In the Mediterranean Basin two projects of economic integration overlap, namely the project of a Greater Arab Free Trade Area (GAFTA) and a process of economic integration of the European Union (EU), which neighbors into EU's Internal Market; the EU endeavors to strengthen cooperation with the neighbors practically on all fields. For decades, in spite of high-pitch rhetoric about Pan-Arabism, practical Arab integration was very limited. Hardly any other region was so divided politically. Furthermore, almost all Arab countries followed inward-oriented development strategies with high protectionist tariffs. These severely constrained economic transactions among the Arab countries. Thereby the Arab world became one of the most fragmented areas in the world. Spillover effects from economic to political integration, which played an important role in European integration could not take place. From the 1970s onwards a slow and often inconsistent transition to open marked economies began. It improved the conditions for Arab economic cooperation considerably, and in 1997 the GAFTA project was launched. It generated indeed increased trade. However, so far it remained `shallow' integration, implying tariff reductions at the border, but not `deep' integration with changes behind the border, such as common competition rules or common products standards. Therefore, numerous non-tariff barriers still exist, and competition remains distorted. Arab voices demand `deep integration', but this requires political decision-making and dispute settlements which would restrict state sovereignty. Currently not many indicators point at such a transition in the Arab world. On the other hand, `deep' integration has made considerable progress among the EU and some neighboring countries, notably Tunisia and Morocco. The impacts have been far reaching, also in the political sphere. This process is likely to impact some Arab countries much more than Arab integration. Theoretically it can be explained in terms of neofunctional theory.

Some decades ago Pan-Arabism seemed to be deeply rooted among the populations of various Arab territories. And in 1945 the then seven independent Arab states formed the Arab League, seemingly a first step towards political integration. However, the League was constructed as a strictly intergovernmental organization which could not bind the member states. Simple rational-choice theory seems to deliver a good explanation: Ruling national elites made some symbolic concessions to Pan-Arabism, but took otherwise care that their sovereignty did not become infringed. In principle, this is still the state-of-affairs with the Arab League and its, by now, 22 members (Zank, 2009c). It would be wrong to assume that efforts at Arab unification have had no effect at all. As we shall see, the GAFTA has produced tangible results. Besides, the Arab League has been an institutional forum for dialogues on various levels, and sometimes Arab leaders could reach consensus on important questions, e.g., in 2002 with the Arab Peace Initiative i.e., the collective offer to normalize diplomatic relations to Israel and recognize its borders as of 1967 if Israel retreats from the occupied Palestinian territories. As these examples show, efforts at Arab integration have produced some results. But they have been modest, if compared to the ideas of the heydays of Pan-Arabism during the 1950s. In cultural terms, the League could assist at modernizing Arabic or developing school curricula. This has been little if compared with the ideas from the heydays of Pan-Arabism during the 1950s, but it has been something.

On the field of economic integration, the Arab world had for many decades mainly seen abortive projects. In 1950 the seven League members signed a Treaty for Joint Defense and Economic Cooperation (TJDEC). The treaty did not gain much practical importance. According to Michael Barnett and Etel Solingen this was not surprising, given the point that Egypt proposed this pact, not in order to foster Arab unity, but to thwart designs of Iraq-Syria unification (Barnett and Etel, 2007, pp. 198-201). At least, the TJDEC led to the creation of a new Arab Forum, the Economic Council, later Economic and Social Council, composed of ministers from the member states.

New attempts were made in 1953 with the Agreement on Trade Facilitation and Regulating Transit Trade (ATFRTT) and in 1957 with the Arab Economic Unity Agreement (AEUA). Initially these agreements included only a subset of Arab countries. But Iraq, Saudi Arabia and Yemen blocked lowering tariffs on manufactured goods because their budget depended to high extent on tariffs. Furthermore, the pressure from special interest groups led to amendments and exceptions. At the end, the agreements had few practical results (FEMISE, 2008, p. 30). In 1964 Egypt, Syria, Iraq and Jordan concluded an Arab Common Market Agreement (ACMA), but also this project could not properly get off the ground.

International Relations Journal, Economic Integration, Free Trade Area, European Neighborhood Policy, Arab Economic Unity Agreement, AEUA, Arab Common Market Agreement, ACMA, Trade Facilitation, Transit Trade, Economic Cooperation, Pan-Arabism, Arab Socialism, Import-Substitution Strategies, International Monetary Fund.