COMMISSION OF THE EUROPEAN COMMUNITIES 
C0M(93) 375 final 
Brussels, 8 September 1993 
COMMUNICATION FROM THE COMMISSION 
FUTURE RELATIONS AND COOPERATION BETWEEN THE COMMUNITY 
AND THE MIDDLE EAST 
TABLE OF CONTENTS 
INTRODUCTION 
I. THE CONDITIONS FOR COOPERATION Pages 
1. From peace process to cooperation process 2 
2. Partnership requires more balanced economic 2 
development 
II. PROMOTING A SUSTAINABLE COOPERATION PROCESS IN THE MIDDLE EAST 
1. steps towards regional cooperation 3 
2. A common regional vision 3 
3. The process should be assisted by outside parties 4 
III. FUTURE RELATIONS WITH THE MIDDLE EAST 
1. A balanced triangular relationship 4 
2. Europe and the Mashrak 5 
3. Europe and Israel 5 
4. Israel and the Mashrak 6 
IV. CONCLUSION 
A* 
Introduct ion 
1. The Community and its Member States have been fully committed to the 
achievement of a just, lasting and comprehensive peace in the Middle 
East, throughout the Arab-Israeli conflict and have congratulated the 
parties on the historic step which has been made in negotiations between 
Israel and the Palestinians. This should give an impetus to the other 
bilateral negotiations and to the multilateral talks on future 
coopérât ion. 
2. The purpose of the present Communication is to explore longer term 
perspectives for involving Egypt, Israel, Jordan, Lebanon, the Occupied 
Territories and Syria in a process of regional cooperation, supported by 
the Community, which should consolidate the emerging peace settlement. 
3. The Community's experience with regional cooperation and its involvement 
in the peace process, especially in the multilateral talks, has led it 
to the conclusion that a longer term approach to problems of regional 
cooperation and security is now needed. Indeed the parties to the 
conflict have requested that the Community help develop such an 
approach. 
4. It is, therefore, timely for the Community and its Member States to 
present to the parties a global perspective on the gains which the 
region as a whole can expect in the context of a political settlement. 
The Community is well placed for this task. It has close relations with 
all the parties directly concerned and has a strong interest in the 
region's security and stability. In its relations with the Middle East, 
the Community will continue to promote democracy, pluralism, the respect 
for human rights, the tolerance of minorities and coexistence of 
different cultures and religions. 
5. Accordingly, this Communication seeks to address three basic questions: 
(i) What are the conditions for cooperation in the region? 
(ii) What role should the Community and its Member States play in 
making cooperation irreversible? 
(iii) How should the triangle of relations between the Community, Israel 
and the Mashrak be developed to optimise benefits for all the 
part ies? 
4 l 
I. THE CONDITIONS FOR COOPERATION 
1. From peace process to cooperation process 
Peace is the pre-condition for the successful development of regional 
cooperation. The Community's own experience demonstrates that war 
between previously hostile parties can be made unthinkable through 
economic integration. While this model cannot easily be transposed to 
the Middle East, it does suggest that the development of regional 
economic cooperation can be a powerful tool in reducing the level of 
conflict, making peace irreversible and encouraging the people of the 
region to learn to live in peace. In this context, the Community should 
support efforts by the regional parties to establish systematic forms of 
cooperation in areas vital to their economic progress and well being 
such as water and energy. 
The peace process should therefore be followed by a "cooperation 
process" between the parties in the region. 
2. Partnership requires balanced economic development 
If cooperation is to succeed, it is essential to reduce excessive 
disparities in income levels between potential partners in the region. 
Despite efforts on their part, none of the Mashrak countries have yet 
achieved self-sustaining growth. Israel, on the other hand, enjoys 
living standards comparable to those in western Europe, although it is a 
substantial aid recipient. These standards are more than ten times 
higher than those of its neighbours. According to the World Bank, seven 
million Israelis could achieve by 2010 a GDP nearly equal to that of the 
130 million Arabs in neighbouring countries. These gaps are similar to 
the income gap separating Europe and the Arab world on the southern 
Mediterranean coast. 
In the long term, the chances of maintaining peace in the Middle East 
will be significantly influenced by the pace of economic development 
throughout the area. This requires, above all, enormous efforts to be 
undertaken by the Arab countries themselves. But it implies, equally, 
the firm commitment of Europe, Israel and the Gulf countries and the 
wider international community to assist them in their endeavours. 
- 3 -
I I. PROMOTING A SUSTAINABLE COOPERATION PROCESS IN THE MIDDLE EAST 
1. Steps towards regional cooperation 
Peace will be sustainable in the Middle East if the peace agreements, 
once concluded, are followed by a long term cooperation process between 
the regional parties. A climate of confidence could best be generated in 
a pragmatic manner through small steps rather than ambitious 
undertakings. This will encourage the regional parties to reflect 
together, to develop habits of cooperation and gradually to consider 
creating institutional arrangements. 
Initially, cooperation has more chance to succeed in the private sector 
and between business federations, universities, municipalities, 
technical institutions. The process could start with any group of 
partners ready to go ahead in any field, from economy to culture. 
Community experience demonstrates how difficult it is to sustain 
regional cooperation efforts without institutions. That is why this 
process should lead the countries of the region along the path of 
"progressive institutionalisation", as Europe did in the 1950s starting 
with the Coal and Steel Community. 
2. A common regional vision 
This cooperative approach has been initiated in the multilateral working 
groups of the peace process in order to contribute to a common regional 
vision for the development of the Middle East. To this end, cooperation 
should go in two directions: the pooling of common capacities and the 
tackling of common problems. 
One of the obstacles to effective economic and social development is the 
small size of the countries concerned which limits economies of scale. 
It would, therefore, be useful for the parties to consider how their 
economic prospects could be enhanced by: 
- creating the basis for a future Middle Eastern economic area 
implying, at some stage, freedom of movement for goods, services, 
capital and labour; 
- efficient regional infrastructures in areas such as transport, 
communications, energy, water management; 
- better use of available resources in tourism, education, research, 
agriculture, industry. 
Energy, water as well as health, the environment and the problem of 
refugees are among the common problems stretching beyond national 
borders which should be tackled in order to help the populations to lead 
a better life, and hence to increase political stability and regional 
secur i ty. 
A regional approach to economic development could offer particular 
advantages to the Occupied Territories and to Lebanon where economic 
revitalisation is the key issue. 
3. The process should be assisted by outside parties 
The experience of the peace process shows the usefulness of working with 
outside partners, acting as catalysts. Their active presence will 
undoubtedly remain necessary for a long time to come. The basic 
multilateral institutional framework created at the Madrid conference 
should, therefore, remain in place. It might well evolve into a regional 
organisation, along the lines of the OECD, with the increasing 
involvement of the regional parties and Europe. 
III. FUTURE RELATIONS WITH THE MIDDLE EAST 
1. A balanced triangular relationship 
Europe should be prepared to offer further support to the region to 
consolidate peace and to encourage regional integration. A triangular 
relationship between Europe, the Mashrak and Israel should be carefully 
balanced to open cooperation opportunities according to the capacities 
of each partner and should also lead to closer relations between Israel 
and the Mashrak. Accordingly: 
1) the Mashrak countries and Israel should be encouraged to undertake 
economic reforms and regional co-operation; 
2) the Community should offer the Mashrak countries a closer 
partnership along the lines of that offered to the Maghreb 
countries, while taking into account the specific characteristics 
of each country concerned; 
3) the Community should offer Israel the same concept of partnership 
adapted to its situation, and should involve Israel more closely 
with European developments where common ground and interests 
exist; 
4) relations with all the countries of the region should be based on 
respect for human rights and the strengthening of democracy; in 
any agreements with the Community the specific clause will be 
inserted indicating that respect for human rights and the 
strengthening of democracy are essential elements of the 
agreement. 
In the present state of fragmentation in the region, the gains brought 
about by reforms at national level will not be able, by themselves, to 
yield sufficient economic effects. Regional cooperation would add 
important economies of scale and opportunities for economic 
specialisation. Therefore, one of the objectives of the future EC 
agreements with the Middle East countries should be to promote regional 
cooperation and institutions (for example water and energy management). 
Despite the fact that the Community concluded cooperation agreements 
with the five countries concerned in the late 1970s, the intensity of 
relations (trade, investments, science and technology, culture, 
political dialogue) neither reflects the region's strategic importance 
for the Community, nor its geographic proximity. They have asked the 
Community to give special attention to the development of mutual 
relations against the background of the completion of the internal 
market, European Union, its involvement with countries of central and 
eastern Europe, the Gulf countries and the Maghreb countries. 
- 5-
The new Community approach should be based on the realisation that the 
time has come to move away from pure development cooperation to 
partnership, engendering new forms of cooperation in many fields, 
whether political, social or economic. 
2. Europe and the Mashrak 
The Community's commitment to supporting the Mashrak economies will 
express its confidence In the region's future. For their part, the 
Mashrak countries will need to demonstrate their commitment to 
partnership by continuing the reform process and taking concrete 
measures to promote regional integration. 
This partnership should be based on: 
- polit ical dialogue; 
- progress towards free trade; 
- encouragement to reform; 
- support for regional cooperation; 
- financial cooperation. 
Regular DO I it ical dialogue will be an essential element given the 
strategic importance of the region. 
Trade should be an important element in the new agreements. The 
progressive dismantling on each side of tariff barriers could lead to 
regional free trade early in the 21st century. This would have a 
positive impact on inter-Arab and Israeli-Arab relations. The parties 
would, thus, participate in a wide area of cooperation and increasing 
economic freedom comprising Europe and a major part of the Arab world. 
It will be essential to assist the Mashrak countries in their efforts to 
reform their political and economic systems, to move to a market economy 
and to control population growth. 
All possible areas of regional cooperation encouraging the Mashrak 
countries to modernise their economies, should therefore be envisaged: 
macroeconomic issues, dialogue in all economic sectors, investment, 
employment, standards, customs, environment, science, technology, 
education, infrastructure, culture, demography, combatting drugs, etc. 
Appropriate forms of financial cooperation will be developed. The new 
EC-Mashrak parthership will require adequate funding both from public 
sources and increasingly through direct private investment. 
3. Europe and Israel 
Israel's particular profile should be taken into account in future EC-
Israel relations and in regional cooperation in a triangular framework. 
- 6 -
With a growing GDP per capita of more than $12,000 and a highly trained 
work force, Israel sees its future as a producer and exporter of high 
value-added goods and services, closely linked to the European Economic 
Area and institutions. Israel would wish to participate in various types 
of networks linking the Community and other European countries, which 
are not open to non-European third parties. 
Although the Community's relations with Israel should be based on the 
same basic concept of partnership which it intends to apply in its 
future cooperation with the Maghreb and Mashrak countries, the substance 
of this partnership should take into account Israel's level of 
development. 
Political dialogue, free trade in goods, capital and services and 
encouragement for regional cooperation should be included in the 
Community's relations with Israel in addition to intensive cooperation 
in all fields from banking to technology, energy, agriculture, 
industrial property etc. 
Israel and the Mashrak 
Whatever the future configuration of relations between Europe, Israel 
and the Mashrak, the Community should do its utmost to convince its 
Israeli and Arab partners to embark on long term cooperative relations 
and work together towards balanced regional economic development. 
It is therefore essential that the eventual peace settlement be 
strengthened by bilateral and multilateral Arab-Israeli cooperation 
agreements and possibly by joint institutions. 
Israel should be encouraged to participate in the development of the 
whole region and assisted in this endeavour. The new contractual 
relations to be established between the Community and all the parties of 
the region will contribute to this. 
IV. CONCLUSION 
Regional cooperation will only succeed with support from outside 
partners. The Community, because of its geopolitical situation, its 
close links with all the parties concerned and its own experience with 
regional cooperation, has a major role to play. It could also help to 
facilitate the rapprochement between the parties to the Arab-Israeli 
conflict by upgrading its own links with each of the countries 
concerned. 
This paper should contribute to the Community's policies towards the 
Middle East in the context of the achievement of peace. The resulting 
guidelines should be translated into work programmes to be implemented 
while peace is being established in the region and security 
strengthened. 
Other complementary initiatives dealing with short and medium term 
issues will be proposed shortly by the Commission, as necessary, in 
the light of the evolution of the peace process. 
COOPERATION PROCESS BETWEEN THE MASHRAK AND ISRAEL 
PROPOSED GUIDELINES 
I. POOLING COMMON DEVELOPMENT CAPACITIES Anro* i 
Pages 
ESTABLISHING THE BASIS FOR A MIDDLE-EASTERN ECONOMIC AREA 
1.1. Goods and services 
1.2. Labour 
1.3. Capital 
2. SETTING UP COMMON INFRASTRUCTURES 
2.1. Transport 
2.2. Energy 
3. EXPLOITING COMMON RESOURCES 
3.1. Tourism assets 
3.2. Professional expertise 
II. TACKLING COMMON PROBLEMS 
1. WATER 
ENVIRONMENT 
1 
Annex 1/1 
11. IHKHJNC COMMON DEVELOPMENT CAPACITIES 
1. ESTABLISHING THE BASIS FOR A MIDDLE EASTERN ECONOMIC AREA 
1.1. Goods and services 
One of the most urgent priorities for virtually all the countries of the Middle East, in particular 
the countries of the Mashrak and Israel, is to encourage trade and thereby foster an optimal 
division of labour between them. 
The present level of trade in goods and services between the Mashrak countries themselves and 
between them and Israel is minimal (less than two billion dollars per year, of which about 80% 
concerns Israeli-Palestinian trade). This situation is due essentially to the political obstacles, high 
levels of protectionism and inadequate transport links. 
With centres like Beirut, Amman and Tel Aviv, ,no more than 150 km from each other, the low 
level of trade between themselves is a costly economic absurdity. Peace could bring about 
change, but as the Egypt/Israel experience since 1981 demonstrates, peace in itself is not a 
sufficient stimulus to intra-regional trade. 
The prospect of a "free trade area" encompassing some 120 million people by 2020 would make 
the region far more attractive for private investors. 
A free trade area between the Mashrak countries and Israel seems to inspire more fear than hope 
among the potential partners, especially the least developed ones. In order to overcome existing 
hesitations, two parallel initiatives appear to be required: 
- the free trade area will have to be asymmetrical, Israel bringing down its protection 
immediately or in a much shorter transitional period (say 3-5 years) than the less developed 
partners (10-12 years) 
- the Community (which is in complete industrial free trade with Israel since 1989) , might have 
to offer the Mashrak countries who are prepared to take up the challenge to establish recipnx.al 
free trade in industrial prtnlucts. 
Thus, the Mashrak countries would not feel isolated in a "club" with Israel, but would feel part 
of a large group covering all of Europe and Israel. It would also oblige them, right from the start, 
to focus on competing in Europe and not only within the narrow Middle East region. 
By opening up their markets between themselves and with Europe, the tiny economies of the 
Middle East will be in a better position, to raise the level of efficiency of their economies and 
therefore to attract more European investment and technical know-how ensuring the reduction of 
the prosperity gap between Europe and the Middle East. 
1.2. Labour 
Labour movement has been, and continues to be one of the key factors of economic and social 
development in the region. On the one hand it has eased the chronic unemployment in the poorer 
parts of the region (Gaza, Egypt, and Jordan) and, on the other hand, it has helped to compensate 
for the scarcity of unskilled labour in the high income countries like Israel and the Gulf countries. 
Annex 1/2 
Labour movements have, however, also been a factor of political tension in the region. Indeed, 
millions of workers have been sent home at short notice without due compensation, without 
accumulation of any social security rights and often even losing much of their savings. 
According to western standards, the material and legal conditions of the migrant population have 
been in many instances inhumane, not subject to appropriate international conventions. 
In the future migration will continue but at a lesser intensity, indeed, joint ventures, sub­
contracting and intra-regional trade in manufactures and components, might be expected to 
replace, at least partially, flows of migrant labour. 
There will be a need for the region to more properly address the issues of rights and obligations 
of migrant workers. Ideally, all the countries concerned should be called upon to negotiate a 
multilateral convention or charter for the protection of migrant workers, similar to those in force 
in Europe. 
As a matter of priority it is necessary to address those issues in relation to Israel and the Occupied 
Territories for some 100,000 Palestinian workers who may continue to work as frontier workers. 
1.3. Capital 
The Middle East at large is marked by the rare co-existence of a few major capital exporters 
(essentially Saudi Arabia, Kuwait and UAE) with all the others needing to import capital, at least 
for some time to come. 
However, in the past, only a small fraction of the overall surplus capital (no more than 10%) was 
invested in the poorer countries of the region, due essentially to political instability and tension 
(Israeli/Arab conflict) and poor economic management and performance of many countries of the 
region. 
The combination of peace and economic reforms should have a positive impact on future capital 
flows and should lead to retaining more of that surplus capital within the region. 
Essentially new rules should assist in lifting national restrictions on foreign capital with direct 
investments, joint ventures, etc. Red tape should be reduced to a minimum. 
2. SETTING UP COMMON INFRASTRUCTURES 
2.1. Transport 
More intensive intra-regional cooperation will require substantial improvement of the existing 
transport infrastructure to allow for speedy and efficient movement of a much higher volume of 
goods and persons (including an increased flow of tourists) moving between the different 
countries of the region. 
It would not be economical to consider building railways between the Gulf countries and the 
Mashrak, let alone introducing high speed trains. 
Much needs to be done within the Mashrak and between the Mashrak and Israel. It is there that 
one should expect a significant increase in the movement of goods and people in the next 10-12 
years. 
<* 
Annex 1/3 
Among the priority tasks to be addressed are the following : 
- negotiating appropriate transit arrangements between all the six countries concerned; 
- completion, by around 2010, of a road system linking the region to Europe via Turkey ; 
- completion of road interconnections between the urban centres of the region themselves to 
the extent that they do not already exist. 
All this will require a minimum of planning and coordination between the parties involved (e.g. 
border checkpoints, truck dimensions, technical specifications of international highways, 
mapping of the interconnections, financing of the roads, user fees, etc..) 
Transport relations between Israel, Jordan and the Occupied Territories will need to address 
points relating to port and airport facilities taking into account the excellent international 
infrastructures in this field in Israel and Jordan and the Palestinian lack of it. 
Equipping the Palestinians with both international port and airport facilities would imply 
multibillion ECU investments which would be to the detriment of the many other priorities for 
their own development. Therefore, in the Palestinian interest, it would be useful to examine 
carefully all options, their costs and benefits, including free and non discriminatory access to the 
Jordanian and Israeli ports and airports . 
What applies to the Palestinians may also apply to the Israelis and Jordanians, though to a lesser 
extent. Jordanians may have an interest in using nearby Mediterranean/Israeli ports and the 
Israelis may have an interest in using both Aqaba port and airport for certain operations. 
An overall study of the transport (and communication) infrastructure for the whole region appears 
essential. 
2.2. Energy 
2.2.1. Electricity 
Except for the linkage between Israel and Palestine on the one hand and certain links between 
Syria and Lebanon on the other hand, there are at present no systems of electrical 
interconnections in the Mashrak/Israel region. 
Considering the short distances between major urban centres, especially between Jordan, the 
Occupied Territories and Israel, and also considering differences in consumption patterns 
between the different countries (on a daily .weekly and yearly basis), it is of immediate economic 
interest for all the countries concerned to interconnect their national grids. This would allow each 
country to maintain a relatively smaller generation capacity and could, therefore, be reflected in 
lower electricity rates. 
Interconnections between the grids of the Mashrak countries and Israel would not involve high 
investments. They could be one of the first practical measures of economic cooperation to be 
taken after peace has been established. 
Establishing electrical interconnections will allow the electricity authorities of the countries 
concerned to engage in a regular dialogue on practical issues related to the production and 
consumption, electricity rates, technical standards, patterns of power generation, etc ... 
The prospect of peace in the region will open a new horizon for the implementation of an 
ambitious hydro-power project ( + /- 800 mgW), linking Israel, Jordan and the Occupied 
Territories. This project would exploit the 400 m height differential between the Mediterranean 
and the Dead Sea. A prefeasibilty study should, therefore, be undertaken in order to find out 
whether such a joint project is technically, economically and politically feasible. 
/jo 
Annex 1/4 
2.2.2. Oil 
The Tapline, which was conceived as the main means of exporting oil from Saudi Arabia to the 
Mediterranean, should have been constructed at the beginning of the 1940s. It would have been a 
2050 km oil pipeline linking Ras Tanura on the Persian Gulf to Haifa. Its capacity would have 
been 250 million tonnes per year. With the outbreak of hostilities in 1947 the initial project was 
changed to Sidon in Lebanon. 
Continuing instability in the two countries to be crossed (Lebanon and Syria) has meant that the 
throughput has never been more than 17 million tonnes per year and that over time it has been 
abandoned in favour of safer and more profitable links. 
Once peace is reestablished the Tapline could easily be reactivated by an extension from Mafraq 
in Jordan to Haifa on the Mediterranean. The cost of this operation (about $ 70 million for a 
capacity of 25 million tonnes per year) should be compared to the cost of transport via the Suez 
canal which means that it would be profitable. 
2.2.3. Gas 
The region at large possesses significant natural gas resources, especially in some of the Gulf 
countries and to a much smaller extent in Egypt and Syria. None of these are linked to the urban 
centres of neighbouring countries. 
It appears promising to map out the regional network of gas interconnections. This could proceed 
in two stages: 
- in the first place, the Egyptian gas pipeline system could be extended to Israel, the Occupied 
Territories and possibly to Jordan (Aqaba) and Lebanon; 
- in the second place, but on a much longer time scale, the linkage of the rich gas reserves of the 
Gulf with the Mediterranean in order to supply the Mashrak with alternative energy for their 
power plants or with petrochemical feed stock. 
2.2.4. Rationalisation in the Use of Energy 
Taking account of demographic factors and trends towards urbanisation as well as the speeding 
up of economic activity which could result from a peace agreement, the potential exists for a 
considerable increase in the demand for energy. 
In addition to this "spontaneous" potential, account should be taken of the impact, particularly on 
the demand for electricity, of solutions to the problem of water such as the treatment of waste 
water or the desalination of brackish and salt water. 
It will therefore be particularly important to ensure firm control of energy consumption in all the 
countries of the region. 
It will be essential that Middle East countries with a high level of energy dependency (Israel, 
Jordan, Lebanon, the Occupied Territories) rationalise their energy legislation and charges and 
put together joint programmes, supported by the international community, for energy-saving 
technologies (which at the same time are favourable to environmental conservation). 
On this basis Israel, Jordan , Lebanon, the Occupied Territories and Syria could also concert (or 
co-ordinate) their long-term energy planning as well as their attempts to encourage the use of new 
and renewable energy sources, particularly solar energy. 
The issue of producing in the Mediterranean a model for energy saving will be the subject of 
discussion at a conference organised in Athens in November 1993 on "energy and the urban 
/)/ 
Annex 1/5 
environment in Mediterranean Third Countries" which will be attended by energy-saving 
agencies from all Mediterranean countries. 
3. EXPLOITING COMMON RESOURCES 
3.1. Tourism assets 
The six countries possess major tourism attractions (sea, desert, mountains, historical 
monuments, religious sites...). They all hope that, with the end of conflict and tension between 
them, tourism can be boosted significantly, for each country individually and for all of them 
collectively. 
They have a joint interest in keeping the region internationally attractive in order to get the largest 
possible number of tourists (which should rapidly exceed 10 million per year if and when 
conditions of internal and external stability prevail). 
As a consequence, tourism is viewed by the countries of the region as having major potential 
under the following considerations : 
- intra-regional tourist flows: when Israelis, Egyptians, Lebanese, Palestinians, Syrians and 
Jordanians travel from one country to another without major restrictions, this will reduce 
mutual prejudice and thereby make conflict less likely; 
- coordinated, or even joint government action will be necessary to facilitate tourism. 
Governments will have to address a number of issues jointly in order to facilitate tourism in the 
region. 
These issues concern items like improvement of transport and communication infrastructures, 
facilitation of border crossings, simplification or abolition of visa requirements, conservation of 
historical sites, joint advertising campaigns, security measures, environmental protection, etc. 
To this end it would certainly be highly appropriate to have a Middle East Tourist Promotion 
Committee established at the level of Heads of National Tourist Agencies in order to exchange 
information and, where appropriate, agree on joint actions. 
3.2. Professional expertise 
The European Community has successfully engaged in a growing range of transborder 
cooperation programmes in all fields: local government, universities, small and medium size 
companies, research institutes, media, culture, etc,... 
The objective of these programmes is simple: to create cooperation networks between people, 
sharing the same expertise. Human interaction is the key factor behind change. 
For the Middle East, this approach would present several advantages: 
- facilitate the transfer of know-how and obtain synergetic effects in priority areas; 
- contribute to the building up of a positive climate of confidence in the region. 
Two sectors should be emphasised: "Science" and "culture". 
n 
Allllt'X I/O 
Science 
With the exception of Israel, which spends almost 3% of its GDP on research and development, 
the role of science and technology is not yet very high in the Middle East, essentially for three 
reasons: 
- the relatively low level of economic and social development; 
- the relatively small number of scientists; 
- its low priority (in budgetary terms). 
More intensive regional cooperation in scientific research would undoubtedly be in the interest of 
all the parties concerned: 
- it would permit the Arab countries of the region to benefit from the achievements which Israeli 
scientists have been able to obtain in such vital areas as agriculture, renewable energy, water 
and medicine; 
- it would allow all of the parties to pool their scarce resources in manpower and finance; 
- it could, through joint scientific projects, develop into an important vehicle of better 
understanding. 
Scientific cooperation does not require sophisticated administrative or institutional structures to 
start with. It can be organised at many levels, with variable numbers of partners involved and a 
minimum of financial input. 
If scientific work is being done in a regional context, it would undoubtedly benefit from outside 
support, involving both scientists and also some finance. In this respect, Europe could play a 
major role as a catalyst, as it possesses the biggest and the most highly envied experience of 
regional scientific cooperation. 
Culture 
Cultural cooperation would be an essential element to underpin the peace efforts in the Middle 
East, especially if it would bring young people of different cultural backgrounds together. 
There is almost infinite scope for fostering more cultural interaction in the Middle East. Two 
possible programmes of regional cultural exchanges, both of which have been successfully tested 
in different European frameworks, might be especially mentioned: 
- firstly, a programme for university interchange, along the lines of the Erasmus, Tempus 
programmes providing for the exchange of graduate students and researchers between the 
Middle East countries; 
- Secondly, a programme designed to promote the exchange of young people between the age of 
16 and 25, in particular between Israelis and Palestinians. 
To that end a Middle East Student Exchange Fund might be set up, which should co-finance both 
types of operations. 
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Annex 1/7 
K TACKLING COMMON PROBLEMS 
WATER 
The need for cooperation in water is urgent, but it is also highly sensitive and possibly 
controversial. 
With the exception of Turkey, Iraq and Egypt, all the countries of the wider region at large are 
short of water resources. The steep increase in the region's population will further reduce the per 
capita availability of water so that the demand and supply situation for water will become even 
more dramatic during the next century. Water, therefore, constitutes a source of potential conflict 
between the various parties unless appropriate measures are taken in time. 
Theoretically, there exist three possibilities for tackling the water issue in the region: 
- reducing the demand for water (in particular for agricultural use); 
- technological devices such as systematic re-use of water and desalination of brackish or sea 
water; 
- exchanging water between the present water surplus countries and those having a water deficit. 
Despite scarcity, almost all the countries in the region waste water. Water prices, in particular 
those for agricultural use (80% of the water supply), do not reflect the real costs (investments in 
irrigation infrastructures and scarcity of water). Raising the level of prices, ideally in a regionally 
coordinated approach, would reduce demand and promote water-saving technologies. 
With the possible exception of Turkey, no country in the region is willing to export its temporary 
water surplus to neighbouring countries taking into account rising water demands in the future. 
Desalination, therefore appears to be the only viable possibility for increasing the water supply in 
the long-term, for at least the coastal regions. However, it remains a very expensive source of 
water, even if technological innovations are taken into consideration. 
However, the countries might usefully engage in joint research activities in order to develop more 
efficient water desalination technologies. The Gulf countries have large-scale experience in water 
desalination (they do not so far have any major power constraints). Israel has engaged in 
considerable advanced research to develop new and more efficient technologies. All this 
experience might usefully be brought together. 
There is an urgent need to address for Syria, Jordan, Israel and the Occupied Territories the issue 
of joint management of the Jordan Basin and, in parallel, that of the Palestinian mountain aquifers 
which flow into the Israeli coastal plains. 
At present these water resources are very unequally shared between the parties, Israel absorbs 
more than 23% of the total sub-regional water resources. 
So as to develop a long-term relationship of mutual trust, based on equitable treatment between 
Israeli citizens and those of its direct neighbours, some sort of joint management scheme could be 
established between the parties. 
One solution to the problem might consist of setting up a Joint Water Corporation, to be 
commercially run, which would supply at least Israel and the Occupied Territories. Practically, it 
would imply that the Palestinians acquire a capital stake in the Israeli National Water Carrier, 
which should by the same token be extended to Gaza and the West Bank. Water would then be 
made available on a non-discriminatory basis to Israeli and Palestinian users, i.e. agricultural, 
industrial, householders. 
% 
Annex 1/8 
It would undoubtedly lead to a progressive move out of highly water-intensive agricultural 
production lines. At a much later stage, the construction and joint management of desalination 
plants along the Mediterranean coast might help to address the issue of growing water scarcity. 
ENVIRONMENT 
The region has not yet been affected by major environmental problems. However, transnational 
environmental pollution is bound to become a problem in the next decades as a consequence of 
population growth and of urbanisation. 
There is, therefore, a need for the countries to establish cooperation through environmental 
ministries or agencies. Such cooperation could cover a wide range of subjects, from the 
measurement of pollution levels to waste disposal (especially for toxic waste), clean air or water 
standards, sewage and water re-use, etc. 
It could also include manpower training, part of which could be organised in a regional 
framework. One might even consider the possibility of setting up a regional manpower training 
centre for environment. 
The Community, with its large experience in environmental policies, might offer its technical 
assistance to help set up different forms of environmental cooperation. 
/*> 
Annex 2 
ECONOMIC DIAGNOSIS 
OF 
THE MASHRAK AND ISRAEL 
Pages 
I. ANALYSIS 
1. COSTS OF FRAGMENTATION 2 
2. FAILING PERFORMANCES 2 
II. PROSPECTS 
1. INCOME DISPARITIES AND EXTERNAL ASSISTANCE 3 
2. PEACE DIVIDENDS AND ECONOMIC REFORMS 3 
3. FUTURE SCENARIOS AND THE POPULATION FACTOR 4 
III. TABLES 
1. MIDDLE EAST AND NORTH AFRICA: SCENARIO FOR THE FUTURE 5 
2. ECONOMIC DATA 6 
Population 
Economy 
Agricultural trade 
Net direct investment (% GDP) 
Aid flows (total and EC share) 
/!(> 
Annex 2/2 
1. ANALYSIS 
1 • CQSÏS_QF_FRA0MliNTAT10N 
90 million people live in six different states and entities. Removing Egypt, with its 55 millions, 
reveals more starkly the prospect of a region where the average state would have around 7 
million people at best. 
The Middle East is economically and politically fragmented. The price paid for fragmentation is 
very high. 
Military expenditure is excessive. On average, in 1979-1989, it accounts for 13% of GNP in the 
Arab Mashrak and 19% in Israel (Europe 3%). Such non-productive expenditures are one of the 
most important reasons for economic backwardness. They deny resources to investment which 
would allow for growth in production. Without them, annual average gross investment should 
increase, from the 20% of GNP to 30% plus, which accounts for the success of fast growing 
regions such as South East Asia. 
Political centralism, which has become the response to internal fragmentation, has an economic 
policy counterpart. With the exception of Lebanon, each of the region's economies is dominated 
by public sector production and by controls on economic activity. 
Autarky, which is one of the typical expressions of the economic orientations in the region, is a 
further manifestation of the desire to translate political control into control of economic activity. 
The consequences are numerous. First, the productivity of capital is very low. Second, scale of 
production is below optimum size. Together these two factors combine towards high cost, low 
volume production of goods at severely uncompetitive prices. In turn this leads to a continuation 
of subsidy and protection that rapidly escalate. As a further consequence inter-regional trade is 
stifled, either directly, in order to sustain failing productive sectors, or indirectly, as goods cease 
to be attractive to external markets. Regional trade is only 7% of total trade. 
2. FAILING PERFORMANCES 
The region is economically failing. Syria and Jordan had annual negative growth of 2.1 % and 
3.9% respectively in per capita incomes in the decade after 1980. Lebanon was catastrophically 
worse. Egypt's growth of 2.1. % in per capita incomes was still low. Even Israel could achieve 
only 1.5% per capita. Overall for the region income growth rate was barely 0.3% higher than 
population growth rate. 
Income levels now are over $10,000 per capita in Israel but the Mashrak Arabs have no more 
than $800. This disparity in incomes poses a threat to ax>peration unless the balance is seen to be 
becoming more even over time. 
Along with failure of income to grow there has been recorded the usual litany of other poverty 
indicators. Unemployment was 20% in the Mashrak and 10% in Israel in 1990 and has 
increased. Current account deficits were 7.1 % of GNP and budget deficits 15% in the Arab 
states. Debt was 115% of GNP for the Arabs and 44% for Israel. 
Human resources are poorly developed. Illiteracy in the Mashrak is double that in Lower Middle 
Income (LMI) countries as a whole. Infant mortality is higher, life expectancy lower. 
If this story is depressing it needs to be borne in mind that at its core there are two economies, 
the Occupied Territories and Lebanon, where conditions, though not reliably measured, are 
considerably worse. 
It is difficult to avoid the conclusion that the economy of the region is a failure. 
-77 
Annex 2/3 
IL 
1. PROSPECTS 
INCOME DISPARITIES AND EXTERNAL AS! 
Israel is markedly richer than its neighbours. In 1990 it had 44% of regional production and 6% 
of population. Per capita incomes are 12.5:1 in its favour. Israel has sophistication in military 
and other technology mat is only matched by some developed countries. 
Arab countries in the Mashrak have experienced very high population growth rates. Jordan, Syria 
and the Occupied Territories are recording rates at over 3 %. The present regional average of 
2.5%, if sustained over the next two decades, will increase population by 60%. 
Except for the Occupied Territories, the region is already the most handsomely-aided region in 
the World. 
Aid per capita 1988 I US $ 
Israel 310.0 
Jordan 119.0 
Lebanon 56.2 
Syria 19.1 
Egypt 29.5 
O.T.'s I 4^4 
Since 1988 major assistance has been offered and accepted for economic reform by Egypt, Israel, 
Jordan, and, to an extent, Lebanon. So far little other than economic stabilisation can be 
reported. 
PEACE DIVIDENDS AND ECONOMIC REFORMS 
The creation of a stable peace in the Mashrak would have an impact on the economic reform 
process which is tentatively beginning. Peace could facilitate reform. A shift in priorities could 
occur. Administrations which focused hard on national security could give more energy and 
attention to economic and social welfare. A reformist agenda might flourish and the political and 
social tension associated with structural adjustment would become more manageable. 
Peace could also facilitate the liberation of resources devoted to security. Consequently the saving 
in resources could be made available for increased investment. 
Although investment increases alone are not the solution to economic growth, they are one key 
element. The region on average needs to improve investment levels from the historic 20% share 
of GDP to an average greater than 25% and, in some cases, Egypt, Syria, and Jordan, for 
example, to 30% of GDP. The potential for tis shift of resources to investment exists. 
Peace would encourage regimes now dominating the economy through the public sector to relax 
their hold and allow a private sector lead. The effects of this would be to release domestic savings 
for investment; encourage the repatriation of savings held overseas; and give some 
encouragement to overseas investors. It should also encourage regimes to shift from a philosophy 
of self sufficiency to one of greater integration in the world economy. Sound economic 
management would continue to be necessary. 
A private sector lead to the region's economies would create short term redundancy and 
disruption with significant social and economic costs. But it should end the chronic under-
performance of the existing capital base of the region. In the longer term, it should guarantee a 
more appropriate production pattern, lower production costs, a more viable economy, and higher 
living standards. 
n 
Annex 2/4 
1 U 1 URL SCLNÀ1UOS AND 111L POPULATION 1 AC 1 OK 
The impact of a programme of national economic reform stimulated by peace has been estimated 
by the World Bank over the next 5 next year period and to the year 2010. 
The Bank believes that, by following the reform path, in 5 to 7 years the effects could be as set 
out in the table below 
Countries GDP per capita 
with reform without reform 
Egypt 2.1 0 
Israel 3.4 1.2 
Jordan 1.5 -0.5 
Lebanon 4.5 0 
Syria | 08) -1.6 
According to the Bank, the pattern of growth for the region will be at or near nil initially. 5% as 
an ultimate target is obtainable and indeed has been achieved in the past. Almost every state in the 
region reached 6% in the period 1965-1980. On average over the 20 years 1990-2010 it could 
lead to a rough doubling of GDP in total, which implies an average growth rate of 3.5%. 
The consequences of the Bank's predictions are set out below *: 
Countries 
Mashrak 
Israel GDP per 
capita 
1990 
(US$) 
820 
10,600 Population 
1990 
(millions) 
83 
5 GDP per 
capita 
2010 
(US$) 
940 
16,860 Population 
2010 
(millions) 
134 
7 
By 2010 Israel would enjoy the 1990 living standard of the average EC citizen. For the Mashrak 
the outcome of twenty years of reform would be very small indeed. The only consolation to be 
found in the Mashrak data is in that unemployment would not continue to rise. 
At the heart of the Mashrak problem is the projected 60% growth in population. This is achieved 
if the region continues an assumed increase of 2.5%. The Mashrak average 1985-90 was 2.6%. 
Five years earlier it was 2.8%. An agenda of peace plus economic reform will not yield 
substantial progress unless it is allied to strong and effective population policies. If the population 
growth rate could be brought to an annual average 2% to the final date, income per capita would 
be $ 1024. A decline to 1.5% would give $ 1127. In themselves these are not achievements that 
would win much applause from the citizenry of the region. Without really meaningful population 
policies even so they are not obtainable. 
A more satisfactory target for the Arab Mashrak would limit population growth to 1.5% and 
create a 5% per capita growth. On this basis population would increase only to 112 million and 
incomes per capita could double by 2010. Whatever the scenarios, increased disparities in income 
levels will remain. 
See in app. 2/5 a more complete tabic including Maghreb. 
11 
Annex 2/5 
III. TABLES 
MIDDLE EAST AND NORTH AFRICA; SCENARIO FOR HIE FUTURE2 
Region 
Maghreb 
Mashrak 
Israel 
Total Population (millions) 
1990 
58 
83 
5 
146 2010 
90 
134 
7 
231 Increase 
32 
51 
2 
85 % 
55% 
61% 
40% 
58% 
Region 
Maghreb 
Mashrak 
Israel 
Total GDP (US S) 
1990 
82 
68 
53 
203 2010 
158 
126 
118 
402 Increase 
76 
58 
65 
199 % 
93% 
85% 
123% 
98% 
Region 
Maghreb 
Mashrak 
Israel 
Europe GDP/capita (US $) 
1990 
1410 
810 
10600 
16000 2010 
1750 
940 
16860 
24000 Increase 
340 
130 
6260 
8000 % 
24% 
16% 
59% 
50% 
Basis for calculation (Except for Europe) 
Quantitative: GDP increase in the nineties: 3%, between 2000 and 2010: 5% 
Qualitative: 
- peace (reduction of military expenditures) 
- wide ranging reforms of economic policies 
- regional cooj>eration 
- financial capacity: 
. short term: international public aid to offset the negative effects of costs of 
economic reforms for reasons of social and political feasibility; 
. medium term: domestic savings, workers remittances, foreign direct investment and 
commercial loans. 
Elaborated on the basis of: "Economic and Social Development in the Middle East and North Africa", by Ishac Diwan 
and Lyn Squire - World Bank Discussion Paper n° 3 - October 1992 
to 
Annex 2/6 
2. ECONOMIC DATA 
POPULATION 
Total (1990;m.) 
Growth rate (89-90) % 
Active population 
of which: agriculture % 
non agriculture % Egypt 
52.1 
2.47 
31.6 
38 
62 Israel 
4.7 
1.84 
38.9 
5 
95 Jordan 
3.2 
3.77 
23.1 
10 
90 Lebanon 
2.7 
0.04 
30.1 
14 
86 Syria 
12.4 
3.56 
23.9 
43 
57 O.T. 
2.0 
2.46 
37.7 
47 
53 
ECONOMY 
GNP per capita (1990 US $) 
GDP total bn. US $ 1990 
Growth rate (GDP 85/90) % 
Current Account 
(surplus/deficit as % GDP 1990) 
Budget Deficit (% GDP 1990) 
External Debt (US $ bn.) 
Trade Imports $ bn. 1990 
Exports $ bn. 1990 
Trade balance 
EC Trade $ bn. 
EC Imports 
EC Exports 
Imports 
Exports Egypt 
610 
27.47 
2.55 
-105 
-18.5 
39.9 
14.5 
8.5 
-6.0 
3.818 
5.280 
26.3 
62.2 Israel 
10920 
53.20 
3.62 
1.3 
4.2 
20.1 
20.3 
16.9 
-3.4 
4.414 
6.669 
21.7 
39.5 Jordan 
1240 
3.81 
1.69 
-29.0 
-18.7 
7.7 
3.6 
2.6 
-1.0 
0.117 
1.056 
3.2 
40.6 Lebanon 
3.79 
1.9 
0.16 
0.960 Syria 
1000 
20.20 
3.39 
12.4 
-0.6 
16.5 
4.1 
4.0 
-0.1 
1.570 
1.070 
38.3 
26.7 O.T. 
1.47 
2.28 
0 
0 
* 0.7 
* 0.4 
* -0.3 
Year 1986, before the intifada 
AGRICULTURAL 
TRADE 
Egypt 
Israel 
Jordan 
Lebanon 
Syria 
Occupied Territories 1988 
1 
5.3 
20.5 
1.9 
8.1 
2.8 2 
18.6 
3.8 
12.4 
16.1 
23.6 1989 
1 
3.3 
19.1 
5.2 
9.0 
2.1 2 
17.3 
4.3 
14.9 
18.0 
27.4 1990 
1 
4.2 
19.8 
4.1 
9.0 
1.3 2 
14.3 
4.1 
20.6 
16.3 
30.4 1991 
1 
5.9 
18.5 
4.6 
11.9 
1.4 2 
8.3 
3.6 
19.6 
12.3 
14.3 
Agricultural Trade - percentage share of agriculture in total Trade with EC. 
1. 
2. EC Imports 
EC Exports 
11 
Annex 2/7 
INFT Dllll-ri IN\ 1 SIIMI'NI 
% C;DP 
Egypt 
Israel 
Jordan 
Lebanon 
Syria 
Occupied Territories 1«>NN 
3.4 
0 
1.1 lOflO 
2.3 
0.2 
0.1 
0 10«J<> 
0.4 
-0.3 
0 
AID FLOWS (US $ m.) 
Egypt 
Israel 
Jordan 
Lebanon 
Syria 
Occupied Territories 1988 
1537 
1241 
416 
141 
191 
9.3 1989 
1568 
1192 
273 
119 
127 
13.3 1990 
5604 
1374 
891 
134 
650 
45.4 
Source OECD Financial Flows to Developing Countries. 
N.B. Occupied Territories aid flows from non OECD D.A.C. members could be 
seriously understated. 
AID FLOWS: EC Share in total % 
Egypt 
Israel 
Jordan 
Lebanon 
Syria 
Occupied Territories 1988 
4 
0.1 
<2 
48 1989 
5 
0.1 
<2 
16 
56 1990 
4 
0.3 
<2 
9 
42 
<n 
AllllOK I 
The Future of relations between the Community 
and the Maghreb 
Summary of Commission Communication 
SEC(92)401 of 30.04.92 
,/ini.|.-/'"-H/l'l'/riotelOOI 
Annex 3/1 
A NEW CONCEPT: EURO-MAGHREB PARTNERSHIP 
The Community must develop a new concept on which to base its 
relationship with the Maghreb, setting itself targets that are both 
realistic and ambitious. The credibility of this new approach must be 
secured by the adoption of the instruments that will guarantee its 
implementat ion. 
1. PARTNERSHIP 
The new Community approach should be based on the realisation that the 
time has come to move away from the idea of development cooperation that 
has held sway over the past few decades, to the idea of partnership, 
engendering new forms of cooperation in all fields, whether political, 
social or economic. 
For its part, the Community will make a firm and convincing commitment 
to help relaunch the Maghreb economy. 
For their part, the Maghreb countries will commit themselves to continue 
with the reform process and to take concrete measures to promote 
regional integration. 
2. A MULTIFACETED CONCEPT 
There are three main strands to this approach: 
2.1. The emphasis in economic cooperation should be on the 
instruments that best reflect the Euro-Maghreb partnership 
approach. 
2.2. In addition to the purely economic aspects of cooperation, the 
new set-up should also incorporate new fields of cooperation 
that will put Euro-Maghreb relations on a comprehensive footing. 
These new fields will be identified jointly, and will cover a 
variety of topics such as culture and social matters, including 
migration, movement of persons, local collectives and education. 
2.3. As regards the contractual framework, the new approach should 
lead to the conclusion of new agreements with Morocco, Algeria 
and Tunisia. 
3. THE MAGHREB STATES 
The three individual states will remain the Community's main negotiating 
partners in the Maghreb. The approach will be implemented through 
agreements concluded with each of the three States separately, following 
the same general outline but with timetables and procedures tailored to 
the needs of each specific country. 
The long-term aims will continue to be the integration of Algeria, 
Morocco and Tunisia, and the creation of an economic area embracing the 
Community and Maghreb countries. 
Ik 
Annex 3/2 
NEW INSTRUMENTS 
1. TECHNICAL ASSISTANCE 
Technical assistance is increasingly becoming one of the main 
instruments of the Community's cooperation policy and should be applied 
so as to reform economic systems: create stock markets, set-up effective 
and fair taxation systems, restructure the public sector, privatisation, 
business administration, etc. 
2. BALANCE OF PAYMENTS SUPPORT 
There will be no rapid economic development in the Maghreb as long as 
excessive debt servicing absorbs a disproportionate amount of foreign 
currency earnings to the detriment of essential imports. 
International action might be taken under the guidance of the IMF. Such 
action would be taken on an exceptional basis and would be strictly 
conditional upon the beneficiary country's financial policy. 
3. INVESTMENT FINANCING 
3.1. Over the next two decades the Maghreb will have to spend large 
amounts on modernising and expanding its productive apparatus 
and its economic infrastructure (telecommunications, roads, 
ports, railways, water, irrigation and energy, etc...). 
The bulk of investment in infrastructure should be financed 
through the international capital market and, to a lesser 
degree, locally. The Community will be involved through the EIB. 
4. NEW SPHERES OF COOPERATION 
(a) Social sector 
The social sector is obviously a special area of discussion in view 
of its objective importance but also its human and political 
implications. 
(b) Culture and communications 
It is important for the Community to pursue, over and above the 
options defined in this document, programmes aimed at greater 
reciprocal understanding between the two shores of the 
Mediterranean. 
This implies very diverse operations, such as a communications 
policy, and action targeted more specifically at young people and 
the media, etc. 
(c) Human rights 
Human rights and democracy have become an essential component of the 
Community's foreign policy. It has been affirmed through political 
commitments, the inclusion of specific clauses as new agreements 
have been concluded, and the setting-up of special programmes for 
certain regions of the world. 
V 
Aiifiox </ i 
(d) Other spheres 
The nature of the Euro-Maghreb partnership implies that there should 
be a dialogue on all matters of common interest. 
NEW CONTRACTUAL FRAMEWORK 
The possibility of concluding new agreements, called Euro-Maghreb 
agreements, with the three Maghreb countries should therefore be 
explored; they would form the basis, framework and symbol of the new 
Community approach. 
Initial contact, particularly with Morocco, has revealed that these 
Euro-Maghreb agreements could be based on four main components: 
a political dialogue; 
economic cooperation; 
free trade; 
financial cooperation. 
1. POLITICAL DIALOGUE 
In line with the growing trend of agreements concluded by the Community, 
the Euro-Maghreb agreements would contain a major political dialogue 
component. 
2. ECONOMIC, TECHNICAL AND CULTURAL COOPERATION 
No sphere of cooperation or dialogue should be excluded from the outset. 
The emphasis would be on aspects which would encourage development such 
as: 
- macroeconomic issues; 
initiation or continuation of a dialogue and cooperation on social 
issues; 
- sectoral dialogues; 
investment; 
cooperation on statistics, standards, customs matters, approximation 
of laws, etc.; 
environment; 
cooperation in science, technology, education, etc. 
3. TRADE 
The long-term creation of an open economic area, an area of trade and 
stability, will therefore be one of the main objectives of the Euro-
Maghreb agreements. 
4. FINANCIAL COOPERATION 
Although the framework has been established for the next years by the 
fourth financial protocols and by horizontal financial cooperation, the 
instruments and objectives of financial cooperation could when necessary 
be adapted to the partners' new requirements. The financial protocols 
will apply until 1996, by when it will be time to take stock of this 
type of cooperation and determine the benefits and the limitations. 
1<* 
Annex 4/1 
THE COMMUNITY'S RELATIONS WITH MEDITERRANEAN THIRD COUNTRIES 
BACKGROUND NOTE 
1. Since the mid-seventies, the Community is linked to most 
Mediterranean non-Member Countries (MNC)(1) through co-operation 
agreements. These agreements provide for free access for industrial 
goods on the Community markets and preferential access for 
agricultural products. The agricultural products vary from one 
country to another. The Agreement with Israel provides for 
industrial free trade on a reciprocal basis which was achieved in 
1989; the other Agreements are not reciprocal. 
2. There is also provision for economic, technical and financial 
cooperation. The latter is implemented through five-yearly 
financial protocols which have provided funds to finance development 
projects as well as economic co-operation in various areas, such as 
environment, scientific co-operation, industrial co-operation and 
training and technical assistance. 
3. The Agreements with Maghreb countries also contain provisions 
relating to workers, but these have had little practical 
application. 
4. In 1987/1988, following the accession of Spain and Portugal, certain 
additional concessions for MNC agricultural exports to the Community 
were laid down in Additional Protocols to the Agreements. These 
concessions, over and above an increase in tariff quotas, foresee a 
gradual reduction (to zero) of custom duties within those quotas. 
Preferential rates of duty continue to apply to quantities exported 
over and above the quotas. 
5. In order to strenghten the Community's global policy towards the 
region, in 1990 the Commission proposed and the Council adopted the 
orientations for a Redirected Mediterranean Policy (RMP). 
6. The RMP provided for 
(i) further limited concessions for agricultural exports covered 
by the Agreements (reduction to zero of duties within tariff 
quotas to be reached in 1993 instead of 1995; a 3 to 5**. 
annual increase in tariff quotas over the 1992-1995 period); 
(1) Agreements exist with Morocco, Algeria, Tunisia, Egypt, Jordan, 
Lebanon, Syria, Israel, Turkey, Cyprus, Malta. There is no 
Agreement with Libya. Autonomous arrangements cover relations with 
the Occupied Territories. 
'I '/'•ll/l'I'/'l''' ''I '"I ' 7? 
Annex 4/2 
(ii) a renewal of the financial protocols with Southern and 
Eastern Mediterranean countries (2) amounting to around 2 
billion ECU in grants from the Community budget and EIB 
loans for the 1992-96 period (the latest Financial Protocol 
with Israel consists of EIB loans only; the latest Financial 
Protocol with Syria has not yet received the favourable 
opinion of the European Parliament); 
(iii) a special financial envelope destined to support structural 
adjustment operations in these countries (300 MECU) for the 
1992-1996 period); and 
(iv) special funds to cater for cooperation activities of 
interest to all MNC (1,800 MECU in EIB loans of which 500 
MECU with a 3% interest subsidy for the environment, as well 
as substantial budget funds : 64 MECU in 1992, 63,5 MECU in 
1993 possibly 300-350 MECU over the 1992-1996 period). 
Total funds available to these countries for the 1992-1996 period, 
including grants from the EC budget and EIB loans, will thus amount 
to about 4,500 MECU, roughly three times the financial support to 
the region in the 1987-1991 period. 
(2) Morocco, Algeria, Tunisia, Egypt, Jordan, Lebanon, Syria, Israel 
•j% 
ISSN 0254-1475 
COM(93) 375 final 
DOCUMENTS 
EN 
Catalogue number : CB-CO-93-415-EN-C 
ISBN 92-77-58384-3 
Office for Official Publications of tbe European Communities 
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