Mediterranean entrepreneurs upbeat over proposed union

PARIS, July 5 (Chinese media) -- Only days to its official launch, the proposed Union for the Mediterranean (UPM) is already raising hopes among entrepreneurs who see it as medium to promote growth, both in the north and south, but Europeans remain reluctant to invest in the Mediterranean basin.

After much acrimony and controversy, the proposed union, thebrainchild of French President Nicolas Sarkozy, is scheduled to beofficially launched during a heads of state and government summit slated for Paris on July 13.

"Business entrepreneurs from both sides of the Mediterranean are busy positioning themselves with a view to finding growth opportunities," a prominent French businessman said recently on the sidelines of regional conference dubbed "MedBusinessdays" held in Marseilles, a port city in southern France.

"The French president has given a new impetus to relations between the European Union and neighboring states from the Mediterranean region by launching the ambitious project," said the businessman.

"Currently, the southern countries are enjoying growth rates twice stronger than ours, these are the locomotives," Philippe de Fontaine Vive, Vice-President of the European Investment Bank (EIB), was quoted as saying during the Wednesday conference.

Nevertheless, speaking during the summit, Habib Yousfi, president of the association of Algerian employers, was quick to point out flaws within the proposed union: "I am a little pessimistic about the UPM. For the moment, we have no clear visionon how we are going to finance investment projects."

"Where are we going to sources the funds? Are they going to come from the European Union or the private sector? We are yet to answer this question and many more," said the Algerian.

"The volume of investment from the European Union has continued to remain subdued," said Peter Mandelson, a former British minister and currently European Commissioner for Trade.

If trade with the EU account for almost half of the total trade done by the Mediterranean countries, imports and exports from these countries account for less than 10 percent of flows into Europe, according to official figures.

In the services sector, arguably the most important, trade between the regional countries represents a paltry 5 percent of the total volume of trade in services of the 27-member EU.

"After largely financing the development of Eastern European countries, the EU is finally turning its attention to the southern shore of the Mediterranean, but it's a little late," said Habib Yousfi.

According to a study conducted by Ernst Young and published Wednesday, potential investors remain cautious about investment opportunities in the Mediterranean basin, even as they continue to invest heavily in both Central and Eastern Europe.

"Many entrepreneurs, especially small and medium-sized enterprises, are reluctant to take risks in the Mediterranean, because the freedom of capital movement is not sufficient yet," said an observer. "There is need to establish a venture capital industry, to invent new forms of funding," he added.

"Just as is the case with north-south trade relations, there is likewise a need to boost trade ties between the southern countries themselves," said Peter Mandelson, who noted they currently represent only 6.4 percent of the total trade of these countries.

Another obstacle on the way of the proposed union, according to keen observers, is the persistent tensions afflicting several southern Mediterranean countries.

"Many people are afraid to invest here," said Jean-Jacques Sarraf, president of Business Med, which brings together 12 Mediterranean employers' associations. As a result it is mainly the Gulf countries that invest in the south. "Therefore, what we need is not their money, but the technology of Europe," he said.

Further, southern entrepreneurs deplore the lack of flexibility in immigration policies. "The only possibility to reduce migration to Europe is to have wealthy southern countries, which could then, in their own right, become chosen destinations for immigrants," said Moulay Hafid Elalamy, who represented Moroccan employers during the Marseilles conference.