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

 

UAE banning all Fruit and Vegetable imports

Early this week, all GCC media covered the latest move of the Government of the UAE banning all fruit and vegetable imports form selected countries.  These happened to be those of the neighbouring Middle Eastern countries of Egypt, Oman, Jordan, Lebanon and Yemen where trading their agricultural products must represent good earnings.
The pretext of such a decision is to protect the UAE’s populations from pesticides contaminated fruits and vegetables. The Government maintains that the said countries affected by the ban must submit certificates documenting all their products were free of pesticide residues prior for imports to resume and that they would be required to comply with the UAE’s standards of food safety.
At the same time, the continuing violence in Yemen seems to be fuelling one of the most incredible in this day and age famine with millions either malnourished or starving of hunger and thirst.

UAE bans import of vegetables, fruits from select countries

Ban covers certain produce from Egypt, Oman, Jordan, Lebanon and Yemen that contain higher level of pesticides

The Ministry of Climate Change and Environment (MOCCAE) has banned imports of certain vegetables and fruits from select countries with effect from May 15 as those products have been found to contain pesticide residues in excess of permissible limits.

The counties that will be impacted by the ban include Egypt, Oman, Jordan, Lebanon and Yemen.

The maximum permitted levels of pesticide residues in foods are stipulated by regulatory bodies in the UAE.

Exposure of the general population to such residues most commonly occurs through the consumption of treated food sources.

 

LIST

All varieties of pepper from Egypt, pepper, cabbage, cauliflower, lettuce, squash, beans and eggplant from Jordan, apples from Lebanon, melons, carrots and watercress from Oman and all types of fruit from Yemen are on the list of banned produce.

The countries impacted by the ban have been requested to provide a certificate of analysis of pesticide residues for all other vegetables and fruits stating that they are free of such residues as of May 15, 2017.

The relevant ministries in these countries have also been asked to comply with the food safety standards adopted by the UAE.

The ban on the above mentioned produce will continue until the necessary safety requirements are met and pesticide residues are cleared.

Through its sophisticated laboratories accredited by the British Commission for Accreditation (UKAS), the Ministry of Climate Change and Environment works relentlessly to analyze pesticide residues in all fresh produce and processed food in line with best international standards.

Food safety

Food safety is a core priority of the UAE’s food security system.

The Ministry of Climate Change and Environment continues its efforts to provide healthy and safe food to consumers in line with global best practices and the objectives of the UAE National Agenda and the UAE Vision 2021.

Enhancing food safety and sustaining local production are strategic priorities for MOCCAE. Furthermore, the Ministry is also keen to ensure that all foodstuffs and products in the country, both domestically produced and imported, are safe for consumption.

 

 

Algeria, a major player for the stability of the Euro-Mediterranean

According to the official Algerian News Agency APS, the High Representative for Foreign Affairs and Security Policy and Vice-President of the European Commission, Federica Mogherini will visit Algeria this week for bilateral consultations that are to include the European New Policy (ENP), and promote a new dynamic in the bilateral relations, likely to reflect effectively the strategic links between both parties through mutual concrete and balanced interests. Thus the ENP reinforces the notion of the role of Algeria, a major player for the stability of the Euro-Mediterranean and North Africa. The ongoing negotiations on the free trade agreement, according to information gathered from the EU, insist on a win / win partnership for shared prosperity,and subject to Europe no longer considering Algeria as a market and  Algeria  deepening its structural reforms, the agreement framework would likely be the same. (1)
Federica Mogherini of the EU

It would be for Algeria, as guarantor of stability in the region, to encourage the development of freedoms in all areas, political, economic, social and cultural therefore set up mechanisms of the rule of law and democratization at the internal level in order to achieve sustainable development for its people.

On the international political situation, Algeria is invited by the Union European to become a member of the Conventions open to third countries, encouraging it to begin a dialogue on legal migration and mobility, traffic of migrants, readmission, voluntary return, regional cooperation for border management, the treatment of the mixed migrant flows and international protection of those in need and improvement of the contribution of Europe domiciled Algerian citizens to the development of Algeria.

On climate change, purpose of the international COP21 conference held in Paris in December 2015, the EU notes with satisfaction that the Algerian party submitted its national plan on climate, demonstrating its readiness to accompany the Paris Agreement. It is in this context that confronted with the depletion of its resources but commanding significant potential, the mini-meeting of the Council of Ministers of February 22nd, 2016 held that the development of renewable energy would be a strategic objective.

As far as the cooperation in security and judicial fields is concerned, this is deemed “essential” by the EU that wants to establish a “targeted and comprehensive dialogue” with Algeria, after positively noting its commitment in the process of revision of the European Neighbourhood Policy (ENP) and takes note of the informal document (‘non-paper’) developed in Algiers, whilst following with interest the dialogues that Algeria is also having with NATO and the OSCE.

It welcomed the constructive role for peace and security of Algeria within the African Union’s and supports and encourages the involvement of Algeria in instances such as the Euro-Mediterranean dialogue, including the 5 + 5 dialogue with the Arab Maghreb Union (UMA). Sharing Algeria’s concerns about the threats facing the region including the Sahel, the EU wishes to fully acknowledge whilst endorsing the mediation of Algeria and supporting its efforts to find a solution to the crisis in Mali, through development in the region as well as international cooperation in the areas covered by the new regional plan of action for the Sahel.

The same applies in the case of Libya where the EU welcomed the diplomatic initiatives undertaken by Algeria. On the Western Sahara issue, the EU supports the efforts of the Secretary-General of the United Nations and of his Personal Envoy seeking to achieve a just political solution that is lasting and mutually acceptable to all and in accordance with the resolutions of the Security Council.

Recalling that the last review of the ENP dates back to 2011 and so in view of the changes experienced by the countries in the neighbourhood since that date, it was decided to conduct a comprehensive review of the assumptions that underpin this policy, as well as its scope of application and how to use its instruments, according to a press release of the Commission. For this purpose, the EU launched a consultation on the future of the ENP on March 5th, 2015.

For Algeria, Europe must take into account, in its neighbourhood policy, its assets including that managed actively by Algeria in its fight against terrorism, regional security against organized crime and the pacification of the Sahel-Sahara southern edge through various mediation, but also of its economic assets including through the supply of Europe in gas for decades and on a strictly commercial basis.

In the Algerian context, the promotion of the movement of people, ideas, and the protection of third countries legally established Nationals in the EU, must be taken into account in the new ENP in order to contribute to the achievement of Algerian priorities with respect to the economic diversification of export promotion of non-hydrocarbon, to food security, the strengthening of human capacities institutional and political, economic and social governance.

Both vertical and horizontal Algeria/Europe cooperation must be based on a win-win partnership for shared prosperity far from any spirit of domination. Algeria in its cooperation with Europe has three main comparative advantages, namely: its effective contribution on equity on the process complex and costly peacekeeping and security in the Sahel-Sahara strip that would benefit the European neighbours in terms of fight against terrorism, organized crime and illegal migration, not to mention the economic impacts.

It is within this framework that Algeria has decided to participate in the ENP, initiated in 2004, and revised in 2009 with concrete proposals in which it has contributed with proposals in the “Green Book” of the European commission on March 4th, 2015, such as the principles of flexibility and ownership, as the basis for the new ENP. Algeria is well underway as part of cooperation offered by the revised neighbourhood policy (Europe 11443) since the latter requires more to establish a plan of action, deemed binding in Algiers, in addition to the lifting of all political conditionalities.

So Algeria is a key player in the region and any destabilization would have a negative impact on the entire Mediterranean and African region (see our interviews to the American Herald Tribune and French daily La Tribune.fr en December 2016.

The Coordinator for Counterterrorism at the US State Department, Justin Siberell recently announced that Algeria is a key partner of the United States in the area of security by referring to a new era of cooperation between the two countries.

Also, facing a world in perpetual motion, both in terms of foreign policy, in economy as well as in defence, related actions with the latest happenings in the Sahel, on the borders of Algeria, with what is happening in the Middle East, in Libya, the urgency of the strategies of adaptation and international and regional coordination would be introduced, in order to act effectively on major events. These new challenges for Algeria exceed in importance the challenges it has ever faced so far.

Called upon and solicited, Algeria legitimately queries its role, and the place or the interest of such option or this frame would hold whether it is in the Mediterranean dialogue of NATO or of the Euro-Mediterranean partnership, whether in its economic or security dimensions. Adaptation is the key to survival and pragmatism a highly appreciated modern management tool in relationships with others, Algeria whose future is in undoubtedly in the Euro-Mediterranean and African space must do with what reason and its interests command.

In summary, the future strategy of Algeria would in order to ensure its safety be to quickly lay down with a reorientation of its economic policy, as a diversified economy in the context of international values, away from the illusion of hydrocarbons eternal earnings and to carefully ponder the recent statement of the Italian Economic Development Minister, Carlo Calenda.

This last announcement, that the gas supply through pipeline contract signed between Algeria and Italy that expires in 2019 will not be renewed, giving “a deficit of 14 billion cubic meters for Italy by 2019-2020 and Italy’s gas supply will be by a long-term contract with the Netherlands by 2020, then with Norway in 2026, not to mention Russia, Iran’s re- entrance, and shortly Libya competitor of Algeria not forgetting the recent agreement of Europe – Israel for the procurement of large volumes of gas through the construction of a new pipeline.

And what will become of the future supply contracts of Algeria, all expiring between 2018 and 2019 at the time when the increase in spot markets, knowing that more than 33% of all revenues of Algeria are from natural gas making it unable to compete with Qatar, Iran and Russia, not to mention the American Shale oil/gas

 (1) study of Professor Abderrahmane Mebtoul, published in the International (IFRI Paris, France) titled “Maghreb-Europe cooperation the geostrategic challenges” , November 2011 – chapter III – “The strategy of the European Union and NATO in the face of the geo-strategic tensions in the Mediterranean”.

Automotive Industry in North Africa or Assembly Plants

The purpose of this article is to as objectively as possible raise the issue of the future profitability of the Automotive Industry in North Africa or Assembly Plants or put simply manufacturing of cars specifically in Algeria.
Because the international constraints are there and in the face of the global changes, the automotive sector is known for its restructuring, mergers and relocation of large groups, and for its high production capabilities. The global market for cars in perpetual mutation is nevertheless an oligopolistic market where a few companies control the international circuits [ . . . ]

Ten questions for their feasibility . . .

The purpose of this article is to as objectively as possible raise the issue of the future profitability of the Automotive Industry in North Africa or Assembly Plants or put simply manufacturing of cars specifically in Algeria.
Because the international constraints are there and in the face of the global changes, the automotive sector is known for its restructuring, mergers and relocation of large groups, and for its high production capabilities. The global market for cars in perpetual mutation is nevertheless an oligopolistic market where a few companies control the international circuits.
It seems that some Algerian officials forget that globalization is here for good with political and economic implications. The press has recently echoed several Algerian operators desirous to embark into projects of cars manufacturing though with Original Equipment Manufacturers (OEM) from France, Italy, South Korea and Germany, etc. have open debates on the viability of such undertakings.
The question that arises, would be in the face of the global changes, about the break-even point of all these small car manufacturing projects, knowing that Algeria would be called to evolve within an open economy, though protectionism being sometimes necessary is only transitional?

According to the ‘Office National des Statistiques’ (ONS), the official agency of statistics, the automotive national park (NPA) totalled 5,683,156 vehicles by the end of 2015, up 4.75% year on year.  This increase of the NPA is due to an increase in registrations of new vehicles in 2015 compared to 2014 of more than 900,000 units, or 7.72%.

The number of operations of registration went from 1,397,554 operations in 2014 to 1,505,403 operations in 2015. According to the ONS, the number of registration of new cars fell from 301,722 units in 2014 to 257,589 in 2015, drop of 14.63% and that, unlike past years before the introduction of import licenses, almost all (91.3%) vehicles imported in 2015 were of the order of 282,119 units and registered their year of import.

Taking into account that the Algerian economy is based on the hydrocarbons revenues, the evolution of the price of oil basically determines the purchasing power of the Algerians and inflation would lead to its deterioration.

Several questions would need answers for any coherent economic policy and these are :

 

-First, what will happen with the inevitable exhaustion of oil in terms of economic profitability on the purchasing power of the Algerians? In this case of the real purchasing power of the middle classes, that will remain in terms of the possibility of purchasing power to buy a car?

 

-Secondly, due to the absence of industrial specialized units, and referring to the knowledge-based economy in order to promote integrated subcontracts, what will be the currency balance of these projected units? Especially that the majority of the inputs (costlier with the slippage of the Dinar) will almost all be imported before?

 

-Third, by international standards, the threshold of capacity at the global level are between 200,000 and 300,000 per year for individual cars, about 100,000 units per year for trucks / buses and scalable with the concentrations since 2009. Cost accountings are fixed costs to variable costs what is the break-even point for a competitive cost compared to international standards and the new mutations of this sector?   The hardware representing less than 20 to 30% of the total cost, whereas like a computer, the costs of software represent 70 to 80%; these mini projects will they ever be competitive in terms of cost/quality?

 

-Fourth, what is the situation of sub-contracting in Algeria in order to achieve an acceptable integration rate that can reduce costs? In making a comparison with neighbouring countries where the integration rate is higher as compared to Algeria, experts stressed during forum at El Mujahid this month that in Tunisia, the number of sub-contractors represent 20% of the industrial companies (1,000 sub-contractors among 5,000 industrial firms), while in Morocco, the rate is 28% (2,000 subcontractors out of 7,000 industrial companies). And that the industrial sector currently represents only 5% of GDP, while the needs of industrial equipment and other industrial components and spare parts are generally $25 billion. The number of sub-contractors in Algeria is generally around 900,000 companies, but 97% of these firms are SMEs, or even of all small enterprises (SEs) with less than 10 employees and about 9000, either 1% active for the industrial sector, the rest operating either in the commercial sector, distribution, services, building and infrastructure sectors.

 

-Fifth, in a coherent vision of the industrial policy taking into account the strong international competition and new technological change in this area, need not we select two or three Algerian constructors in a win/win partnership with foreign partners so as to start mastering the international circuits with precise specifications giving them tax and financial advantages in functions of their ability. So for an integration between 0 and 10% rate, the benefits must be limited to the maximum and before a certain threshold of production not exceeding 5000 units/year in order to avoid that during this period some operators might be tempted in a rentier logic, to arrive at more than 30.000/50.000 units per year without integration, increasing this way, the import components currency Bill.

 

-Sixth, related to the previous question, are we currently building a manufacturing factory of cars for a local market while the objective of the strategic management of any business is it not either regional and / or global in order to guarantee financial profitability in the face of international competition; this sector being internationalized with sub segments nesting at the global level?

How then will these micro-units often oriented to the domestic market, realize the rate of integration of 40 / 50% at the end of about five years, and risking to close by bankruptcy after having benefitted with all the benefits that are supported by Algerian Treasury subsidies where the importance of strict State regulations to avoid transfers of annuity in favour of a rentier minority?

 

-Seventh, an industrial policy without control of the solar is inevitably doomed to failure with a waste of financial resources. Also the automotive industry becoming capital based, with digital programming eliminating almost all intermediate jobs, what is the number of direct and indirect jobs that can be created, referring to the necessary qualification, taking into account new technologies applied to the automobile?

 

-Eighth, what will be the cost and strategy of distribution networks to adapt to these technological changes?

 

-Ninth, will these cars use petrol, diesel, LPG, hybrid or solar referring also to the policy of generalized fuels subcidies that distort the optimal allocation of resources?

 

-Tenth, how to approach the world market with the existing rule of 49 / 51% knowing that no reputed foreign firm would accept such a rigid constraint of this type. This rule not only carries the risk of all additional costs being born by Algeria, but could lead to further debts that might envenom tensions between 2017-2020?

 

In conclusion, I would not remind enough that the engine of any development process lies in research and development, that without the integration of the knowledge economy, economic policy or any project has no future in the 21st century. In the face of a turbulent and unstable world where technological innovations are constantly changing, Algeria should invest both in democratic institutions in segments where it can have comparative advantages, i.e.: agriculture, tourism, new technologies and in sub-segments of certain industrial sectors, taking into account the on-going deep technological changes and a major restructuring of this industry that is internationalized.

We need a New Narrative for Globalization of Klaus Schwab

Looking for some good weekend reads, we could not let the following article We need a New Narrative for Globalization of Klaus Schwab [ . . . ]

Looking for some good weekend reads, we could not let the following article We need a New Narrative for Globalization of Klaus Schwab, Founder and Executive Chairman, World Economic Forum go unnoticed. As a Regular Author, Klaus Schwab produced many noteworthy contributions in various media on this very subject, and we could not let it pass without hopefully helping its spread throughout the MENA region.  Globalisation is as a matter of fact impacting the MENA Region which with its diverse countries socio-economic and political arrangements does contribute to the ever increasing expansion globalisation but in its own discrete ways, resulting in as diverse appreciation and / or revulsion as elsewhere by its populations.

The only sure thing about this phenomenon is that it (globalisation) is here to stay and that it has only one way to go: expand further.  As put by this author: ‘We have to manage our future based on the fact that we are simultaneously local, national and global citizens with overlapping responsibilities and identities.’  And that: ‘The promise of a better future lies in acting together as stakeholders of a technology-driven global transformation process, with the objective of building a more modern, inclusive and human world.’ 

Klaus Schwab: We need a new narrative for globalization

Published by the WEF on Friday 17 March 2017

The world is at a historic crossroads. Market extremism, often labelled neoliberalism, which has shaped our national and global policies for the past three decades, has become a toxic fuel for the stuttering engine for global growth. It has also generated polluting side effects that are no longer tolerated by large portions of society.

Yet market-driven globalization has lifted over a billion people out of poverty and has been an overall driver of improved standards of living. In its present form, however, it is no longer fit for purpose in our current – nor particularly our future – context.

What are the reasons?

First, the global economic system has moved from focusing on meeting the needs and aspirations of crucial segments of society who feel they are living in a precarious situation, to focusing on the optimization of the system itself. As such, individuals want to regain control of their livelihoods and seek out more than material satisfaction. People are searching for meaning and purpose in their lives – lives that are not solely defined by economics and business, but which also encompass social and cultural affinities. Many people feel spiritually isolated in a globalized world and long for a socio-economic context in which greater emphasis is placed again on shared values and less on impersonal rules.

In addition, the legitimacy of a purely market-driven global economy was undermined by a growing number of systemic challenges, such as:

  • The transition from a unipolar to a multipolar world, and consequently, to a world with competing societal concepts which challenge “Western” thinking;
  • Market power, corrupt practices and speculative financial practices distorting the fairness of markets and the process of real long-term value creation;
  • Transformation of production processes, emphasizing automation, capital and innovation over manual, and soon intellectual, labour;
  • The serious threat to the preservation and regeneration of our environment, caused by the excessive use and erosion of our natural resources.

Unheeded warnings

Since the 1980s, I have drawn attention repeatedly to the deficiencies of neoliberal globalization. For example, in an editorial for the International Herald Tribune (now the New York Times) more than 20 years ago, I wrote:

“Economic globalization has entered a critical phase. A mounting backlash against its effects, especially in the industrial democracies, is threatening a very disruptive impact on economic activity and social stability in many countries … This can easily turn into revolt …”

Even though the World Economic Forum emphasized the importance of social responsibility in its programmes in Davos and around the world, these warnings were not taken seriously enough.

Today, we face a backlash against that system and the elites who are considered to be its unilateral beneficiaries. The danger of this backlash is that it overlooks the fact that the search for innovation and competitiveness is still the main driver of economic development, and ultimately social progress. It is not the market-based system itself that is the issue, but rather its implementation. It is the lack of adequate and trustworthy principles to maintain a social contract inside it, which is indispensable to a fair, prosperous and healthy society.

Moreover, the tendency to resurrect national borders and other obstacles to global interconnectivity overlooks the fact that the world has become a community of shared responsibility. Global cooperation cannot be undone without causing major damage to all involved. We depend on each other when confronting the challenges of pollution, migration, space exploration, terrorism and crime – to name but a few.

It is also true that some of the elites were at the origin of aberrations in the system, just as others triggered a popular outcry over excessive abuses of this power. But any society that wants to remain dynamic needs people who assume responsibility for political and economic successes and failures alike. In a fast-changing world, where our very notion of identity is being challenged, the ideological choice is no longer between left and right, but rather between open and closed – with one of the consequences being that people are increasingly opposing “cosmopolitan” elites.

Thus, the ideological battle currently raging should not be between defending the “old” system against the current forces offering simple answers to very complex sets of challenges. Instead, this impasse must urgently be overcome – to not only be responsive to the grievances and anger of large portions of society, but also to move forward. Failure to do so will only result in a further shift towards more polarized societies and a breakdown of the norms that are fundamental to social cohesion.

The future challenge: the Fourth Industrial Revolution

There is no new replacement or ready-made ideology that can be conveniently taken “off the shelf”. Our priority should instead be to redesign our economic and social systems, taking into consideration that humankind, thanks to global interconnectivity and the growing impact of the Fourth Industrial Revolution, is becoming more sophisticated, and the individual more emancipated.

The Fourth Industrial Revolution will completely alter how we produce, how we consume, how we communicate and how we live. It will redefine the relationship between citizens and the state. It will provide us with great opportunities for enhancing the lives of individuals and societies. It will allow, if we get it right, a much more human-centred approach, fostering not only material satisfaction, but also genuine individual and societal well-being for all.

The present focus of our economic and political discussions seems to completely miss the mark. We have now a historic window of opportunity to shape technological breakthroughs, such as artificial intelligence and gene editing, in the service and for the benefit of humankind. We have two options. We can either fully use the opportunities of the Fourth Industrial Revolution to help lift humanity to new heights, or we can allow ourselves to be controlled by the forces of technology and end up in a dystopian world in which citizens will have lost their autonomy.

Mastering the Fourth Industrial Revolution is a global challenge. The tension between globalism and nationalism is artificial. We have to manage our future based on the fact that we are simultaneously local, national and global citizens with overlapping responsibilities and identities. The best way to develop a sustainable future is through the stakeholder concept, which I developed more than 40 years ago, and which forms the base of the Forum’s philosophy.

The basic principle for the success of the stakeholder concept is to find long-term solutions based on dialogue, and endorsed by the commitment and willingness to achieve the best outcome in the shared long-term interest of all stakeholders. As the international organization for public-private cooperation, the World Economic Forum is committed to serving this purpose as a catalyst and convener.

The promise of a better future lies in acting together as stakeholders of a technology-driven global transformation process, with the objective of building a more modern, inclusive and human world.

 

 

Chancellor Angela Merkel in Algiers on 20 and 21 February

German Chancellor Angela Merkel, calling for closer cooperation with the countries of North Africa, intends to obviously achieve, on the occasion of this visit, more of the security situation in the region and by the same consolidate the economic relations between the 2 countries.

Cooperation between the 2 countries ? How ?

German Chancellor Angela Merkel, calling for closer cooperation with the countries of North Africa, intends to obviously achieve, on the occasion of her visit, more of the security situation in the region and by the same consolidate the economic relations between the 2 countries. Chancellor Angela Merkel in Algiers on 20 and 21 February follows on the Algerian Prime Minister’s visit on 12 January 2016 that in addition to the discussed security aspects, it had enrolled as part of the consolidation of economic cooperation between Algeria and Germany notably through the germano-algerian joint commission. This latter was set up in 2010, following the visit of the president of the Algerian Republic, to Berlin.

Germany’s socio-economic

German politics traditionally are normally dominated by two large movements, the CDU – CSU (the Christian democratic union of Ms Merkel and its Bavarian ally, the Christian Social Union) and the SPD (Social Democratic Party). German diplomacy strives to develop a balanced position in its dialogue with the Arab and Muslim world. Present in several States in the region, close political foundations of the major German parties play an important role in this effort of dialogue with all of the local political movements.

Currently, the migration crisis and the situation in the Middle East do concern jointly Turkey (first host country of refugees, with 2.5 million) and Germany, (first host of the European Union). Dialogue around this issue, for which Germany is quite involved, was to find an agreement between the European Union and Turkey, which aims to permanently reduce the number of people seeking asylum in Europe. Based on three central pillars (bilateral trade rooms, Germany Trade and Invest Agency, and economic counsellors of embassies), economic diplomacy conducted by Berlin translates into a strong attention paid to large emerging countries.

Largest economy in the European Union, Germany is a federal State consisting of 16 Länder account about 82 million inhabitants to 01 January 2016 with demographic projections of 72.2 million in 2030 explaining its immigration target with a + 1.4 million migratory balance policy (2015) where the Turks represent in 2015, 9.1 million or 11.1 percent of the total population.

This may put into question its economic dynamism and eventually expose it as a result its open economy to international uncertainties including the protectionist threat of the new American president, the British Exit from the EU and the current fragility of China. Its Gross Domestic Product in 2015 was € 3026.6 billion, with a Per Capita GDP of € 37,107 with an unemployment rate of 5.0% (2015) and 4.5% for 2016, with an annual average inflation rate to 0.1% for 2015.

Meanwhile Germany continues for several years its fiscal policy that is marked by the desire to reduce debt and public deficits, in accordance with objectives set by European treaties. Public debt amounted to € 2150 billion at the end of year 2015 (71.2% of GDP) and 69.2% (2016). The Bundestag has adopted on November 25, 2016 a Federal budget for 2017 and plan for its 2018-2020 program a budget that will be balanced on the whole of the period.

The 2017 federal budget spending is € 329.1 billion, representing an increase of € 12.1 billion compared to 2016.

Tax revenues are planned at € 301.03 billion. According to the multi-annual programming of the Bund, the federal budget should be balanced and should continue to be as such on the whole of the budgetary program of 2018 to 2020 period.

Industry, which represents a significant share of GDP remained almost stable for 20 years (25.7% in 2016 and 23.0% in 1994).  Agriculture represents 0.9%, industry 28.2% and services based on new technologies 72%.

German GDP grew by 4.1% in 2010, from 3.7% in 2011, 0.5% in 2012, 0.5% in 2013, 1.6% in 2014, 1.7% in 2015, and 1.9% in 2016. Highly internationalised companies, exports represent 39% of the GDP in 2015. World Trade Organisation ranked the country in 2015 as the third largest global exporter, behind China and the United States. The density of its fabric of medium and intermediate-sized companies (the “Mittelstand”) innovative and export

Literally champion of the world for exports, Germany has with a trade surplus in current accounts at $ 297 billion for 2016 before China’s $ 245 billion, according to a study by the IFO economic Institute, while in 2015, the balance of payments surplus of China totalled $ 293 billion and that of Germany was $ 257 billion and the United States run a deficit of $ 478 billion.

For 2015, its main customers were: United States (9.5%), France (8.6%), United Kingdom (7.5%), Netherlands (6.6%), China (5.9%), Italy and Austria (4.8%) and suppliers (2015): China (9.7%), Netherlands (9.3%), China (9.7%), Netherlands (9.3%), France (7.1%), United States (6.3%), Italy (5.3%)

 

What prospects for cooperation?

According to the Secretary of State at Germany’s Ministry of Economy and Energy and co-Chair of the economic joint commission, Germany and Algeria since its independence had good relations of friendship, and I quote him :

“We are aware of the political importance of Algeria in the Arab world and Africa. Algeria is a major and reliable political partner of Europe, for example in the areas of security, regional stability and our common fight against terrorism which are the subject of a close and trusting cooperation between our countries since many years. In addition, Algeria is one of the largest national economies in Africa. It is located at the interface of the Western world, of the Eastern world and the African world, and connects, because of its geographical location, the markets of Europe, Africa and the Arab world.”

Algeria at current prices Gross Domestic Product according to the World Bank was for 2015 at $ 214 billion, with as at January 1st, 2016 a population of 40.4 million inhabitants and an economy that directly and indirectly relies on hydrocarbon exports for 97 / 98% of its foreign exchange earnings.

The volume of bilateral trade between Algeria and Germany recorded in 2014 about € 5.1 billion and no significant change between 2015 and 2016. Germany imported from Algeria for an amount of € 2.5 billion (mainly oil) and exported at a cost of about € 2.6 billion to Algeria. According to Reuters News Agency and the information site “Deutsche Welle”, there was a signing of a major contract of armament between Algeria and Germany (to be confirmed) and exports in armament of Germany destined for Algeria would have reached during the period of January to September 2016 over € 4,029 billion.

In 2015, the bulk of the external trade of Algeria remained focused on its traditional partners such as China with $ 8.22 billion, France $ 5.42, Italy with $ 4.82, Spain with $ 3.93 and Germany $ 3.38 billion. In the first eleven months of 2016, Algerian Customs data show $ 42,78 billion for imports of goods, services not included.

Italy preserved its traditional first customer position of Algeria’s in the first eleven months in 2016, by absorbing $ 4.41 billion of exports, or 17.24% of Algerian overall exports during this period. It was followed by Spain, France and the United States, as well as by Canada that have imported for respective amounts of $ 3.24 billion (12.67%), $ 2.95 billion (11.53%), $ 2.79 billion (10.9%) and $ 1.25 billion (4.91%). Paradoxically Germany does not show in this section of the Algerian exports for these seem not exactly high enough to be classed within it.

In terms of imports, China remains at the top of the supplying countries of Algeria with $ 7.7 billion representing 18.01% of imports overall Algerian between January and November. France with $ 4.37 billion (10.22%), followed by Italy with $ 4.26 billion (9.96%), Spain with $ 3.29 billion (7.71%) and Germany with $ 2.7 billion (6.34%).

So what are these prospects for the Algero-German cooperation? 

Several areas of cooperation have been identified, but the main hurdle would be that most German operators appear not to be attracted by investments in Algeria, for at least as long as the regulatory framework is really not in their favour.  According to numerous statements of many German operators and government agencies, the Algerian rule 51/49 share ownership split, that is applied to foreign investments, with total disregard for either strategic or non-strategic sectors would be the main culprit for all potential German investors including SMIs/SMEs like from many other countries to stay away from Algeria.

However some 4400 family-run companies in Germany form the backbone of the German economy, not to mention an Algerian diaspora evaluated to approximate 30,000 in Germany, are rather “well integrated”. According to German data, about 220 German companies are located in Algeria and employ around 2000 people, operating in different sectors of activity such like energy, services, hydraulics, transport and construction technology and the development of renewable energy in which Germany has a great experience. Algeria import essentially mechanical, electric, steel, equipment vehicles and chemical products and fats from Germany.

Algerian exports are, conversely, made up mainly of hydrocarbons (oil and gas) and derivatives. Despite this minimal trading far below the potential, the ‘shared’ political of the two capitals and their economic and geostrategic interests, remain, despite the world economic and financial crisis, in support of the strengthening of all economic exchanges and bilateral cooperation in all sectors. The main objective is to strengthen the partnership, while studying the economic market of the two countries to seek opportunities of cooperation so as to increase trade and bilateral cooperation especially in the sector of energy (solar, wind, and solar) and technologies.

Algeria, prioritised for next years, despite the existence of several other options, resourcing of renewable energy whilst pursuing at the same time win/win partnership with Germany for an integration and advancement of technological and managerial know-how of Algerians, with the aim to concluding contracts of cooperation with Algerian companies in all sectors including those channels where Algeria has a global comparative advantage to use its international business networks.

 

In conclusion, Germans that generally have no historical precedent with Algeria, as of their well-reputed pragmatic attitudes and well-known frankness did recently approach the Algerian Government confirming that their readiness to intensify cooperation, was it not for those recent Government measures of Algeria.  These were qualified as being counterproductive, administrative in their outlook whereas what is required should focus as the economic reference of the currency exchange balance as well as the accumulation of organisational and technological knowledge. The Algerian economy predominantly bureaucratic and rentier economy that produces the informal sphere could do with a financial and socio-educational reform, in addition to the lifting of the land system.  And it is up to the Algerians to remove those obstacles for the good implementation of the business, assuming of deep structural reforms, good governance and a visibility and coherence of socio-economic policies of the Government.  It is under these reservations, that any Algero-German cooperation could be and intensify in the context of mutual respect.

ademmebtoul@gmail.com

Updated on February 22, 2017.

The planned visit to Algiers was put off at the request of the Algerians, the German government spokesman said.

“The Algerian government asked at short notice for it to be postponed, the federal chancellor complied with this wish.”

Ups and Downs in the Global Economy

Ups and downs in the global economy, and / or the economy of the large countries blocks or the small ones, there seems always to have trade businesses that are vulnerable to any adverse winds. Would the Brexit vote and a new man in the White House have any bearing on the business of trading? With all the books and discrete writings since Neanderthal times, on trade, fair or not [ . . . ]

Ups and downs in the global economy, and / or the economy of the large countries blocks or the small ones, there seems always to have trade businesses that are vulnerable to any adverse winds. Would the Brexit vote and a new man in the White House have any bearing on the business of trading? With all the books and discrete writings since Neanderthal times, on trade, fair or not and those many varieties in between, we have still got things to discuss such as in the proposed article written by Arancha González Laya, Executive Director, International Trade Center and published by the WEF on Thursday 9 February 2017.

What about what is happening in the MENA’s GCC countries with Christine Lagarde of the IMF visiting Dubai who said yesterday that Algeria was “a good example” in budgetary management.  Thoughts ?

‘Inward-looking trade policies invite retaliation’ – IArancha Gonzales Laya, ITC

The above Image is of REUTERS/Carlos Jasso

The future of trade could be good, bad – or just plain ugly

The outlook for global trade cooperation is darkening. Amid the sluggish recovery from the global financial crisis of 2008-09, trade and globalization have in many advanced economies become lightning rods for public anxiety over diminished economic prospects, rapid technological change, immigration and more broadly discomfort with the pace of social change.

In these countries, the social licence on which open markets rest has become fragile. The result: sustained pressure on the international economic system that has underpinned seven decades of peace and unprecedented prosperity. We today run the risk of shifting from a rules-based trading system to one based on deals and power politics.

Some of the anti-trade sentiment is the result of rising wealth inequality and stagnating real wages. Policy and business elites did not speak frankly about the unequal distribution of benefits from trade, and failed to adequately accompany market-opening with good domestic policies to equip displaced workers to upskill, adjust and share in the new opportunities being created. Yet technological change is responsible for far more of the job losses than imports of goods and services: trade has simply become a more identifiable scapegoat.

However unpopular trade may be in some quarters, the fact is that trade does improve productivity and growth in aggregate. If governments start to go it alone on trade, it will become harder, not easier, to generate the jobs and rising incomes that angry electorates want. Inward-looking unilateral trade policies invite retaliation. The open global economy has enabled the largest-ever reduction of extreme poverty. Closing markets would close off prospects for poor countries to trade their way out of poverty. And the singular lesson of the 1930s is that zero-sum approaches to economic relations lead to trade wars, economic stagnation and, ultimately, conflict.

A World Economic Forum council focusing on the future of international trade has identified three potential scenarios for how the upcoming years might unfold. Borrowing from Sergio Leone, we call them “the good, the bad and the ugly”. The risks are firmly on the downside, but it is not too late for governments, businesses and civil society to work together to arrest the slide: to choose reason over friction, cooperation over conflict, and multilateralism over unilateralism. Responsive and responsible trade and investment policies are possible, but it will take hard work at home and in the global arena.

Further reading . . .