A joint group of North African and European countries in April announced the launch of a long-term investment fund called InfraMed, that is the first financing facility of the Union for the Mediterranean (UFM). Equipped with a joint commitment of $543 million, InfraMed will be an equity investor in projects to build urban, energy and transport infrastructure in the Southern and Eastern Mediterranean regions. The fund will be open to other long-term investors in Europe, the Middle East and North Africa (MENA), with the aim of doubling its assets in the coming months. Other countries in the region are expected to adhere to the fund, French Ambassador to Tunisia Serge Deagaillaix said at a regional economic forum.
InfraMed will invest in infrastructure projects compliant with “social and environmental responsibility criteria enshrined in the United Nation sponsored Principles for Responsible Investment and the principles set forth in the Long-Term Investors Club charter,” according to a statement released by EFG Hermes.
InfraMed is arriving at a convenient time. As the global economic crisis curbs cross-border capital flows, infrastructure projects across the southern rim of the Mediterranean are struggling to find investors.
The Union for the Mediterranean is the third European led push to integrate the Northern and Southern Mediterranean countries in 15 years, after the Barcelona Process and the Mediterranean Union.
The UFM aims to boost economic and political connections between Europe and the MENA region. It is seen as a promising forum for addressing a number of regional issues, ranging from Middle East peace talks and North-South trade to stemming immigrant flows.
Nicolas Sarkozy’s relentless campaigning shepherded the UFM proposal all the way through the successful 2008 launch that united 40 leaders from the EU, North Africa, the Balkans, the Arab nations and Israel in one gathering. But analysts worry that the push to unionize the Mediterranean is bound to encounter resistance, particularly in the form of Arab-Israeli tensions and the vast divide between Northern and Southern economic and political development.
North Africa’s reception of the UFM has varied from country to country. Morocco and Tunisia were early enthusiasts of the plan, eager to tap into its economic resources. Algeria, initially objecting to Israeli involvement, ultimately signed on. Libya is the only Mediterranean-rim country not to participate at all. Libyan leader Muammar Gaddafi said he suspected that the France-backed UFM is really a move to buttress French hegemony in the MENA, under the guise of European and Mediterranean cooperation.
Launching a financing facility for infrastructure is a positive, non-controversial beginning for the UFM, especially since the fund is co-managed by two Arab and two European companies. If successful, the fund could prove the UFM’s potential to serve the interests of all its diverse adherents.
The InfraMed fund’s members include are Caisse de Depot et de Gestion (Morocco), EFG Hermes (Egypt), Caisse des Depots (France), and Cassa Depositi e Prestiti (Italy).
