The Desertec Project: a New Resource Curse for Countries in North Africa and the Middle East?

Large-scale plans for a renewable energy cooperation project ‘Desertec’ between the Middle East

North Africa (MENA) and Europe, based on wind and CSP sites in the MENA region, were

published in 2009 by a consortium of European energy, financial and industrial companies. An

investment volume of 400 billion € till 2050 leading to annual electricity exports of 700TWh to

Europe is projected. In addition to the benefits for Europe to increase renewable energy

generation and decrease greenhouse gas emissions, the consortium claims that Desertec

contributes to economic growth, development and employment opportunities in the MENA

region. However, it has been shown that countries with large natural resource exports

experienced reduced economic growth rates. This phenomenon is known as the resource curse.

A risk could thus arise for the MENA region countries due to large electricity exports. This

thesis evaluates the potential risk of the emergence of the resource curse in Northern Africa and

the Middle East due to the Desertec project. Based on three key factors, institutional quality, the

level of accountability and corruption, the susceptibility of states in the MENA region towards

the resource curse is examined. Moreover CSP is compared to oil and natural gas to access how

prone this technology is to the resource curse. Through the combination of country and

commodity factors it is demonstrated that the resource curse risk varies depending on the

specific country characteristics: an already existing resource curse due to oil and natural gas, the

quality of institutions or the size of the GDP in relation to possible rents.