Arab Integration: Barriers and Workarounds
Valdai Discussion Club Conference Hall, Bolshaya Tatarskaya 42, Moscow, Russia
List of speakers

On October 23, 2019, the Valdai Discussion Club held a presentation of a new Valdai paper, titled “Economic Integration in the Middle East: Problems and Prospects”. The presentation’s participants discussed why, in connection with the region, we often speak about political contradictions or even open conflicts which hinder the economic integration of the Arab world – and what opportunities exist for its implementation.

The paper’s author, Dmitry Maryasis, Senior Research Fellow at the Department of Israel at the Institute of Oriental Studies of the Russian Academy of Sciences, and Deputy Dean at the Institute of Economics, Mathematics and IT at the Russian Presidential Academy of National Economy and Public Administration, stressed that since many analytical papers are devoted to integration in the Middle East the question is not how integration is going, but what it could mean. In other words, what problems exist in the region, which could be more easily solved jointly, and what is preventing the countries from uniting to solve them. Given these parameters, the author excluded from the analysis Iran, Israel and Turkey as exceptional non-Arab players and identified three blocks of issues: energy; water and food shortages; and population issues, including migration, labour availability and its quality. Although the urgency of these problems is different, every year they become more serious, and the attempts of each country to solve them individually have not yet led to success. Therefore, according to the speaker, only a combined approach can solve them.

Maryasis proposed a new principle of integrated work, which would make it more efficient and simplify the task. “Integration should not come from every country, but happen on a sub-regional scale,” he suggested. “There are three groups of countries with similar characteristics – these are the Maghreb, Mashriq and the Gulf countries. First, you need to facilitate integration within groups, and then strengthen it, part-to-part. This involves a smaller number of players, since work is carried out first at the sub-regional level, and then at the regional level. However, the military conflicts and other geopolitical factors greatly complicate integration, and it is not expected in the near future, but the wishes could accelerate it,” he concluded.

Supporting the main ideas of the Paper, Andrey Fedorchenko, Director of the Centre for Middle Eastern Studies of the Moscow State Institute of International Relations, made a number of critical comments on some points. One of them concerned the assessment of the three highlighted problems: according to the expert, the Arab countries will have enough energy for a long-term period, so fossil energy sources will remain the basis of the energy balance of most countries in the world for a very long time to come. As for water, its lack in the Arab world is such that the countries are unlikely to share it with each other and unite on this basis. Finally, regarding labour, the problem lies in the fact that the rich Arab monarchies will continue to perform the function of a magnet, “pulling in” the most skilled labour from other Arab countries.

According to Fedorchenko, there are nine main obstacles to pan-Arab integration: protectionism (including exemption lists), differing economic development levels, an underdeveloped transport infrastructure, the absence of agricultural products from existing integration agreements, weak financial integration base, the inflexibility of the economic mechanisms, political disagreements, and the reality of a “patchwork” approach to the matter in the form of various overlapping trade agreements. “Assessing the prospects of this integration, I think that this is not a cure-all and it is necessary to approach it from the other side. It is necessary to carry out three blocks of measures: systemic economic reforms, bilateral cooperation development and a revival of the Barcelona Process and the Union for the Mediterranean. This is possible if Europeans show a greater understanding of Arab issues.”

According to Alexander Akimov, head of the department of economic research at the Institute of Oriental Studies of the Russian Academy of Sciences, the complexity of the Middle East lies in the fact that the economic processes there are too linked to political ones. On the other hand, the very foundation of integration remains a considerable problem, since in most areas – for example, in terms of exports and transport services – the Arab countries resemble competitors rather than allies.

“The last obstacle is that the region is too big; it stretches from Yemen to Morocco. There have been only two integration projects that have ever spanned this territory – the Roman Empire and the [Arab and later Ottoman] Caliphate. In addition, there are a lot of regions nearby that are pulling the Arab countries to pieces – for example, colossal food imports come from India, Russia, Ukraine and France,” the speaker noted. However, despite all these obstacles, there are still preconditions for integration: the Arab world is a large market, profitable for investors, and it has a young population with a high degree of adaptability. Finally, in connection with the development of robotics and artificial intelligence, the system of productive forces is changing all over the world – but both of these can be bought and are therefore quite affordable for the Arab countries.

Omar Al-Ubaydli, Director of Research at the Bahrain Centre for Strategic, International and Energy Studies (Derasat), also agreed with the paper’s author, but outlined several other barriers to integration. “Most countries in the Middle East do not have an economic strategy – not even an internal one, not to mention other countries,” he said. “Some countries – Yemen and Syria – are at war, and economic integration issues for them are now deeply secondary. On the other hand, for the Gulf countries, it is much easier to cooperate with external players than among themselves – these are monarchies, and by their nature it is more difficult for them to cooperate among each other, because they do not think about the decades to come. Of course, nothing can be done with the monarchies themselves – but you need to create governments that will make plans with long-term aims.”

The moderator of the presentation, Andrei Sushentsov, programme director of the Valdai Discussion Club, concluded that the discussion’s participants were unable to answer the questions completely. However, in this case, it was more important to ask the questions, and the attempts to answer them were “creative and intense.”