffering from the aftermath of the 2008 financial crisis, with important industries such as tourism still far from recovery. Moreover, large increases in food and raw material prices caused a huge trade imbalance (Egypt- as well as Venezuala – is a significant net importer of food).

With the rising cost of food, an unsustainable trade imbalance leading to unaffordable domestic subsidy programs, an overly concentrated economic model susceptible to crippling exogenous shocks, and a growing population to “feed”, the situation mirrored the predictable fall of a neatly stacked set of domino chips. These countries simply ran out of room and ran out of time to modernize their economies to provide opportunities for their growing young population.

Leaders fell back on the status quo, too afraid, too self-interested, or too corrupt to make the difficult trade-off decisions to fix the numerous structural imbalances. These were tragic and epic failures.

In this context, what does responsible leadership mean? While it is tempting to provide the never incorrect “it depends” answer, I believe there are two universal and key themes.

First, globalization, like capitalism, must be effectively managed to be more inclusive. Globalization leads to a bigger overall pie, but responsible leaders must find ways to distribute that pie to more people. Conversely, protectionism and populism to me is just Neo-Luddism, a misguided and ultimately futile tilting against windmills which will only lead to a smaller pie for everyone.

With technological advancement and the oft-touted “knowledge economy” naturally favoring a small group of the highly skilled, government and the private sector can and must do more to even the playing field, including potentially higher minimum wage laws or progressive taxation to fund more targeted and effective social programs. These programs must be financially sustainable, free of corruption, and efficiently enacted.

At a community level, responsible leadership must encourage more volunteerism and gifting – of not just money, but time, knowledge, and mentoring those with less opportunity – and these individuals and institutions must personally lead by example. The leaders and workers of tomorrow need to understand the impact of globalization, both its benefits and its implications, so that workers are motivated to develop competitive skills in an increasingly global and interconnected economy. Inevitably, there will be groups who will be marginalized and unable or unwilling to adapt to this future, and the social programs will need to be creatively designed to reach and help these people.

Second, responsible leaders must have deep social capital, particularly “bridging social capital”. According to Robert Putnam, a political scientist and Harvard Kennedy School of Government professor, bridging social capital builds key networks between different social groups. It allows people from different socio-economic backgrounds, genders, ethnicities and cultures to share and exchange ideas and build consensus among groups with diverse interests.

Responsible leaders must develop empathy and solidarity with all people they serve, so that they will forge collective benefits that enlarge the pie for everyone. Again, volunteerism and community engagement are crucial. Unfortunately, with social media and an overabundance of choice, people are easily conditioned to only seek out interactions with people they “like” or to “friend” people of similar views or backgrounds. This is the exact opposite of the desired outcome, and can lead to irresponsible leaders with low social capital, and low empathy, who see the world as a fixed pie that must be divided up with the largest slice going to themselves and people like them. The future of the world, particularly the one that the young will inherit, must be defined by what we share, not our superficial differences.

So what, again, is a responsible leader?

In summary, a responsible leader to me is person who has abundant social capital, an intrinsic desire to maximize the economic pie to create opportunities for everyone, someone who is able to effectively manage globalization, and looks to build bridges instead of walls. He or she will enable hope to once again flourish within the sea of hopelessness, and turn despair into optimism.

About this article: Rawan Al-Butairi is a World Economic Forum Global Shaper. Her article is one of the short-listed entries in the 2016 Global Shaper essay competition on the theme of responsive and responsible leadership.

What next for Middle East’s media?

 

AMEinfo produced this article written by Mujeeb Rahman, Journalist on 28 December 2016; it is republished here below.  It is question of the Mass Media notably of the printed type.  But the media generally are lately undergoing some sort of mutations with the online one coming up to maturity possibly at the expense  of its printed counterpart.  Mujeeb’s question What next for Middle East’s media? should be answered but only if taking every aspect of life in the countries of the MENA are taken into account. 

In that region, the other problem would be that of the Freedom of Speech as illustrated by 2 recent events that were covered here in MENA-Forum.   A journalist dies whilst held in prison for alleged defamation in Algeria Friend and Fellow Countryman M. Tamalt Passing Away or simply imprisoned for one reason or another as in More journalists jailed than in nearly 3 decades  and their media literally obstructed by the authorities as in In solidarity with Doha News .

 What next for Middle East’s media?

  •  2016 has been the year that wasn’t for the Middle East media
  •  7DAYS closed down, Emirates 24/7 and Khaleej Times slashed jobs
  •  GN Media closed down four popular radio stations
  •  Newspapers and magazines adverting spend to drop by by 6.1 per cent and 4.5 per cent, respectively, in 2017

The year 2016 ends with yet another blow to the Middle East’s media industry as UAE’s free tabloid newspaper 7DAYS shut down on December 22 because of the “challenging” market conditions.

The newspaper, owned by the UK-based Daily Mail & General Trust Plc (DMGT), had earlier announced that it was ceasing the publication after 13 years, citing bleak prospects of print media.

The industry had also witnessed a few other closures and job cuts due to rising cost and major decline in ad revenues during the difficult year.

The year that wasn’t

2016 has been the year that wasn’t for the media in the region.

As it tried everything it could to survive, 7DAYS cut its frequency from five days a week to weekly in November. But the newspaper, neck-deep in financial trouble, met with the ultimate fate as it also shut down online news website on the same day the last copy rolled-off the press.

“The current trading environment and future global outlook for print advertising remains severely challenged,” Mark Rix, CEO of 7DAYS Media, said when announcing the closure.

News website Emirates 24/7, run by government-owned Dubai Media Incorporated, shed staff as part of a restructuring. Media reports suggest that Khaleej Times daily had also laid-off nearly 30 staff during this year.

Dubai-based GN Media closed down popular Radio 1 and Radio 2 stations in June. Later in September, the media group closed two other remaining radio stations, Josh and Hayat.

“Following a strategic review of our operations, GN Media have made the decision to exit the broadcasting sector,” the company said then referring to the closure of its broadcasting arm, Gulf News Broadcasting.

Not only the small fries but also major publication and broadcast organizations had tough time during the past 12 months.

The Doha-based Al Jazeera media network announced in March that it was cutting 500 jobs. The broadcaster had earlier this year shut down its English-language channel in the US, Al Jazeera America, saying the business model was “simply not sustainable in light of the economic challenges”.

Declining ad spend

Print ad spend has drastically declined in the past few years in the UAE and across the worlds.

Globally, adverting spend in newspapers and magazines dropped this year from 2015 by 8 per cent and 5.9 per cent respectively, according to a recent report by London-based consultancy Warc. They are projected to fall further in 2017 by 6.1 per cent and 4.5 per cent.

In the region, newspapers accounted for 45 per cent of the advertising market in 2010. But they now represent only 32 per cent the market, according to the findings in a study by Northwest University Qatar.

Zenith Optimedia had earlier this year forecast an 11 percent drop in overall advertising spending in the region for 2016 as the region’s governments, the largest buyers of advertising, were trimming down spending on the back of lower oil prices.

Changing trends

Television still accounts for the vast majority of advertising in the region. Leading professional services firm PwC has revealed that the TV advertising market in Middle East and Africa (MEA) has seen double digit growth despite the economic and political turbulence. It predicts that the region will be the fastest-growing region globally with 12.1 per cent CAGR for TV advertising.

Digital advertising is picking up pace with the fast growing Internet and Smartphone population in the region. Both TV and digital advertising platforms are growing at the expense of print. From 2010 to 2015, digital advertising grew from $105 million to $550 million, or 10 per cent of industry mediums, NUQ finds.

PwC projects that by 2018, Internet advertising will overtake TV as the largest advertising segment

By Mujeeb Rahman, Journalist

Mujeeb Rahman is a business journalist at AMEinfo. His areas of focus include economy, markets, politics and international relations in MENA and Asia-Pacific regions. An ex-BBC digital journalist, he delves deeper into the subjects that matter most

Qatar’s policy of qatarisation

We have written on numerous occasions on Qatar’s policy of qatarisation (Ref. 15 years of Qatarisation), here is DohaNews produced article on Qatar peculiar situation of its minority autochthonous population.  We could safely say that it is about the same situation in all countries of the GCC.

Yes, Qataris have almost always been a minority in their own country

Qatar’s population is continuing to grow, but the number of Qatari nationals remains fairly static, at around 10 percent of the country’s residents, according to some estimates.

However, it used to be as high as 42 percent, according to Priya D’Souza.

The former editor of BQ Magazine was born in Qatar, and her family has lived in the country since the 1950s.

However, Qatari nationality is passed down almost exclusively through the father’s bloodline, and expats who are born in Qatar are not usually granted citizenship.

D’Souza recently left Qatar for good, and is now writing a series of posts for website calloftravel.com to “shed some clarity on the Qatar community (both local and migrant) to aid those looking to make Qatar home for the next few years.”

‘Waves’ of migrants

In her first post, “Have Qataris always been a minority in their country?” D’Souza outlines immigration patterns to Qatar since the 1940s.

She also charts the changing relationships between the local population and expats. Her family for example still has close friendships with Qatari families they have known for almost 70 years.

Souq Waqif

But it is difficult to call a country home and not a hold passport to that nation, she added. All families who have lived here for generations “have at some point hoped for Qatari citizenship.”

Now, changes appear to be afoot among this population, with many long-term resident families considering, “for the first time in decades” leaving Qatar.

She didn’t elaborate why, but added:

“While Qatar will always hold a special place in my heart as the country I was born in, the Qatar of the last decade and what it is turning into, is the reason I had very little choice but to leave,” she said.

D’Souza’s future posts will cover topics such as how safe the country is; whether Qatari society is hypocritical; migrant worker rights and treatment; working in Qatar and censorship; and Qatarization.