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The West Mediterranean, a basin for the mixing of cultures

The West Mediterranean, a basin for the mixing of cultures

The West Mediterranean, a basin for the mixing of cultures and fruitful dialogue between different civilisations.

Following a Meeting of the 5+5 in Marseille 23 and 24 June 2019, this contribution was my intervention as member of Algeria’s delegation headed by the Minister of Foreign Affairs before the various foreign representations and the President of the French Republic as part of The 5+5 Dialogue.  A sub-regional forum for the ten Western Mediterranean countries that take part since its creation, five from the north of the Mediterranean (Spain, France, Italy, Malta and Portugal) and five from the southern shore (Algeria, Libya, Morocco, Mauritania and Tunisia), all working in the hope for concrete results for the benefit of both sides of the Mediterranean western basin.

The Algerian delegation delighted with Marseille, the seat of different cultures and venue for this final meeting where in a few months, we have carried out an important work showing the vitality of civil society in the western Mediterranean. It was not that obvious at the outset.  From April to June 2019, civil society in the western Mediterranean on both sides worked together to bring concrete solutions to the region “through the implementation of concrete projects for human, economic and sustainable development. We hope that all of these reflections and proposals for initiatives will be shared today with leaders at this summit in Marseille to determine which ones will be implemented as a priority, the means and mechanisms to be implemented to forge strong links in all areas around the Mediterranean in order to boost cooperation, based on the conviction that civil society must be fully involved in the definition of a new “positive” agenda. I recall that recently with renowned experts from Algeria, Morocco, Tunisia, Mauritania and Libya and 15 European personalities during 2015 and 2016, we produced under my direction and that of my friend Camille Sari two books (1050 pages), one on political institutions, the other economic in all its diversity entitled “The Maghreb in the face of geostrategic issues published by Harmattan Editions, following on from my contributions on this subject at the level of The French Institute of International Relations between 2011 and 2013 on Europe-Maghreb relations.

The ideas are not new but unfortunately have not been realized. I recall that during a meeting almost similar at the UNESCO in 1993 at the initiative of Pierre Moussa with Mr. Thom Bekki then Vice-President of South Africa on the theme – Africa-Maghreb as part of the strategy Euro-Mediterranean, I had advocated in my speech the creation of both a Euro-Mediterranean university as a place of fertilization of cultures, against intolerance, and a Euro-Mediterranean bank and stock exchange with financial instruments adapted to the situation for the realization of concrete projects by promoting decentralized networks of economic, social and cultural actors, involving international financial institutions and traditional banks.  I reiterate these proposals for this summit of 5+5 in addition to the creation of an economic and social council at the level of the Western Mediterranean (5+5) whose vocation is to bring together the different segments of civil society, experience if successful could be extended to a global civil society bringing together the different regions of our planet in order to combat insecurity, migration and thus promote a balanced and global solidarity space.

It is in this context that I would like to welcome the initiative of His Excellency the President of the French Republic, Mr Emmanuel Macron, to whom Algeria has given its support from the outset. This initiative, it seems to me, is part of the new transformation of the world, ecological challenges, the breakthrough of digital and artificial intelligence to witness between 2025/2030/2040 a fourth global economic revolution based on knowledge, which will influence all international relations, recalling the conclusions of COP 21 and COP 22, which calls on all humanity for a solidarity future. The 21st century will have three strategic actors forging dialectical links: states that must adapt to globalization (the centralized bureaucratic Hegelian state is outdated, the North African states have unfortunately copied the French Jacobin system, a blocking factor for reforms as shown by my friend Jacques Attali, the international institutions that need to be renovated with the massive entry of emerging countries including China, and civil society which will play an increasingly important role more predominant, non-antinomic with the other two players but complementary. The common hope is that this important meeting will be able to turn the Mediterranean basin into a lake of peace, tolerance and shared prosperity based on a win/win partnership far from any spirit of domination, through tolerance and dialogue cultures of which I am deeply attached.

Algeria is a strategic player in the Mediterranean and Africa since it played an essential role in the various meetings in preparation for the 5+5 meeting where it proposed concrete projects with a regional impact, favouring economic interests and the stability of the region, taking into account the transformation of the world. Algeria, endowed with the issue of Energy Transition, proposed projects from civil society, where the work of the Forum in Algiers organized in the form of four thematic sessions, namely: Renewable Energy and Energy efficiency; Electrical interconnections, Natural Gas as the engine of an energy transition and the digital transformation of the energy sector.  It is that energy will be at the heart of the sovereignty of states and their security policies and their economic dynamics alter the balance of power on a global scale and affect political recompositions within countries as regional spaces. The energy transition refers to other subjects than technical, posing the societal problem. It can be viewed as the passage of human civilization built primarily fossil, polluting, abundant, and inexpensive energy, to a civilization where energy is renewable, scarce, expensive, and less polluting with the objective of eventually replacing energies stocks (oil, coal, gas, uranium) with flows of energies (wind, solar). This raises the problem of a new model of growth and consumption: all economic sectors and households are concerned. The important potentials of all forms of energy in the Mediterranean, that of wind or sun, or of fossil fuels present in its subsoil, can make this area contacts between millennia-old civilizations, which have always been subject to political tensions, a new energy region of the world, at the gates of Europe, Africa and the Middle East. Crossroads of three continents, fragile from an environmental point of view, the Mediterranean basin is also a region that provides energy, such as those of the wind or the sun, or fossil fuels present in its subsoil. The energy mix of tomorrow will be electrically dominant, as the electricity market is expected to increase by almost 80% by 2040. Solar thermal for export, combined with photovoltaic for internal consumption needs, is expected to be the most important resource for electricity generation. Hybridization with gas should already allow it to be competitive. Electric highways in continuous current to cross the Mediterranean could be used to meet the growing needs of Europe’s Mediterranean coast and superconductivity completed by liquid hydrogen cooling will be the most medium-term solution to meet the needs of Northern Europe.

After the mixed results of the Barcelona Agreement and the Union for the Mediterranean, let us hope that this summit can lead to concrete results for the benefit of the people of the region. I am convinced only the culture of tolerance will allow our space, in the face of the new challenges of globalization, to meet the challenges of the 21st century in the face of fierce competition, including the breakthrough of emerging countries, the rise of global terrorism threat, the rise of protectionism detrimental to the growth of the world economy, existing a dialectical link between security and development, to the dangers of populism.  Finally, co-development in the Mediterranean via the continent Africa issue of the 21st century can, as I pointed out recently in interviews with AFRICAPRESSE.PARIS and the American Herald Tribune, curb ensure security and avoid destabilization that would have geostrategic repercussions for the entire Mediterranean and African region.

I wanted to stress during this meeting on behalf of Algeria, that a strategic player at the regional level will contribute to the success, based on a win-win partnership, of this enormous undertaking, an old dream, forging our common Mediterranean consciousness.  I quote the conclusion of my speech: “Mr. President of the French Republic, you, who are the age of my son, hope that all together leaders of the 5+5 and civil societies of our region, supported by international institutions, will realize this old dream that I defend with the many Maghreb and European friends, for more than 30 years the Mediterranean, a place of mixing of cultures, tolerance and fruitful dialogue between different civilizations, our common destiny being to do business together.”

Finally, as I pointed out in an interview with Jeune Afrique, Paris on June 24, 2019, far from any vision of disaster, Algeria’s future holds immense hope as at the end of my interview, and I quote: “Our youth and the National People’s Army have shown unwavering maturity. But it is imperative to move beyond the current status-quo before the end of 2019 with transparent elections, as a longer transition period could inevitably lead the country to an economic and social drift. And as in economics, lost time is never caught back, the productive dialogue with concessions on both sides for Algeria being its benefit, accompanied by a profound restructuring of parties and civil society based on new networks, is the only way out of the current crisis.”

ademmebtoul@gmail.com

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The cries Algeria’s youth for a profound change must be heard

The cries Algeria’s youth for a profound change must be heard

The cries Algeria's youth for a profound change must be heard
Professor Abderrahmane Mebtoul, Economist, Expert international. © DR at AP.P

In this long plea where he begins by paying homage to the Algerian youth, Professor Abderrahmane Mebtoul analyses the handicaps, both political and economic, which overwhelm Algeria despite its immense potential. Then projecting himself into the perspective, he evokes the scenarios of the future and pleads with a lot of arguments and a great conviction, for “an indispensable global reform” (…) by flattening the differences through dialogue and consultation.  He notably insists that The cries Algeria’s youth for a profound change must be heard.

So, here is this contribution from Prof. Abderrahmane Mebtoul, Economist, International Expert as posted on AFRICAPRESSE. PARIS on March 5, 2019, in French.

The strong mobilization of 22 February and 1st March implies a good analysis of the aspirations of civil society. Certainly not the rentier living in the salons, but the one that we saw on the street, the youth who does not want to be recovered.

The lesson given to the leader of the Workers’ Party, which was booed, should serve as lessons. At a time when the world is experiencing political, social and economic upheavals, where Algeria is being challenged by some 70% of its population claiming genuine democratic reforms – a condition of harmonious and sustainable development in the face of the relentless globalization – we must pay a great homage to our youth who have not experienced the drama of the years 1990-1999, and yet want a change.

Let us salute its political maturity and peaceful marches without violence, where political parties in all tendencies have played no role in mobilizing. Let us also salute our security forces who have managed in a modern way these events which must be meditated profoundly by the parties of power and their satellites – weakly representative, not to say non-representative – as well as by any of the opposition, which was off-track.

A partisan system disconnected from the society

According to some sources, the number of political parties is approaching sixty, often with unnatural alliances, whereas in democratic countries these alliances are made by ideological affinity and a clear programme.

Also, except for ten of them, the others show a formal and ostentatious presence in the elections… Furnishing the emptiness, powerless almost always to act on the course of things and to articulate clearly the concerns and aspirations of the real society.

Because of the internal crises that periodically shake them, the discredit that strikes the majority of them, the defiance of them and the partisan activism, the current political formations today have a low capacity to carry out a work of mobilization and efficient management, to contribute significantly to the political socialising, and thus to make an effective contribution to the work of national recovery.

As proof, the last parliamentary elections, both 2012 and 2017: considering the null and official data of the Ministry of the Interior, the 3/4 of the Algerian population are not represented by the elected officials.

The discredit which strikes political groups, both from the power and from the opposition, must give way to credible, non-artificially created formations, subject therefore to the possibility of an objective assessment of the status and role which must be theirs in a society that aspires to join the ranks of democratic societies. These formations will have to be more capable of mobilizing society than in the years to come, reforms – long deferred to guarantee a fictitious, transient social peace – will be very painful.

An atomized civil society with an informal dominant

Civil society in Algeria is shattered. Contrary to the accepted and illusory ideas of past years, in a context of social disintegration and “satellite TV” youth, most official religious brotherhoods have less and less impact.

On the other hand, the confusion that currently prevails in the national association movement makes it difficult to devise a strategy to take into account and mobilize it. Its diversity, the politico-ideological currents that pass through it and its complex relationship to society and the State add to this confusion and make imperative an urgent reflection for its restructuring, its current state reflecting the major fractures have occurred in the national political system. Thus, it will soon be divided into four fundamentally different civil societies: three at the level of the real sphere and one dominant in the informal sphere.

The most important segment of this civil society, the privileged and often unique interlocutor of the public authorities, is constituted by appendages of power, located on the periphery of the parties in power and whose officials are sometimes deputies, senators, living in large part of the transfer of the rentier annuity. In fact, those who pride themselves on mobilizing millions of voters live in air-conditioned lounges, disconnected from society.

The second segment is that of a civil society frankly rooted in the Islamist movement, with there also appendages of legal Islamic parties.

The third segment is that of a civil society claiming the democratic movement. Poorly structured, despite the relatively large number of associations that comprise it, and undermined by contradictions in relation, among others, with the question of leadership. For these first three civil societies, their impact on the turnout in the last local and legislative elections, despite their accession, was relatively low.

We finally have an informal, unorganized, totally atomized civil society. It is by far the most active and important, as well as we saw on February 22nd and the 1st March 2019, with precise codifications forming a dense mesh.

Without the intelligent integration of this informal sphere – not by authoritarian bureaucratic measures, but by the involvement of society itself – it will not be necessary to rely on a real dynamism of civil society. Because when a state wants to impose its own rules disconnected from social practices, the society has its own rules that allow it to function with its own organizations.

Three scenarios for Algeria from 2019 to 2025

The dynamism of the partisan system and of civil society in order to make it an effective instrument of the framing of forces and a powerful lever of their mobilization is likely to succeed only if the movement that composes it, is not in the service of ambitions personal unmentionable and sometimes dubious.

We can foresee the different scenarios possible depending on the state of the power relations at the internal level, considering the evolution of the strategy of the actors at the external level.

The first scenario: failure of the reform process.

The conditions of failure are real and combined in the legal and economic environment in case of lack of visibility and coherence in the economic and social approach. Risk accentuated by the annuitants at the internal level and certain segments of external actors maintaining informal relations and who are not interested in deepening the reforms (loss of contracts in case of transparent tender notices).

On the other hand, the ambiguity of legal texts allows for the legal blockade of reforms, while the multiplicity of speakers allows for the confusion of prerogatives. Other parameters contributing to the risk of failure: the fragility of internal private investment capacity, stabilization plans that have made forced savings to the detriment of the average layers that have impoverished; the mistrust generated by internal and external investors through continual changes in legislation, while the stability must be rigorous; populist speeches on account settlements on the sensitive subject of taxation, and finally the high pressure of a fraction of the internal and external actors linked to the interests of the annuity, that to preserve protectionist postures because the liberalisation Destroyed a fraction of the annuity.

The second scenario is the status quo.

It would lead to the regression for both social and physical, the world being in perpetual motion. This hypothesis will prepare the conditions of failure by imputing the current social conditions (poverty and unemployment) to reforms, which, except macroeconomic stabilization, are timid in Algeria (microeconomic and institutional reforms, Issues of future years), or to technical bodies while petrol is the absence of political will (neutralization of power relations).

This status quo will participate in a programmed failure and would be suicidal for the future of the economy and Algerian society. This is maintained by the confusion of some concepts assimilating false reforms to the sale of national heritage.

Thus, according to the proponents of this analysis, the reforms would be dictated by the major global oil companies, the IMF and the World Bank. A posture reminding us of the Times of the Inquisition against those who advocated the market economy and the establishment of democracy.

The third scenario is the success of solidarity-specific political and economic reforms as contained in the legal, economic and political environment of Algeria, thanks to a youth increasingly aware of the country’s future issues.

The rupture of the previous system, in view of historical experiences, only occurred through violent but short-lived revolutions. Successful experiences have shown that the gradualist pathway inserting the Conservatives into a reformist dynamic has involved a profound redevelopment of the structures of power and new people acquired in the reforms with cultural demystification, the devastating rumours in the opinion are only the translation of the weakness of the communication system, especially in Algeria where the oral route is predominant.

There is, therefore, therefore, an urgent need for close cooperation between the supporters of the reforms, the political parties, the associations and, in general, all civil society, the administration, public and private enterprises, the collectives of Workers, trade unions, flattening differences through dialogue and consultation.

The goal will be to make the strategic objective emerge through a symbiosis of individual interests and collective interest, showing that the medium-term winners of the reforms will be more numerous than the short-term losers.

The support of external actors for their interests in order to avoid the negative effects of the Destabilisation, but above all the mobilisation of the favorable internal actors because no country can make the reforms in our place, the fate of Algeria is in the hands of Algerian and Algerian.

Algeria, an indispensable actor for Euro-Mediterranean and African stability, can lead to a process of inseparable reforms of a profound democratisation of its society. In the business world, feelings do not exist, only reforms will allow economic growth and the reduction of the nagging problems of unemployment and poverty. Any obstacle to these reforms only decreases the rate of growth, increases the country’s insecurity and, Over there, contributes to social and political destabilization. Time being money, any delay in the process of reforms could result in more important social costs that could be supported by the most disadvantaged.

A strategic vision to surpass a multifaceted crisis

It is time to have foresight in the medium and long term, in order to correct the mistakes of the past, like navigating on sight by ignoring the aspirations of society.

The strategic question is: shall we go towards a real salutary change by reorganizing society, due to the global geostrategic upheavals announced between 2019-2025-2030 or, thanks to the passive distribution of the annuity, shall we simply replaster, postponing the inevitable social tensions?

These are important enough reasons to seriously consider reorganizing the partisan system and civil society so that they can fulfil the function that is them in any democratic political system that reconciles modernity with our authenticity, far from administrative injunctions.

The redesign of the state, including administration, integration of the informal sphere, reforms of financial, fiscal, customs and socio-educational systems, new mechanisms of regulation and social cohesion, optimisation of the effect of public expenditure and the new management of infrastructures based on the rationalization of budget choices… and pose the problem of the future of the Algerian economy so as to reconnect it with growth and, consequently, to alleviate unemployment.

As I have often recalled, in this month of February 2019 – and this is not today – Algeria is going through a crisis of governance, which implies having a strategic vision of the future of Algeria on the 2030 horizon.

Algeria needs for its national and international credibility, geostrategic tensions at the level of the region and the inevitable budgetary tensions between 2019-2020-2025 to bring all its children into their diversity and not to divide us, requiring a minimum of economic and social consensus that could not mean unanimism, a sign of decadence of any society in order to stabilise the social body.

The reforms – beyond the natural resistance of the pensioners – by rehabilitating good governance (the fight against corruption, in concrete terms and not only by legislation) and human capital, are the basis for development. The cries of youth in these months of February and March 2019 for a profound change must be heard so that Algeria can meet the challenges of the 21st century characterized, in this constantly interdependent world, by major geostrategic upheavals in the security, economic, political, social and cultural fields.

Faced with the inevitable budgetary tensions and the geostrategic stakes of 2019-2025-2030, the success of the reforms must be based on four axes: gathering, rebasing of the state, democratisation and economic reforms accommodating economic efficiency and profound social justice.

Summit of the western Mediterranean countries

Summit of the western Mediterranean countries

Stability at the regional level and intensification of all partnership, for a lake of peace and shared prosperity.

After the mixed impacts of the Barcelona Agreement and the Union for the Mediterranean (UfM) activities, a summit of the western Mediterranean countries as a significant meeting will be held on 24 June 2019 in France to boost cooperation between countries of the two shores of the western Mediterranean.   The refocusing on the western Mediterranean is accompanied by the realization that the residents of this basin share not only primary common interests, particularly in the economic field but also security in order to establish a “strengthened association”. The objective being “resolutely political” to avoid a north-south fracture that could carry all the drifts and extremities, that can lead to major imbalances. For example, for this meeting, the migratory flux depends largely on the under-development of the disadvantaged regions of the southern shore of the Mediterranean and instead of feeding the misunderstanding about the idea of a “union” of the two shores.  Would it make more sense to conclude a pact of cooperation and solidarity limited to the States on both sides of the Western Mediterranean, a pact based on shared values and principles; a pact motivated by an objective of solidarity and development, in the framework of a win-win partnership?

Civil society, a significant player

We must be aware that all new international relations are no longer based mainly on personalized relations between heads of state but between decentralized networks and organizations through the involvement of the civil society which can promote cooperation, a dialogue of cultures, tolerance and symbiosis of the contributions of the east and the west.  It is dangerous to be locked up in a ghetto that would inevitably endanger life through violence. The latest events should make us think even better by avoiding this confrontation of religions because so much Islam, Christianity or Judaism have contributed actively to the flourishing of civilizations, to this tolerance by condemning any form of extremism. Future relationships between the two shores of the western Mediterranean composed of 5 + 5 countries can be enabling vectors. For, overall, southern Europe and the Maghreb cannot escape this adaptation to global mutations (the current crisis leading to profound upheavals in both geostrategic and socio-economic areas) and more globally in the whole of the Mediterranean region. For there is a need to overcome narrow chauvinistic nationalisms insofar as true nationalism in the future will be defined as the capacity to increase together with the standard of living of all populations by our contribution to global added value. The world is currently characterized by interdependence between countries. This does not mean the end of the role of the state but a separation of politics and economics which cannot be subjected to the vagaries of the economic situation, the State dedicating itself to its fundamental mission of macroeconomic regulator and macrosocial.  We firmly believe and after analysis that the intensification of cooperation between the two shores of the Mediterranean and more specifically between Europe and the Maghreb ought to be based on true co-development, with the possibility to disrupt bureaucratic behaviours of all conservative rentier annuitants and register them in a dynamic perspective profitable to the populations of the region. It is that the Mediterranean area can be a place of creation of logical networks allowing to communicate with distant cultures by promoting the symbiosis of the contributions of the east and the west. This network must promote communication links; freedom insofar as the excesses of corporate voluntarism inhibit any spirit of creativity.

It is that the Maghreb and Europe are two geographical regions presenting a millennial experience of openness on Latinity and the Arab worlds with natural links and in its whole door of culture and influences Anglo-Saxon.  It is essential for Europe to develop all the actions that can be implemented to achieve desirable balances within this set. The creation of weak regional economic spaces is a stage of structural adjustment within the globalized economy with the objective of promoting political democracy, a humanized competitive market economy, debates different ideas through social and cultural actions to combat extremism and racism the implementation of ordinary affairs. Thus, it is necessary to pay attention to the educational action because the thinking man and creator must be in future the beneficiary and the leading actor of the development process. That is why we are advocating the creation of a Euro-Maghreb university as well as a cultural center of the Mediterranean youth as a means of reciprocal fertilization of cultures for the realization of the sustained dialogue in order to avoid prejudices and conflicts sources of unnecessary tensions as well as a central Euro bank to promote trade. Algeria and France can promote the creation of these empowering structures.

Cooperation between the Maghreb and European 5 + 5 countries

It is in this context that must be apprehended a realistic approach to co-partnership between the two shores of the western Mediterranean where civil society will play a significant role, considering the fast approaching Fourth World Revolution in the geostrategic, economic, social and cultural fields.  At the global level, we are witnessing the evolution of a past accumulation based on a purely material vision, characterized by rigid hierarchical organizations, a new method of accumulation based on knowledge control — technological news and networked organizations, with segmented global chains of production where investment, in comparative advantages, being realized within sub-segments of these channels. As Jean-Louis Guigou, president of the IPEMED (Institute of Economic Foresight of the Mediterranean world, in Paris), it must be made clear that, in the interest of both the French and the Algerians, and more generally the Maghreb and Europeans as well as all the south Mediterranean populations. More precisely, economically the win-win partnership at the country level two shores of the Mediterranean, presents 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 rebalancing of southern Europe through the amplification and tightening of links and exchanges in different forms.  Exchanges can be intensified in all fields: agriculture, industry, services, tourism, education without forgetting cooperation in the military field, where Algeria can be an active actor, as shown by its efforts towards the stabilization of the region. Moreover, let us not forget the number of residents of Maghreb origins, and whatever the number, the diaspora is an essential part of the rapprochement between our peoples because it contains essential intellectual, economic and Financial. Also, must mobilize at various stages of intervention the initiative of all the parties concerned, namely Governments, diplomatic missions, universities, entrepreneurs and civil society.

The intensification of cooperation between the two shores of the western Mediterranean will only be possible if the involved countries have a realistic approach to co-development far from the mercantile vision and the spirit of domination, having a shared vision of their becoming.  The symbiosis of the contributions of the East and the West, the dialogue of cultures and tolerance are sources of mutual enrichment. The latest events should even better make us think, avoiding this confrontation of religions because both Islam, Christianity and Judaism have contributed actively to the flourishing of civilisations, to this tolerance by condemning any form of extremism. Globalization is a blessing for humanity if we integrate social relations and not confine it solely to merchant relations by synchronizing the real sphere and the commercial sphere, economic dynamics and social dynamics. At the time of the geostrategic tensions at the level of the region, the consolidation of large ensembles, the challenges of globalization, the rapprochement between the two shores is necessary for an intensification of cooperation, to measure the weight of the history that binds us. However, let us be realistic for in practice, the implementation of sound business, like the image of a country, no longer rests as in the past on personalized relations between heads of States or ministers but instead must be the result of decentralized networks, favouring the involvement of innovative, dynamic individual and companies. Tactics must be integrated within the strategic function/objective of maximizing the social well-being of the entire Mediterranean region.

Concerning the summit of the western Mediterranean civil societies on June 24, 2019 in France, this important international meeting will bring together, the heads of States and Governments, the President of the World Bank, the presidents of the EIB, the EBRD, the Director-General of the OECD and non-State actors of civil society in all their economic, social and cultural diversity. Its political launch will have on the 15th meeting of Ministers for Foreign Affairs of the 5 + 5 dialogue on 18 January 2019 in Valletta. Five groups have been set up: Morocco will lead the economy, and innovation component, Portugal, culture, Italy, sustainable development, Malta youth and mobility, and Algeria has had the most critical component, having been made responsible for the Energy Transition.  This could mean regional cooperation projects, conventional energies, non-conventional energies, renewable energy, energy efficiency, and in general proposing the new energy consumption model 2020/2030. His Excellency, the President of the Republic of Algeria, appointed professor Abderrahmane Mebtoul, expert International, to lead the Algerian delegation, at the International Meeting on June 24, 2019, in France.

Revival of the Arab Maghreb Union

Revival of the Arab Maghreb Union

The Maghreb with 99,380,000 inhabitants with a $375.6 billion GDP in 2017 is in north-west Africa, as delimited to the north by the Mediterranean and to the south by the Sahara, in the west by the Atlantic Ocean and by Egypt in the East. A revival of the Arab Maghreb Union, despite its huge development potential and common cultural and linguistic ties, “the Maghreb is one of the least integrated regions in the world”. Studies have shown that the removal of barriers in the region could have significant economic benefits, support efforts to combat instability and help address several regional challenges including socio-economic development, combating climate change, protecting the environment and developing clean, sustainable energy.

Part 1 – Realities and perspectives

The total area of the Arab Maghreb Union (AMU) is 5.8 million km², representing 4.3% of the world’s area and exceeding almost 80% of the area of the European Union is mostly desert. On February 17, 2018, the AMU celebrated its 30th birthday. At the end of November 2018, its Secretary-General was requested by Algeria to arrange a meeting of the Council of Foreign Ministers in order to revive the notion of a Maghreb together and the reactivation of its bodies. The purpose of the contribution that follows many international contributions on this subject is to draw up the balance sheet and look at prospects.

The Maghreb is confronted with the emergence of a globalised economy and society to numerous challenges.  On the one hand, the nation states have difficulties in coping with the world economy’s upheavals and on the other, to face the international institutions as a unified front.

Governments across the AMU’s nation-states per the current crisis are almost unable to fulfil their missions as a result of the complexity of modern societies and the emergence of the multitude of fragmented subsystems. The uncertainty feeds on the crisis of political representation, hence the need to integrate more into a larger ensemble in order to be able to respond to new global concerns is dragging on.  A centrepiece in the Euro-Mediterranean and African region, the Maghreb as the origin of the new migratory flows is fast becoming a geostrategic and economic issue for the European Union, the USA and China in the context of a competition.  Three countries of the UMA, Morocco, Tunisia and Algeria have signed their “Euro-Mediterranean Association” agreements that go well beyond the simple trade liberalisation as initiated as early as the end of the years 1960 in the framework of the first Euro-Maghrebin trade agreements.  It is commonly acknowledged that the results of this association agreement are mixed. However, since then, we have a new data which is that of the Union for the Mediterranean which tends to be supplanted at present by the 5 + 5 Summit which enshrines economic cooperation and Maghreb integration as a priority.  This principle of economic integration (by the market) of the Maghreb countries, the idea came during the two conferences of ministers of the economy of the Maghreb, the first on 26 September 1964 and the second on 26 November of the same year in Tangier (Morocco).  These two conferences culminated in the establishment of the Maghreb Consultative Standing Committee (MCSC).  It is responsible for studying all problems associated with economic cooperation between the North African countries.  After three years of trials and errors, the Maghreb community issue is precise, and in 1967, the MCSC produced a report in which three types of solutions were put forward from the integrationist perspective.  These are:

  • The maximum resolution would imply the signature of a treaty establishing the Maghreb Economic Union on the model of the Treaty of Rome. It would mean the fixing of a timetable for the elimination of customs duties and quota restrictions, establishment of a standard exterior tariff, harmonisation of economic, fiscal and monetary policies and finally the establishment of joint institutions with decision-making powers;
  • The minimum solution which would make the gradual creation of an economic union a mere declaration of intent, the only legal commitments limited to the periodic participation in negotiations on tariff concessions or the choice of places of new industries;
  • The intermediate solution based on the interaction between trade liberalisation and technical harmonisation should cover a period of 5 years during which the Maghreb countries would commit: too linear reductions (10% for example per annum) of customs duties and quantitative restrictions on traded products, to the establishment of a list of industries to be approved and whose products would be guaranteed free movement and franchising on the Maghreb market, the creation of a Maghreb integration bank to finance projects of common interest and promote this simultaneous and equitable industrialisation, the possible establishment of a union of payments and finally the harmonisation of their trade policies with regard to third countries in order not to jeopardize later the establishment of a standard external tariff system.

The set of principal axes highlighted previously, were taken up at the Maghreb Summit, which was held in Zéralda (Algeria) in 1988 and the second Maghreb Summit held on 19 February 1989 in Marrakech, saw the adoption of the Treaty of the U. M. A. which defines the modalities of a Maghreb construction and its development strategy. Various sectoral committees have worked very cyclically to try to establish a free trade area gradually, assuming the free movement of products between the partners — a customs union and therefore new standard management instruments such as the unification of tariffs and the elaboration of unified policies, aiming at defining the usual rules to enable the implementation of a regulatory system economic development in the region. The objective to be achieved at these summits as a last resort was to establish a common market and a progressive and comprehensive economic unit, a prelude to the best complementarity between the five countries in the region. The declaration of the Heads of State on the establishment of the AMU, adopted at the Marrakech summit, marks for its part the will of the member countries to translate into reality the dream of the Maghreb’s generations to build a viable union. It can be seen in their declaration that it should be perceived as “a complementary community that cooperates with similar regional institutions, a community that participates in the enrichment of dialogue and putting its potential at the service of strengthening the independence of the States parties of the Union and safeguarding their achievements, working with the international community to establish a world order in which justice, dignity, freedom, human rights and where relations are imbued with sincere cooperation and mutual respect.

Professor of universities and international expert, Dr Abderrahmane Mebtoul, ademmebtoul@gmail.com

2nd edition of the International Conference of African Organisations

2nd edition of the International Conference of African Organisations

Migration crisis in Africa; challenges, issues and perspectives

This contribution is a synthesis of my intervention following the invitation of the organizers of the provisional programme of the 2nd edition of the International Conference of African Organisations and all members of the UN Economic and Social Council (ECOSOC), that is held at the ‘Centre International de Conférences Abdelatif Rahal’, Algiers on 19 to 21 November 2018, bringing together several African organizations and personalities.  It will be concerning all migratory flows; responsibility of which being shared between the leaders of the north (recent flows into the USA) and between Europeans and Africains.

Africa a continent with significant potential

Some countries including Nigeria, Gabon, Chad, the Democratic Republic of the Congo, Algeria, Libya specialize in oil, gas and raw materials and having experienced high demand and high prices in the world markets allowing them relative financial ease.  Conversely, countries such as Benin, Malawi, Mauritius, Swaziland, Ethiopia, Togo, Mali, which are penalized in products that often experience deterioration in terms of trade, misery, famine and often internal conflicts and where the military expenditure budget in Africa is beyond human understanding to the detriment of the allocation of resources for development purposes.

The ten richest African countries in decreasing order are for the current GDP in 2017:

  • Nigeria with $581 billion,
  • South Africa with $276 billion,
  • Egypt with $264 billion,
  • Algeria with $170 billion,
  • Sudan with $124 billion,
  • Morocco with $121 billion,
  • Angola with $104 billion,
  • Ethiopia with $93 billion,
  • Kenya with $77 billion and
  • Tanzania with $52 billion.

On the other hand, the poorest countries are in decreasing order:

  • Burundi with a GDP per capita at $285,
  • Malawi with a GDP per capita of about $300,
  • Niger with a GDP per capita of about $364,
  • Mozambique with a GDP per capita of $382,
  • The Central African Republic, GDP per capita slightly higher than $382,
  • Madagascar, GDP per capita is about $401,
  • Somalia with a GDP per capita about $434,
  • Democratic Republic of the Congo with a GDP of about $444 per capita,
  • Liberia, with per capita GDP at about $455 and
  • Gambia with a GDP per capita at slightly higher than $473.

Security and stability of States must be based on democratic values

However, beware, we must be wary of the global GDP that veils the interprofessional (concentration of income) and interregional disparities, as for any comparisons only similar methods of calculation should be used. An example in 2014, The African continent was learning with amazement that, following a statistical review, Nigeria became the first African economy (ahead of South Africa) with a revalued GDP of $510 billion in 2013, compared to $262 billion in 2012. The GDP of South Africa was about $384 billion that same year. The magnitude of this re-evaluation of Nigeria’s GDP Following a statistical review is not an isolated case in Africa. However, these indicators are not enough to understand the situation in Africa. Also, in order to analyse blockages in Africa, the economic factors of political factors cannot be isolated. The joint African Development Bank – Global Financial Integrity (ADB – GFI) report highlights the fact that Africa has suffered from net outflows of the order and that the flight of resources out of Africa over the last thirty years – the equivalent of Africa’s current GDP – is curbing the launch of the continent. Thus, African leaders bear a heavy responsibility to their people and must promote the rule of law, good governance, therefore, the fight against corruption and tribal mentalities, the protection of human rights and the commitment resolutely in the overall reform, thus the democratisation of their society considering cultural anthropology avoiding the unconnected patterns of social realities. So is essential raises the problem of the security and stability of States which must be based on democratic values. In the region, we have seen profound changes in the Saharan geopolitics after the collapse of the Libyan regime, with consequences for the region. Also, the importance of the weight of the informal in Africa produces crippling bureaucracy, promotes corruption, varying by country, but generally exceeding 50% to 60% of the economic surface. For some countries, this sphere employs more than 70% of the workforce. According to the International Labor Office (ILO), this sector provides 72% of jobs in sub-Saharan Africa, of which 93% of new jobs are created, compared with the formal sector, which employs only about 10% of jobs on the continent. In the Maghreb per our study carried out for the French Institute of International Relations (IFRI), Paris – December 2013, the informal sphere in the Maghreb, it exceeds 50% of the economic area and employs more than 30% of the working population.  The gap between the rich and the poor is increasing with the income gap reinforcing the inequities in wealth, education, health and social mobility.  A Large and young population is not a handicap for a country, provided that this population is active and that it works in the formal sector so that its work can benefit the dependent population, the very young and the very old.  Sadly though, 75% of the sub-Saharan economy is informal, and the education sectors in these countries are now affected, and the young people who come out poorly trained.

Globalisation and migratory flows

Immigration is now the entry, in each country or geographical area, of foreign persons who come for an extended stay or to settle there. The word immigration comes from the Latin in-Migrate meaning “to enter a place”.  On the margins of this phenomenon is the dual nationality and nomadism, the notion of immigrant is based on the declarations of the place of birth and nationality.

The emigrant is the person who left his place in a country for another place in another, in order to settle there temporarily or permanently. A human migration being a displacement of individuals is probably as old a phenomenon as humankind.  It is increasing in numbers by 2% per annum and measures stocks that include voluntary migration and forced migration. Internal migration to countries is also on the increase, but it is more about population displacement. Statistics show that huge migratory waves have recently declined, in favour of a trend towards immigration more related to brain drain and skills from developing countries, to the detriment of the latter. The characteristics of the current African migratory phenomenon are the diversification of the countries of provenance and destination, as well as the forms are taken by migration. It is estimated that the return of capital or remittances to the countries of origin from the host countries is at least equal if it is not much higher than the amount of financial assistance provided by the so-called “rich” countries to the poorer countries.  If today most migrants move through regular channels, the migratory phenomenon is marked by a rise in the power of forced migration, mainly caused by conflicts and climate change. According to the most optimistic predictions, emanating from many institutions of the United Nations in charge of migration issues, by 2050, the number of displaced persons could jump to a minimum of 6 million/year.  The cause being climatic disturbances, extreme weather phenomena, declining water supplies, desertification, rising sea level and degradation of farmland.  According to international experts, it can also have several causes:

  • Economic: The search for a job, greater prosperity, better working conditions. This is the primary cause of current emigration;
  • Politics: The escape of an oppressive regime;
  • Religious: The hope of a more tolerant land of welcome;
  • Climate change: The taste for a different weather environment (generally milder, warmer and sunnier) and,
  • Fiscal: The will to be in a more favourable legal and financial context. This phenomenon plays particularly for the highest strata of society and in favour of tax havens.

In the era of globalisation where migratory flows are a concrete reality, migration has been globalised, with the same outcome of urbanisation and metropolisation of the world, demographic pressure, unemployment, information, and transnationalisation of migratory networks. The categories of migrants and countries have become more complex, with the globalisation of migration being accompanied by regionalisation of migratory flows. On a global scale, migration is geographically organised where complementarities are built between departure and reception areas. These correspond to geographical proximity, historical, linguistic and cultural links, transnational networks built by migrants, and smugglers (a form of slavery) that form a formal or informal space of movement, accompanied or not by institutional facilities of passage. Migrations have more than tripled since the mid-years 1970: 77 million in 1975, 120 million in 1999, 150 million in early 2000, near 300 million in 2017. This translates the mobility factors for different reasons.  Gaps between levels of human development, political and environmental crises, producers of refugees and displaced persons, reduced transport costs, a generalisation of passport issuance, the role of the media, awareness that one can change the course of his life through international migration.

Global warming, whose responsibility lies mainly with the rich countries and some emerging countries, that could strike the brunt of Africa within 2025/2030/2040, will accentuate the exodus of its populations. These different factors accentuate the bi-polarisation of three worlds, the rich countries, the emerging countries, and the developing countries pushing them to this exodus.

The demographers consider that migration will be an essential adjustment variable by 2050, due to which 2 or 3 billion of additional individuals are expected on the planet, while the effects of climate change will probably be if not already felt and that some areas will no longer be able to feed any additional populations

Dr Abderrahmane MEBTOUL, ademmebtoul@gmail.com

Eight factors determining the price of oil

Eight factors determining the price of oil

As put by Kimberly Amadeo in her article on The Behind-the-Scenes Role of Commodities Traders,  Oil prices are controlled by traders who bid on oil futures contracts in the commodities market. That’s why oil prices change daily. It all depends on how trading went that day.

Other entities can only affect the traders’ bidding decisions. These influencers include the U.S. government and the Organization of Petroleum Exporting Countries. They don’t control the prices because traders actually set them in the markets.

The oil futures contracts are agreements to buy or sell oil at a specific date in the future for an agreed-upon price. They are executed on the floor of a commodity exchange by traders who are registered with the Commodities Futures Trading Commission (CFTC). Commodities have been traded for more than 100 years. The CFTC has regulated them since the 1920s in the US and by equivalent institutions in every developed and / or developing country.  It is also function of the following:

The eight factors determining the price of oil

According to the September monthly report of the International Energy Agency (IEA), in August 2018, for the first time, the bar of 100 million barrels produced per day was crossed. World oil consumption represented 97.4 million barrels per day (MBJ) in 2017 (including 57 MBJ by non-OPEC countries), equivalent to 1,127 barrels or 179,000 liters per second. Also, despite the commitments of the Paris Agreement (COP21) of December 2015 (entered into force in November 2016), global awareness for the climate does not seem to reach the oil sector. A list of eight reasons that determine the current course.

  • The first reason, as noted in international reports would be a recovery of growth for 2018, but with a slowdown forecast for 2019 and 2020. Many international experts, as well as international institutions such as the IMF and the World Bank, foresee a possible global crisis horizon 2020/2025 in case of acceleration of protectionist measures between the US and Europe, as well as between the US and China.  Moreover, the latest report of the IEA of October 2018 warns the countries dependent on the oil revenues, due to a change in the trajectory of growth based on a new configuration of the global energy demand (Energy efficiency, renewable energies, hydrogen inlet horizon 2030 all based on the Knowledge economy) that will impact the demand for traditional hydrocarbons.
  • The second reason is respect for the quota of each member of the OPEC as decided upon in December 2016 in Vienna with notably Saudi Arabia representing 33% of OPEC’s. It is worth noting that OPEC in its entirety represents 33% of global marketing, even though the current tensions between Iran and Saudi Arabia can lead to a disagreement between unsatisfied OPEC’s members.
  • The third reason is the agreement between OPEC’s Saudi Arabia and non-OPEC Russia; these two countries producing each more than 10 million barrels per day. Moreover, any different decisions from these two countries would impact the price of hydrocarbons downwards.
  • The fourth reason is the political situation in Saudi Arabia, the world not seeing yet evident in the action of the kingdom’s Crown prince, with the fear of internal political tensions, but above all the sale of 5% shares of the country’s largest company ARAMCO, to maintain its shares at a high level; sale that has been postponed.
  • The fifth reason is the tension in Kurdistan (this area producing about 500,000 barrels/day), declining Venezuelan production, socio-political tensions in Libya and Nigeria.
  • The sixth reason is the American president’s speech on the US having second thoughts on the agreement on Iran nuclear deal; with sanctions beginning to be applied on November 5th, 2018. This would certainly be mitigated by the European position that decided to set up a barter system to circumvent the transactions in Dollars, and the Chinese market or the Iranians can get paid in Yuan.
  • The seventh reason is the weakness of the Dollar in relation to the Euro.
  • The eighth reason is the decline or rise of US stocks, while not forgetting the Chinese stocks.

In the short term, the above eight reasons may influence the price of oil either upward or downward, with some factors being more predominant than others.  The Minister of Energy of Saudi Arabia reported on October 30th, 2018, under American pressure to raise its oil production to 12 million barrels per day against 10.7 million currently, to fill in for the Iranian production and in this case, it will be followed by Russia that does not want to lose market share.  In this hypothesis, the price of Brent should, except for a significant global crisis where the prize could fall below 60 Dollars, fluctuate between 65 and 75 Dollars, 70 Dollars a barrel, being the price of equilibrium in order not to penalise either the consumer countries or the producing ones.  The oil price went lower than $60 mainly as consequent to the massive entry of U.S. shale oil and gas with a production exceeding 10 million barrels/day.

In August 2018, according to the US Energy Information Agency (EIA), the US has even turned into the world’s leading producer of oil, in front of Russia and Saudi Arabia, with 10.9 million barrels per day and this production should even exceed 11.5 million barrels per day in 2019.

Without democratic and moral institutions, no development

Without democratic and moral institutions, no development

Economists and politicians, during this inevitable global society transition phase, must rethink the links between ethics and development because without democratic and moral institutions, no development would seriously be even envisaged.


As we have learned from the founders of economics science, e.g. political economics, that since natural resources are only an ancillary means of creating the illusion of virtual wealth, work is the only foundation of all wealth of a nation and speculative actions based on immorality, could destroy a nation.

Links between morality and multi-dimensional development

The global economy in this 21st century is characterised by the interdependence of economies and societies, living in a glass house, because of the revolution in the field of telecommunications.

No country can escape it, if new mechanisms of supranational regulation are not put in place to rehabilitate the real sphere, the currency being at the service of the economy and not an instrument to dominate it.  So of course, as part of a competitive global economy considering global comparative advantages and having to link economic efficiency with profound social justice – economists will talk about fairness.

Today, we are on the verge of a new transition from global society, with profound geostrategic upheavals, which will entail painful social adjustments and thus a new social regulation to avoid exclusions.  ‘Everyone for oneself’ would be suicidal with disastrous conflicts.  For this, politicians and economists need to rehabilitate a strategic factor of development, morality.  For there are inextricable links between sustainable development and morality – in fact, the reward of effort – and a fight against corruption in its various forms.  The foundation of all global crises or the development of societies is not only explained by the economy but also reliable data.  In the line of the teachings of Plato and Aristotle on the moral of rulers, the contribution of Ibn Khaldun (1), pioneer of modern social sciences is of great scope on both scientific and operative given the current global crisis.  Explaining the numerous chairs of teaching in Europe and the USA, it developed a theory of history centred on the great movements of society where its theses are exposed in the long methodological introduction (nearly 1000 pages), known as “ Muqaddima”, of the work to which he worked for thirty years, i.e.  Kitâb Al ‘Ibar or The Sample Book or Book of Considerations on the history of Arabs, Persians and Berbers.  For Ibn Khaldun, the study of a society implies what three dimensions that are analysed jointly:

  • The economic dimension, the needs of human groups and how to satisfy them;
  • The cultural dimension which includes the regulation of social relations, but also the use of techniques, the arts and science;
  • Finally, the political dimension, the power within the groups and the central power at the level of Global society.

The author clearly shows that most of the dynasties had the same fate: founded by a tribal group that was able to seize the central power, having experienced a period of prosperity and then a period of decay until another tribal group acquired enough strength and maturity based on the moral to seize in his turn the central power.

Ibn Khaldun distinguished five phases.

  • In a first phase, the leader of the tribal group, founder of the dynasty consolidates his power, supported by a strong ‘açabiyya and getting the allegiance of increasingly numerous tribal groups.
  • During the first two phases, politics dominates and allows for some economic development.
  • In the fourth phase, the power is strong, the perception of taxes promotes certain prosperity; the architecture, the techniques, the arts and the letters grow, and the people are living in certain ease.
  • In the fifth phase, self-satisfaction is recognised, and the dependency on physical assets established;

Spending will undermine the public purse especially as the men in power tend generally to surround themselves by characters who are principally looking for material profits. Taxes are rising, and the population is impoverished. Discontent settles in, and the dynasty would lose the support of its people, which will allow another tribal group endowed with a strong ‘açabiyya and nourishing a political project to seize in its turn the central power and to found a new dynasty.

This decadence is mainly due to the lack of morality.  It is in the same philosophical thought that Adam Smith (2) the founder of the modern economy has highlighted the dialectic links between morality and wealth of nations. He taught morale at the University of Glasgow and published in 1759 The Theory of Moral Sentiments. His The first book, the object being to define the principles of morality, seize the virtues necessary for the proper functioning of society and understand where the moral sense comes from, his work highlighting the crossroads of economics and moral philosophy.  Karl Marx will deepen these fundamental contributions in the Capital, Joseph Schumpeter in Reforms and democracies and between 1990 – 2018 most Nobel Prize winners in economics were awarded to the institutionalist.

Morals and democratic institutions considering the social specifics (3)

At an international meeting organised by the European Union, in Malta on December 24 through 26, 2011, attended by important international personalities, and in which we discussed these links, with the future of the Arab and Mediterranean economies.  Many participants from both shores of the Mediterranean have highlighted the fact that the establishment of new democratic institutions causes, in the short term, an economic slowdown, gives the impression of anarchy for the supporters of power because destroying their privileges, but with medium and long-term hope for the entire population.  The new institutions and economic reforms are destroying the old logic of the system, often based on informal, personalised relationships, not on institutions. It had been pointed out during this important meeting that Islam is a religion of tolerance, not being able to assimilate itself to intolerance and extremism which leads to terrorism which is nourishing itself of the planetary threat of misery and lack of morality of the leaders.  The chauvinistic speeches, confusing patriotism and chauvinism nationalist of some leaders denouncing “conspiracies from the outside”, no longer carries in a population with a growing majority, open to the world.

Moreover, it had been affirmed in conclusion that both global and internal upheavals in these regimes are the consequence of dictatorships and authoritarianism that have become, in a complex world, severe threats to the sovereignty and independence of these countries and, in general, to global security.  However, it is necessary to recognise for narrow interests; developed countries do not necessarily favour this trajectory.  It is in this context that the functioning of the international economic and political system must be rethought imperatively the policies of the West’s complacency towards these dictatorships which threaten global security.  It implies more morality on behalf of the leaders of the West because if there are corrupt, there are corrupters.  However, if we must not be utopian: the rule of law does not necessarily overlap with the concept of western democracy as we have seen from historical experiences (see the experience of South Korea).  Indeed, democratisation does not happen by a magic wand, it will take time, as has been the case in the west and some countries in Asia and Latin America.  Democratisation will move forward by power relations both at the internal levels (Conservatives / Reformers) than international.  The Democratic institutions considering the anthropology of societies as brilliantly illustrated by the Indian economist Nobel Prize laureate Amartya Kumar SEN will eventually achieve the symbiosis of Citizens / States in the context of a more participative and humanised society.  Often called “good governance and the rule of law”, without credible morals and institutions, which must take cultural morphology and history specific to each company, posing necessarily the issue of the independence of justice, of the anti-corruption struggle, there can be no development and it is a universal law that applies to all countries.

In summary, for Algeria, institutional and micro-economic reforms must be part of the framework of a clearly defined strategy considering the transformation of the world, that can only come from the interior brought by new reformist social forces that will remove some power segments from where those strong resistance pockets of the rentier’s and their supporters.  The Forum Mediterranean of the Institutes of Economics (FEMISE), published it and to a few years a report of a hot news in this month of October 2018 citing Algeria: “Despite the optimism of the public authorities fuelled by the euphoria of oil prices, Algeria has yet to find a model of growth that can reduce inequalities, unemployment and poverty.”  As well Algeria has two choices: to make efforts to reform its institutions and the economy towards more democracy and transparency or to regress to a protectionist attitude. So, there it always comes down to morality, (the virtue of labor closely linked to the rule of law and the democratisation of society, especially those responsible for giving an example if they want to mobilize their population and overcome the current entropy and enable the country to develop depending on its potential, and these are enormous.

Paris on October 26, 2018

Dr Abdulrahmane Mebtoul, ademmebtoul@gmail.com

Notes

  1. Ibn Khaldoun, (May 27, 1332 – March 17, 1446) as better known than his full name Abu Zaid Abdul-Rahman Ibn Mohamed Ibn Khaldun el-Hadrami, is a historian, philosopher, diplomat and politician. He was one of the first theorists in the history of civilisations per the analysis of the social and political changes he observed in the Maghreb and Spain of his time being at the forefront of sociology and one of the founders of political sociology.
  2. Adam Smith (June 5, 1723 – July 17, 1790), is a philosopher and the father of modern economic science. He had in 1759, published a Theory of Moral Sentiments, where we find this idea that every man, under the principle of “sympathy”, aspires to the greatest possible happiness of the greatest number of men possible. His main work, however, published in 1776, was on “The Wealth of Nations” and this is one of the founding texts of modern economics.
  3. Institutionalism is an economics thinking trend that emerged in the US at the beginning of the 21st century, under the impetus of mainly the writings of Thorstein Veblen, John Rogers Commons and Wesley Clair Mitchell, focusing understanding of the role of institutions in shaping economic behaviour, integrating the work of the substantivism developed by Karl Polanyi.

 

Primacy of Knowledge and good Governance in the World

Primacy of Knowledge and good Governance in the World

Two 2018 reports dealing with Human Development that do not give the same results (certainly using different methods of calculation) were published. It is that of the UNDP and recently on 11 October 2018 that of the World Bank. These two reports show the urgency of adapting to the new global geo-strategic mutations, the world being at the dawn of the Fourth World Economic Revolution, which will be dominated by the primacy of knowledge and good governance in the world as the two pillars in the foundation of the development of the 21st century.

The UNDP’s

The latest report of the United Nations Development Programme (UNDP), examines the positive and negative linkages between work and human development in a rapidly evolving world, where rapid globalisation, demographic transitions, environmental challenges and many other factors create new opportunities, but also pose risks, that generates winners and losers.

In its recent publication of the Human Development Index (HDI) report 2018, the UNDP confirms the weak positioning of Africa. The ten least well-ranked countries out of a total of 179 assessed by the report are African. The UNDP reveals that, beyond the overall improvement in the living conditions of peoples, many challenges remain.  Men may live longer, but that does not change much in their quality of life. Hundreds of thousands of young people are completing school and yet they have no guarantee of finding decent work.  According to the UNDP for the year 2017, (edition of 2018), average HDI levels have risen significantly since 1990 – by 22% worldwide and by 51% in the least developed countries. A further examination of the elements constituting the HDI provides data on the unequal distribution of results in education, life expectancy and income within countries. The inequality-adjusted human development index makes it possible to compare the levels of international inequality: the higher this level, the lower the HDI of a country.  Considerable variations in the quality of education, healthcare and many essential aspects of life are observed from one country to another.  A primary school class has an average of 39 students for one teacher in sub-Saharan Africa and 35 in South Asia, but 16 to 18 in OECD countries, East Asia and the Pacific, as well as in Europe and Central Asia.

On the other hand, while 28 and 27 doctors respectively care for 10 000 people in OECD and European countries, and in the countries of East Asia and the Pacific, these figures are reduced to only eight in South Asia and fewer than two in sub-Saharan Africa.  Norway, Switzerland, Australia, Ireland and Germany dominate the ranking of the 189 countries and territories of the most recent HDI released today by the United Nations Development Programme, while Niger, Central African Republic, southern Sudan, Chad and Burundi are at the bottom of the table of national health, education and income outcomes. The transition from a large number of countries to the higher category of the HDI reflects a global trend towards continuous improvement in human development: of the 189 countries for which the HDI is calculated, 59 now belong to the category “Very high human Development” and 38 only at the category “Low Human development”, compared to 46 and 49 respectively eight years ago (2010).  The HDI was developed in 1990 by the Pakistani economist Mahbub Ul Haq and the Indian economist, Nobel Prize in Economics Amartya Sen.  The HDI is a composite index, ranging from 0 (appalling) to 1 (excellent), calculated by the average of three indices. The first aspect (A) quantifies health/longevity (measured by life expectancy at birth), which provides an indirect measure of the satisfaction of essential material needs such as access to healthy eating, drinking water, housing, good hygiene and medical care adopted by the United Nations Development Programme (UNDP) in 1990. It is more reliable than the previously indicator used, per capita GDP, that does not provide information on individual or collective well-being but quantifies economic output. The second aspect (B) is the knowledge or level of education measured by the adult literacy rate (percentage of 15 years and older who are able to quickly write and understand a short and straightforward text dealing with daily life) and the gross enrolment rate ( Combined rate measurement for primary, secondary and higher levels). It reflects the satisfaction of intangible needs such as the ability to participate in decision making in the workplace or society. The third aspect (C) is the standard of living (logarithm of the gross domestic product per capita in purchasing power parity), to encompass the elements of quality of life that are not described by the first two indices such as mobility or access to Culture thus giving HDI = ADE divided by three.

The World Bank’s

Unveiled at the annual meetings of the World Bank and the IMF in October 2018, the Human Capital Index is one of the issues addressed in the 2019 edition of the World Development Report entitled “The Changing Nature of Work”, which deals with the importance of investing in human capital to prepare for tomorrow’s work.

For 126 of the 157 countries covered by the index, the data broken down by gender, the new Human capital Index shows that 56% of children born today in the world will be deprived of more than half of their potential income in adulthood because states do not make the necessary investments to produce an educated, resilient and well-off population, ready for the world of work of tomorrow.  The human capital index measures the level of human capital that a child born today is likely to achieve by the age of 18, given the health and education services in his country. It measures the distance between a country and the excellent situation of schooling and health.

According to this report, “Human capital is often the only capital of the poorest people”.  It is one of the key factors in sustainable and inclusive economic growth. Investments in health and education have not received the attention they deserve. This index establishes a direct link between improved health and population education, productivity and economic growth. Hoping that it will encourage countries to take urgent action and invest more and better in their population. All countries, regardless of their income levels, must develop their human capital to be able to compete in the economy of the future.

Thus, this measure incorporates three factors:

  • Survival: a child born today will he reach an age to go to school?
  • Schooling: what will be the duration of his or her education and what will he have acquired?
  • Health: will this child leave the school system in good health, ready to continue his education or enter the labour market

Also, it is within this framework that special global attention should be given to the human development indexes of UNDP and the Bank which are a significant breakthrough in the use of more credible indicators than the gross domestic product (GDP). According to many international experts, these indicators include essential shortcomings, mainly: the selection and weighting of the selected indicators; i.e. the quality and reliability of the data used to calculate them which are highly variable from one country to another; the use of averages, without considering both socio-professional and spatial inequalities. The level of both schooling and health varies considerably between countries, and finally, some social indicators are difficult to quantify distorting comparisons from one country to another. Also, the qualitative analysis must necessarily supplement the quantitative deficiency. It is also desirable for both the UNDP and the World Bank reports supplementing their indices with new indicators that would consider, participation, gender, enjoyment of human rights, civil liberties, social integration, environmental sustainability and for third world countries, the weight of their ‘informal’ sphere.  All of this will assume a statistical apparatus that is efficient and adapted to social situations including standards of good governance and indices of corruption and transparency.

Ranking of Algeria?

At a time, when and contrary to the speeches of most Algerian officials, we also witnessed two declarations by two principal partners of Algeria, who translated the concerns of both domestic and foreign investors. The Ambassador of the United States of America, Mr John Desrocher, for whom Algeria, in order to “attract other investments, will require more transparency, predictability and better market access”, the other of Jean Louis Leven, senior French official in charge of technological and industrial cooperation between France and Algeria, who deplores the “moving economic regulations of Algeria and for which the Algerians do not sell their country well enough to foreign investors and tourists”.  According to the UNDP index, between 1990 and 2017, the Algerian HDI rose from 0.577 to 0.754, an increase of 30.6 per cent, according to the UNDP report. The index shows an upward curve from 0.644 in 2000 to 0.749 in 2015 and then to 0.754 in 2017 in the category of countries with a high level of human development. Algeria came in 2017 to the 85th place of this ranking of the countries; an increase compared to 0.752 obtained in 2016 but which had, then, placed Algeria in the 83rd place of this chart which evaluates the efforts of 189 countries and territories in this field. Algeria has significantly improved its ranking at the African level and thus points to second place, just after Seychelles nearly having figured fifth in the edition of 2016. In the Maghreb, Algeria is ahead of Morocco (123rd place), Tunisia (95th place), Libya (108th place), Mauritania (159th place) and the HDI of Algeria in 2017 remains above the average of 0.699 obtained by the Arab countries, according to the explanatory note which was consecrated to him.  Life expectancy at birth in Algeria recorded a slight progression of 76.1 years in 2016 to 76.3 years in 2017, but with a slight difference of 77.6 years for women and 75.1 years for men. Following the same trend, the expected duration of schooling increased from 14.3 years to 14.4 years, while the average duration remained the same for the two years to 8 years. Enrolment is a little higher among women than men whom last year was 14.6 years old compared with 14.1 years. The gender gap is widening as shown by the GNP per capita index, where men earn $23,181, compared to only $4,232 for women. The global index for GNP per capita was $13,802 last year compared to $13,809 in 2016. According to the World Bank index of 2018, the 28 “Pioneer” countries are Saudi Arabia, Armenia, Bhutan, Costa Rica, Egypt, the United Arab Emirates, Ethiopia, Georgia, Indonesia, Iraq, Jordan, Kenya, Kuwait, Lesotho, Lebanon, Malawi, Morocco, Uzbekistan, Pakistan, Papua New Guinea, Peru, the Philippines, Poland, Rwanda, Senegal, Sierra Leone, Tunisia and Ukraine. However, Africa is at the bottom of the scale.  In this table of 157 countries, Seychelles 43rd World achieves a national index of 0.68 points, which means for the bank, that the “Economic potential” and the future of the population (and the country as a whole) is amputated by 32%. It also implies heavy economic losses and an annual reduction in GDP growth in the years to come.  Seychelles is followed by Mauritius (world 52nd with 0.63), Algeria (World 93rd with 0.52), Kenya (World 94th with 0.52), Tunisia (World 96th with 0.51) and Morocco (98th worldwide with 0.50). As for other greats on the mainland, they have no better clues and are lost at the bottom of the leader-board. This is, for instance, Egypt (World 104th with 0.49), South Africa (World 126th with 0.41) and Nigeria (152nd worldwide with 0.34).

Meanwhile, it must be recognised that in Algeria, a lot of effort in education in investments was made.   However, the alarming drop in the educational levels could be explained by mainly relying on the quantity factor rather on the quality, of both school and universities ending up by obvious inadequacy of the vocational training to the new mutations, a significant loss from primary to secondary, then from secondary to universities, except for about 20% (part of which is expatriated through brain drain) .  From 1974 to 2018, the improvement of the purchasing power of Algerians goes through a reorientation of the current socio-economic policy in order to necessarily have a growth rate higher than the population growth rate otherwise the unemployment rate will go up (growth rate higher than 7/8% over several years to create 350.000/400,000 new workstations per year).  This growth rate depends on the new governance and the improvement of human capital eternal resource much more important than all the ephemeral mining resources by a fight against mismanagement, over costs, corruption, and targeting projects creator of value added within the framework of universal values. What helps alleviate social tensions is paradoxically the social subsidies/transfers, the housing crisis and the ‘informal’ sphere that allow for combined income (sharing the same charges). Generalised subsidies without targeting and the resolution of the housing crisis without an economic stimulus.  Its recognition of an important state effort for subsidies and social but generalised transfers are a source of social injustice and wastefulness. Social transfers budgeted for 2019 will amount to 1,772,500,000,000 Algerian Dinars (DZD), representing 8.2% of GDP and up DZD12.5 billion (+ 0.7%) compared to 2018 and about 21% of the total state budget which is close to DZD8.56 trillion.  Social transfers have reached DZD1,625 billion in 2017 versus DZD1,239 billion in 2010. This amount was increased to DZD1.76 trillion in the fiscal year 2018, up by almost 8% compared to 2017. The rate of social transfers had reached 22.8% of the state’s general budget over the period 2000-2004, then 24.5% over the period 2005-2009, then 25% of the state budget in 2010-2015 and 23% between 2016 and 2017.

Return to Protectionism and new Global Economic Crisis

Return to Protectionism and new Global Economic Crisis

A trade war between the USA and China: could it be a return to protectionism and a prelude to yet a new global economic crisis horizon 2020/2022?

Return to Protectionism and a new Global Economic Crisis ?

The Chinese president, Xi Jinping, at the World Economic Forum, on January 17, 2017, said addressing the new U.S. President Donald Trump: “There is no point in blaming the globalisation. Any attempt to stop the exchange of capital, technologies and products between countries is impossible and backward in history.  We must remain committed to the development of free trade and investment [transnational], and say no to protectionism.  We need to rebalance globalisation, and make it stronger, more inclusive, more sustainable”.  In a statement dated September 29, 2018, reported by the Chinese official agency (Xinhua), Xi Jinping has clearly stated that “China would not close its doors to the world but would rather widen their openness”.  Citing as an example the openness of China in the service sector: The World Trade Organization (WTO) has put in place more than 160 sub-sectors that need to be opened.  All developed countries have opened an average of 108, while China on its own has opened 100, far exceeding the average of 54 of the developing countries.  In this context, it is useful to recall the fundamentals of the crisis of 1929 and that of 2008 to draw lessons for the future of the global economy.

The crash of 1929 is a consequence of a speculative bubble, the genesis of which dates back to 1927. The bubble was amplified by the new stock-credit purchasing system, with investors able to buy securities with only 10% coverage.  The rate of borrowing depends on the short-term interest rate.  The continuity of this system depends therefore on the difference between the rate of appreciation of the shares and the rate of borrowing.

The foundations of the crisis of October 2008

There are many similarities between the crisis of October 1929 and that of October 2008.  The economic boom was preceding the crisis, increasing indebtedness and divorce between the real and financial spheres, impact on the real sphere with the fall of technological values.  However, unlike in 1929, there was a more critical interconnection of economies with a stronger global regulation.

Moreover, the economies of the developed countries are in deflation (low inflation, unemployment and negative growth) and not in stagflation (inflation and unemployment decreasing).  As evidenced by the socialisation of the losses of some banks, the speed of the interventions of the central banks such as the American FED, the European Central Bank, the Bank of England and their Japanese, Russian, Chinese and even their Indian counterparts coordinated to break the vicious circle of lack of trust.  They did unblock all interbank lending that constitutes the vital element of operation of the global economy.  With repeated bankruptcies, the interbank credit source of the expansion of the world economy has tended to dry up especially at the level of the business banks that have experienced an unparalleled expansion during the contemporary period. Unlike a universal bank, a business bank does not have the opportunity, in the event of challenging market conditions, to rely on individual deposits to raise funds for the short term, although they continue to issue debts In the short term to finance their business. However, increasingly the financial institutions with which the banks of business refinance refused in a period of crisis to lend because of lack of confidence in the repayment capacity of these banks. The essence of the crisis of both 1929 and 2008 is a denaturation of the foundation of capitalism as described by the founders of the political economy based on enterprising creators of wealth, Karl Marx had not written Socialism but Capital.  This crisis is therefore related to the increased financialisation in disconnection with the real sphere and the non-symbiosis of economic dynamics and social dynamics forgetting that work is undoubtedly a price but creator of value and growth vector.  In fact, with this growing financialisation, we have two types of stock ownership.  Direct detention (those who hold them in their own right) and lengthy detention (those who hold them through an intermediary: management bodies, life insurance companies, pension funds, etc.). The new fact is the rapid and significant change in the type of actions held by households. The direct holding of shares becomes a minority, while the lengthy detention has highly developed.  Pension funds control Wall Street, managing more than a third of the US market capitalisation. These dysfunctions have been concretised through the mortgage crisis (Subprime) In August 2007, a crisis that has spread to all the world’s stock exchanges with losses estimated at several hundred billion Dollars that I summarise in five steps.

a-    Banks have made real estate loans to poor or low-collateral households at high-interest rates.

b-    Distribution of bad debts in the market: to evacuate risks, banks “sent their receivables, that is, they cut their debt into financial products to sell on the market. Globalisation has done the rest, by disseminating these risk securities in the portfolios of investors of the whole planet. Hedge funds (Hedge Funds) were of Wholesale buyers of Subprime, often on credit to boost their Yields (up to 30% per annum), and to play the leverage effect, the Hedge Funds Borrowing up to 90% of the sums required.

c-    Reversal of the U.S. real estate market: Towards the end of 2005, U.S. interest rates began to rise as the financial market sputtering. Thousands of households were unable to honour their repayments resulting in losses for banks and investors who bought the bonds have seen their value collapse.

d-    Crisis of confidence: the banks have found themselves in a situation or as in a poker game, they know what they have in their balance sheet, but not what is in that of others because these bad mortgages were bought all over the world, and the distribution of the risk was not known.  This situation has caused the stock markets to fall and paralyse the market Inter-bank, banks no longer or very little afraid that their counterparts would be in a red line.

e-    Intervention by central banks: in the face of market paralysis, the banks massively intervened in early August 2007 by injecting several hundred billion dollars and euros of liquidity.

Lessons to meditate

As noted in the Echos.fr in its edition of March 5, 2018, “As in the 1930s, populism and protectionism were gaining ground, today’s Americans are sinking into protectionism and the Europeans voting for the closing of doors.

These events give off as an already-seen impression.  So, they have already taken place in the years 1930, followed by other disasters, even more deadly. However, the political crisis is taking place this time in slow motion. Europe in a meeting in Brussels on September 16, 2018, created a commission to circumvent the embargo on Iran and payment in Dollars, putting in wanting to place barter mechanisms.

Since March 8, 2018, the US president has decided to introduce 25% tariffs on US imports of steel and 10% on aluminium, further threatening to impose customs duties on some 50 billion from 22 May, Chinese goods exported to the United States. On 06 July 2018 the United States planned to implement taxes on 34 billion of products imported from China, the first tranche of the 50 billion blocks, China has decided to retaliate with similar taxes, which will hit notably soybean and cars from the United States. According to the Figaro.fr in its edition of September 26, 2018, the USA would have threatened in order to counter the trade imbalance vis-à-vis China of $375 billion in 2017 (source US Treasury) and in the case of Chinese retaliation, to go even further in this way : taxes could increase from 10% to 25%, and 267 billion of additional Dollars could be affected, almost all Chinese imports. According to the agency (Xinhua) as of September 29, 2018, in 2017, every American farmer exported on average more than 10,000 Dollars of agricultural products to China, the company General Motors sells 4 million vehicles each year in China, surpassing its sales in the United States during the same period and in 2016, U.S. companies made sales of over $600 billion in the Chinese market.  While not forgetting the important assets in US Treasury bonds that are part of the quotation of the Dollar.  In April and March 2018, China was a net seller of U.S. state bonds that was a concern for the financing of the United States.  The stock of U.S. state borrowings in the foreign exchange reserves of the PBoC approximately $1.2 trillion, or nearly one-third of the foreign exchange reserves from the middle, or about 20% of the total sums held by foreign entities in the US.   It was within this framework of economic warfare between the two largest global economies that 1140 economists, together with former councillors and budget director of past Republican presidents Harvey Rosen and Wendy Gramm in a letter to the US President on May 3, 2018.  They “exhorted him not to repeat the mistakes of the past and renounce all protectionist measures so as not to repeat the same mistakes that could lead to a crisis equivalent to that of 1930”.  For these economists, Trumpian protectionism will hardly reduce this deficit, for some obvious reason: it generally concerns products that the United States no longer manufactures and that it would be too complex and too costly to develop again under the aegis of “Made In USA ». Taxes would, therefore, have the sole consequence, deleterious, or raise prices for American consumers. Even sound of Bell on 02 July 2018, where the International Monetary Fund “while saluting the performance of the American economy, urged Washington to renounce its protectionist measures that threaten the economic health of the United States and the rest of the world.  It is that from 2008 to 2018 a new paradigm: one went from the banking crisis to a crisis of indebtedness of States hence the importance of acting on six interdependent levers because, in September 2018, the world economy is still characterised by turbulence which may repeat the scenario of the years 1929/1930 and the crisis of 2008.

  • First, it is a question of identifying a typical response to the financial crisis, all measures projectionists that must be temporary and targeted, but durable and generalised slow the growth of the world economy.
  • Second, open the door to an in-depth reform of the international financial system.
  • Third, take new initiatives to counter possible bank bankruptcies and impose new accounting standards on banks.
  • Fourth, introduce stricter rules on rating agencies, securitisation and golden parachutes.
  • Fifth, public expenditure must be achieved through coordinated budget deficits of energy savings for Building & Infrastructure and clean technologies for the automotive sector,
  • Sixth, rethinking the current global economic system that promotes North/south Bipolarization, poverty detrimental to the future of humankind, accelerated by the most debatable governances of most southern leaders.
Strategies for Adapting to the New World

Strategies for Adapting to the New World


The forum of leading global policymakers of the developed and emerging countries in recent years has addressed several strategic themes that challenge Algeria today. These included and were not limited to issues such as the 4th Industrial Revolution, Climate, Migration, Energy and the impacts of terrorism. In Strategies for Adapting to the New World, Prof. Klaus Schwab, president and founder of the World Economic Forum, said: “The 4th Industrial Revolution refers to the fusion of technologies, especially in the digital world, which has significant effects on the political, economic and social systems, it will be a matter to establish a system of common understanding of this industrial revolution”.  We shall see such varied themes as to how our lives are to be changed by this Revolution, how business structures will be modified by the new technologies and how rapid technological change will revolutionise work such as what is the future of financial services, how to restart the global economy.  Debates about the possible impact of intelligence on defence systems and the future of fuel energy on climate change will take a different meaning.  Facing the New World Revolution in 2020 through 2040, including the development of Artificial Intelligence and digital transformation, Algeria has so much to do in the political, security, social, cultural and economic fields of adaptation strategies, if it wants to avoid its marginalisation.
For François-Xavier Sambron, Government institutions and businesses spend a lot of time and energy managing tasks daily, whether it is prioritising, planning over time or overseeing routine workloads.  Although familiar, this exercise is nonetheless complicated and ineffective, while efficiency implies breaking down its tasks. In this context, according to this author, we have six digital impacts that revolutionise the function of a political and economic manager, see “My Business-Digital” – February 2018.
First, in traditional management, the manager’s power resided primarily in his ability to distribute or maintain information. This situation is reminded to us by the famous adage that “information is power”.  Today, it derives its legitimacy from its ability to link and interconnect collaborators and services among themselves, and its ability to synthesise and sort through the profusion of information received to extract the essentials. This method is exceeded because the “New Generation” manager gives priority to sharing and transparency, looking for above all to empower its employees by opening doors and guiding them in the right direction.  By greatly facilitating the flow of information within the company, digitalising is both the primary trigger and contributor to the so-called collaborative management.
Secondly, the manager has to be-first a developer of collective intelligence, a leader, a facilitator, thanks to the information is now widely shared, like not the one who knows but the one who pulls his team.  He is the host of a team that seeks to fulfil its objectives by taking maximum advantage of the resources of the company, Putting Interacting with different skills to create value.
Thirdly, the vertical authority based on the hierarchical organisation of the company and the status of the collaborators gradually gives way to a horizontal authority based on the knowledge, competence and reputation of each. The company is now governed by two Forms of authority that act in parallel, one falling within the processes and priorities defined by the management, the other translating the competence of each collaborator. In this context, the manager must rebuild his power horizontally both to communicate and to identify skills, to value them and to organise them and contrary to the past, his leadership is no longer expressed vertically but Horizontally.
Fourth, thanks to the digital revolution, the manager now has a wide variety of tools that allow him to send the right message at the right time to the right collaborator. Whether it is via messaging (instant or not), social networks, collaborative platforms, sending SMS, etc.  Besides, the multimedia capabilities of these different means of communication (audio, video, animation) Facilitate the dialogue and encourage the feedback of the collaborators.
Fifth, for the effectiveness of an organisation, new tools such as collaborative applications, project management solutions, business or administrative workflows, etc., make it possible to set and share priorities and objectives, and to ensure the detailed planning of the tasks to be performed as well as the progress of the latter. At the level of the activity monitoring, the digital usually provides many elements of measurement used in its evaluation as to the identification of its malfunctions. The introduction of quantifiable indicators (productivity, costs, quality, deadlines) enables monitoring of the activity over the water and the rapid initiation of corrective actions in case of discrepancies. Thanks to this continuous supervision, the manager is now in a capacity to steer his team finely as each of its members and to follow up the fixed course.
Sixth, technologically, the digital transformation of a company takes place primarily regarding the human resource, pillar of management, making it necessary to accompany all the collaborators in a transition of which they will be the main actors.  In this context, the manager occupies the first role to engage his team in this significant project and encourage each employee to take their place in front of Explain the merits of these changes, reassure the collaborators about their future and value the role of each in this mutation.
In conclusion
Political, entrepreneurs, researchers, ordinary citizens, we all live today in a society of electronic communication, plural and immediate that compels us to make decisions in real time.  The control of time being the primary challenge of this century, any inadequacy of these mutations would further isolate the country.  It, therefore, needs an adaptation strategy in the face of new global and energy changes with the advent of the Fourth Economic Revolution that will be based on digital, technological news, green industries with an energy mix between 2020 through 2040.  As the world advances, artificial intelligence and digital revolutionising both international relations, the management of States, institutions, businesses and relationships that are personal, many leaders could need a Cultural Revolution (an upgrade) to adapt to the arcane of the new economy. The majority of organisations must move away from the utopian patterns of the past of the years 1970 through 1990 and be ready at the dawn of a veritable planetary revolution.  Emerging countries have no future if they do not promote good governance and the knowledge economy, which must adapt to these new mutations, the two fundamental pillars of the development of the 21st century.  For Algeria, the 2016 – 2018 World Economic Forum report is far from the country’s vast potential has a lesson nevertheless to be learned; that is the balance sheet is very mixed despite the importance of public spending.  Furthermore, and according to an OECD report, Algeria would spend twice as much to have twice as many results as compared to similar countries in the MENA region.
Algeria suffers from a closed business environment that is believed to be resolved by legislation when it comes to tackling functioning of a business company: a bureaucratic financial system and an inadequate socio-educational system together land transactions, for instance, tend to be causing high costs.  There is still much work to be done, referring to political, social, cultural and economic factors to liberate creative energies, to attract the real creators of local and international private wealth confronted with the bureaucratic burden and the lack of visibility and coherence of socio-economic policy. This implies a specific strategic objective, adapting to the new World at least ten years and another governmental, institutional organisation around essential ministries and large regional eco-poles. Some would still choose the wrong way in their economic policy, which could lead the country to a stalemate and considerable financial losses, by ignoring the new global mutations.  It is thus, necessary to go for a new model of consumption, because of the significant strategic error of reasoning at the global level in a linear consumption model, and not continue to live from the illusion of the material age.  This would urgently require some cultural change of all business leaders.  I would draw the Government’s attention to the non-coherent current policy that may lead the country to accelerate its foreign exchange reserves’ depletion, without however sorting out the real problems of the country’s development. It is all about the technological and managerial accumulation within the framework of the values of financial capital as only one way to avoid monetary illusion.

ademmebtoul@gmail.com

The Iranian economy facing American sanctions

The Iranian economy facing American sanctions

The U.S. president twitted a new warning on August 7, 2018, to all still trading countries with Iran, after the reinstatement of sanctions against Tehran, threatening that these will not be able to do so with the United States.

The purpose of this contribution is to analyse the situation of the Iranian economy facing American sanctions starting with its socio-economic Situation. Iran holds the fourth largest world oil reserves with more than 160 billion barrels; its OPEC quota is close to 2.7 million barrels a day and produced before the US sanctions up to 5 million. It also has the second largest gas reservoir after Russia and before Qatar, with more than 34 billion cubic meters or more than 16% of the world’s reserves. Iran essential resources being on the planet’s belt of copper reserves benefit from considerable reserves of other minerals, such as iron, aluminium, lead and zinc.

  • Agriculture contributes to 9.3% of GDP, employing 17.9% of the working population in 2016.
  • The secondary sector accounts for 33.8% of the labour force and contributes to 38.2% of GDP.
  • The tertiary sector contributes to 52.4% of GDP and employs 48.3% of assets.
  • The mainly imported goods are machinery, iron and steel, electrical and electronic equipment and cereals.
  • The Iranian economy remains mostly dominated by the public sector that controls the bulk of the economy with a fragile banking sector.
  • The agricultural sector whose main crops are pistachio (the world’s largest producer), wheat, rice, oranges, tea and cotton contribute to 9.3% of GDP and employs 17.9% of the labour force.
  • The textile industry is the second most important sector after oil.
  • The other major industries are the refining of sugar, the industrial preparation of food, petrochemicals, cement and construction.
  • Traditional crafts, such as carpet weaving, ceramics, silk and jewellery, are also vital to the economy.

Structurally, the economy is dependent on oil revenues that account for almost half of the state’s revenue. The Iranian population, with an efficient educational system, has risen from 21 million inhabitants in 1960 to 80.6 million inhabitants in 2017 with an extrapolation of 84 in 2020. The urban population represents about 73%, a life expectancy of 71.15 years. GDP estimated at $412.2 billion in 2016, second in the MENA region, after Saudi Arabia has a rate of growth was 4.6% in 2015, 4.5% in 2016, with a pre-penalty forecast of 4.8% in 2018 and potentially 4.5% in 2019. Recently, in its 2018 report, the World Bank for 2017, Iran’s GDP was estimated at $439.5 billion with a GDP per capita of $6974. So, for the first half of 2017 (from April to September, depending on the Iranian calendar), GDP growth at factor cost was 4.5% (annual slip). After the lifting of the sanctions, the non-oil sector mostly boosted overall growth over this period, contributing to the growth of the economy to the tune of 3.2 %. With the announced sanctions, this will have an impact on the rate of Unemployment that was 12.20% in 2012, 10.60% in 2014, 11.67% in 2015, 11.3% in 2016 , 11.4% in 2017 and 12.1% in March 2018, according to the official, indeed undervalued, mainly affecting young people (under 25 years of age represent 32% of the population) and in particular young women graduates. For 2016/2017, The male unemployment rate is 10.1% and 19.1% among women, a sign of the deepening gender inequalities in the labour market, each year, 800 000 people entering the labour market. This is due in large part to the increase in the population’s activity rate, to 40.4% compared to 35.4% in 2014. Let us recall that Iran has embarked on a series of reforms spread over 20 years covering the period 2016-2021, including the recasting of non-targeted generalised subsidies. Thus, the complicated subsidy scheme, which estimated at 27% of GDP in 2007/2008 (approximately $77.2 billion), was replaced by a programme of direct monetary transfers to Iranian households. The second component of subsidy reform, launched in the spring of 2014, provides for a more gradual adjustment of oil prices than previously envisaged and a broader targeting of transfers to low-income households. The removal of nearly 3 million of high-income households from the beneficiaries’ lists would have led to a reduction in the targeted subsidy organisation (TSO) spending of 4.2% of GDP in 2014 to 3.3% in 2017.

The financial situation

According to an Iranian Ministry of Economy announcement dated February 19, 2017, the public debt figure of government and public institutions for the current Iranian fiscal year ending March 20, 2017, reached 700 trillion of Tomans, or $200 billion. However, the external debt is now estimated to approximately $7.116 billion as at December 31, 2016, according to CIA World Factbook. With respect to trade balance in 2016 and compared to the evolution of 2015, we have 37,383,000,000 of export Dollars (plus 29.34%) and 36,041,000,000 of import Dollars (less 5.37%) with as the main supplier being China (24.44%), the United Emirates (15.04%), South Korea (8.14%), Turkey (6.80%) and Germany (5.72%).  France, which has many large companies engaged in the country, has just withdrawn from Iran because these carry out their transactions in Dollars, that according to the French Treasury, “due to the reinforced sanctions imposed on Tehran from 2011 onwards, our trade with Iran has been reduced from a peak of €4.3 billion in 2006 to €515 in 2014”. Started timidly on the rise in 2015 (+22% at €628 million) even before the lifting of the reinforced sanctions, they departed in 2016 (+239% to €2.1 billion) to reach €3.8 billion at the end of the financial year 2017, which was a new level since 2008. However, the budget tensions persist.  According to the IMF, the budget deficit has grown to 2.4% of GDP in 2017, due to a rate of growth in public spending higher than the increase in revenue.  According to the World Bank, in the first nine months of the year 2017, tax revenues grew by only 4.4%, while operating expenditure increased by 16.8% and investment expenditure amounted to 91% after two years of contraction through the lifting of sanctions. Thus, the surplus of the current balance of transactions rose to 4.1% of GDP in 2017, a slight improvement over the 3.9% of 2016, due to the increase in oil prices, while the export volumes remained stable, around 2.4 million barrels per day, production remaining in line with the limitations agreed upon in the OPEC framework. The current balance in 2014 was 3.8% compared to the gross domestic product (GDP), 0.4% in 2015, and less -0.6% in 2016 with a forecast of zero (0%) in 2017, while public debt/GDP was 15.6% in 2014, 17.1% in 2015, 17.5% in 2016 with a forecast of 17.7% in 2017. Following the popular protest movement in Iran from the end of December 2017 to the beginning of January 2018, the exchange rate has deteriorated considerably, volatility has increased, and the gap between the official and the parallel market has between the beginning of December 2017 and the beginning of March 2018, the Iranian Riyal (IRR) depreciated as compared to the Dollar. Thus, the IRR was quoted at 14,777 for a Euro in 2011, 15,643 a Euro in 2012, 24,456 a Euro in 2013, 34,653 a Euro in 2014, 32,188 a Euro in 2015 and 36,335 2017 a Euro. On August 7, 2018, at the reinstatement of sanctions the IRR was at IRR42,105 an official Dollar and IRR50,965 a Euro, thus a very high depreciation of the Iranian currency which influences the rate of inflation. On the black market, according to the Financial Information Market, a reference on currency market fluctuations, the Dollar had exceeded the 50,000 Riyals in April 2018, and since July 2018, more than 65,000  with the risk of going to 90.000/100.000 despite the threats of the authorities to ban possession of more than €10,000 and against all those who practice other rates of “Lawsuits” comparable to those reserved for “Drug traffickers”. According to the IMF, the inflation rate was over 35% between 2012/2013, and due to greater budgetary rigour reduced to 15.6% in 2014, 12.0% in 2015, 8.9% in 2016, 8.0% in 2017 but was back at 13.7% in June 2018 with food inflation reaching more than 20%. Moreover, the raising of the bank interest rate, which is 18% in July 2018, which will only hinder investment. In fact, this rate is much higher per Steve H. Hanke, professor of Applied Economics and co-director of the Institute for Applied Economics and the Study of Business Enterprise at Johns-Hopkins University, considering that the informal sphere aligns typically aligns typically with the free market price.

Iran facing American sanctions

The first wave of American sanctions came into effect on August 7, 2018, at 4:01 GMT. It includes blockages on financial transactions and imports of raw materials, as well as penalising measures on purchases in the automotive and commercial aviation sectors. It will be followed in November by measures affecting the oil and gas sector as well as the central bank (Interview with Professor Abderrahmane Mebtoul In Arabic at the Iranian International agency IRNA on 28 July 2018 “Impact of American sanctions against Iran on the price of oil”. The American president threatens to ban “any country that trades with Iran will not be able to do so with the United States of America”. These American sanctions are likely to have a negative impact, the resumption of foreign trade and Iranian investment as exports of oil had regained their pre-sanctions levels. For proof, the trade volume between Iran and the EU Member States reached 16.6 billion Euros in the first ten months of 2017, an increase of 61.6% compared to the same period of 2016. What about the end of 2018? We are witnessing a gradual withdrawal of major American and European groups. After the 2015 agreement, Total, the French oil and gas group had partnered with the Chinese NCPC to invest €5 billion in the operation of the South Pars gas deposit in the Persian Gulf. A project of which Total, which could not obtain an American derogation, will probably disengage. The Italian rail industry could suffer from these sanctions. The public group of Railways of Italy has In July 2017 signed an agreement for the construction of a high-speed line between Qom and Arak in northern Iran. Italy had become Iran’s first European trading partner, with exports to the country rising by 12.5% in 2017, reaching 1.7 billion Euros. In tourism, British Airways and German Lufthansa, that had resumed direct flights to Tehran, will have to stop if they want to continue to operate transatlantic flights freely. The French Accor Hotels, which opened two hotels at the Tehran airport in 2015, could be penalised, just as the Emirati Rotana Hotels that said they wanted to establish themselves in Iran. The so-called Blocking Law approved by the EU Ministers of Foreign Affairs on July 16, 2018, annulling the effects in the EU of any foreign court decision based on these sanctions, to protect European companies that decide to take risks by remaining in Iran, exposing themselves is meant to circumvent such American sanctions. Will it be useful in the face of American requirements? To global transactions that are mostly in Dollars, the Euro is still an ancillary currency, demonstrating that both political and economic Europe is not autonomous in major economic decisions. What will the threat of Iran blocking the Strait of Hormuz 40 km wide, between Oman and Iran in the Persian Gulf consequences be? As a vital sea corridor, this a crossing passage for more than 30% of the world’s oil trade. On several occasions, the Iranian supreme leader and the guards of the revolution brandished the threat of a blockade if oil exports were to be blocked by American sanctions. The US president was demanding OPEC to increase production to bring down prices while recalling the links between certain cartel members and the United States. However, does this increase in the production of two major producers such as Saudi Arabia and Russia, not risk question the OPEC Vienna Agreement while not forgetting this political will of the US to increase their market share in Europe via the supply of shale gas? What does this recent speech of the American president hide by wanting to meet the Iranian leaders? In the event of effective sanctions, the other OPEC countries, being competitors of Iran, including Russia, that outside the black market that is likely to develop, would leave China’s big energy consumer free to import oil and gas at a competitive price and invest massively in Iran. Is trade between Iran and China that exceeded $45 billion in 2017, compared with $35 billion in 2016 and forecast as expected to increase to between 15 to 20 per cent each year until the end of the sixth five-year programme of development?

ademmebtoul@gmail.com

Challenges of 2018, 2020 & 2030 Algeria: Reform

Challenges of 2018, 2020 & 2030 Algeria: Reform

The challenges of 2018, 2020 & 2030 Algeria: reform of the political system and economic transition would be a dialectical link between politics and economics where social forces inevitably carry any project, often with different interests. In a democracy, it is through the ballot box that the political minority submits to the will of the majority. As not to recall that in the past(1), I had the honour of coordinating several multidisciplinary works, of a topicality hot theme, having addressed the political reforms, social and economic issues; the fruit of collective work in the drafting of which contributed colleagues specialists in anthropology, economics and Political Science of the Universities of Oran and Algiers. At that time, I had given several lectures at the Universities of Annaba, Tizi Ouzou, Sidi Bel Abbes and Oran before closing at the National School of Administration of Algiers (ENA). Other conferences between 2007 and 2017 were held to explain our approach that is as always based on democratic alternation while considering our authenticity, and a diversified and non-hydrocarbons economy within the framework of universal values.
This operational work is now the hot topic and the subject of this present contribution, which is part of the already well-established tradition of ‘Transitology’.
It is about dealing with all Third World countries experiences and those of the former socialist bloc with the objective of reviewing policies that various government teams have developed and executed in response to the tremendous internal and global challenges.
Development in Algeria involves reform of the political system
For Algeria, a proactive management since independence with internal power issues lead to an economic, social and cultural crisis and, to the increasingly burdensome external constraints resulted in some changes, sometimes hastily carried out, revealing a very bitter reality: the dramatic absence of a genuine national strategy to adapt to this total and inexorable phenomenon of Globalization.  The combination of endogenous and exogenous factors and the massive-sometimes direct and insidious-moment intervention of internal and external actors has led to a transition that has been dragging on for decades and not just for the current period. As previously recalled, the economy is fundamentally political as we have been taught by its founders including Adam Smith, David Ricardo, Karl Marx, Joseph Schumpeter and closer to us the Nobel Prize in Economic Science awarded to all those Institutionalists between 2000 and 2017.
The fundamental reforms of the socio-economic transition refer to the ‘Refounding’ of the State which implies to grasp the real tendencies of the Algerian society in the face of both internal and global changes. The demands of a strong statement of its righteousness and its right, if they constitute a vital tool for national cohesion and the destiny of the nation, must not obscure the needs of Local Authorities autonomy which must be restructured according to their anthropological history and not according to electoral or clientelist needs. The cohesion of these spaces and their involvement in the management of their respective interests and territorialities would then trigger a dynamic of positive complementation’s and make the control of the groups easier for the national political centrality. The autonomy of Local Authorities does not mean autonomy of government but an act that strengthens good governance by reinforcing the role of civil society, that only actions of common interests must legitimise and not be State support only.
The ‘refounding’ of the State, not to say its foundation as a public entity, passes necessarily through a profound change in the social function of politics. The end of the cash-cow State and that of the revolutionary legitimacy means above all that the benevolent or charitable power inaugurated as an implicit political contract by the supporters of benevolent socialism to legitimise the exchange of a part of the rentier’s annuity against political dependence and submission. It has removed any spirit of active citizenship; shear power must give way to a just, vigilant and righteous power. It is the Law norms that legitimise the actual status of national citizenship.
The transition from the state of “support” to the State of justice is, from my point of view, a major political gamble because it merely implies a new social contract and a new political contract between the Nation and the State.  Algeria cannot get back to itself only if all false privileges are banned, and criteria of competence, loyalty and innovation reinstated as gateways to success and social advancement. Competence is by no means synonymous with positions in the informal hierarchy, nor be positioning in the perception of a rentier annuity, it is enough by itself, and its effectiveness and legitimacy mainly verified in the relevance of the ideas and the symbolically positive that it anchors in the bodies and social actors.  Moreover, competence is not a diploma only but a conscience and a substance that nourishes the institutions to build the foundations of knowledge to have a real impact on the global social dynamics to realise the aspirations of an Algeria anchored to modernity while preserving its authenticity.
The ‘refounding’ of the State cannot be confined to a technical reorganisation of authority and powers and governance is a matter of real and non-fictional legitimacy.  This implying redevelopment in the organisation of authority poses the strategic problem of the future role of the State primarily influenced by the effects of globalisation on economic and social development, mainly through real decentralisation. A first cell par excellence, the Algerian ‘commune’ has been governed by texts which are no longer topical, in other words, lapses have stricken them. The central objective of the approach is to transform the ordinary “providence” into a “common enterprise”. This implies that all the components of society and the actors of economic, social and cultural life, are involved, without exclusivity, in the decision-making process which commits the configuration of the image of the Algeria of tomorrow which will have to gradually move away from the spectre of exclusion, marginalization and all negative attitudes that undermine social cohesion. The involvement of the citizen in the decision-making process that engages the future of future generations is a way for the State, to mark its will of justice and to rehabilitate its credibility by giving a definite meaning to its role as regulator and arbitrator of social demand.  The image of the common-manager based on the need to do more and better with limited resources. There would be more room for waste and the right to error, which necessarily excludes sight-seeing, to the benefit of positive actions by long-term prospects on the one hand, and coherent arbitrations on the other, which implies a certain degree of rigour in the act of Management. It would mean addressing the democratic political-institutional underpinnings, the redesign of the unjust system and civil society.

 ademmebtoul@gmail.com 

 Notes:  

(1)- Collective work under the direction of Prof. Abderrahmane Mebtoul  “The stakes of Algeria: reforms and democracy” 2 volumes Kasbah Edition Algiers-2005 (520 pages)

-Lecture by Professor Abderrahmane Mebtoul on November 26, 2014 at the Club of Pines, Palais des Nations Algiers – in the presence of the Prime minister, the majority of members of the government and executives of the Nation – following the debate I held at Radio France Internationale RFI Paris on November 12, 2014, with Prof. Antoine Halff  Former chief economist of the Government  Barak Obama and director of foresight at the IEA, on “Prospects for the fall of the Cous of hydrocarbons and their impact on the Algerian economy ‘

-Interviews by the American Herald Tribune of December 28, 2016 and the French financial newspaper La Tribune.fr March 2017 « Any destabilisation of Algeria would have an impact on the Mediterranean and African area. ‘

-Collective work “The geostrategic stakes of the integration of the greater Maghreb” Edition l’Harmattan Paris/France-2015 under the direction of Abderrahmane Mebtoul and to Camille  Sari Two books (1050 pages) The first collective work is entitled “What governance and institutions in the Maghreb in the face of geostrategic issues”.  The second book Collective Trafficking Of the Maghreb economic integration, a forced destiny.

-A contribution of Professor Abderrahmane Mebtoul  Institute French international Relations – IFRI-“Europe/Maghreb cooperation in the face of Geostrategic issues 55 pages 04 April 2011” and the same author “The problem of the informal sphere in the Maghreb” (IFRI 28 pages December 3, 2013).

-Africa, Maghreb and migratory flows» Site Afrik Press Paris France two parts, June 24/27, 2018

 

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