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Middle East needs radical reforms to catch up with other regions

If Arab countries do not take the necessary steps to implement the much needed reforms, these will be imposed from outside, and we would have only ourselves to blame.
Middle East needs radical reforms to catch up with other regions
Henry T. Azzam, The Daily Star, Lebanon

The Arab region today is at a crossroads. Our leaders can either choose the traditional conservative approach toward reform, aimed at marginal damage control, or take bold decisions with a clear goal to secure the future. The minimalist approach will almost certainly mean giving away the right to have a say in the future and accepting what is imposed on us by outside powers. The authorities in the region have typically responded to challenges facing them in the past with long time lags. What we are experiencing today is the cumulative effect of these delayed responses.

The profound dilemma facing policymakers is the perceived conflict between "freedom" versus "security," "change" versus "stability" and "reform" versus "traditional values." These will have to be addressed head on, because by far the most dangerous enemy at this stage is complacency. In the current geopolitical environment, every missed opportunity to act has direct and immediate risks associated with it that should not be underestimated.

The wave of democracy that transformed governance in most of Latin America and East Asia in the 1980s and early 1990s has barely reached our region. The Arab Human Development Report that was published by the UN last summer notes that out of seven key regions of the world the Arab region has the lowest freedom score, which includes civil liberties, political rights, a voice for the people, independence of the media and government accountability. The US chose to leave the Arab world to its own political and social devices so long as it remained a dependable source of oil and did not present a threat to Israel. The arrangement lasted a very long time and had Sept. 11 never happened, it would have lasted longer.

The lack of democracy and the absence of public liberties were necessary for the stability of the mostly autocratic regimes in the region. Sept. 11 changed all that. It revealed a new enemy to the US, even more fanatical in the US administration's view than communism which the US fought throughout the 20th century. Hence the realization that preventing the next attack on the US will require America to engage the Arab world in the same way it engaged Europe and Asia a half-century ago.

The victory in Iraq has emboldened the resolve of the US to impose its own agenda upon the entire region. According to US commentators, while the first Gulf War in 1990 was fought in defense of the status quo and to preserve regional "stability," the most recent war on Iraq was fought to introduce radical changes and shake up regional "sterility." The US administration made it clear that by changing the regime in Iraq it will create a model democratic state that could be emulated elsewhere in the region. The argument presented is that poverty and lack of outlets for political expression creates breeding grounds for extremists. It was relatively easy for the US to impose democratic systems on Japan and Germany after they were defeated in World War II. Some key members of the Bush administration were also encouraged by the sweep of democratic governments in Eastern Europe in the late 1980s after the fall of the Berlin Wall and felt that history can repeat itself in the Middle East.

There is a strong belief in the Arab world that reform and democracy must come from within and not be imposed by an external superpower. Even if the "democratization" campaign of the US is genuine, it will not be able to put in place new standards of Arab governance. Democracy and reform should be homegrown, taking into consideration internal conditions and limitations of the various Arab countries. It is up to us to decide how we want to transform our countries in order to step firmly into the 21st century. However, if Arab countries do not take the necessary steps to implement the much needed reforms, these will be imposed from outside, and we would have only ourselves to blame.

The Middle East has abundant resources, a geostrategic advantage, and enormous economic potential. Yet, it has been the slowest-growing region in the world in the past two decades. Rapid increases in the labor force, together with the slow economic growth rates, have meant lower per capita income and high and rising unemployment. In most Arab countries, the public sector is still the largest employer and the largest consumer of goods and services in the economy. Financial markets in much of the region are shallow, fragmented and have not played the intermediation role needed to underpin investment and growth. Lack of transparency, poor governance, and high levels of corruption in the region constituted serious obstacles to the development of an open, competitive, and market-driven investment climate. It is important to note that the record of those countries in the region which have recently undertaken economic reform and strengthened institutions and governance structures (such as Jordan, UAE and Bahrain) have achieved relatively higher growth rates.

The region has been preoccupied with the Arab-Israeli conflict and huge amounts of resources were devoted to mitigate this threat. In many cases, long-overdue economic and political adjustments were delayed, using this cause as an excuse. While the Arab region allocates about 8 percent of its GDP to defense, this rate falls to less than 3 percent in many other regions of the world. Not only have these resources been "misallocated," but the forgone income and opportunities associated with this misallocation have undoubtedly affected the region's economic growth rates.

The main dimensions of the much-needed reform strategy would include: (a) strengthening and broadening the domestic political support base of governments; (b) making economic growth a national obsession; (c) developing the region's human resources and equipping them with the skills essential to compete in today's world markets (d) changing the role of the state from that of a "player," a dominant actor in the economy, toward that of a "referee," or a regulator whose role is to provide a stable macro-economic environment and a level playing field for the private sector; (e) establishing civil societies; (f) allowing larger female participation in politics and economics and (h) re-engaging the world by projecting a positive image of the region's culture and religion.

Each of these requires policies that constitute radical departure from the past, have short-term costs and can alienate many vested interests. At the domestic political level, this calls for changes in the mode of governance. At the economic level, the challenge is for policymakers to put economics ahead of politics and to think beyond short-term revenue needs and allocations concentrating on macroecnomic viability, competitiveness and sustainable growth.

Henry T. Azzam, chief executive officer of Jordinvest, wrote this commentary for The Daily Star

homepage: homepage: http://www.dailystar.com.lb/opinion/22_04_03_e.asp

Progress can be a step backward 23.Apr.2003 08:48

dan

The modern world is manipulated by multinational corporate interests. A lot of what you have stated plays into that hand. "Progress" is driving our world into destruction. Although I am agnostic, I feel much of the fundamentalist movement is moving in the right direction. There are not driven by profits.

other regions? 23.Apr.2003 19:32

heimdallr

You mean like Singapore and Honduras?