The Impact of the European Unions’ Neoliberal Agenda on the North African Countries Les enjeux de l’agenda néolibéral de l’Union européenne pour les pays de l’Afrique du Nord
Edited By Gisela Baumgratz, Khaled Chaabane, Werner Ruf and Wilfried Telkämper
One year ago the negotiations between Tunisia and the European Union about a deep and comprehensive free trade agreement (DCFTA) had started in Tunis. Experts from both sides of the Mediterranean accepted to contribute to this book in order to foster the public debate in the North-African countries by informing actors of the civil society about the risks of this new generation of free trade agreements of the EU for the respective countries and their population. In fact, by analyzing the impact of the structural adjustment programs of the World Bank and the International Monetary Fund in Tunisia, Morocco and Algeria since the late 1980s followed up by the EU’s free trade policy, the authors seriously doubt about the positive effects on development and prosperity promised by the promotors of free trade. They underline, on the contrary, that it is the EU which profits from the asymmetric power-relations in order to pursue its economic and especially its security interests related to "illegal migration".
Publié un an après le début des négociations sur l’Accord de libre échange complet et approfondi (ALECA) entre la Tunisie et l’Union européenne, cet ouvrage veut contribuer au débat public dans les pays concernés et alerter les acteurs de la société civile sur les risques que comporte cette nouvelle génération des accords de libre-échange de l’UE. Les experts nord-africains et européens réunis pour débattre des enjeux de la politique économique de l’UE vis-à-vis des pays de l’Afrique du Nord mettent sérieusement en cause la promesse de développement et de prospérité du libre-échange. Analysant l’impact de cette politique entamée par la Banque mondiale et le FMI depuis les années 1980 en Tunisie, en Algérie et au Maroc et poursuivie par l’UE, ils soulignent au contraire que l’UE profite de l’asymétrie des relations de pouvoir pour poursuivre ses intérêts économiques et sécuritaires liés à la « migration illégale ».
Open Markets and Closed Frontiers. The European Union’s negative and exclusive neoliberal integration (Elmar Altvater)
At the beginning of the 19th century, the German geographer and natural scientist Alexander von Humboldt discovered, in the Mediterranean basin, a geological constellation of “dry” terrestrial masses consisting of rocks, stones, land and “liquid” maritime masses of water. They formed a favorable environment for seafaring and land transport, i.e. for the extensive as well as intensive exchange of goods, capital, people, information and cultures. He was sure that this uniqueness of the Mediterranean was a decisive factor for the supremacy of this region in the “civilized” world. In his treatise on Science and Nature, “Cosmos”, he described the Mediterranean region as “privileged by nature”, the Northern shores being more favored than the Southern (“underprivileged”) shores. This “North-Mediterranean structural privilege (Dill 2013: 11 f) ended with the discovery of the “new World” and the shift of the world economic center from the Mediterranean basin to the Atlantic. The Mediterranean and (to a lesser extent) the Baltic Sea had been “dethroned as motors of civilization” (Dill 2013: 12).
This earth-historical constellation opened space for technical, social and political progress, the formalization of borders of newly founded empires, city states and since the 16th century nation states, the birth of citizenship so that the cross border transport of goods and services and the migration of people could remarkably increase. After the Second World War also monetary and financial relations (which already have a long and negative imperialist history since the indebtedness of the Osman Empire in the 19th century) developed under the rules of the Bretton Woods system, i.e. under the influence of the IMF and the World Bank. These relations never were smooth and simple, they were crisis ridden and they triggered political unrest in many countries, including the Arab world.
The political and economic situation around the Mediterranean also changed. The dynamics of integration on the European shores of the Mediterranean in the decades after the Second World War and the developments in Northern Africa, the Maghreb and the Levant (not to speak ← 97 | 98 → of the Ukrainian crisis on the shores of the Black Sea) triggered in recent times massive flows of migrants and refugees towards the countries of the European Union. In addition, the growing instabilities and crises-tendencies of the world economy and particularly of financial markets had a massive impact on the region. Hence, the unevenness and inequality of incomes, of wealth, of the distribution of jobs and thus of employment chances between the Southern and the Northern shores of the Mediterranean increased. The pull-factors of migration are located on the Northern shores and the push-factors on the Southern. Therefore, the direction and the routes of migration are predictable. However, turbulences of migration flows provoked chaos in the whole world-region from the Baltic and the Channel to the Sahara and the Persian Gulf. It is an open question whether the European Union as the most powerful actor in the region is able to find a solution to this major crisis.
1. Negative neo-liberal integration
The EU since its very origin in the 1950s followed the trajectory of a “negative integration”. Nobel laureate Jan Tinbergen in the 1950s coined this word not as a critical evaluation but as a descriptive and analytical explanation of an integration project, based on the liberalization of markets by dismantling borders, by deregulation of political rules and by the privatization of public goods and services. As early as 1944, F.A. von Hayek had put forward the term “negative integration” in his famous book on “The roads to serfdom”. He cynically aimed at making deregulation, privatization and liberalization irreversible on the national level by an international treaty that no national government had the legal power and political legitimacy to reverse. Being “locked in” the Hayekian project of negative integration no left government would have a chance to realize an alternative: it would have to accept “the rules of the game”.
Half a century of political deregulation, privatization of public spaces and goods and economic liberalization made that markets in the economic space of the EU are as free as never before in history – and market actors such as big corporations or financial institutions more powerful than ever. Thus markets are more than free: they are “disembedded” markets (Karl Polanyi): disembedded from social networks of the society, from the “web of life”, as Jason Moore puts it and thus also from nature. The labor movement and its organizations, i.e. trade unions are as weak as never before in modern history of developed capitalist countries. They even do not have the power to guarantee formal labor standards. Employment gets informal and inequality between classes and within classes increases, as many reports about global inequality clearly show.1 ← 98 | 99 →
Since the “neoliberal counter-revolution” (Milton Friedman) in the 1970s trade relations and investment flows multiplied in the last decades partly because of diminished transaction costs. Due to intensive competition, technical product-standards are equalized, juridical regulations harmonized, fashions and styles assimilated. Most important the unit labor costs of production are on a common downward trend. Vice versa, the cultural, technical and natural diversity diminished, influencing direction and speed of social, economic and last but not least ecological evolution.
In the very long perspective, this is a reversal of a development, which already began millions of years ago, when the Mega-continent Pangea broke into pieces, i.e. into the present five continents separated from each other through the waters of the great oceans. Distance then was the reason for the diversity of ecological development in different world regions – until the new warm period of the Holocene, which began about 11700 years ago in the history of the planet Earth, facilitated the diversities of human development. Since the formation of a capitalist world system in the “long 16th century” (Fernand Braudel), social development accelerated, up to industrial capitalism in the last quarter of the 18th century. Growth rates of the world economy sprang up from nearly zero during the millennia before the industrial revolution to 2.2 per cent per capita and year from 1820 to 1998 (calculation by Angus Maddison 2001). That is a reduplication of real per-capita-income from one generation to the next. The liberal promise given by the classical political economy of an increase of the “wealth of nations” was not false. The impact on the culture of modern societies is immense because qualitative diversity changes into quantitative inequality of incomes, wealth and access to resources. This is the origin of the fetishism of growth dominating the modern world.
There are not only economic, social and political, but also geological consequences of the industrial revolution and its repercussions, so that geologists now speak of a new earth-historical period, the so-called Anthropocene, or even better “Capitalocene”. Now, human activities under capitalist rules – production, investment, trade, migration stimulated by profit-maximization – not only shape the economy, but also the geology of the Earth. The continents, which geologically drifted away from the original super-continent, Pangea, now, are, once again to integrate into an economic “Neo-Pangean” supercontinent. Human trade agreements, such as the Transatlantic Trade and Investment Partnership (TTIP) “bridge” the Atlantic Ocean; the Transpacific Partnership (TPP) “bridges” the Pacific; the Bilateral Investment Treaties (BIT) between European and African countries, “bridge” the Mediterranean. They “create” this new “continent” together with a network of financial relations forcefully organized as a straightjacket for debtors to protect the monetary wealth of creditors. So, ← 99 | 100 → the new financialized supercontinent is dominated by a globalized socio-economic formation: by modern Capitalism. Therefore, it makes sense to call this intercontinental constellation the “Capitalocene”. The most successful “neo-pangean” integration-project is the EU. It is forming not only a European, but also a powerful global economic entity.
2. The hierarchy of disembedded markets
The EU and its treaties with neighboring countries and regions are part of the “longue durée” (Fernand Braudel) of history which is characterized by very long-term geological properties. In the shorter term of history, the neo-pangean integration exhibits a hierarchy of markets, which never existed so obviously as nowadays. On the top of the hierarchy, there are financial and currency-markets where the formation of interest and exchange rates takes place driven by private actors and only to a lesser extent by public institutions, i.e. by national governments, by central banks or by international financial institutions such as the Bretton Woods-institutions. On the lower level of the market hierarchy come markets for goods and services and the formation of commodity-prices. The crucial prices for the economic performance in the world are energy-prices fossil fuels, electricity). In this context, the most important actors are private ones, mostly big transnational corporations, and state-owned companies which also follow the principle of profit-maximization.
The least-important market in a modern capitalist system is the labor market. It determines employment (and unemployment), the precariousness of employment and formal and informal wages and salaries. – There is, however one decisive difference compared to the before mentioned markets: the deregulation of labor markets is limited to the national space and does not include the European or global space. Social systems and the welfare state even in a highly integrated area as the EU are still, mainly national within national borders.
Therefore, the process of negative integration is substantially incomplete. Article VIII of the Roman treaties of 1956 established the four fundamental freedoms: (1) the freedom of capital transfers, (2) the freedom of trade of goods, (3) that of services and (4) the freedom of movement of people, particularly of migrant workers from member country to member country of the EU. However, national borders while abolished on commodity and financial markets still matter on the labor market. The EU made serious efforts to establish a space of free movement of persons (the creation of the “Schengen-space” and the Dublin II rules). But due to the recent increase of the number of refugees, this free space is, more and more closed by new walls and by fences of NATO-razor wire, and the establishment of refugee camps very often not obeying to humanitarian minimum-standards. ← 100 | 101 → Neo-nationalists, chauvinists, inhumane attitudes of citizens in nearly all European countries contribute to this. The Nobel peace award winning EU (2011) has become a continent of shame.
The most intriguing evolution of the transnational labor markets in the EU is the consequence of a profound change of the European migration flows in the last decades. In the past centuries Europe, particularly Western and Central Europe, was a continent of emigration. Due to the capitalist production of “redundant population”, as David Ricardo called the side effect of productivity-growth inscribed into the laws of capitalist accumulation, more than 50 million people left Europe since the beginning of industrialization in the late 18th century until the First World War. 50 million people immigrated into the “New World”, to the Americas, to Australia, but also to Africa and Asia, mostly as settlers, later also as workers in the flourishing new industries. The success of primitive capitalist accumulation in Europe to a considerable extent was the consequence of the success of methods aimed at getting rid of the “redundant population”.
Nevertheless, these population flows also had another unintended effect. The “post-pangean separation” of the continents symbolically reversed. The separation of Africa from the Americas and the disappearance of a “Pangean” land bridge between Africa and Europe is over – not because of a new continental shift, but because of global trade-, information-, financial- and migration flows which create a new, a “neo-pangean mixture” of populations, cultures and social and economic systems.
The problem is that this earth-historical passage to a planetary state of increased entropy occurs not in hundred thousands or millions of years but in a very short period of centuries or even decades and years. Therefore, long-term migration processes turn into short-term changes, which create unintended, chaotic turbulences and thus natural catastrophes, social unrest, political and even military conflict. This is the reason why it is necessary to take the different layers of history into account – as Fernand Braudel proposed in his history of the Mediterranean world – when we analyze the relations between the EU and Africa.
3. Bastard Integration
Why is deregulation and negative integration at the end of the day a failure? The data show that there was an uneven and cyclical but stable upward trend of economic development in the EU and then in the Euro-zone over decades until the crisis of the 1970s and then again until the outbreak of the crisis of 2008. Therefore, one can say, that in the past economic growth was the driver of economic and political integration by building European political institutions and a Europe-wide civil society. Therefore, very often the picture of the cyclist is used who does not fall as long as he holds a ← 101 | 102 → minimum tempo with his bicycle. Growth results in improved living and labor conditions of many European citizens. The 30-years period after the end of the Second World War therefore represented what Germans called the “economic miracle” and the French “les trente glorieuses”. Only since the 1980s, the new discourse about the “costs of growth” came up.
The EU-markets outgrew the geographical and political limits of the EU In these roaring years of fast growth and intensified integration of global commodity chains and after the neoliberal deregulation in the 1970s. Transnational corporations of the EU became more and more dependent on global financial markets. Nevertheless, economic growth rates declined. The political elites in the EU as well as on the other side of the Atlantic Ocean, in the USA and in Canada, are hoping that the historical exhaustion of the growth-potential can be stopped by means of further (deeper and broader) market integration. Now, mainstream economists do not consider economic integration as being a result of economic growth, but as a prerequisite of further economic growth. Economic research-institutes calculate gains from transatlantic integration with TTIP in the size of several hundred billion Euros. The promise of stimulating growth rates by negative integration is ideologically loaded and growth rates are absurdly overestimated. Markets once embedded into a framework of social and ecological regulation, after being disembedded only follow the economic rules of mere profit making.
It is a Keynesian idea to enhance economic dynamics by means of demand stimulation. This idea is an eclectic combination of econometric calculations and neoliberal promises of growth-creation by (negative) market integration, i.e. by an anti-Keynesian retreat of the state from active intervention into the economy. Hence, European integration is a project of “bastard-integration” which results inevitably in nothing less than the return of disembedded markets after an era of “welfare economics” and social policy.
This is a re-make of the “great transformation”, which Karl Polanyi described in his seminal book on the emergence of modern market capitalism in England in the last quarter of the 18th and the first half of the 19th century. The rhetoric of “free markets” today should not be understood as an argument in favor of free, but of disembedded markets with no respect for social and environmental boundaries which need regulation and rules.
The reason is that disembedded and deregulated markets are highly profitable markets. It was already David Ricardo who explained that the “the rate of profits never (can be) increased but by a fall in wages. There can be no permanent fall of wages if the prizes of the necessaries on which wages are expended do not fall. If, therefore, by the extension of foreign trade, or by improvements in machinery, the food and necessaries of the laborer are available at a reduced price, profits will rise… Foreign trade then, though highly beneficial to a country, as it increases the amount and variety of the objects on which revenue may be expended, and affords, by the abundance and cheapness of commodities, incentives to saving, and to ← 102 | 103 → the accumulation of capital, has no tendency to raise the profits of stock, unless the commodities imported be of that description on which the wages of labour are expended.” In Ricardo’s times it was above all basic food stuff, such as cereals which became less expensive due to foreign trade (e.g. with Ireland and the colonies in North America or with Tsarist Russia) and therefore beneficial for profits and profitability of British capital, for capitalist accumulation and economic growth. Today the situation is different, for there are many industrial high-tech goods such as automobiles, electric household-equipment or electronics for participation in the digital world, which belong to the indispensable basket of wage goods. This is a powerful reason not only for a trade but also for an investment partnership, which allow for the construction of transatlantic commodity chains including trade companies in the circulation of capital, as well as manufacturers, industrial producers, extractive companies and financial institutions. Disembedding now is not only a measure concerning markets for goods and services but also places of production at different and separate locations of the global market place and of different but connected industries and branches. This is the basis of further negative integration between developed economies. Less developed economies cannot participate in such an integration project on a playing level field.
Participation in commodity-chains including high-tech-production sites and diversified trade prerequisites qualified labor, hence a highly developed education system, technology and infrastructure, big science as well as an efficient administration, capable governance bodies and last but not least a sophisticated financial industry. Thereby developed market economies are harvesting the comparative advantages of liberalized trade systems. Less developed economies are falling behind. The Ricardian theorem of comparative cost advantages today is a fairy tale without any justification in the real world. This is also a lesson learned in the last decades of trade relationships between the EU and the countries on the southern shores of the Mediterranean.
David Ricardo as well as John M. Keynes argued in their economic writings that the liberalization of trade could be beneficial for the trade partners, contrary to the liberalization of financial markets. Because of the hierarchy of markets, free and disembedded financial markets require adjustments on commodity and labor markets, which can be harmful for the societies concerned. The situation for trade partners therefore is unequal and asymmetric. This is the reason why the doors of the rooms where trade negotiations take place are closed to the public. The negotiations on the TTIP or the TPP are secret and not transparent, without public participation and democratic control. Only pressure organized by social movements and political parties can stop and reverse the anti-democratic tendencies included.
The transatlantic and transpacific regulation is conceived as the overarching regulatory free trade framework for the hundreds of free trade ← 103 | 104 → and investment agreements negotiated between the EU and the USA as well as other countries, among them also the countries of the Maghreb.
4. Sequences of debt crises and the failure of negative integration
Finance today is global and the rules emanate from global markets, applied on the local or regional level. This is part of the conditionality of modern finance. The vehicle of the conditionality is indebtedness and the debt service imposed by creditors. It is an insane and crisis-prone relationship, which since the liberalization of financial markets in the 1970s has driven so many countries into severe debt crises and undermined or even destroyed national sovereignty. This is an experience, Tunisia made under the rule of a British-French-Italian Finance-Commission after the Tunisian state bankruptcy. At the end of the day, Tunisia ended as a French protectorate.
The most recent example for the consequences of indebtedness is Greece. The financial and political pressure on the country destroys economic structures, the social fabric, and political democracy. Indebtedness prohibits the economic development of whole continents, instead of creating credit-financed growth – as the Bretton Woods institutions and their neoliberal ideologies promise. The stock of debt increased everywhere in the world with different consequences for debtors and creditors. For creditors claim monetary wealth, which, being securitized can be traded on global financial markets, by a variety of financial innovations including also illegal and criminal transactions. Debts however are an obligation to be serviced by the concrete (mostly national) debtor – after a bail-out operation in which private debts are changed into public debts – out of revenues produced on a concrete place by the working population.
Therefore, during the debt crisis of the 1980s, Latin American countries were obliged to service the Latin American debt. In the 1990s the debt crisis became Asian, then during the “new economy” and later in the “subprime-crisis” it became American and finally in the second decade of the 21st century it became European, and in Europe it became Greek, Irish, Portuguese, Spanish and Italian.
It is clear now that the financial crisis hits the Euro and therefore a backbone of the European negative integration project. It is now facing challenges for which the ruling elites in the EU are not well prepared: If European integration continues to be seen as a means to overcome the crisis, it can no longer be on the road of negative integration. The Greek example of forcing a sovereign country with a population of 11 million people into misery by the European partners (“brothers and sisters”) clearly shows that negative integration ends up in economic disaster, social disintegration and political turmoil. Therefore further integration only can happen as a project ← 104 | 105 → of positive, i.e. non-neoliberal integration. Negative, neoliberal integration ends up in a dead end.
The emergence of new actors on the stage underpins this assessment. The BRICS-Group, on the one hand, is the result of an arbitrary exclusion of China and India from the TTP and of Russia from the TPP as well as from the TTIP: The USA and the EU attempt to exclude competing market-participants from the new oceanic (Atlantic and Pacific) trade and investment zones. Thus, the bastard-integration schemes, which follow the line of negative integration, are not appropriate to reestablish the super-continent Pangea, because they are not inclusive, but exclusive. They follow the geopolitical line of supremacy without hegemony.
5. Regime change, migration and the closure of borders
It is also obvious that negative integration of disembedded labor markets is destructive for the social fabric, which makes a humane society. It is not only income, jobs and other economic factors, which determine the direction of migration but many other factors, which make up human security: Secure housing, political and public security, a safe and secure natural environment including food security, security of access to land and basic public goods and services and always more climate security are important. With regard to human security, the European community still is much better off than other regions neighboring the EU. This is the reason why, during the last few years, a strong pull-tension grew up between the EU and countries of the Balkan, the Levant, Northern Africa and the Maghreb, which made that a growing number of people stranded at the borders of the EU, partly due to the activities of a new “industry” emerging around migration and flight. The flight- and migration routes follow the networks established by a diversity of intermediaries, legal, official, informal and sometimes criminal ones.
The situation aggravated, due to political and military interventions deemed to achieve a regime change in some countries such as the Iraq, Afghanistan, Libya and Syria. The following political instability and chaos triggered a further wave of migration. Hundreds of thousands if not millions of refugees have been driven to Europe.
In the 1990s, large parts of the refugees came from former Yugoslavia, when the country was dismantled in the Balkan wars. EU-members were directly involved in the destruction of civil societies and of political state structures in Serbia, Kosovo, Bosnia and Hercegovina, Croatia, Macedonia. Ten years later Libya, Syria, the Iraq and Afghanistan transformed into failed states not at least become of US-, NATO- and EU-interventions.
The United States were the driving force of the new regime change wars around the EU. European states were also involved in this chaos creating wars. The fall and the cruel assassination of the former Libyan ← 105 | 106 → leader Muammar Gaddafi was enforced by France and the United Kingdom and other countries. Bulgaria, Lithuania, Romania, the Czech Republic, Hungary, Slovakia and Slovenia allowed the secret prisons of the CIA on their territory. These countries are members of the EU, and therefore the treatment of refugees and inmates in these establishments is a case of the EU, if not of human right and the international community.
However, in the mainstream European discourse, the civil wars in the Middle East and North Africa are attributed to fanaticism, corruption, dictatorship, economic failure and other reasons in the emigration countries, for which the EU and its member states reject or deny any responsibility.
Moreover, many of the refugees, on their way to the European shores and harbours come for economic, political and ecological reasons from regions farer away from Europe. Very often they are not in line with the Geneva Convention on refugees, which defines a refugee as a person who “from the well-founded fear of persecution because of his/her race, religion, nationality, belonging to a particular social group or political opinion” is forced to leave his/her country. In fact, there are additional reasons for fleeing one’s country or region. Under the predominant conditions of economic reproduction, survival of people is in danger because climate change or environmental destruction up to nuclear contamination of landscapes forces people out of their traditional neighborhoods.
This is a situation quite different from that immediately after the collapse of the Soviet bloc in 1989. Prior to the fall of the Berlin wall refugees from Eastern bloc countries were welcome in the West. Escape helpers, i.e. migration intermediaries used to be perceived as “freedom heroes”, who helped to overcome borders to emigration into the “free world”. The treatment of refugees today fundamentally changed, rhetorically and politically: nowadays borders are set up to prevent immigration. Refugees are facing rigid restrictions on immigration. The governments of certain countries define themselves ideologically as a “no-immigration country”. The former “freedom heroes” are now traffickers of human beings.
In this respect, the meaning of the market-hierarchy becomes obvious. Globalized markets for capital and goods and services are free and exceed all limits, while the migration of people is blocked. The notion of ethnically homogeneous nations and colonial and racist thinking spread and justify the fortress Europe against the Southern Mediterranean coasts and within the minds of people. This new state of mind finds its political expression in the recent changes of the European asylum policy, security and military defense measures as a reaction to increasing rightist movements everywhere in the EU. These are only some consequences of the contradictions between more and more open financial and commodity-markets and the closure of the labor market.
The EU responds to the growing number of refugees by the militarization of border controls (Frontex). In the political discourses the main problem, ← 106 | 107 → however, is not the humanitarian catastrophe before the house-door of the EU, but the “unequal burden” of migration-costs to be shared by the member countries of the EU. Each member country of the EU tries to load the burden of the growing number of refugees on the shoulders of the neighbors. The predominance of neoliberalism in the past decades has destroyed the germs of solidarity so that the social web of an integrated Europe is going to be broken. This also is an argument for a project of positive integration.
The categorical imperative of Immanuel Kant urges citizens on the “limited surface” of planet Earth to elaborate common rules, which allow a peaceful and decent conviviality of people, of women and men of all nations, colors, religions or races. The Kantian world is the opposite of the situation today. For, the forces of disembedded markets result inevitably in a TINA-situation: There is no Alternative. On the long run, however the social, economic and ecological system needs transformation.
Dill, Hanns-Otto (2013): Alexander von Humboldts Metaphysik der Erde. Seine Welt-, Denk- und Diskursstrukturen, Berlin, Peter Lang.
IWF (2015): Florence Jaumotte and Caroline Osorio Buitron, “Power from the People, Finance and Development”, March 2015, Vol. 52, No. 1
Oxfam (2015): Social Injustice
https://www.oxfam.de/economy-1-percent on the 62 super-rich persons in the contemporary world.
1 e.g. the recent IMF-study: “Power from the People” (http://www.imf.org/external/pubs/ft/fandd/2015/03/jaumotte.htm) or the Oxfam-publication on social injustice (https://www.oxfam.de/economy-1-percent on the 62 super-rich persons in the contemporary world).