The EU needs to expand its support for the MENA region’s digital transformation

Recently re-elected as European Commission president, Ursula von der Leyen indicated that her next term will focus more on the Mediterranean region, announcing plans to create a separate portfolio at the commissioner level to deal with it. This new portfolio would “focus on investment and partnerships, economic stability, job creation, energy, security, migration, and other areas of mutual interests, respecting our values and principles,” according to the Commission president’s policy outline for her next five-year term. This comes on the back of financial aid packages to Egypt and Lebanon worth €1 billion each at a time when both countries are experiencing economic crises. The support for Egypt is part of a larger loan program worth up to €5 billion. Both countries are linked to the European Union through the Southern Neighborhood partnership, which includes 10 countries and territories: Algeria, Egypt, Israel, Jordan, Lebanon, Libya, Morocco, Palestine, Syria, and Tunisia.

EU policy toward the Southern Neighborhood and the wider Middle East and North Africa region is varied, focusing on areas including human rights, good governance, the green transition, migration, and conflict resolution. A key theme that this article will analyze in greater depth is the EU’s support for the region’s digital transition, which is enshrined in the bloc’s new Agenda for the Mediterranean and forms part of the Global Gateway Initiative, the EU’s global infrastructure strategy.

The EU’s new Agenda for the Mediterranean, officially presented in the Joint Communication on a Renewed Partnership with the Southern Neighborhood, named seizing the digital transition as one of its key policy focuses and an area for cooperation with Southern Neighborhood countries in line with efforts to strengthen resilience and build prosperity. As part of the Global Gateway Initiative, the EU launched the “MEDUSA” Submarine Cable Project, which aims to install a fiber-optic cable between five European countries and Morocco, Algeria, Tunisia, and Egypt to deliver high-speed internet to universities and educational and research centers in these countries. The EU projects that more than 4.5 million students are expected to benefit from the increased connectivity the cable will offer.

Digital transformation will play a key role in shaping relations between Europe and the MENA region, but despite these high-level announcements, EU strategy and programming on the ground would need to expand to meet the region’s requirements and serve the EU’s strategic interests.

What's at stake and what Europe stands to gain

Despite improvements in various areas, the Southern Neighborhood and large parts of the wider MENA region continue to suffer from digital divides when it comes to internet access and usage along gender, urban-rural, and age lines.

Internet usage in Arab states has increased significantly in the past two decades, rising from 8.6% of individuals in 2005 to 69% in 2023, according to the International Telecommunications Union. The gender divide in internet usage has decreased from 14 percentage points in 2019 to 10 percentage points in 2023, with 64% of women vs. 74% of men using the internet in the latter year. A large divide persists between urban and rural areas as 82% of the population in urban areas in Arab states used the internet in 2023, while only 51% in rural areas did so.

Various studies have presented estimates on how digitalization could boost economic growth and job creation in the MENA region. A 2021 World Bank study estimated that a fully digitalized economy could lead to GDP per capita rising by at least 40% and employment in manufacturing rising by 7%.

By supporting the digital transformation in the Southern Neighborhood, Europe stands to gain in multiple ways: Europe could access needed talent in the Information and Communications Technology (ICT) sector and support economic stabilization in the region, thus disincentivizing irregular migration. By deepening ties with Southern Neighborhood countries in the digital realm, Europe could boost its political influence and improve its ability to successfully promote an open and inclusive internet governance model alongside its partners, countering China’s influence on digital transformation in the MENA region. Digital transformation is also a critical aspect in strengthening both regions’ climate resilience, for example, by increasing the deployment of smart grids that can optimize energy usage and by using digital technologies to analyze large amounts of data in order to predict the impact of climate change. 

Where the EU should contribute more

As part of its focus on digital development in the Southern Neighborhood, the EU has rolled out and planned a wide range of digitalization initiatives, including on digital skills, entrepreneurship, and e-government services. The EU is, according to an EU official based in the region, currently focusing on areas where it believes it can add value, particularly digital skills, data protection, and artificial intelligence (AI). The EU has, on a global scale, presented itself as a regulatory superpower. The focus on areas where the EU can add value is sensible, especially considering limited budgets. However, given how interrelated and widespread the problems hindering inclusive digital development are, a full gap analysis and an expansion of digital development programming are crucial.

The EU should (and can) expand its programming in the following key areas:

Despite the regional conflict dynamics and political tensions that arose with the Oct. 7 attack and the subsequent war in Gaza, the EU should ensure that the MEDUSA project will be expanded to the Mashreq countries to improve access to high-speed internet in the region. This should particularly include Lebanon, which, according to a source familiar with EU strategy in the region, was supposed to be part of the project. Amid its ongoing economic crisis, Lebanon has been suffering from unreliable and expensive internet access, coupled with a lack of reliable electricity. Gaining access to high-speed internet through MEDUSA would be very beneficial for Lebanon, according to the source, who pointed out that a lack of infrastructure in the country was a problem in this regard. Furthermore, the lack of an agreement between Lebanon’s caretaker government and the International Monetary Fund (IMF) on financial support has prevented the granting of crucial loans needed to upgrade the infrastructure. Once an IMF agreement is in place, the EU should finance improvements to Lebanon’s digital infrastructure through the European Investment Bank.

As the laying of the MEDUSA fiber-optic cable to connect the North African partner countries continues, the EU should work with Mashreq countries to develop a timeline on when and how the connectivity project could be expanded. Southern Neighborhood countries would need to prove the productive usage of the improved connectivity in order to ensure the long-term future and possible extension of the project, according to another source familiar with EU strategy in this area.

Discussions with the Mashreq countries on the MEDUSA project could be coupled with preparatory work on establishing a Digital for Development (D4D) Hub for the MENA region, which could serve as a platform for governments to work with the private sector and civil society to support digital development. Similar hubs have already been established for sub-Saharan Africa, Latin America and the Caribbean, Asia-Pacific, and the EU’s neighboring countries, which include the Southern Neighborhood countries.

A key issue negatively impacting the growth of the digital economy (and the wider economy) in the region is the mismatch between the skills of graduates and those needed by private sector companies. The EU in this context recently completed a project with French telecommunications company Orange to set up a coding academy in Amman, Jordan. According to the EU official based in the region, there are now plans to expand the approach of partnering with European private sector actors to the regional level.

Setting up partnerships with multinational and local companies to teach digital skills across the region could enhance participants’ chances in the local, regional, and international job market. However, given the aforementioned digital divides with regard to gender and location, any program should focus on including traditionally disadvantaged parts of the population, such as girls and women as well as rural residents. To counter the urban-rural divide, learning centers should be established in rural areas as well. If this does not prove feasible, programs should work with local communities to provide transport options or other means to enroll rural residents in these learning initiatives. This way the EU could intensify its efforts to tackle the prevailing digital inequality across the Southern Neighborhood and wider MENA region. Such efforts could be undertaken in cooperation with the European Training Foundation, which specializes in helping EU neighboring countries reform their education and training systems.

Such efforts should also include engagement with local governments and civil society on how disadvantaged population segments could be provided with affordable and reliable access to the internet, such as through the financing of improvements to the digital infrastructure.

The EU should expand knowledge-sharing initiatives with Southern Neighborhood countries, including through the Technical Assistance and Information Exchange (TAIEX) instrument and longer-term Twinning projects of the European Commission, as part of which public sector experts from EU member states share their expertise with partner countries. This type of exchange can be beneficial to both sides, allowing local authorities to access crucial knowledge to design and implement policies, while also giving the EU an opportunity to promote its regulatory approach and best practices in the region.

A planned TAIEX on AI in Jordan is a positive step in terms of sharing expertise on future technologies. It comes at a time when MENA countries, particularly the United Arab Emirates and Saudi Arabia, are investing in AI. In May, Egypt and Italy agreed to establish an AI center in Cairo, which reportedly could be operational later this year and aims to position Egypt as a hub for AI development across Africa. The EU could back regional AI initiatives by supporting programs to create more tech talent, such as AI engineers and data scientists.

Given the apparent lack of a comprehensive analysis of the implementation of the EU’s digital development strategy in the region, the EU and its partners should step up its data analysis and reporting on digital development in the Southern Neighborhood. This could be done in accordance with the Digital Economy and Society Index (DESI) indicators, which track progress made by EU member states on digital transformation. Countries of the Western Balkans region hoping to join the bloc have started to annually report on progress according to the DESI indicators. A fuller picture of digital transformation in the Southern Neighborhood would enable local governments and the EU to implement more targeted programs and policies. Improved data on digital development would also allow both local governments and the EU to track the impact of specific policies and programs, which could improve the efficiency of resource allocation. Such an analysis could also inform future TAIEX and Twinning projects. Based on the 2023 report on how these projects are faring, Southern Neighborhood countries such as Egypt and Lebanon could benefit from longer-term support, including on digital development.

Digital development could play an important role in several of the areas a new Mediterranean portfolio is likely to focus on, including economic stability, job creation, and energy. The EU should ensure that digital is being mainstreamed across the focus areas of this potential new portfolio and is integrated with the bloc’s existing digital initiatives in the region and the new Pact for the Mediterranean that von der Leyen announced will be developed in 2024-29. This means that digital elements are integrated at all stages throughout the conception and implementation of policies in the region. For example, according to another source familiar with EU strategy, the Commission is also designing a new program to promote digital trade and e-commerce to enhance new business opportunities and promote regional economic integration.

In order to achieve its goals in the region, including countering China’s Belt and Road Initiative, at a time of budget constraints, the EU and EU member states need to improve their coordination of digital policies toward the region. A future Commissioner for the Mediterranean could, as part of their portfolio, coordinate policies with EU member states.

Digital transformation offers many opportunities for cooperation between the EU and the Southern Neighborhood, as well as the wider MENA region. However, it can only serve to promote inclusive development if regional governments and their European partners dedicate more resources to address the digital divides prevalent in the MENA region. Leaving these divides unaddressed risks worsening existing socio-economic inequalities and preventing inclusive economic growth.

The Middle East is charting its own course in digital transformation, and European countries should engage with the region accordingly rather than anchoring their relationship solely on 20th-century migration and security concerns. Technology is central to EU-MENA relations, and it is time for Brussels to base its relationship with the Middle East on 21st-century principles.

Manuel Langendorf is an analyst and editor at Middle East Minds, a MENA-focused consulting and analysis company. His work focuses on digital transformation in the MENA region.

Photo by Michele Spatari/NurPhoto