Regional Integration in the Middle East and North Africa: A Call to Action

Countries in the region now have more incentives to move forward with regional integration

Opportunities for regional integration include energy and water supplies and some sub-geographical areas within the region. (AFP)

The Middle East and North Africa (MENA) region is rich in human and natural resources, a common culture and languages, and a solid legacy of skills in trade. The region's total population is close to that of the European Union, yet it is the least economically integrated region in the world. As countries in the region seek to create more jobs, attract more investment, boost growth, and recover from the COVID-19 pandemic, they are today finding a strong economic incentive to accelerate efforts for economic integration.

Throughout history, the region has been at the crossroads of regional trade routes, and its countries have previously concluded a range of multilateral, regional and bilateral trade agreements, but their tangible outcomes have been limited. The benefits of regional integration include the spillover effects of growth, market expansion, and economies of scale. These advantages are well understood by the region's economists, as well as by merchants and farmers. But what the region lacks is not justification or capabilities to achieve integration, but rather a sense of urgency to prioritize and move towards integration.

As pressures from climate change, population growth and development increase, it will become increasingly important to develop adequate frameworks to enhance regional cooperation. A wide range of global examples demonstrate the power of water as a catalyst for cooperation. As a result, strengthening transboundary water cooperation can be a powerful tool for improving water security in the countries of the region, as well as promoting economic prosperity and increasing cooperation.

Opportunities for regional integration include energy and water supplies and some sub-geographical areas within the region. These areas will benefit from advanced dialogue, basic technical work, and the promise of strong positive economic impacts in the very near future.

With the exception of the Gulf Cooperation Council countries, the energy sector in the region is characterized by grid interconnectedness but lacks integration. The result is that only 2% of the electricity produced in the region is exchanged between countries each year. Recognizing these advantages, the Arab Ministerial Council for Electricity, under the supervision of the League of Arab States, has given priority to the establishment of the Arab electricity market. The World Bank participates in this initiative and provides technical assistance and advice. The Arab electricity market has an ambitious goal of increasing cross-border electricity trade from 2% currently to 40% by 2035. This will provide the region with one of the world's largest integrated multi-country power grids – producing a total generation capacity of more than 600 gigawatts by 2035.

In North Africa, existing regional energy links with European countries on the Mediterranean must also be expanded. In a recent meeting with Arab governors during the World Bank Group Annual Meetings, I emphasized the need to continue and accelerate these vital regional energy initiatives, and to prioritize actions that will help reduce imbalances between the demand and supply sides in many MENA countries.

The fact that water resources in most countries of the region are shared provides an opportunity to accelerate the pursuit of regional integration. In the region, all river basins, tributaries and groundwater aquifers are common water resources. As pressures from climate change, population growth and development increase, it will become increasingly important to develop adequate frameworks to enhance regional cooperation. A wide range of global examples demonstrate the power of water as a catalyst for cooperation. As a result, strengthening transboundary water cooperation can be a powerful tool for improving water security in the countries of the region, as well as promoting economic prosperity and increasing cooperation.

Finally, as outlined in the recently released update document of the World Bank Group's Approach to Regional Integration in Africa, it is necessary to strengthen and enable the strong historical and socio-economic ties that exist between the Maghreb and Sub-Saharan African countries. In anticipation of the entry into force of the AfCFTA, it is now time to expand and consolidate existing programs of regional cooperation, including in the areas of agriculture and digital transformation where progress is most needed, and to explore additional opportunities for regional integration between North Africa and Sub-Saharan Africa.

Despite the enormity of the challenges of establishing and maintaining regional trade, infrastructure, and institutions, MENA countries are on the cusp of important initiatives for regional integration that will enable much-needed improvement in efficiency, economic diversification, confidence-building, and green growth, all of which are It will play a catalytic role in economic growth and poverty reduction in the region. The World Bank Group stands ready to play a role in furthering this forward-looking agenda.(David R. Malpas)