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The cost of a non-unified Maghreb

Francis Ghilès, a recognized expert on energy issues, gave us his take on economic integration in the Maghreb a few weeks before the launch of the new trans-Mediterranean pipeline, Medgaz. In the interview, he highlighted the exact historical circumstances surrounding the creation of the Pedro Durran Farrel pipeline. Ghilès stressed the importance of the past in any true understanding of current energy perspectives in the Maghreb.

 

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*Translated from the original version in French

1. As of today, where do we stand in terms of regional economic integration in the Maghreb?

Today the integration process has broken down. Since the 1990s, it has faced political obstacles and roadblocks which have undone previous accomplishments.

Thanks to a window of opportunity in the middle of the 1980s, the Arab Maghreb Union (UMA) was created in 1989. In 1984, the President of Algeria, Chadli Bendjedid, was able to convince Algerian leadership to re-embrace diplomatic relations with Morocco. He called for relations that did not require any settlement of the dispute over Maghreb international borders as a precondition. The challenge of economic cooperation was no small task, but the Moroccan King, Hassan II, accepted this rapprochement between Algeria, Morocco and their neighboring countries. Thus, construction negotiations for the creation of a pipeline between Algeria and the Iberian Peninsula began. The Algerian head of state proved himself politically courageous by overcoming the indecisiveness of certain army and security leaders in the country.

The construction of a pipeline to bring the two countries together was possible because of new technical and economic opportunities. The techniques necessary to lay a pipeline in deep water had been mastered by the Italian company SAIPEM, and the Spanish energy market was growing. The Moroccan side could benefit from the royalties it received. Furthermore, the pipeline would permit the Kingdom to satisfy its growing needs namely in Jorf Lafar and Casablanca by purchasing Algerian gas, in an amount that could exceed its royalties.

Thanks to these negotiations, an agreement was reached in the beginning of the 1990s to build the Pedro Duran Farrell pipeline. Morocco, nonetheless, made two mistakes. The first was to insist on receiving 7% royalties on the gas flow. Tunisia accepted 5.5% royalties for the Enrico Mattei pipeline, which has connected Algeria and Italy since 1983. The second mistake was its refusal to let Algeria invest capital in the underwater portion of the pipeline. Such investments were permitted with the Enrico Mattei pipeline, the only underwater gas pipeline in existence at the time. Enrico Mattei should have been seen as an easy example to follow. Morocco was initially committed to buying 1 billion cubic meters of Algerian gas in addition to its royalties. However, it retracted this offer right before signing the contract.

Without a doubt, these blunders were the result of the Moroccan negotiators' lack of long-term vision. However, despite the extremely cold relations between the two countries, I am not the only one that thinks that the Maghreb economy was build through an agreement over the joint use of phosphates, gas, sulfur and ammonia .

Only through an agreement to work on something in common, like the countries in Europe did after 1945, will the Maghreb become an actor in control of its own destiny. If not, regional political decision makers will lose their countries’ global status. Their countries will become nothing more than chess pawns on an international chessboard.