A sea with an inner dynamic

Innovation is often viewed as a mindset or something that can be stimulated with the right policies. However, it also has a clear geographical component. Many ancient cities were built alongside rivers. Today’s most innovative regions – Silicon Valley, Boston, New York, London, Dubai, Tel Aviv and Singapore – all look out over an ocean.

The proximity of open water stimulates entrepreneurship, lofty ambitions and risky ventures. In this series in the Dutch newspaper Het Financieele Dagblad, our lead researcher Haroon Sheikh looks into the innovative strengths and developments in seven major coastal regions. This week’s edition is about the Mediterranean Sea. Coming up next week: the Arabian Seas.

We often associate the Mediterranean Sea with various problems: the financial crisis, the Arab Spring, the Israeli-Palestinian conflict, boat refugees and – most recently – Catalonian separatism. However, “Mare Nostrum” is also home to innovation: there are technology hubs, energy hubs and junctions of people and goods that create new and dynamic connections to the rest of the world.

The geography of the Mediterranean Sea is remarkable. Many different peoples live along the coastlines of this large sea. It is not an inland sea like the Caspian Sea or the Black Sea, whose coastlines can be dominated relatively easily by a single country. Throughout history, only one nation ever managed to control the coastlines of the Mediterranean: the ancient Romans. They called it Mare Nostrum: “our sea.” Since then, no one else has managed to repeat the Romans’ feat.

China’s influence grows in the East, while France is the regional power in the West

Nevertheless, the Mediterranean Sea has some similarities to inland seas: after all, there are only three ways to get in or out. Gibraltar, Istanbul and Suez are the three narrow, strategically located straits. In 1956, an international crisis erupted when the Egyptian president Nasser nationalized the Suez Channel. The Bosporus is vitally important to Russia, the Brits still retain their possession of Gibraltar and Spain has two enclaves to the south of that strait in Morocco: Ceuta and Melilla.

This sea therefore brings together different peoples on three different continents, while simultaneously being fairly closed off from the rest of the world. The French poet Paul Valéry spoke of a “Mediterranean civilization” that unites Southern Europe, Northern Africa and the Levant.

Nowadays, Brussels views the Mediterranean Sea as a clear border, yet evidence of how porous this border has always been can be found everywhere. Egypt’s second-largest city is named after the Greek conqueror Alexander the Great, Jordan’s capital of Amman boasts a Roman amphitheater, the majestic Alhambra in the south of Spain was built by Arabian dynasties, the Maltese language has Arabian roots and Palermo’s cathedral shows a variety of cultural layers.

The pattern is clear: historically, the Mediterranean world forms one large community. The rise of three kinds of dynamic locations also transcends national borders.

Silicon Wadi

When it comes to the technology hubs, Israel is the undisputed leader in the Mediterranean region. In parallel with Jerusalem’s conservative rule, a start-up economy with the nickname “Silicon Wadi” grew around the coastal city of Tel Aviv. After Silicon Valley, this is the largest start-up ecosystem in the world. Only the United States and China have more companies listed on the Nasdaq stock exchange.

The innovative IT companies based in Israel attract attention from all over the world. GPS navigation company Waze was purchased by Google in 2013 for a sum of circa $1 billion. Mobileye, which develops technology for autonomous vehicles, was taken over by Intel in 2017 for the incredible sum of $15 billion. Volkswagen invested in the taxi app Gett, while the Japanese organization Rakuten purchased Viber, which is comparable to WhatsApp.

Israel has made the best of its situation. In the face of military threats and droughts, the country became a leader in the field of technology. Israel leads the way when it comes to drones and military technology: the Iron Dome defense system is perhaps the most effective missile defense system in the world. The country also has a leading position in the field of desalination: the process by which salt water is turned into fresh water.

Tunisia is another recent Mediterranean technology hub. The country emerged from the Arab Spring relatively unscathed and today boasts a sizable middle class of well-educated citizens. European call centers, high-grade electronics production and engineering have been outsourced to Tunisia on a large scale. Since 2003, aviation is one of the country’s fastest-growing sectors. Even after the Arab Spring, it continued to grow at an annual rate of more than 10%. The country’s offshore hubs are particularly popular among French aerospace organizations.

Another aerospace ecosystem has developed in Morocco. Boeing, Bombardier, Safran and Thales have production facilities in this country. The new Mediterranean technology hubs create new connections, e.g. between Israel and the US and between Northern Africa and Western Europe. In the early years of the twentieth century, the strategist Nicholas Spykman wrote that it is the Sahara, not the Mediterranean Sea, which forms the true border between the two continents. Northern Africa has always been closely connected to Southern Europe.

Gas hub Algeria

A second dynamic development in this region is energy. Algeria has positioned itself as the central gas hub between the two continents. The Maghreb-Europe Gas Pipeline is a complex alliance that ties together Spain, Portugal, Morocco and Algeria. The Transmed is the longest international pipeline. It carries Algerian gas to Italy via Tunisia and Sicily. Finally, the ambitious Trans-Saharan line will run straight through the desert to connect the Algerian infrastructure to Nigerian gas fields.

After a bloody civil war in the nineties, Algeria remained stable during the Arab Spring. Europe is looking for alternatives to Russian gas and Miguel Arias Cañete, the European Commissioner for Energy, views Algeria as an important partner.

New gas fields are also being discovered in the eastern parts of the Mediterranean region. The energy-poor Israel struck proverbial gold in its territorial waters with the Tamar and Leviathan gas fields. The country now has the opportunity to become a major energy producer if it can resolve the regional tensions with Turkey concerning the status of Cyprus and the border dispute with Lebanon about exclusive economic zones (EEZs).

An even bigger gas field was discovered in 2015 by the Italian company Eni. The Zohr gas field, located in Egyptian waters, is the largest energy find ever made in the Mediterranean Sea. Recently, Egypt has also widened the Suez Channel. At the moment, the country is trying to attract investors from the Middle East and China in order to become a regional energy hub.

With the Mediterranean gas hub and the southern gas corridor, the European Union is connected to the energy fields in the eastern region of the Mediterranean Sea. New hotspots are also being developed in the sustainable energy sector. Desertec, an ambitious European plan led by German energy companies to generate solar energy in the Sahara, ran aground. However, a new project soon appeared: the Moroccan project Noor – Arabian for “light” – can become the largest solar power plant of its kind. The plan’s first phase was initiated in 2016 and King Mohammed VI wants more than half of Morocco’s energy to come from sustainable sources by the year 2030. In the long run, the country will even become an exporter of energy.

China’s point of access

The junctions of people and goods form a third innovative power in the Mediterranean region. Historically, Malta and Cyprus, the British ports on the maritime route to the east, were areas where shipping, trade and banking flourished. Today, new streams of goods mainly come from Asia. The rapid growth of global tourism also brings large numbers of visitors to the Mediterranean Sea.

The result is the development of coastal cities and regions that perform better internationally than their countries’ hinterlands. While the Greek economy nearly collapsed, the port of Piraeus thrived after it was connected to Chinese trade routes. As part of its Belt and Road Initiative (BRI), China is now building railroads across Eastern and Central Europe, which will allow Piraeus to become China’s point of access into Europe.

The same thing is happening in Italy. National reform proved difficult to achieve in recent years and the upcoming elections in March of 2018 might lead to more upheaval. Meanwhile, export from cities in Northern Italy continued to grow, while Venetians are leaving the city en masse to escape the unending stream of tourists.

Spain was forced to make cuts as a result of the financial crisis, while Barcelona was flooded with tourists. The current major, Ada Colau, was elected to reduce these numbers. The economic dynamic strengthened Catalonia’s longing for independence. This development brings back the historical Mediterranean city states. Regardless of whether Catalonian independence will eventually come to pass, these coastal regions are increasingly following a different dynamic than the nation states they are a part of.

This pattern is evident throughout the Mediterranean region: economic and political crises put existing nation states under pressure. As a result, dynamic regions arise that create new international connections: technology hubs collaborate with France and the US, energy hubs connect to the Iberian Peninsula and new junctions are created to accommodate Asian trade and global tourism.

These dynamic “islands” are the future in a volatile environment. At the same time, the weakness of many Mediterranean nations creates opportunities for stronger powers. In the east, China’s presence in this sea, which forms the end point of the Maritime Silk Road, will continue to expand.

France is the regional power in the western area. Macron’s sights appear to be set on reforming the EU, although it has been clear for years that France is not the dominant force there. As a result, the country is starting to shift its focus to the south. Nicolas Sarkozy formed a “Mediterranean union” in 2008; a plan that met with resistance in the rest of Europe. Since then, France maintains a diplomatic and military presence in the region. From Libya and the Sahel countries to Syria and Qatar: Paris is gradually creating a new sphere of influence in the Mediterranean Sea.

In the east, Turkey continues to be a rising power. The presence of Turkish military and commercial vessels in the Mediterranean Sea is rapidly expanding. President Erdogan is out to recapture the glory of the Ottoman Empire. In the “white sea,” (Akdeniz), Turkey’s influence once reached as far as Malta.

The innovative power of the coastal regions is putting the existing borders between countries and continents under pressure. As a result, an old world rises again in a new shape: the porous – and therefore dynamic – Mediterranean civilization.

To read the article in Dutch, click here.


About the author
Haroon Sheikh (37) supervises FreedomLab Thinktank, works as a researcher at the investment company Dasym and is part of the VU’s Centrum Ethos as a philosopher.

He earned his doctoral degree with research into the influence of old traditions on modern societies and published two books: De Opkomst van het Oosten and Embedding Technopolis.
A book about new seaside powers will appear in 2018, based on these features in FD Morgen.