Many Arab countries are realizing that the call for political, economic and social reform is getting louder, especially since the spontaneous democratic groundswell that shook the region in 2005. Participants at the World Economic Forum meeting that took place in the Egyptian resort of Sharm el Sheikh last month debated the lengths to which Arab countries should go in pursuit of reform. Executive reports the highlights.
Saturday 20 May
Hosni Mubarak opens World Economic
Forum on the Middle East
Egyptian President Hosni Mubarak opens the World Economic Forum on the Middle East with a call to the international community to work together to resolve regional conflicts. “Peace and development are indivisible,” the president tells more than 1,200 government, business and civil society leaders from 46 countries meeting in Sharm el Sheikh.
“The Middle East stands at a crossroads and it is up to us to make choices. Egypt’s choice is peace as it is the only path to development. We seek international partnership based on investment and not on aid and assistance. We are confident that building democratic societies is the only way to a better future that we seek,” he says.
Klaus Schwab, founder and executive chairman of the World Economic Forum says the meeting is “the most powerful demonstration of hope and will and determination to create the necessary conditions for economic, social and political development.”
World Economic Forum on the Middle East sets action priorities
The co-chairs of the Forum set five pillars for action to help prepare the way for a more prosperous future for the region. Over the course of the three-day meeting, participants focus on democracy, peace and stability; youth and understanding; global integration; investing in the future; and the business agenda.
“Peace is the crucial component upon which all the pillars of this summit can be achieved,” says Shafik Gabr, head of Artoc Group for Investment and Development. The prosperity of future generations depends on stability in the region, he argues.
H.R.H. Princess Lola Al Faisal, vice-chair of the board of trustees and general supervisor, Effete College, Saudi Arabia, describes the next generation as a “population bulge” in which 60 million people in region are under 25-years-old. “I see this youth bulge as an asset” in which the region needs to invest through education.
The private sector will lead the way in creating jobs for the region’s youth, says Nemir Kirdar, founder, president and CEO of Investcorp. Mohamed Al Mady, vice-chairman and CEO of Saudi Basic Industries Corporation (SABIC), notes that investing in human resources through education, technology and creativity would give the young the tools needed to fill the jobs crucial to economic development.
Oil Boom: sedative or stimulant for economic reform?
The hike in oil prices has completely changed the economic climate that forms the background to reform in the Middle East. Top leaders are asked if governments are using the new budgetary resources to push forward reform or if the tough decisions are now on hold.
“Cautiously optimistic” is the reaction of Mustapha Nabli, chief economist and director, Middle East and North Africa, of the World Bank. “But the potential is still big to do better.”
William Rhodes, chairman, CEO and president, Citicorp Holdings and Citibank; and co-chair of the meeting, draws a distinction between the oil boom of the 1970s and the present one. Whereas much of the money left the region in the first boom, “I think a lot of this money will remain in the area now,” he tells a packed session audience.
He continues that this was thanks to strengthened financial systems and large-scale privatization. Rhodes calls on the private sector to “step up,” to “really get involved in working with government and international investors” to drive reform. Improved corporate governance, transparency and a proper regulatory framework in place, he argues, would only expand private sector participation in the economy which is crucial to job creation and development.
Sunday 21 May
US and Middle East set development,
“This is an era where ground is shifting in the Middle East,” states Robert Zoellick, US deputy secretary of state, when asked to define US policy in the region. “We can help empower. We can help the process in terms of political engagement. But it has to come from the people themselves,” he says. Amre Moussa, Arab League secretary-general, agrees that reform is necessary in the Arab world. But that change has to come from Arab societies on their own terms.
“Reform is one of the priorities of the Arab world,” Moussa says. “All countries and societies want to move ahead and have their own views of how to move ahead. Reform is an item for all of us to support but we have to be cautious because of the fragility of the security situation and uncertainty on the international scene.”
Referring to the situations in Iraq, Iran, Palestine and Darfur, Moussa says that “we have to get back to a situation of dialogue.”
Getting to work in the Middle East
Generating new jobs for a rapidly growing labor force is an imperative for most Middle Eastern countries – even the relatively wealthy members of the Gulf Cooperation Council. Participants in a session on the topic discussed the additional challenge of creating jobs that would satisfy the career aspirations of their highly educated nationals. Traditionally, local college graduates have been absorbed into an oversized public sector. In an era of privatization and liberalization, however, this solution is no longer viable.
H.E. Sheikh Mohammed Bin Essa Al Khalifa, chief executive of the Bahrain Economic Development Board, Bahrain, says his country’s objective was to create incentives for private employers to hire Bahraini nationals, without resorting to quotas or expensive government subsidies.
Labor market reform can help create the conditions for employment growth, but it won’t generate jobs themselves, notes Augusto Lopez-Claros, chief economist and director of the Global Competitiveness Network for the World Economic Forum. For that, he says, the GCC countries need an “engine of job creation.” Increased trade – particularly increased intra-regional trade – could be that engine. “But this is an area where the Middle East, including the Gulf countries, are falling behind with respect to the rest of the world,” Lopez-Claros says.
Israel and Palestinians hold highest level talks in 11 months
Israel and the Palestinians hold their highest-level meeting since June 2005 at the Forum. Both sides say the meeting between Tzipi Livni, deputy prime minister and minister of foreign affairs of Israel, and Mahmoud Abbas, president of the Palestinian Authority, is the first, and that more will follow. Livni also announces that Israel will release a part of the frozen tax revenue due to the Palestinians.
Abbas and Livni both call on the Hamas-led Palestinian government to recognize Israel’s right to exist, to renounce violence and to recognize international peace agreements made by their predecessors as a crucial step towards continuing the peace process.
Saeb Erekat, head of PLO Negotiations Affairs Department of the Palestinian Territories, urges the international community to help ease the crisis facing the Palestinians.
Meanwhile Munib Masri, Chairman, PADICO (Palestinian Territories), unveils a new private sector initiative to push for a Palestinian government of national unity. “The private sector took its place to say we want to be part of this process and have a national unity government which could be the answer to the wishes of the Palestinians and Israelis,” he says.
“Red carpet in, red tape out”: rebranding the Middle East
Business leaders discuss the roles of marketing and branding in the promotion of the Middle East as a destination for tourism and inward investment. During a WorkSpace session, participants consider how the image of the Middle East might be revolutionized and propose a number of innovative campaign ideas.
The main outcomes are:
n Create a task force of stakeholders from the private sector to fund a marketing campaign for the Middle East. Appoint a campaign champion.
n The private sector will work to ensure that sufficient money is made available to fund the campaign.
n Bring Middle Eastern leaders together so that stakeholders can understand better what the region offers and represents.
n Efforts will be made to project Middle Eastern opinion leaders onto the international stage.
n Proposals to progress a campaign entitled "Red Carpet In, Red Tape Out" greeted with enthusiasm by participants.
Trading the way into the global economy—
Increasing trade ties at the multilateral, regional and bilateral level will enhance the Middle East’s participation in the global economy, agree panelists in a session devoted to trade.
Trade officials from Egypt, India and the US discuss the importance of trade in creating jobs, increasing competitiveness and driving development.
They stress the need for not only free trade among nations, but also fair trade that has benefits for both the developing and developed worlds.
World Economic Forum launches Egyptian Education Initiative
Egypt adopts the Forum’s Education Initiative, which aims to improve schooling in the country through information and communication technologies. Launched with the First Lady of Egypt, Suzanne Mubarak, and the Prime Minister of Egypt, Ahmed Mahmoud Nazif, the Egyptian Education Initiative (EEI) is announced at the Forum.
“Investing in our children’s education is investing in Egypt’s future,” says Yousry El Gamal, Egyptian minister of education.
The EEI will focus on four tracks: pre-university education, higher education, lifelong learning and e-learning industry development. The first phase of the EEI will impact 820,000 students in 2,000 schools and over 300 colleges.
Monday 22 May
World Economic Forum on the Middle East outlines action agenda
The 1,100 participants at the World Economic Forum on the Middle East commit to increase the role of the private sector in driving the Arab world development agenda. The meeting’s co-chairs deliver a joint list of outcomes from the three-day conference which includes restarting Israeli-Palestinian talks after 11 months and the launch of the Egyptian Education Initiative to benefit 820,000 children in 2,000 schools.
Other achievements of the meeting include:
n Participants expand a valuable network fostering communication and exchange among young people through the Forum’s Young Global Leaders community.
n For the first time, the Women Leaders Program brings together women ministers from across the region to construct a five-year action plan for public- and private-sector policies to address the region’s gender gap.
n The Forum takes initial steps in launching a private sector-funded branding campaign for the Middle East under the banner “Red Tape Out, Red Carpet In.”
n The Forum recognizes social entrepreneurs for their achievements in promoting sustainable business practices in Egypt.
n Egypt’s National Competitiveness Council publishes its third report.
n Agreement is reached to consider amendments to the open skies policy for Egypt.
Queen Rania sees winds of change blowing in right direction
Queen Rania of Jordan closes the Forum with a positive review of reform sweeping the Arab world. In a conversation with Professor Klaus Schwab, founder and executive chairman of the Forum, the Queen says “when we look at reform in our part of the world, different countries are moving at different paces but there is reason to be optimistic.”
The Queen says she hoped that when the World Economic Forum on the Middle East convenes in Jordan next year, greater regional stability would bring “a bit more clarity and visibility into the future.”
Touching on the theme of the meeting, “The Promise of a New Generation,” Queen Rania says that to realise such a promise, the Arab world needed to “implant the right values.” Principal among these she says was communication, both within and across borders.
Leave the business of business
Middle Eastern business leaders urge governments around the world not to intervene in free trade. “Governments should not meddle with these issues… if we believe in free markets, then they have to be free,” says Naguib Sawiris, chairman and CEO of Orascom Telecom Holding. His comments follow several well-publicized cases including Dubai World; Mittal Steel and Enel’s failed bids for their foreign competitors.
Despite his decision to cede control of US ports acquired in a P&O takeover because it sparked a US political outcry, Dubai World Executive Chairman, Sultan Ahmed Bin Sulayem, remains upbeat. “America is an exception… it’s a misperception and a political battle that we got caught between and this won’t deter us. This doesn’t make it a no-investment area,” he tells session participants.
Panelists says they as the business community would work closer with governments to fight negative perceptions of the Arab world following September 11. These perceptions are not only a political problem, but negatively impact business activities.