President Barack Obama, while focusing on
political change in his long-awaited speech on the
Middle East last month, to his credit also
recognized the need for economic development and
growth in the region.
This is not just a
need; it is an imperative for achieving a
successful transformation of the region from
autocratic to democratic governance. For regime
change to be successful, it must be quickly
followed by meaningful economic prosperity. An
economic turnaround will not begin in earnest
before regime change is well underway. The
importance of the sequence and the symbiotic
relationship between a political and an economic
about-face may have escaped policymakers and
regional experts, or
has been underestimated, in
the Washington shuffle.
To differing
degrees, one of the major reasons for, if not the
major drive behind, protests in the Middle East
and North Africa has been economic deprivation and
injustice. While a combination of many factors go
into economic success, the quality of institutions
- the rule of law, respect for contracts,
protection of property rights, trust, effective
regulations and their supervision, civil freedom
and the like - are recognized as important
elements for economic success and sustained
growth.
In the Middle East and North
Africa region, where dictators have been the norm
and numerous countries have been blessed with
enormous oil and natural gas reserves,
illegitimate rulers and their cronies have little
incentive to develop and nurture good
institutions. They can best enrich themselves if
they are the law unto themselves and face no
restrictions, allowing corrupt practices and
rent-seeking activities to thrive.
While
rulers are busy enriching themselves and signs of
economic injustice - such as fat foreign bank
accounts, lavish palaces, luxury cars, parties
with expensive artists and much more - develop,
the local economies languish, citizens are
deprived amid rising unemployment and there is
little hope for the average person to live a
dignified life. Invariably, economic and social
injustice drive protests, but the foundation for
an economic turnaround and economic justice will
not come about under autocratic rule because
ruling elites are unlikely to adopt reforms that
will ultimately limit their ability to enrich
themselves.
In such a setting, while
protesters may be euphoric in the immediate
aftermath of a dictator's departure, their
euphoria might be short-lived. Citizens will need
to see tangible economic benefits quickly, at
least the basic necessities of life, followed by
jobs. Otherwise, new protests will be sparked and
the ensuing turmoil will only exacerbate already
poor economic conditions. The military may step in
to restore law and order with the noblest of
intentions, but they could then become comfortable
in their new-found position, and the euphoria
could end with a military dictatorship and the
continuation of a closed circle of economic
deprivation and injustice.
The White House
should take note. The effort to bring about the
required sea change in economic performance in the
Middle East will be much more difficult than the
political change we have been witnessing. While
the right spark can overthrow dictators in a
matter of days, the initiation of a sustained
economic turnaround, depending on the
circumstances, could take a number of years. It
will require significant resources as well as a
deep understanding of these economies.
In
the case of Egypt, it will require much more than
what was initially articulated by President Obama
in his speech, namely US$1 billion in debt relief
and $1 billion in guaranteed loans; those amounts
are in addition to proposals from the
International Monetary Fund and the World Bank,
$180 million pledged by Britain, $1.75 billion by
the European Union, and $20 billion "loosely
promised" last month at the Group of Eight summit
in France.
The White House should look to
the assets of the Mubarak regime, most of which
have been stashed abroad. Although Qatar is
initiating a drive with the rich members of the
Gulf Cooperation Council (GCC) to establish Middle
East Bank for Reconstruction and Development, this
may be a tough sell to family rulers who may be
praying deep down for a failure of the Arab Spring
and with Saudi Arabia doing all they can to stop
political change and protect all remaining Arab
dictators in the region.
Still, the
members of the GCC - Bahrain, Kuwait, Oman, Qatar,
Saudi Arabia and the United Arab Emirates - should
think long and hard about their financial support
for an orderly transition to democracy in those
countries already troubled by internal unrest,
lest they be blamed for turning their backs and
face turmoil that could be their own undoing.
France's President Nicolas Sarkozy, ever
the optimist, has expressed the hope of getting
$10 billion from the GCC. Washington will have to
develop a much more thoughtful plan for Egypt and
Tunisia, and indeed for the region, than what a
standard IMF or World Bank proposal is likely to
offer. Libya may be much easier, given its
significant foreign assets and the confiscated
foreign assets of Muammar Gaddafi, his family and
cronies.
Again, the important point that
cannot be overemphasized is the significant
attention, time and resources required for an
economic turnaround. If the White House
underestimates this need and does not move quickly
to get the process underway, Obama's initiative to
improve relations with the Muslim world will fail
and the Arab Spring will quickly turn back into
the Arab winter.
Flowery speeches that
single out some of the tyrants of the Middle East
while saying nothing about the al-Sauds who are
trying to reverse the movement to representative
government and undermine US efforts, and
committing insufficient resources to an economic
turnaround, will do more harm than good in
improving relations with the Muslim world.
Hossein Askari is Professor of
International Business and International Affairs
at the George Washington University.
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