Mediterranean Economies 2023
DOI: 10.1401/9788815411167/p3
The conflict has intensified tensions
between Russian and European authorities. In response, the European Commission implemented
economic sanctions against Russia in an attempt to persuade Russian forces to withdraw from
Ukraine. Additionally, over 700 companies chose to suspend their operations or exports in
Russia, demonstrating their opposition to the war and their commitment to continue selling
their products in other countries. These multinational companies span various sectors,
including the textile industry. These sanctions are expected to produce significant economic
effects. In chapter 3 Yolanda Pena-Boquete, Ivan Sergio and Maria Seredenko examine the
implications of a one-year halt in exports from Italy and Spain to Russia on the Italian and
Spanish economies. By isolating the export impacts from other potential factors like import
reductions or changes in
¶{p. 14}energy prices, the chapter offers valuable
insights for policymakers to identify the sectors that may face the greatest consequences,
and explores alternative solutions and compensatory measures. The findings indicate that
Italy would experience a higher degree of impact compared to Spain due to the disruption in
exporting to Russia. The objective of the chapter’s analysis is to identify the sectors that
would witness significant declines in production, value-added or employment and to suggest
possible counter effective policy measures.
Assessing not only the direct impact of
the cessation of exports from Spain and Italy to Russia but also the indirect effects on
suppliers of export firms is crucial when examining the complete trade closure between
Europe and Russia. Utilizing multisectoral models based on input-output tables enables the
calculation of both direct and indirect effects stemming from the halt in exports to Russia.
Consequently, this chapter estimates the extent of production and job losses in Italy and
Spain resulting from the inability of exporting companies and their suppliers to engage in
trade with Russia. It is important to point out that many Spanish and Italian companies had
already faced significant operational restrictions in their dealings with the Russian
market, particularly following the Russian invasion of Crimea in 2014. Consequently, the
complete termination of trade relations with Russia may have a mitigated impact on these
countries.
The Russia-Ukraine war has reinforced
the strategic position of the Mediterranean in the energy markets. In chapter 4 Irene Bosco
and Giovanni Canitano investigate the dynamics of the commercial trade in energy sources in
the Med area and in MENA countries, taking into account the consequences of the COVID-19
pandemic and the Russian-Ukrainian conflict. The chapter mainly focuses on the exports and
imports of fossil fuels, since these still represent the main energy resources for most
countries, but also analyses the dynamics of the renewable energy market. The MENA region
plays a vital role in fulfilling the energy needs of neighbouring countries due to its
advantageous geographical position, both as a source provider and for commercial trade.
Europe and Asian regions heavily rely on oil and natural gas as their primary fossil fuels,
although there has been a rise in the consumption of renewable energy due to the green
transition. While the United States and Russia also ¶{p. 15}contribute as
energy suppliers, MENA countries continue to be the primary providers of oil and natural
gas. This is particularly significant given the recent disruption in energy supplies caused
by the Russian-Ukrainian conflict.
The MENA region also faces significant
challenges regarding food security since it relies heavily on the global food trade and is
particularly vulnerable to supply chain disruptions and price surges, as experienced during
the COVID-19 pandemic and the Russian-Ukrainian conflict. Long-standing challenges, such as
population growth, climate change, land degradation and water scarcity, further threaten
food security in the region. In chapter 5 Chahir Zaki and Nora Aboushady analyse the role of
trade policies in addressing food security. The chapter’s main notion is that open
international trade systems can improve global food production efficiency, affordability and
nutritional utilization. Yet open trade policies are not sufficient and must be accompanied
by domestic policies that ensure equal access to affordable food at the household level.
Additionally, international cooperation is needed to support smallholder farmers, enhance
their inclusion in the global system and increase their resilience to market shocks.
Despite their dependence on global food
markets, MENA countries impose high tariffs and non-tariff measures (NTMs) on imports, along
with costly administrative procedures. Trade agreements within the Arab region and bilateral
agreements with the EU often exclude or hinder food trade through excessive use of NTMs. To
improve food security, MENA countries can employ several strategies. Firstly, adopting more
open trade policies by eliminating tariffs and NTMs, especially on strategic food imports,
would enhance affordability and availability of essential items. Trade facilitation
measures, such as automating customs and streamlining administrative procedures, are
necessary to reduce trade time and costs. Secondly, modernizing the agricultural sector to
increase productivity and output, while addressing rural poverty, is crucial. MENA countries
should focus on agricultural self-reliance, where revenues from high-value crop exports
sustain food staple imports. Increasing productivity can be achieved through trade
liberalization of agricultural inputs, technological advancements, and investment in
research and climate-smart agriculture. The third strategy involves deploying non-trade
policies to enhance access to food at the national ¶{p. 16}level. This
includes expanding safety nets through targeted food subsidies or conditional cash transfers
to protect vulnerable groups from price fluctuations. Addressing rural poverty and
integrating smallholders into the global food value chain are also essential steps.
The COVID-19 pandemic acted as a
catalyst for the digital transformation of businesses, industries, governments and societies
worldwide, including Mediterranean countries. By exacerbating the disruption in the value
chain of production in many sectors and reinforcing the role of the military industry the
Russia-Ukraine war has accelerated the digital transition in many countries. In chapter 6
Luisa Errichiello, Luigi Guadalupi and Francesco Andreottola attempt to explain how COVID-19 has affected ongoing processes of digitalization in the
EuroMed countries through a comparative lens. The analysis employs a longitudinal dataset on
digitalization produced by the European Union and measured through the so-called Digital
Economy and Society Index (DESI), a comprehensive measure of data related to 27 individual
EU members reflecting different aspects of digitalization. The chapter also uses qualitative
data (based on technical reports, working papers, official documents, etc.) related to each
country to support the interpretation of the quantitative analysis. Digital transformation
can represent an important opportunity for Euro-Mediterranean countries, especially for
developing ones. To foster digital convergence between these countries, governments should
put in place policies to support the training and development of digital skills of the
population, to encourage high investments in digital infrastructures, promote collaboration
between countries to define standards and share data and, finally, encourage a common
culture regarding the protection of personal data and cyber-security.
As already stressed, the COVID-19
pandemic and the Russia-Ukraine war have put supply chains (particularly those connecting
with China and Asia) under pressure. In particular, these events have affected freight
transport and logistics around the globe, causing major interruptions and producing a great
deal of stress which resulted in the significant increase of freight rates and transport
costs, as well as in the delivery times of goods. Such events have had significant
consequences in the Med area where the disparities between southern Mediterranean countries
¶{p. 17}and their European counterparts in terms of development and
sophistication of the transport and logistics systems are increasing. In chapter 7 Pietro
Evangelista, Tania Toffanin, Jamal El Baz and Jukka Hallikas explore the effects of the war
between Russia and Ukraine on freight transport and logistics in the Mediterranean region.
Southern Mediterranean countries, in particular, are having increasing difficulty
integrating in international supply chains and adapting their transport systems to the
changes that have taken place in global logistics and supply chain management.
The war has highlighted the fragmented
approach to managing supply chains and the lack of resilience in responding to crises and
disruptions, including the COVID-19 pandemic. This has resulted in a «logistics gap» between
the countries on the northern and southern shores of the Mediterranean Sea. The EU countries
on the northern shore have more advanced transport and logistics systems, as well as
competitive logistics companies, compared to their counterparts on the southern shore. The
logistics sector in the southern Mediterranean countries is still underdeveloped, with
limited capacity, technological innovation and know-how. Local logistics companies often
work as subcontractors for larger EU logistics service providers, offering a limited range
of services and hindering their integration into international supply chains controlled by
European companies.
While the future of the war in Ukraine
remains uncertain, it is evident that it is altering the global geopolitical equilibrium.
From a policy perspective, it is crucial for Mediterranean countries to integrate with the
EU countries to enhance the preparedness and resilience of their logistics systems in
handling future crises. This requires removing tariff-related barriers and strengthening
trade liberalization between the two blocks to maximize the economic benefits of a Free
Trade Area in the Euro-Mediterranean region.
The war in Ukraine, more than the
COVID-19 pandemic, risks producing significant long-run effects on Mediterranean societies.
The recent increase in energy and food prices together with the slowdown in economic
activity has put a strain on more fragile economies by increasing inequality and poverty
almost everywhere. Countries with weak welfare and health systems, in particular, have found
it difficult to cushion the most vulnerable social groups from consecutive multiple shocks
whose consequences are still evolving. Depending on the dynamics of
¶{p. 18}geopolitical tensions, the effects of the war may badly hurt the
growth prospects of the whole Med area.
In chapter 8 Bruno Venditto, Immacolata
Caruso and Valentina Noviello examine the interconnection between external events like
conflict and climate change and their impact on human migration. The objective is to
understand how such movements can reinforce existing inequalities or create new imbalances,
with a specific focus on the gender gap. While there is general consensus among scientists
and scholars about the rapid pace of climate change, the relationship between climate change
and human migration is not always well-explained or fully understood. Forced migration is
often sensationalized and portrayed in alarming terms, promoting fear-based narratives of
large waves of migrants relocating to Europe and North America.
Prior to the humanitarian crisis
resulting from the war in Ukraine, migrants were typically perceived through a Eurocentric
lens or flawed representations, and discussions on human mobility focused on finding
solutions to the perceived threats posed by these migratory movements to prosperous Western
Europe. In parallel, the discourse on human mobility began to centre around categorizing
migrating individuals. However, it is evident that, regardless of individual states’ flow
control policies, people will continue to move.
In chapter 9 Desirée Quagliarotti and
Stefania Toraldo consider and examine the Mediterranean region both as a nexus for water,
energy and food (WEF) and a hotspot for climate change. The idea is that the WEF nexus and
climate change are closely interconnected, with multiple bidirectional interactions. Yet the
current approach to WEF policy and decision-making in countries has primarily focused on the
supply side, disregarding climate change issues. This approach has created a negative cycle,
leading to trade-offs rather than synergies across resources, sectors, and even societal and
environmental goals.
The ongoing war between Russia and
Ukraine, along with the resulting sanctions, has significantly disrupted energy and food
markets. These disruptions are expected to have widespread effects well into 2023 and 2024
since Russia and Ukraine play pivotal roles in global commodity markets. The impacts of the
war are not evenly distributed, particularly affecting countries heavily reliant on imported
energy and food from conflict-affected
¶{p. 19}areas, including many
Mediterranean countries.