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Storms in the Mediterranean. War in Israel and the end of the Migration Consensus BoP Brief #7
A Mediterranean-focused Brief analyzing the end of the migration consensus in Europe, Morocco's moment, and Hamas attack on Israel.
For many years, I have been stressing the renewed importance of the Mediterranean.
In an era of multipolarity with more autonomy for middle powers, the demographic rise of North Africa, and, thanks to its geographic connectivity, the Mediterranean is again a key geopolitical hotspot.
Even when I wrote my thesis about China in 2019, I centered it around Beijing's impact on Mediterranean geoeconomic dynamics.
More by chance than by design, this edition of the Business of Power Brief focuses on developments that are mainly taking place in the Mediterranean, proving the growing structural weight of the region's geopolitics in world politics.
The end of the migration consensus?
Everyone is talking about migration. Migrant crises have become a central concern in a time of upheaval.
The massive flood of immigrants impacts the fundamental pillars of a community's social fabric. It can deteriorate the sense of shared identity, city landscape, security, and societal trust. But it also has a clear economic impact in areas like job access, rent prices, and the overcapacity of welfare infrastructures.
Migration is a hot topic on both sides of the Atlantic, and we even see blue territories like New York City backing down on open border policies.
But rising concerns over mass migration are not a "first-world problem" anymore. Sometimes ignored by Western analysis, opposition to migration has become a central topic in the political discourse in developing economies like Egypt, South Africa, Chile, and many others.
However, if there is somewhere where the shifting consensus on migration will have the most important consequences, this is Europe.
Europe is hardening up.
If there is one topic I have noticed a shift in the general discourse over the years every time I go back to Europe, it is migration.
European nations have been the most affected by the latest waves of migrants from Africa and the Middle East crossing the Mediterranean.
We have seen a public discourse change in France, Italy, the UK, and even Germany in recent years. In yesterday's regional elections in Baviera, the German anti-immigration party, Alternative for Germany, ended up in second.
However, the fundamental changes occur when a shift begins in traditionally pro-open borders strongholds:
In Catalonia – one of the European territories with the lowest vote share to parties opposed to illegal migration – medium cities like Manresa and Molins de Rei have witnessed battles and French banlieue-style riots protagonized by migrant groups, prompting citizen mobilization.
In Ireland, as reported by Aris Rousinous, grassroots have risen opposing the intake of refugees and migrants. Interestingly, even the Ukranian ambassador complained that Ireland couldn't provide for all the Ukranian citizens they were taking.
Focus on the big picture.
For forty years, the trio of free flow of goods, capital, and people was the mantra of the hyperglobalization era.
That world is ending. It is natural that once the consensus on the economic policy has shifted, the other pieces of the puzzle begin to move.
A change in the discourse doesn't necessarily mean a radical shift in the policy. Even when political parties with programs about limiting immigration take office, that rarely changes. Giorgia Meloni recently said that "Italy needs more migrants."
However, we have already seen an agreement between the US and the EU to restrict the conditions for asylum seekers. But that is a cosmetic measure that won't stop the flow of migrants that reach Southern European shores by the thousands every week.
The structural conditions that allow, promote, and incentivize mass migration flows haven't changed. In the technological dimension, it is much easier to move from one continent to another today than a hundred years ago.
In the same way that we can be skeptical if we can fully decouple Western economies from China without going trhough a profound transformation, European countries would have to go trhough deep changes to deal with mass migration problems.
The "migrant question" won't be "solved" anytime soon, only mitigated and managed – even when enforcing a policy of stronger border control.
It will remain a problem in Europe, implicating security, identity, and economic issues.
European politics will regularly be dominated by a local/foreign axis that might or might not overlap with a sovereigntist/EU axis – that will depend on the EU policy and relations among EU members on this matter.
That might further political fragmentation, having, for instance, anti-migration left and pro-open borders left options in the same elections.
We could also see a confluence of interests in new populist upheavals, affecting other shifting consensus like support for green policy.
Europe's societal tensions and inter-ethnic conflicts will keep growing. European public discourse will devote more attention to the migration issue, surpassing other pressing problems like industrial recovery and Ukraine.
Despite recently suffering a terrible earthquake, Morroco's economy keeps attracting investors.
Casablanca has surpassed Tel Aviv as the third-best regional financial center for investors in the Middle East and North Africa region.
Despite some hype from Morroco, the country is nowhere near surpassing the Israeli industrial and tech sector – its economy doesn't necessarily play the same role.
Nonetheless, Morroco's success in attracting investors' interest is proof of its living momentum.
Morroco has many elements in its favor:
A growing young population
A stable government
A relatively peaceful neighborhood
An excellent location for near-shoring policies of the EU
Morroco also enjoys good relations with America. And it could become a major LNG hub, even debunking the Iberian peninsula.
As is happening with Mexico, many Chinese companies have offshored some of their production in the North African country to better access North African markets and avoid de-risking EU policies against Chinese-made goods.
A possible trend that we might see in the future is a growing integration between the Iberian peninsula and Morroco.
Spain recently had to pay painful diplomatic concessions in the Western Sahara, recognizing it as Morroco's territory.
Madrid also fears the attempts of Morroco's reclamation of Spain's North African cities of Ceuta and Melilla and its constant use of migrants to put pressure on Spain's Southern border.
Nonetheless, some Spanish companies expect to benefit from Morroco's growth, and Madrid has a long-term policy with Morroco to ensure this happens.
The 2030 Football World Cup will be co-organized by Morroco, Spain, and Portugal. We need to read the organization of this event as part of a larger trend of Ibero-Morrocan integration projects.
A potential source of tensions
While some industries may benefit from that, Spain's agriculture sector might not be happy with Morroco's growing economic influence.
In the long term, if not accurately planned, a growth in offshoring to Morroco could entail severe risks for the re-industrialization ambitions of Iberian economies.
In societal terms, Morroco represents a major migration concern for the Iberian Peninsula and Europe, and it is unclear if a focus on economic growth would curtail Morroco's assertivity.
If Morroco keeps growing while Spain's economy keeps declining, I wonder how Spanish society will deal with a scenario where Moroccans are not only cheap labor and “underage criminals” but first-division football club owners, real estate magnates, and preferred clients at luxury brand stores.
Regardless of Spanish-Morrocan relations, in the context of growing geopolitical tensions in the Eastern Mediterranean, the geoeconomic balance of the region is shifting Westwards, and Morroco enjoys a privileged position to take advantage of it.
Hamas offensive in Israel
Many things can be said about the Hamas offensive during the past weekend that, at the moment of writing these lines, have already cost more than a thousand lives.
I'll focus here on the possible geopolitical implications of the situation.
The situation is still evolving, so anything said here is contingent on the evolution of the events and the performance of the IDF and Hamas and Hezbollah militias on the battlefield.
Why did Hamas attack?
The long-term strategic reason for Hamas' actions and diffusion of disturbing images in its own communication channels is unclear beyond causing a psychological impact on its enemy and maybe gaining the kind of popularity among radical Islamists that ISIS gained in the West.
Owning the Israelis might be "cool" among Hamas’ supporters on social media for a few days, but it doesn't seem to be a sound strategic reason for such a large offensive.
I recommend Jacob L. Shapiro's insightful emergency podcast in Cognitive Investment, commenting on the situation. The Shapiro's summarizes three possibilities:
Desperation due to the dire humanitarian situation in Gaza and the fact that the world seems to be moving on from the Arab-Israeli conflict.
Internal infighting, getting ahead of political rivals, and gaining support in the West Bank.
Provoking an Israeli overreaction, generating outrage among Arabs, and forcing a regional war implicating Hezbollah and Muslims around the world.
A regional war won't happen. Thus, none of these reasons seem to be able to bring any good outcome for Hamas or the Palestinians.
The first outcome is that Netanyahu has achieved a unified and focused Israel after at least a year of internal turmoil.
The opposition has offered him a national unity government, and despite the intelligence mishap, Netanyahu will come out stronger of this.
Israel has mobilized 300,000 troops, its largest mobilization in history, and plans to enter Gaza with 100,000 soldiers.
There is no reason to think that the IDF offensive over Gaza won't be successful in obliterating Hamas. However, it will be brutal in terms of civilian losses and Israeli casualties. Urban warfare in a hostile, densely populated area is never a good option.
Regional geopolitical implications
Many highlight that the reason for Hamas to perform this attack was to derail the normalization process between Saudi Arabia and Israel. I agree that is a possible factor, too.
Nevertheless, Saudi Arabia's statement about Hamas's offensive didn't have an especially harsh tone against Israel. Depending on the impact of Israeli retaliations on civilians, we could see stronger statements.
However, I think there are strong interests on both sides for a rapprochement, and no war in Gaza would derail the current negotiations – other possible problems seem more relevant for that outcome to happen.
We are well beyond the times of Pan-Arabism. Saudi Arabia is not going to intervene, no matter what.
Palestinians are a pawn in this game, and Saudi Arabia will take as much advantage as they can from this situation but won't endanger significant advancement of their interest.
Several sources indicate that Iran has helped Hamas to plan the attack, which is likely.
That could reinforce the idea that Iran wanted to prevent Israel from normalizing relations with Saudi Arabia, which would indeed leave them isolated in the region.
But again, the most likely outcome is a stronger and more united Israel and the crippling of Hamas in Gaza, without any meaningful change in the diplomatic stand of Israel among the Arab world.
Even if Hezbollah joined the fray – which seems likely – they are likely to suffer substantial losses this time.
However, the scenario of a long war would also devastate Israeli capacities, which is one of the few reasons I find how this could come out as a win for Teheran.
On Twitter, Marko Papic signaled that the 2006 war between Israel and Lebanon didn't affect oil markets. For now, it seems the situation is similar.
The natural gas market might be another thing. Due to security concerns, Israel has suspended production at the Tamar gas field and will look for alternative sources, thus likely increasing prices.
Israel increasing its buying capacity in an already competitive market won't be good for Europe.
Regarding trade, there are also comments about the possibility that the Suez Canal could be affected by the actions of the combatants or by a flood of refugees from Gaza.
Egypt has a wall on the border with Gaza, and as I mentioned above, it doesn't seem that its population would be especially welcoming of more Palestinian refugees.
In the Yom Kippur War of 1973, the Suez Canal was affected, but then Egypt was the main opponent of Israel. I don’t think this is a likely scenario, but the risk has definitely increased.
The Middle East and the Arab-Israeli conflict, specifically, attract a lot of attention and strong feelings. Still, in the grand scheme of things, its implications in the global geopolitical scene are relatively low.
No major global power has an existential interest that might now be on a course of collision in the Middle East.
China imports oil and wants stability there, but won't go to war because of that. The US doesn't even import oil from there anymore. Neither China nor the US wants the situation to escalate. They will focus their actions on preventing that.
Indeed, an increase in the instability in the region might be precisely a consequence of the US's lost interest and power projection capacity there.
No World War III is coming out from this.
However, linked the previous comments of this Brief:
The war could provoke a flood of refugees to Europe, but also Egypt and other neighboring countries in the East and Southern rim of the Mediterranean.
Confrontation and tensions between supporters of Palestine and Israel might take place in European nations and America.
Possible mimics of Hamas tactics by other Islamist groups on Western soil will be a security concern. If that happens, it will have a tremendous impact on Western public opinion.
The growing instability in the Eastern Mediterranean will increase the capacity of attraction of the Western Mediterranean.
Nonetheless, the geopolitical importance of the Indo-Mediterranean will remain more central than the Atlantic-Mediterranean axis.
This Brief was longer, but leaving Israel and Palestine apart, there have been important developments flying under the radar lately that I think are worth paying attention to.
As always, many thanks to you all, and I'd appreciate your comments and shares. I am sure you have your own takes on these issues, and I'd love to know them.
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