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Ceuta it is one of those great unknown to most of the Spanish. With almost 85,000 registered inhabitants, stands as an essential geostrategic center: border to the south with Morocco and with the Strait of Gibraltar to the North. A city with more than 400 years of history that has abundant tourist attractions: the Al-Mansura Walls, La Almina, the San Amaro Park or the Royal Walls.
A historical and cultural enclave that, in 2019, the last prepandemic year, visited 76,400 tourists, most of them Moroccans. A complex year for Ceuta in which Morocco -in October- decided unilaterally the closure of the Tarajal II border crossing after the death of two porters. A measure that jeopardized 25% of the region’s GDP.
In that border, the most unequal in terms of per capita income, dynamics were installed over the years of atypical trade, with the passage of goods on foot to avoid the payment of tariffs as the maximum exponent.
Through the new circuit, the Tarajal II, inaugurated by the former Minister of the Interior Juan Ignacio Zoido, the last month of trade in September 2019 almost 27,000 women and 29,000 men crossed, according to data provided to EL ESPAÑOL-Invertia from the autonomous city. That year, until the border crossing closed, 175,324 women and 209,000 men had passed packages across the border.
Behind that closure, there is also a roadmap to be implemented by Morocco after the development of the north of the country during the two decades of the reign of Mohamed VI. Objective? Attract tourists.
Precisely, the neighboring country put an end to this activity in Tarajal II in October 2019, shortly after the port of Tangier Med will go into operation. And four months later, on March 13, 2020, with the Covid-19 pandemic, the land border was unilaterally closed.
The cross-border trade on which a good part of the businesses in the area live has come to an end, with a special impact on the entry of coffee, tea, mate, spices, footwear, machinery, electrical material or made-up textile articles. According to data from the General Directorate of Commerce, In the first half of 2019, the city imported goods for 139.3 million euros. Two years later, it reaches 67.8 million euros.
The same does not happen with exports. Ceuta has managed to go from 3.2 million euros to about eight million in the first half of 2021. The reason? “Sales with Spain thanks to the increase in the price of hydrocarbons, especially natural gas”, as can be read in the report of the General Directorate of Commerce.
The border closure coupled with the pandemic has also motivated a retail collapse in Ceuta, which has not yet managed to regain pre-pandemic levels. A situation that is felt in the streets of the city, where there are more and more businesses that hang the closed sign and premises with that of for sale or rent.
Service economy
All this accompanied by the decrease in port traffic due to the lack of passages and the suspension of the ‘Operation Paso de El Estrecho’ (OPE) by Morocco, and the closure of fifty shops and a dozen hotel establishments.
Are the consequences of an economy based, fundamentally, in the offer of services. This is reflected in the occupation of its citizens. Of the 27,800 employed persons that, according to the latest EPA of the National Institute of Statistics, there are in Ceuta, 15,000 work in the private sector; fundamentally in the service sector due to the lack of industry and agriculture in the area.
The other 12,800 are public employees, and of them just over 3,000 are members of the Army. This places Ceuta as one of the places in which there are more members of the Department of Defense in Spain.
As if that were not enough, and after a year and seven months after the closure of the border, businessmen and households that employed Moroccan citizens are still without a workforce. For instance, Before the pandemic, 2,200 domestic workers from Morocco were registered in Ceuta.
That explains the long queues at the Post Office and Western Union shipments. Some weeks up to 60,000 euros were processed from Ceuta to Morocco, according to data provided by Ceuta TV.
And why have services been the object of development? In large part because the objective that has existed for many years has been to position Ceuta as a tourist and shopping destination for Moroccan citizens who live on the other side of the border. In fact, part of the Special Economic and Fiscal Regime of Ceuta was designed with that objective in mind.
Tax regime
We talk about a relatively favorable taxation of investments and that it seeks not to drown the citizens who reside in it. Thus, for example, the quotas corresponding to the returns generated in Ceuta and Melilla are reduced to 50%. In addition, the VAT is replaced by the Tax on Production, Services and Imports of the cities of Ceuta and Melilla, which stands at a maximum of 10%.
As if that were not enough, workers and freelancers enjoy a 60% deduction in personal income tax on the income obtained in Ceuta, as well as a 50% deduction from Social Security contributions to those companies that hire workers in the city.
An attractive tax system that, for Alberto Garcia Valera, partner responsible for tax policy at EY Abogados, it is “the best tax system in Europe in North Africa”, as highlighted in an article published in Expansión.
However, the fact that Morocco now wants to change the way it manages the border forces to seek a new economic structure. The Moroccan goal is for the border to be exclusively touristy.
The game
What is working now on the Spanish side? Basically in attract those companies that provide digital services. Thus, those who develop gambling activities online from the city they have a reduced rate of 10% if they have their registered office in Ceuta and personnel hired in the area. This has allowed it to attract a multitude of companies in the sector, which carry out their operations there. The goal of the Ceuta government is to attract some 4,000 companies.
But it’s not enough. The Chamber of Commerce and businessmen in the area are concerned about the economic future of Ceuta. They have been working with the city government for years in a urgent plan to help change the economic fabric, but also social. We are talking about a region that boasts a unemployment rate of 24.2%. The second region with the highest unemployment in the country.
The youth unemployment reaches 70%, something very dangerous in a province that holds the second place in terms of births. The latest data from the INE show that in 2020 there were 9.97 births per 1,000 inhabitants. Well above the national average, which stands at 7.15 per thousand inhabitants.
A situation that can only be reversed through coordinated action between the local government, employers, the Government of Spain and the European Union. Can’t forget that Ceuta is not only a point of union between Spain and Morocco. It is also between Europe and Africa. This makes the autonomous city also a point of friction at times due, above all, to the territorial annexation that is always pursued from Rabat.
“Busy” city
The neighboring country considers Ceuta an “occupied” city and this is reflected in the documents. In fact, the media repeatedly cite it as a “besieged” city.
That border was ratified by both parties after the decolonization of Morocco in 1956, although the agreement omitted trouble spots. This led to the Parsley crisis in the summer of 2002. And, currently, the greatest diplomatic crisis persists, which also involved a migration crisis.
On May 17 and 18, the Moroccan authorities allowed the entry of more than 10,000 national citizens, including thousands of minors. Rabat opened its borders for 36 hours after the Spanish government welcomed the general secretary of the Polisario Front, Brahim Ghali, at the San Pedro de Logroño Hospital for suffering from Covid-19.
At this time, diplomatic relations are beginning to get back on track, after the European response in support of Spain. In fact, strengthening cooperation with Morocco is one of the great objectives of the new Foreign Minister, José Manuel Albares.
Economic Forum
Precisely, your Secretary of State for the European Union, Juan González-Barba, will be in charge of closing the Spanish Economic Forum that EL ESPAÑOL-Invertia celebrates in the autonomous city between Tuesday 28 and Wednesday 29. An appointment that will serve to analyze the economic and social potential of Ceuta.
Along with González-Barba, the Secretary of State for Tourism, Fernando Valdés, will also participate in the meeting. A Spanish Economic Forum which will be inaugurated by the Government delegate in Ceuta, Salvadora Mateos, and the president of the Governing Council of the Autonomous City of Ceuta, Juan Jesus Alive. There will also be the president of the Chamber of Spain, José Luis Bonet; the president of EY, Federico Linares; Antonio Garamendi, President of the CEOE, or the former Minister of Finance, Cristóbal Montoro.
Together with them and to talk about business opportunities, internationalization, digitization and international politics, they will also be Jose Bono, lawyer and former defense minister; Jaume Miquel, the president of Bend; Jose Maria Pacheco, president of Konecta; Rosauro Varo, President of GAT Inversiones; Patricia Benito de Mateo, CEO of Openbank, or Clara Sanz, the General Secretary for Vocational Training of the Ministry of Education.
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Reference-www.elespanol.com