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Brussels, 21 May 2019

Dear representatives of the private sector, entrepreneurs, incubators, banks, and partner organisations, Ladies and Gentlemen,

Thank you for being here today.   For some of us it is Ramadan, and I really appreciate the extra effort this entails.

The last five years have shown more clearly than ever, that what happens in the Maghreb and the Mashreq affects the everyday lives of those of us who live in Europe… not just in the southern coastal regions, but the whole of the European Union.  Working with our southern Neighbourhood is not a choice, it is a necessity.

In my time as Commissioner for the European  Neighbourhood Policy, I have put economic development at the heart of our relations with the south, because I believe it is key to stabilisation.  It will not, on its own, remove the challenges of conflict, radicalisation and people trafficking, nor does it replace democracy itself as the best way to address social unrest.

BUT without economic development we will not be able to address these challenges, and none of our nations will achieve their full potential.

Perhaps more to the point, the rising generation on both sides of the Mediterranean expects economic opportunity.  

Investing in the young generation and their skills, giving them jobs and chances to develop their potential, creates more cohesive societies, where people can realise their  ambitions, for themselves and their families.   

This is true on both sides of the Mediterranean – but in Morocco, Algeria, Egypt, more than a quarter of people are under 15. In Jordan more than a third. In the EU less than a sixth.

It is essential to give the younger generation opportunities  everywhere – but particularly in the Southern Mediterranean.

That is why you are here today.

The European Commission does not create jobs.  Your governments can create jobs, but your region needs less, not more, public sector employment.

You are here today because your voice is crucial.  Policy makers in Brussels but also in your home capitals – need to hear from you, what your priorities are, and how we can best create the conditions for you to prosper. Because if policy makers create the right climate, your side of the bargain is to grow businesses that offer new opportunities to others to work, and improve their lives.

The EU is the first economic partner in trade and investment of our partner countries in the Southern Neighbourhood.

We are well aware of the classic challenges facing the economies of the region. Youth unemployment is on average 30% in this region. For young women, it is 50% and exclusion of women from the job market is a loss to the whole economy. Economic growth is slow, with trade and investment flows that have not yet reached their pre-2011 level in many countries, and which are suffering the repercussions of conflict in some cases.

Since I became Commissioner for the Neighbourhood, the European Union has given a very specific focus to these challenges.

By the end of this budget period we will be able to say that around half of our overall €11 billion funding for the southern Neighbourhood will have been spent on economic co-operation.  Around 30% to 60% of individual country allocations are dedicated to job creation and inclusive growth. This is complemented by the extensive use of blending operations through the Neighbourhood Investment Platform (NIP).

AND a significant part of the billions we are investing in economic cooperation has been dedicated to private sector development - with projects that facilitate entrepreneurship, skills and innovation; develop SMEs; promote trade and investment; and improve the regulatory environment for business. 

Before I go any further I would like to say frankly, that I would like to have been able to go even further. Efforts are being made in all your countries, but there is so much more to do.  We in the EU cannot compensate for the missed opportunities we see in the region.

The Mediterranean is the least economically integrated region of the world, with a huge opportunity cost amounting to 1-2% lower growth of GDP in the region.  We all know how it has come about that such a tiny proportion of the region’s trade is south-south, but it is no one’s interest that this continues! 

Another missed opportunity in the region, is in the investment climate. Every investor has a global choice.  There is always another option. And investors like to go where they are sure that rule of law is secure, where rights are respected – including the rights of their employees - and where corruption is the exception not the norm.

Then, there is the vexed question of truly free trade. In the EU we believe not only we, but also your economies benefit from free trade, and that the deeper and more comprehensive free trade areas that are on offer are an opportunity that should not be missed. Certainly we do not believe that imposing tariffs is the right way forward.

Crucially, the regulatory and banking environments in individual countries often do not favour the kind of lively entrepreneurial culture that is needed.  Whenever I hear from business people in the region they complain of red tape, and particularly the burdens on small businesses.  

All the evidence is, that it is not big business that creates the most jobs. It is small and medium-sized enterprises that provide the swiftest gains in employment, and that is why it is essential to create the right conditions for individual entrepreneurs to do business.

That means the right legal framework and the necessary respect for rule of law – but also the right conditions for small operators to turn ideas into jobs. SMEs are an engine for job creation, if they are allowed to get on with it. 

We all know how much talent there is in the region, but it is time to stop talking about how better to match skills to job opportunities and make sure that the training and education on offer are fit for purpose.

And, finally, beyond training, we need to make sure that the right support is there for risk-takers and innovators.  It is particularly important to stimulate start-ups -  whether they are giving a new twist to traditional activities to find new markets, or helping to diversify the economy into new areas.

I have said that the EU cannot compensate for choices in the region that we see as missed opportunities. BUT we nevertheless do a great deal.

·      In Tunisia, for instance, the EU has supported the a major initiative to support start-ups through support to incubators  

·      In Jordan, we are supporting  much needed economic and labour market reforms to boost employment opportunities

·      In Egypt  a Facility for Inclusive Growth and Job Creation  is facilitating access to finance for SMEs.

·      In Morocco, key actions focus on sustainable growth and regulatory convergence with the EU.

These are just some examples which I chose because  parallel events are being organized in these four countries today, and we will link up with them later.  So altogether we will be bringing together around 150 actors from the region. Quite a brainstorming session!

In my experience, good ideas don't get far without financing. In partnership with financial institutions,  we have set up the EU Initiative for Financial Inclusion which reaches 200,000 small businesses across the region. I am happy that some of our partner banks are here today.

AND one of the things of which I am proudest, is the way we have been able in the last five years to step up co- ordination in the donor – or as I prefer to say –  in the investor community.

To give you an example, last summer, I led a high-level mission to Tunis with a delegation of eight development financial institutions. This had simply not been done before. We were able to discuss with Tunisia our joint analysis of the priority reforms necessary to attract investors into the country. I will take a similar mission to Jordan next month.

Lastly, the new European External Investment Plan (EIP) is helping to stimulate the private sector to invest, by providing guarantees to lower the risks of investing – for example in small businesses or in renewable energy.  Launch events have been held in Egypt, Jordan, Lebanon, Morocco, Tunisia and Palestine and the first agreements are now being implemented.

Ladies and Gentlemen,

There is no magic formula, but your countries’ economic development needs a vibrant private sector, and pro-active entrepreneurs like yourselves.

Over the next 24 hours or so you will be discussing what you believe policy makers need to do to help you to keep your side of the bargain and create businesses and jobs. You will meet this afternoon in workshops to hone these into a list of recommendations, and then people here and in the region will vote on these to draw up 12 top priorities for action.

I will see you for dinner when we break the fast later this evening, and I will be back tomorrow to receive your recommendations. 

Together with our friends from the Union for the Mediterranean, we will make sure that your work is not only discussed today but is also fed into strategic policy dialogues in the future.

Thank you – and I am looking forward to seeing the outcome of this unique event.