Regional issues

54 - Reforming financial support to the MENA region

Grade: B-
Unity 4/5
Resources 3/5
Outcome 5/10
Total 12/20

Europe responded to the revolutions in the region by promising money, mobility and market access. But its support fell dramatically short of a new “Marshall Plan”.

Financial co-operation with MENA states over recent years, based on long-term support for modernisation, came under sharp criticism for having contributed to the consolidation of authoritarian rule. While Europe was pressed to show renewed and concrete solidarity with the people of North Africa, the economic crisis and national spending cuts undermined the possibility of any momentous increase in funds. The revolutions prompted changes to European policy towards the region, the ENP and development co-operation in general. The European Commission and High Representative Catherine Ashton took the lead by promising “more for more” and “money, mobility and market access”.

Much of the money for the region was reallocated from the EU budget for Asia and Latin America. Additional funding came mainly from loans: the EIB lending ceiling in the region was increased by €1 billion and the EBRD’s mandate was expanded to include the region. There was a 25 percent increase in funds available for the last two years of the multiannual financial framework (about €800 million) and a 50 percent increase in funding for the neighbourhood was proposed for the seven years to 2020. How allocation and implementation modalities will change in practice remains unclear, with a need to balance political steering (conditionality and differentiation) with predictability in funding. Some new instruments were introduced, such as a new €350 million SPRING programme to ensure more flexibility in allocating resources to reforming countries, while more focus was put on civil society support, youth, employment and the private sector. 

Some member states, including the UK, Sweden, France and Spain, also redirected some of their bilateral funding towards the region, but member states disagreed about whether to use EIB reflows (which was prevented mainly by Germany) and on moving money from the Eastern Neighbourhood to the south (which Slovakia and Poland resented). As a result, the EU’s support for the region fell dramatically short of a new “Marshall Plan”.