Wanted: Regional Cooperation for an Arab Marshall Plan

Article Summary
Given imbalances in Middle Eastern economic growth between poor and indebted countries and those awash in wealth, two scenarios are possible for regional development, writes economist Ibrahim Saif. The first involves an increase in competitive investment in a number of sectors; the second is a “Marshall Plan” for the Arab world.

In light of the deteriorating economic situation in the Arab world - with the exception of the Gulf states - and given the variety in the expected and achieved growth rates of the region, two scenarios are possible [to strengthen the Arab regional economy]. The first is the promotion of regional cooperation between those Arab countries that have financial surpluses and others who present promising opportunities but need investors. The second option revolves around the possibility of launching a regional project, whereby the Gulf states would help other [Arab] countries in need of [financial] aid during their transitional periods.

As far as regional cooperation is concerned, the Arab Spring, the global economic crisis and the European crisis have revealed that countries and regions previously considered safe havens for investment are no longer so - Europe is conclusive proof of this. The situation of the world's largest economy (the United States) is no better than Europe's. In fact the dollar, still considered a [strong currency], is losing ground, and it is not yet clear how the United States will solve its debt and deficit crises.

In the midst of these significant global changes, a number of Arab countries are moving into new political stages. This indicates that achieving long-term stability is possible. Stability in Tunisia, Egypt and Morocco would pave the way for new investment opportunities. New regulations are causing a reshuffling of economic actors. This will set the stage for increased competition and limit both nepotism and corruption. [Such a climate] would encourage local and foreign [entrepreneurs] to invest and make use of their savings.

Optimistically speaking, stability can contribute to the diversification of economies. [The Arab world] is currently plagued by [an over reliance] on traditional sectors. [Stability] will drive investors to sectors they used to avoid under authoritarian governments, as they were characterized by various degrees of corruption and a lack of stimulus for long-term investments. In fact, such [investments] require preparation and commitments different from the prevailing capitalist procedures.

The promising opportunities and financial surpluses in the Arab region along with the favorable investment climate are likely to promote regional cooperation and facilitate customs [and other trade-related] procedures. In addition, [the cost of trade] between these countries [will diminish] due to investment guarantees. This is a measure seemingly being contemplated by the Gulf Cooperation Council (GCC) in order to strengthen its ties with both Morocco and Jordan.

With an eye towards strengthening regional cooperation, projects are underway to improve telecommunications infrastructure, land transport, rail, power and the merging of electrical grids. These sectors can be developed on a [competitive] basis, which would be in the interest of [the people working in these sectors]. Funding can be easily ensured, provided [these projects] are based on specialized studies and accompanied by commercial promotions. [These projects] should not be regarded as [unifying countries in and of themselves], but rather as projects which accept help from the private sector in order to benefit from its experience in business and project management.

The second scenario can be described as a Marshall Plan [for the Arab world], in reference to the US plan to help Europe in the aftermath of World War II. In fact, the preconditions for such a project are nonexistent in the Arab world. There exists no joint political project, no economic trend based on a specific ideology and no favorable climate for the implementation of such [an ideology]. [New] trends and forces of attraction have begun to emerge with the recent elections, and therefore there is no [single] pattern to follow and no institutions of joint Arab action capable of implementing [this ideology]. Furthermore, even the institutions of the countries that would supposedly benefit from such a project have no experience in [dealing with] countries benefiting from financial surpluses.

Therefore, given the situation in the Arab world, strengthening regional cooperation and serving the common interests of many [Arab countries] seem more realistic than [implementing] a project similar to the Marshall Plan. Some regional cooperation projects in the energy and transportation sector can pave the way for a type of Arab integration. It should be noted that [this integration] has remained [no more than] ink on paper over the past five decades. This is a result of the absence of adequate tools for its implementation, a lack of cooperation with the private sector and, most importantly, the lack of a clear political vision.

Found in: investment, gcc

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