Salvatore Capasso, Giovanni Canitano (a cura di)
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.