The Barcelona Process: The European Union's Partnership with the Southern Mediterranean

The European Union (EU) has identified the Mediterranean (MED) region as a key external relations priority. EU policy towards the region is governed by the comprehensive Euro-Mediterranean Partnership Initiative, launched at the 1995 Barcelona Conference between the EU and the 12 Mediterranean partners. The Barcelona Process entails a new, broader and more far-reaching agenda of cooperation with the non-EU Mediterranean countries, including the creation of a Euro-MED free trade area to be established by 2010. The Barcelona Agreement contains three chapters of cooperation: the political and security chapter; the economic and financial chapter; and the social, cultural and human chapter. Many view the economic element of the agreement as the most important one. The core of economic cooperation is the establishment of a region-wide free trade area which will serve to enhance economic development by expanding bilateral support and trade. The Barcelona process is complementary to, but separate from the Middle East peace process and as such, has managed to serve as a forum for the participating countries, despite the ups and downs in regional relations. Since the outbreak of the al-Aqsa Intifadah in September 2000, and the breakdown of Israeli-Syrian talks earlier in the year, the Barcelona process is facing serious challenges and some Arab countries chose to boycott the November 2000 Euro-Mediterranean Summit in Marseilles, refusing to participate in a cooperative forum including Israel. The process nevertheless remains the only multilateral forum outside the United Nations where all the parties to the conflict meet. Important benefits have been predicted for many of the Mediterranean cooperation partners. The partnership is intended, for instance, to encourage foreign investment and in the long run promote income convergence as well as political stability and security. However, some analysts fear the potentially negative effects of opening up to European exports on weaker and less competitive MED industries, and the effects of the loss of government revenue which could result from significant reductions in tariffs. Moreover, some fear that economic liberalization tends to increase pressure on the physical environment, as trade and investment expand. In order to avoid important adverse effects on the environment, some advocate a supporting institutional framework in order to take advantage of the opportunities for improvement, while also dealing with potential threats to the environment. This report also provides a brief discussion of how the Barcelona Process relates to the Middle East peace process, as well as to other U.S. interests. For further information on related issues, see CRS Issue Brief IB91137, The Middle East Peace Talks , by Carol Migdalovitz, updated regularly, and CRS Report RL30311, Middle East: the Multilateral Peace Talks , by Joshua Ruebner, updated August 17, 2000.

Order Code RL31017 CRS Report for Congress Received through the CRS Web The Barcelona Process: The European Union’s Partnership with the Southern Mediterranean June 12, 2001 nae redacted Research Associate nae redacted Analyst in Middle East Affairs Foreign Affairs, Defense, and Trade Division Congressional Research Service ˜ The Library of Congress The Barcelona Process: The European Union’s Partnership with the Southern Mediterranean Summary The European Union (EU) has identified the Mediterranean (MED) region as a key external relations priority. EU policy towards the region is governed by the comprehensive Euro-Mediterranean Partnership Initiative, launched at the 1995 Barcelona Conference between the EU and the 12 Mediterranean partners. The Barcelona Process entails a new, broader and more far-reaching agenda of cooperation with the non-EU Mediterranean countries, including the creation of a Euro-MED free trade area to be established by 2010. The Barcelona Agreement contains three chapters of cooperation: the political and security chapter; the economic and financial chapter; and the social, cultural and human chapter. Many view the economic element of the agreement as the most important one. The core of economic cooperation is the establishment of a regionwide free trade area which will serve to enhance economic development by expanding bilateral support and trade. The Barcelona process is complementary to, but separate from the Middle East peace process and as such, has managed to serve as a forum for the participating countries, despite the ups and downs in regional relations. Since the outbreak of the al-Aqsa Intifadah in September 2000, and the breakdown of Israeli-Syrian talks earlier in the year, the Barcelona process is facing serious challenges and some Arab countries chose to boycott the November 2000 Euro-Mediterranean Summit in Marseilles, refusing to participate in a cooperative forum including Israel. The process nevertheless remains the only multilateral forum outside the United Nations where all the parties to the conflict meet. Important benefits have been predicted for many of the Mediterranean cooperation partners. The partnership is intended, for instance, to encourage foreign investment and in the long run promote income convergence as well as political stability and security. However, some analysts fear the potentially negative effects of opening up to European exports on weaker and less competitive MED industries, and the effects of the loss of government revenue which could result from significant reductions in tariffs. Moreover, some fear that economic liberalization tends to increase pressure on the physical environment, as trade and investment expand. In order to avoid important adverse effects on the environment, some advocate a supporting institutional framework in order to take advantage of the opportunities for improvement, while also dealing with potential threats to the environment. This report also provides a brief discussion of how the Barcelona Process relates to the Middle East peace process, as well as to other U.S. interests. For further information on related issues, see CRS Issue Brief IB91137, The Middle East Peace Talks, by (name redacted), updated regularly, and CRS Report RL30311, Middle East: the Multilateral Peace Talks, by (name redacted), updated August 17, 2000. Contents The Political Context of the Barcelona Process . . . . . . . . . . . . . . . . . . . . . . . . . 1 Background and Motivations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 The Three Components of Cooperation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Political and Security Cooperation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Economic and Financial Cooperation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Social, Cultural and Human Cooperation . . . . . . . . . . . . . . . . . . . . . . . . . . 3 3 4 4 Economic and Environmental Implications of the Barcelona Process . . . . . . . . . 5 Prospects and Limitations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 The Peace Process and U.S. Interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 List of Tables Table 1. Status of Euro-Mediterranean Association Agreements . . . . . . . . . . . . 5 Table 2. MEDA I Bilateral and Regional Cooperation . . . . . . . . . . . . . . . . . . . . 7 The Barcelona Process: The European Union’s Partnership with the Southern Mediterranean The Political Context of the Barcelona Process Background and Motivations In 1995, the European Union (EU) initiated the Barcelona Process of cooperation with 12 southern Mediterranean non-EU member countries (MED countries), thereby superceding previous phases of cooperation.1 The first period of the Euro-MED relationship, 1958-79, was characterized as “an emerging relationship,” the focus of which was the free entry of manufactured goods into European Community (EC)2 markets. During the subsequent period from the late 1970s to the mid-1990s, most Mediterranean countries negotiated cooperation agreements with the EC. Eventually, there was a recognition of the need to broaden the basis of cooperation in order to tackle issues of common concern, and this led to the development of the Barcelona Declaration. The policy objectives of the Barcelona Declaration are to develop a common area of peace and stability, a zone of shared prosperity, a free trade area and rapprochement between peoples and cultures.3 As compared to the EU’s previous Mediterranean policy, the “proximity policy” launched by the Barcelona declaration is innovative in three respects. It represents a comprehensive policy of cooperation between ‘equal’ partners with ambitious longterm goals such as respect for human rights and democracy as well as political, security, social, cultural and human cooperation. It furthermore introduces regional cooperation, aimed at encouraging economic integration among the MED countries. 1 The MED cooperation partners are Morocco, Algeria, Tunisia, Egypt, Jordan, Israel, the Palestinian Authority, Lebanon, Syria, Turkey, Cyprus and Malta. It should be noted that the individual members of the EU: France, Germany, Belgium, the Netherlands, Luxemburg, Italy, Spain, Portugal, Greece, Denmark, the United Kingdom, Ireland, Sweden, Finland and Austria, also have their own bilateral relationships with the MED countries, outside of the Barcelona framework. 2 The European Community formally came into existence on the 1st of November 1993. The Maastricht Treaty on European Union changed the name of the old European Economic Community to the European Community and established the EC as the first pillar of the newly created European Union. 3 Evaluation of Aspects of EU Development Aid to the MED Region: Final Synthesis Report. COWI Consulting Engineers and Planners (Denmark) in association with the Netherlands Economic Institute (The Netherlands) and Andante (Sweden), November 1998. p. 5-8 CRS-2 Finally, increased funding was provided to broaden and enhance cooperation, as well as to offer financial support for difficult reform processes.4 From the point of view of the Mediterranean partner countries, the Barcelona process is advantageous insofar as it provides assistance in economic modernization and liberalization. EU-MED cooperation is intended to promote reforms aimed at modernizing economies, raising the level of economic infrastructure, promoting private investment, and creating employment opportunities. According to one observer, cooperation with the EU offered through the Barcelona Process is seen by the MED countries as an opportunity to penetrate the EU market under more favorable conditions than would otherwise have been available, specifically as the EU now increasingly focuses its attention towards the east, in anticipation of enlargement.5 The MED countries, furthermore, view EU-MED cooperation as a significant chance to upgrade their economies and carry out various reforms with the financial support of the EU. It also provides a chance to create an environment conducive to trade and investment while strengthening political stability and regional integration and cooperation.6 According to one economist, the MED countries committed to the Barcelona Agreement because ultimately “it represented the best and possibly only attractive choice for their small open economies in the rapidly changing world of globalization.7 It should be noted that the 12 MED countries differ considerably in their levels of advancement in the cooperation process. Turkey, Malta and Cyprus, for instance all have candidate EU member status, and therefore also have access to EU assistance through the pre-accession process. The other MED countries are not likely to become members of the European Union and the Barcelona process is therefore their primary means of cooperation with the EU. For the EU, there are several important political and economic goals of cooperation with the Mediterranean countries. EU countries believe it is important to send signals to the MED partner countries that they remain important to Europe, even as the EU prepares for enlargement to the East.8 Supporting processes towards good governance, democratization, rule of law and respect for human rights in the Southern Mediterranean are important objectives of EU cooperation. Furthermore, controlling immigration, drugs and crime are other important goals of common efforts. The Barcelona agreement, moreover, recognizes the interdependence of the EU and the 4 The Euro-Mediterranean Partnership: Barcelona - a historic change and chance. Background of the Barcelona Process. See the European Commission website at: [http://europa.eu.int/comm/external_relations/med_mideast/euro_med_partnership/backg_ barcelo_process.htm] 5 Friends of the Earth Middle East. Euro-Mediterranean Free Trade Zone: Implications for Sustainability, Case Studies, Assessments and Recommendations. July 2000. p. 52 6 Ibid. 7 Ghesquiere, Henri. Impact of European Union Association Agreements on Mediterranean Countries, International Monetary Fund, Middle Eastern Department, Working Paper, August 1998, p. 22 8 Friends of the Earth Middle East. p. 52 CRS-3 Mediterranean countries as regards the environment and the energy sector. The partnership therefore has wider aims than traditional financial and technical support to economic development. The Euro-Mediterranean Partnership is currently the only multilateral forum outside the United Nations where all the parties to the Middle East conflict meet.9 The Barcelona Process is separate from the peace process, but designed as a complementary instrument which will facilitate regional dialogue. One of the instruments of this process, the Charter for Peace and Stability, elaborated by senior officials of the 27 partners dealing with political and security matters, is aimed at contributing to peace and stability in the region through partnership-building and confidence-building measures and thus also give the EU a lasting political role in this conflict area.10 The Three Components of Cooperation The Barcelona Declaration has three main fields, or chapters of activity: the political and security chapter, the economic and financial chapter, and the social, cultural and human chapter. By combining all three chapters into one comprehensive policy, the Barcelona Process acknowledges that financial, economic, cultural and security issues cannot be effectively tackled separately. Political and Security Cooperation This chapter of the Barcelona Declaration consists of three parts; political dialogue on the bilateral as well as the regional level, partnership-building measures, and the Charter for Peace and Stability. Political and security cooperation is central to the Euro-MED partnership, providing a new forum for conflict resolution. The overall aim of this chapter of cooperation is to create an area of peace and stability based on the principles of human rights and democracy. The Barcelona Process is not an instrument for military cooperation. However, it provides a forum for the creation of tools which will be necessary for the construction of a future Euro-Mediterranean security regime. The preparation of such a toolbox would represent a confidence-building effort within the Euro-MED context.11 Furthermore, the prospect of regular meetings between signatory governments, such as Israel and Syria, is viewed by most observers as potentially important, if such meetings could be arranged. It is difficult, in the current context of 9 The EU’s Mediterranean and Middle East Policy: The EU and the Middle East Peace Process; the Union’s Position and Role. See the European Commission website at: [http://europa.eu.int/comm/external_relations/med_mideast/mideast_peace_process/] 10 11 Ibid. Tanner, Fred. “The Euro-Mediterranean Security Partnership: Prospects for Arms Limitation and Confidence-Building.” Mediterranean Politics. Volume 5, number 1, Spring 2000. p. 201. CRS-4 violence and adversarial politics in the Middle East, to imagine any credible commitments by major players in the Arab-Israeli conflict to regional security objectives and principles. Examples of cooperative efforts in this context are: a foreign policy institute network, training and information seminars for Euro-Mediterranean diplomats, cooperation among civil protection authorities on natural and man-made disasters, and bilateral and regional projects for promoting human rights and democracy in the Mediterranean region. Economic and Financial Cooperation This chapter contains three interrelated objectives: establishing a EuroMediterranean Free Trade Area (FTA); supporting economic transition and helping MED partners meet the challenges posed by economic liberalization; and enabling an increase in investment flows to the Mediterranean partners, through economic liberalization and integration. The process of liberalization will essentially entail the opening of MED markets to EU goods, as the EU already accords duty free access to most MED manufactured goods. The process of liberalization requires the gradual removal of all tariff and non-tariff barriers to trade in manufactured goods by 2010. Trade in agricultural goods will be progressively liberalized through reciprocal preferential access. For a discussion of MED agricultural exports to Europe, see below. The priority sectors of economic and financial cooperation, include, among others, industrial cooperation, holding conferences on the environment, energy and transportation, as well as addressing the problem of scarce water resources. Social, Cultural and Human Cooperation The social and cultural partnership aims to “improve mutual understanding among the peoples of the region and develop a free and flourishing civil society by means of exchange, development of human resources, and the support of civil societies and social development.”12 It is part of a European Commission initiative to encourage the creation of non-governmental networks linking the northern and southern shores of the Mediterranean together as a series of confidence-building measures. The cornerstone of such efforts is increased cooperation with civil society. Certain MED governments have felt threatened by these attempts to activate civil society, but the provisions built into the Barcelona Declaration and the individual association agreements formally oblige them to accept such cooperation efforts. Cooperation in this area includes programs for the preservation of the EuroMediterranean cultural heritage, supporting projects in the fields of television, radio and cinema, as well as bringing together youths from across the Mediterranean in order to advance mutual understanding and cohesion. 12 The Barcelona Process: Five years on 1995 - 2000. European Commission, Brussels. p. 7 CRS-5 Economic and Environmental Implications of the Barcelona Process The economic element of the agreement is viewed by many analysts as the most important and far-reaching one. The aim is to establish a Euro-Mediterranean Economic Area, the core of which will be a region-wide Free Trade Area covering most industrial products.13 It aims at enhancing economic development by expanding bilateral support and trade. The new Association Agreements set up bilateral industrial free trade between the EU and its partner countries around the Mediterranean. The EU-MED Association Agreements, EMAAs, an essential feature of the implementation of the EU-MED partnership, are gradually replacing the 1970s cooperation agreements. The EMAAs establish conditions for progressive liberalization of trade in goods, services and capital, and are designed to prepare the countries for the 2010 World Trade Organization (WTO) compatible free trade area in industrial goods.14 They also provide for financial support to mitigate some of the adverse effects of economic liberalization. Many analysts view free trade as a catalyst that will help bring about necessary but difficult reforms in the business environment of the MED countries. The association agreements are part of a strategy to encourage signatories to abolish trade barriers and adopt common rules and procedures for trading and conducting business among themselves. While the free trade agreements prepare the ground for increased north-south trade, the biggest challenge for EU support efforts will be to encourage south-south integration. The EU thus also promotes the establishment of free trade agreements among MED countries. Table 1. Status of Euro-Mediterranean Association Agreements* COUNTRY SIGNED ENTRY INTO COMMENTS FORCE Under negotiation. Negotiations concluded in June 1999. ALGERIA EGYPT ISRAEL JORDAN LEBANON MOROCCO PALESTINIAN AUTHORITY Nov. 1995 Nov. 1997 June 2000 Feb. 1996 Interim Association. Agreement signed in Feb. 1997. Mar. 2000 Ratified by Jordan in Sept. 1999. Not yet ratified by all EU members. Under negotiation. Under negotiation. SYRIA July 1995 Mar. 1998 TUNISIA * Cyprus, Malta and Turkey are all potential members of the European Union and signed first generation Association Agreements, outside the Barcelona context, in 1972, 1970 and 1963 respectively. Morocco and Tunisia both signed cooperation agreements in 1976, and have since also signed Association Agreements with the EU.Source: European Council, Agreements Office. 13 14 Ghesquiere. p. 5 Evaluation of Aspects of EU Development Aid to the MED Region: Final Synthesis Report p. 6 CRS-6 Proponents of the Barcelona Process have predicted important benefits for most of the Mediterranean countries. Improved resource allocation, harmonization of traderelated regulations, along with increased assistance from the EU could enhance prosperity and employment.15 The agreement is also expected to encourage foreign investment. Over the long run, it is hoped that the Euro-MED free trade area will promote income convergence and ensure political stability and security. On the other hand, sceptics fear that the elimination of trade barriers to European exports will have considerable adverse effects on the weaker and less competitive Mediterranean industries.16 Significant tariff reductions, it is also feared, will cause considerable loss of revenue for many of the MED countries. Moreover, the failure, thus far, to grant access to Mediterranean agricultural exports into the European market, may dampen some of the positive effects of the agreement. The EU offers financial support to the process of reform as countries move towards greater economic liberalization. MEDA17 is the major financial instrument for the implementation of EU financial support to the Mediterranean region. Defined as “financial and technical measures to accompany the reform of social and economic structures in the Mediterranean non-member countries,” MEDA goes far beyond traditional development aid in that it makes economic transition and free trade the central issue of EU financial cooperation with the Mediterranean region. For the period 1996-1999, MEDA accounted for over EUR 3.4 billion (approx. $2.9 billion) out of the total funds of EUR 4.685 billion (approx. $4 billion)18 allocated to the Mediterranean partners. Approximately 86 percent of MEDA funds are channeled bilaterally to nine of the MED partners (all except Cyprus, Israel and Malta due to their relatively high levels of GDP. Cyprus and Malta, nevertheless, are candidates for EU membership, and as such receive bilateral aid from the EU as part of the preaccession process).19 The other 14 percent of resources are devoted to regional activities from which all 12 MED countries are eligible to benefit. Over the period 1995-1999, MEDA funds went to four main types of operations: support to structural adjustment (16%), support to economic transition and private sector development (30%), classical development projects (40%), and regional projects (14%). The EU is currently in the process of completing MEDA II, which originally was to be in effect between 2000 and 2006. This process, however, has not yet been finalized, and MEDA I has thus been extended. 15 Ghesquiere p. 5 16 Mahjoub, Azzem; Zaafrane, Hafedh. “The Euro-Mediterranean Free Trade Zone: Economic Challenges and Social Impacts on the Countries of the South and East Mediterranean.” Mediterranean Politics. Volume 5, Number 1, Spring 2000. p. 19-21. 17 The name MEDA is not an acronym. The official name of the program is MEDA. 18 Exchange rate of May 30, 2001. 19 The EU’s Mediterranean & Middle East Policy: The Euro-Mediterranean Partnership (Barcelona Process), The MEDA Programme. See the European Commission website at: [http://europa.eu.int/comm/external_relations/med_mideast/euro_med_partnership/meda.htm] CRS-7 Table 2. MEDA I Bilateral and Regional Cooperation MEDA I (1995-1999) - BILATERAL AND REGIONAL COOPERATION* COMMITMENTS MILLIONS OF EUROS PAYMENTS MILLIONS OF EUROS PAYMENTS/ COMMITMENTS (%) ALGERIA 164 30 18.2 MOROCCO 656 127 19.4 TUNISIA 428 168 39.3 EGYPT 686 157 22.9 JORDAN 254 108 42.5 LEBANON 182 1 0.5 SYRIA 99 0 0.0 TURKEY 375 15 4.0 WEST BANK AND GAZA STRIP 111 54 48.6 SUBTOTAL: BILATERAL COOPERATION 2 955 660 22.3% REGIONAL COOPERATION 480 230 48% 3 435 890 26% TOTAL * The low levels of disbursement are explained by various factors such as the domestic political situation in the case of Algeria, or restrictions imposed by the European Parliament due to the human rights situation in Turkey. Source: Report from the Commission: Annual Report of the MEDA Programme 1999, Brussels Dec. 12, 2000, p. 8. Economic liberalization and integration into the global economy will entail a significant burden on local economies. For instance, the EU-Tunisia Association Agreement calls for the modernization of some 4,000 Tunisian industries. By 2000, 1,624 firms had applied for funds to modernize, 860 of the applications had been accepted, and it was estimated that the cost of modernization would amount to $1.2 billion.20 Such modernization efforts represent one example of MEDA funded projects. Agriculture is an important sector, both socially and economically, for many countries around the Southern Mediterranean, employing large segments of the population and generating much needed foreign currency. 21 The EU’s Common Agricultural Policy (CAP) makes the extension of cooperation into this area 20 al-Hayat, March 1, 2001. 21 Friends of the Earth Middle East. p. 2 CRS-8 complicated. The EU-MED partnership calls for progressive liberalization of agricultural trade, but stops short of calling for complete free trade as it does in the case of manufactured goods. Limits have been imposed so as to ensure MED crops do not compete with European production, thus forcing farmers who wish to profit from the EU market to choose crops which may not be appropriate to the region. Such crops normally demand intensive applications of inputs e.g. water and agrochemicals and/or farming marginal lands, which may have negative environmental effects in the long run. Analysts have pointed to potential positive and negative effects on the environment as a result of the Barcelona Process. Trade liberalization is viewed by many analysts as a factor that encourages urbanization, which will further heighten pressure on already burdened urban environments in the MED region.22 Moreover, industrial and agricultural activity could intensify, as foreign investment increases and the MED economies focus increasingly on export promotion. Furthermore, as these countries open up to increased trade and remove customs duties, the funds available to various governments will be reduced, potentially limiting their ability to address social and environmental issues at a time when pressures and needs are mounting.23 There are, nevertheless, some potential positive ecological outcomes. The availability of more advanced technology and the removal of certain subsidies may lead to enhanced efficiency and less pollution. Environmental niche markets, such as organic crops, may bring potential gains both for trade and the environment.24 Increased economic activity could boost tax revenues and give governments enhanced capabilities for dealing with environmental programs. In order to take advantage of the opportunities for improvement, however, some advocate the establishment of supporting institutions and policies, backed with sufficient authority and finances. The EU has a Directorate-General dealing with environmental issues and NAFTA has a relevant set of institutions.25 This sort of supporting institutional framework has yet to be established in the context of the EU-MED cooperation process. Prospects and Limitations The process of liberalization will essentially entail the opening of MED markets to EU goods, as the EU already accords duty free access to most MED manufactured goods. The EU therefore stands to gain from such increased access to MED markets, while the Mediterranean partner countries have an opportunity to attract European technology and investment, as well as increased financial assistance through various programs intended to mitigate the negative effects of economic liberalization. Nevertheless, thus far not many European businesses have shown great interest in the opening MED region and in the opportunities offered by the Euro-MED Partnership. 22 Ibid. 23 Ibid. p. 1 24 Ibid. p. 73 25 Ibid p. 1 CRS-9 The benefits for the Mediterranean countries of cooperation with the EU have, so far, been limited, although Morocco and Tunisia are exceptions. The growth of their garment industries, and intensive sub-contracting in that sector, would not have been possible without the advantageous conditions of access to the European market offered from 1978, with the entry into force of cooperation agreements. Industrial development and trade in manufactured products nevertheless remained essentially limited to this sector.26 The rest of the region has thus far remained largely unresponsive to the opportunities to sell in the European market. Many see the participatory partnership approach of the Barcelona process is a strength in that it brings many diverse nations into cooperation. But others worry that it creates enthusiasm and expectations which, if not met, might lead to disappointment and loss of confidence. The diversity of the MED countries and the political tensions between some of them already has posed, and will continue to pose, problems and slow down the process of cooperation. Furthermore, the long-term success and sustain ability of the partnership will hinge on the establishment of durable peace and stability in the region. The Euro-Mediterranean Partnership has also given new impetus to the idea of intra-Arab free trade. This would comprise a major step towards a true free trade area around the Mediterranean, with intra-MED as well as EU-MED free trade, as opposed to a hub-and-spokes system of trade only between the EU and individual MED countries. Many observers believe that the domestic markets of individual MED countries are too small to draw substantial interest from the international business community. In order to attract larger shares of foreign direct investment, they maintain that the MED countries have to be perceived as part of one big market where it is possible to invest and trade without restrictions.27 The Barcelona Process can thus offer important financial and technical support for the process of regional integration as well. The Peace Process and U.S. Interests The Barcelona process is complementary to, but separate from the Middle East peace process and as such, has managed to serve as a forum for the partners to meet despite the ups and downs in regional relations.28 Following the outbreak of the alAqsa Intifadah in September 2000, and the breakdown of Israeli-Syrian talks earlier in the year, the Barcelona process is facing serious challenges and some Arab countries chose to boycott the November 2000 Euro-MED Summit in Marseilles, refusing to participate in a cooperative forum with Israel. 26 Rhein, Eberhardt. “Euro-MED Free Trade Area for 2010: Whom Will it Benefit?” The Journal of North African Studies. Volume 3, Number 2, Summer 1998. p. 4 27 Joffé, George. “Perspectives on Development: The Euro-Mediterranean Partnership.” The Journal of North African Studies. Volume3, number 2, Summer 1998. p. 13 28 Dalak, Eva. “Focus on Europe: The European Union and the Middle East.” Bulletin of Regional Cooperation in the Middle East published by Search for a Common Ground in the Middle East. Volume 8, number 4, Winter 2000/2001. p. 14 CRS-10 The Barcelona Process signals that Europe seems to want to take on a bigger role in the advancement of the peace process. While some observers view the United States as wary of Europe’s perceived bias towards the Arab countries, the Europeans, according to some analysts, are critical of what they see as an American tendency to support Israeli positions. The EU nevertheless recognizes that it cannot replace the United States as the prime peace promoter, which was explicitly acknowledged in the final statement of the Marseilles summit in November 2000.29 The Union maintains that it strives to complement the American position on Middle East peace, rather than compete with it, according to the statement. The EU presents itself as a ‘facilitator of regional dialogue’ through the Euro-Mediterranean Partnership. According to the European Commission, “one of the successes of the Euro-Mediterranean Partnership is to have allowed, against a tense background, dialogue to be pursued between Mediterranean Partners involved in the [Middle East peace process] in a context of regional meetings on all questions of common interest. The Partnership still remains the only multilateral forum outside the United Nations where all the conflict parties meet.”30 Despite the positive effects of the Barcelona Process, some might feel that it is competing with American interests. However, no such concerns have recently been voiced by U.S. officials. 29 Conclusions formelles de la Présidence, Quatrième conférence Euro-Méditerranéenne des Ministres des Affaires Etrangères, Marseilles, France, 15 - 16 November, 2000. 30 The EU’s Mediterranean & Middle East Policy: The EU and the Middle East Peace Process; the Union’s Position and Role. See the European Commission website at: [http://europa.eu.int/comm/external_relations/med_mideast/mideast_peace_process/] EveryCRSReport.com The Congressional Research Service (CRS) is a federal legislative branch agency, housed inside the Library of Congress, charged with providing the United States Congress non-partisan advice on issues that may come before Congress. EveryCRSReport.com republishes CRS reports that are available to all Congressional staff. The reports are not classified, and Members of Congress routinely make individual reports available to the public. 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