the Blog Papers of Dr. Michael Sakbani; Economics, Finance and Politics

Dr. Michael Sakbani is a professor of economics and Finance at the Geneva campus of Webster-Europe. He is a senior international consultant to the UN system, European Union and Swiss banks. His career began at the State university of NY at Stoney Brook,then the Federal Reserve Bank of New York followed by UNCTAD where he was Director of the divisions of Economic Cooperation, Poverty Alleviation, and UNCTAD`s Special Programs. Published over 100 professional papers.

Tuesday, February 08, 2011

the Arab World in the Vortex of the Storm: Egypt, Tunisia and the Rest

Michael Sakbani is a professor of economics and Finance at the Geneva campus of Webster-Europe. He is a senior international consultant to the UN system, European Union and Swiss banks. His career began at the State University of NY at Stony- Brook then the Federal Reserve Bank of New York followed by UNCTAD where he was Director of the divisions of Economic Cooperation, Poverty Alleviation, and UNCTAD`s Special Programs. He published over 100 professional papers.

NAME: MICHAEL SAKBANI
LOCATION: GENEVA, SWITZERLAND
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TUESDAY, FEBRUARY 08, 2011
The Arab World in the Vortex of the Storm: Egypt, Tunisia and the Others
By
Dr. Michael Sakbani*



The Tunisian revolt, more than anything in recent memory, might transform a significant area of the world revealing in the process the irrelevance of much of the received political wisdom about the readiness of the Arab society for democracy. Often one has wondered why the Arabs, people of great wealth, talent and major civilization, have been so far behind others in the march to freedom, political liberalism and democracy. There was no dearth of facile explanations: ranging from the tired clichés about Islam, to the imperialist anthropology of condescendence espoused by Orientalist, to the fundamentalists` rejection of democracy. The Tunisian events and what is now unfolding in Egypt simply discredit much of all that. The Tunisian and Egyptian youths showed that the oppressive autocratic Arab regimes and their security apparatuses are not to be feared; they can be challenged and even thrown out. The psychological barrier of fear is thus broken. Henceforth, the tyrants who have been in power for a generation and plan to have hereditary republics can no longer sustain the status quo. While the outcomes of these two popular revolutions are yet unknown, the future will not include despots with one-party system, militarists with the power of the gun, and even hereditary autocrats with wealth and tribal alliances. The Arab street is discovering its
power to say: enough, no more.

Why have the despots collapsed so quickly?

Some observers have expressed their astonishment that such long repressive regimes could collapse so quickly as if they were made of carton. The observation is rather too simplified; for most of them have indeed stood for a very long time. When their end came, one could see that their accumulated failures and inability to change made the end inevitable. The failure was multifaceted enough that it left their citizens incapable of answering for themselves the purpose of having such governments. The irrelevance of government to the average citizen led to a stoic resignation enforced by fear and hopelessness. But living is all about hope; and this is especially so among the young. The young who could not immigrate were caught in the Bouazizi syndrome of despair: immolate yourself or rise against those who deny you a decent existence; the cost of the choice being the same, fear should no longer be there. This is what ignited the revolution of the despairing youth, the youth that has been outside the compass of the regimes and what is left of the feeble opposition.
The catalog of failures

The political systems
In the catalog of failures, the political one is obvious to all; in the Arab world, politics ceased to exist. The one-party state anchored on the security apparatus and possibly the Army, which has been the norm in the Arab republics, has bulldozed the political and civil scenes and left no civil institutions. The old political parties were banned and, in time, disappeared. The permitted opposition parties live by the grace of the regime and in obedience to it and they, generally, lack popular bases. Civil society institutions like trade unions, professional associations and advocasy institutions are under the regime control. Without freedoms of expression, of assembly and of association, the society has no opinions, no views and above all no public debate. In short order, the insular leaders trusting only their cliques and beneficiaries reduced the concept of the modern citizen-state to one based on family, tribe, sect, party and recently, sectarian factionalism. Their dispossessed citizens came to feel the alienation of the outsiders. In this world of the dysfunctional state living in eternal status quo, the decision making circles are the protectors and beneficiaries of the regime and they function in perfect insularity and often lack of expertise and empirical knowledge. We now know the delusional hubris under which labored Saddam Husain, Bin Ali, Husni Mubarak and Gazzafi.
The Arab leaders did not come to power by popular choice; they came by military coups, party takeovers or hereditary means. None seems to have had a vision and an intellectual capital. Perhaps some, like Nasser, had an instinct for reform. In his book on the years of the White House, Henry Kissinger said that one enters government service with a certain amount of intellectual capital and vision. After four to five years, according to Kissinger, one has to come out for renewal of one’s exhausted capital. In the Arab countries, the leaders did not have this problem; they entered to govern and to govern they stayed until the onslaught of political Alzheimer'. The people they saw and consulted were like themselves, exhausted old hands. Some Ministers and councilors were in the same place for two decades; the Prime Minister of Bahrain has been in office for 42 years. The insularity of the regime led to thinking that after the Pharaoh leader is no more, the best replacement is his son.
Political failure also includes the absence of freedoms. Limitations on freedom in politics, civil society and the economy together with state domination over citizens, lock up the capacity of the society for self-help and deprive the country of its elites. Time and again, the lack of freedoms along with the dearth of economic opportunities have been the driving forces of brain drain in the Arab World.

Failure of Economic and Social Developments
The second class of failures is in the economic and social developments. In the early 1950`s, many Arab countries, like Syria, Lebanon and Iraq were as well off as South Korea, Malaysia and several Latin American countries. In some indexes: literacy and GDP per capita, these countries were favorably comparable to Turkey. Five decades after, they remain underdeveloped while the comparers have become dynamic developed countries. The failure here is undoubtedly due to wrong policies, wrong choices of economic systems and the inability to review and reappraise these choices. A closed system neither knows what is happening around it nor what is happening to it. In Tunisia and Egypt, where half of the population is below thirty, the respective economies proved incapable of offering jobs, basic necessities, and hope for a better future. The rate of unemployment among the youth in Tunisia, according to official statistics, has been 21 % (among some university graduates 44%. In Egypt, youth unemployment is estimated at 25%, almost double the general unemployment rates. In Egypt, the economy creates 60 % of the jobs needed to accommodate the new entrants into the labor force, while in Tunisia it creates 70 %. Interestingly, neither Egypt nor Tunisia has been doing badly as regards their per capita incomes and their rate of growth. The rate of GDP growth in Tunisia has ranged from 4.6 to 5 percent in the last three years, and in Egypt from 4.5 to 7 percent, and has averaged 6% over the last decade. These rates are higher than most European and developing countries. Yet in both cases, the growth of the economy has not generated enough jobs. This is due to the significant increases in productivity relative to labor inputs. Perhaps, the spotty increase in income, by virtue of its skewed distribution, brought about rising expectations. At any rate, the oligarchic nature of the ruling regimes seems to skew the distribution of income and wealth: thirty percent of income growth in Egypt accrues to the top 10 percentile of the population and 3.7 % to the lowest 10 percentile. In Tunisia, the respective figures are 33% and 2.3 %. We know from comparative economic statistics that the distribution of wealth is usually considerably more skewed than income. Mr. Bin Ali`s family, friends and other beneficiaries, became certainly very wealthy, as did the Mubaraks and their business clique. According to the Guardian, the Mubarak family has amassed a fortune of $ 30 billion!! In the event, the skewed distribution of wealth and income, created impoverished masses and withered gradually the middle class. Forty percent of the Egyptian population lives below the poverty line, on less than two US dollars a day. Tunisia is better off, but not in relation to its per capita income, which is 3.7 times higher than Egypt’s. This descent into misery takes place in full view of the social media with the TV screens displaying daily the going and coming of the life style of the rich and the corrupt.

Another aspect of economic failure has been the emphasis on imported consumer goods in the context of the total liberalization of trade. In 2010, Egypt ran a trade deficit of $22 billion and its current account was $ 5 billion in the red. Egypt's foreign debt exceeds now 75 % of the GDP. Tunisia`s deficit was $4 billion in 2010. Both countries were severely hit in 2010 by the increase in international commodity prices, in particular food prices. In 2010, overall inflation was 13 % in Egypt and 14% in Tunisia. In both countries, however, given their dependence on food imports, the rise in international food prices, which has exceeded 25 % in some basic staples, hit the budgets of the poor consumers with full force. Had the two countries been to some extent self-sufficient in food and basic goods, the impact would have been significantly attenuated. In the event, the poor came to be squeezed mercilessly where their demand is perfectly inelastic. Economists and market analysts are unanimous that food prices will follow a rising trend in the foreseeable future. Thus, the Arab countries would be better served to work for substituting for food imports through local or regional food production schemes.

The industrialization of the Egyptian economy and the technological development of its agriculture and infrastructure started in the late fifties` under Nasser. It was led and dominated by an unprepared public sector. However, this process was effectively aborted in the 1967 war and its aftermath. The public sector-led growth had only limited success. Thus, it was effectively abandoned under Sadat and rejected under Mubarak in favor of the private sector. The experience of Egypt over the last twenty years shows that the private sector has proved, on the whole, disinterested in agriculture or industry, except light two-digit type transformations. The bulk of investments have been in commercial activities and tourism. Given the limitations on arable land in Egypt and the size of its population, neglect of industry and technology-based products is rather the wrong choice. In Tunisia, the pattern of growth emphasized the service sector, in particular, tourism in addition to light transformative industries. Tunisia also developed here and there pockets of its infrastructure, especially in human resources. To be sure, it is perfectly acceptable for an economy to develop its service and commercial sectors, but it is imperative to couple that with productive real sectors capable of producing in a sustained fashion, jobs and essential goods. It is telling to note that almost all the autocracies have palliatives like food and fuel subsidies to defray the burden of the populous instead of developing their productive capacities. This composite failure was on display in the recent revolts as we saw on the TV screens in Cairo and Tunis the coming together of the poor, the unemployed youth and the withered and diminished middle class.

Education, knowledge and R&D

The above failures are, in the non- oil economies, associated with the deterioration of the quality of education and learning. Given the dearth of resources, pressure on the system of education due to the double coups of more egalitarian educational opportunities and galloping population growth, has resulted in deterioration of quality and neglect of specialized technical learning. According to UN reports, only two Arab countries, Libya and Bahrain, can provide all their youth with the opportunity to acquire appropriate education at high levels. The UN Report on Arab Education documents in table 3.3, the inferior results of test scores of degree holders; only 12% scored good results. In higher education, there is not among the top four hundred universities in the world a single Arab university. The picture is more somber if the oil-exporting countries are excluded, as they have spent in recent years significantly on education.

Of particular alarm is the widespread illiteracy of Arab women. The Human Development Report estimates that in 2005, 60 percent of females were illiterate. Despite the increased enrollment of women in all levels of schooling, especially at university level, their stock is still limited. The energy exporting Arab countries plus Jordan and Tunisia, have boosted significantly the number of women in tertiary education, but the problem is that high education in the Arab countries remains separate from employment needs and in the case of women, not fully deployed. It should be recalled that many of the manifestations of social development are associated with the spread of literacy and the availability of jobs for females. Outside the agricultural rural sector, female labor participation rates are less than a fourth of the males’ rates. The received traditions of Arab societies are not helpful in this regard; women labor participation rates in the Arab countries are much below those of other developing countries, and ironically, Tunisia has one of the best. No society can become modern and fully productive if women are relegated to home and household work. On the basis of a capital-output ratio of 3 to 1, and using Ockun’s law, it can be shown that raising the participation rate of women to 40 % of the national labor force, would add 1.2 percent to the trend of GDP growth. The revolutionary republics proved to be just as backward in their orientations as the traditionalist kingdoms and principalities. Finally, the refuge over the past three decades into authentic traditions, known as “Islamic Awakening”, has reinforced the back -referencing to ancestral traditions in Arab societies, thereby increasing their cut off from contemporary modernity. This adds to the failure of modernization and feeds into social obsolescence.

The total expenditure on research and development in the Arab world does not exceed 1 percent of the GDP in the highest-ranking country, Tunisia. The UNESCO’ s Science Report of 2010, estimates R &D expenditure in Egypt at 0 .23 of 1 percent of the GDP. This compares with an average of 2.2 percent in the OECD countries and higher than that in the US; Japan, Israel, Malaysia, China and South Korea. Qatar has set an ambitious 2.8 percent to be reached in five years. Saudi Arabia and Libya have also ambitious plans. But the rest of the Arab countries rank among the lowest in the world in spending on R & D. Absent governments’ commitment to R & D, the private sector expenditure operates in a vacuum. Development of knowledge and knowledge application are the bedrock of advance and the source of growth of productivity which has historically accounted for two-thirds of GDP growth in almost every country. After the passing of the fossil energy era, the Arab countries’ future problems will be in water resources, in desertification in food production and coping with climate change, all of which needs knowledge and research.
The failure of educational transformation condemns social and economic transformation. In the global economy, only the educated and well trained will have a chance and only economies with a capacity to export and trade have been successful. Egypt and Tunisia, like all other Arab countries, are insignificant participants in world exports outside the oil sector.

Rounding up this catalogue of failures is the particular feeling of most Egyptians that their country under Mubarak has abandoned Egypt’s traditional leading Arab role. This was evident in Palestine during Israel's attack on Ghazza and Lebanon where Egypt became an objective ally of Israel. During the last five years leading to the division of Sudan, the strategic depth of Egypt, Mubarak was a passive observer toeing the US line. The same can be said regarding Egypt’s role in Somalia and before and after the invasion of Iraq. Egypt also abandoned under Mubarak its old role on the world scene. The shrinkage of Egypt’s role in the region created a vacuum filled by new non Arab players like Turkey and Iran, who have their own agendas. This has made Egypt a third rate state.

The social media and communication technology


The widespread use of the new communication technology and its associated social media among the young turned out to be decisive in these youth revolutions. A quarter of the population in Tunisa has computers and there are an estimated 10 million users in Egypt. Together with the enormous spread of satellite TV outside government controls (some hundred such channels), some of which like al Jazeera, are among the most effective in the world, and the very high ownership of portable devices the media brought the world to Arab citizens. It informed their vision of it and opened their eyes about their marginality in their own countries. Years of advocacy on Satellite channels of human rights, of the absence of representativeness of Arab governments and the lack of freedoms, entered the culture of the youth. For this youth, rising expectations juxtaposed themselves against their reality of economic misery and, in the process, created the combustible material from which the sudden revolutions ignited. On these TV channels and on their smartphones, they saw the events in Tunisia. Their phones and computers also enabled them to communicate and spread the facts without censure or “retouche”. On the occasion of the death under torture of blogger Khaled Said, they called for a day of anger on the day of the police, the 25 of January 2011. The youth went to Tahrir Square in the thousands and held bravely there for two days. Soon they were joined by others and thus were set in motion the seminal events of the last weeks.
When the two regimes faced large masses of the population, neither the Army was able or willing to protect them, nor was the security force capable of killing enough people to maintain their masters. In the end, the people proved to be the only force that determines who governs.

Contagion and prospects:

The various Arab countries still under autocracy, have different conditions and dissimilar backgrounds. But they share the failures expounded above. They also share, in varying degrees, the pervasiveness of corruption. This is both a source of susceptibility for contagion and caution about possible failure. Contagion is probable in Yemen, Sudan, Jordan and the Palestinian territories. In Yemen, President Saleh has been in power for thirty-two years and despite his consummate skill in manipulating the various opposing groups and his gift for political theatre, he has achieved very little outside securing Yemen’ s unity. Large chunks of the country are excluded from executive power and the North and South are in quasi-open rebellion against him in the center. He has promised much and delivered nothing. In Sudan, President Bashir came with the Islamists to power in 1991and has managed to lose South Sudan and devastate Darfour. He has just gotten himself reelected without opposition for another term, and after the dismemberment of his country, he refuses even to change his cabinet. The Palestinian authority on the West Bank and Hamas in Ghazza, have both become illegitimate as their terms expired more than a year ago. As the wikileaks’ papers show, the Palestinian Authority has been negotiating with Israel for 19 years without results. Its policy seems to consist of offering Israel one concession after the other without response. Its lack of strategy and accomplishment is only matched by Hamas whose avowed resistance is negligible and its strategy leads nowhere. Meanwhile, the Palestinians suffering continue and their cause face bleak prospects. The King of Jordan, who came to the thrown on a promise of openness and reform, has achieved very little on this score. He is far from a constitutional monarch, and more like a dictator. To his very modest economic record, he has added a deepening division among his citizens between Palestinians and Jordanians. While Jordan has done well in education and public health, its social development has been rather modest.
If the rulers of Syria, Algeria, Libya and Iraq do not head the urgency of reforms, they might also be facing popular revolts. It will be more difficult and more bloody in these cases, but still inevitable.
Before the 17 of February, nobody would have picked Libya as the next eruption. But 41 years of Gazzafi’s dictatorship and rule without institutions or civilized norms, have been enough to mobilize another youth led revolt. But with megalomania galore and psychopathic determination to defend his power even by bombing his people, Gazzafi insists on staying in power and denying even the revolt in the streets. From where we are now, it looks that his time is up and he most likely will soon join the circle of despots in exile. However, if a stalemate developes, it will be bloody, costly and devastating to libya’ s future.

The monarchies: Saudi Arabia, Bahrain, Oman, UAE, Kuwait and Morocco face the problem of lack of popular participation and basically royal family monopoly of power. The struggle of the people there is about establishing constitutional monarchies rather than removing the kings. With the exception of Morocco, the economic conditions in these countries are quite good. Nonetheless, as Bahrain is now showing, the central question is about freedom, political participation and social modernization.
Failure in Egypt and Tunisia are still possible. The leaderless popular revolutions in Egypt and Tunisia have no pre thought- out programs, no charismatic leaders and, for the time being, no agreed tactical plans. Their visions of freedom, democracy and social justice, are long term strategies without operational signposts. In effect, these two popular revolts do not obey the norms of revolution models. Revolutions require programs, leadership and popular insertion. This is partially absent in the event. Thus, they need in the transition common agreement and joint tactical aims among all the political participants. They need the emergence of political leadership and the mobilization of expertise, which has been for long absent from the public function. Unlike Iraq, they should attract and accept the participation of the uncompromised and able elements of the old regimes. Their aim must not be revenge and settlement of accounts, but turning a new page. But in all of that, they should take the necessary time to prepare for the organized participation in the future elections of all parties without exclusion. Without adequate preparations, the revolutions risk being high jacked by the better-organized groups, e.g., the Muslim Brothers, even if the latter play by the rules and had bumbled throughout the early phase of the Egyptian uprising.

Democracy is an institutional envelope that requires many building- blocs: an independent judiciary, the rule of law, the existence of civil and political institutions, the freedoms of expression, assembly and association, free and universal elections and the vigil of a liberal society. The culture of Arab society has not always evolved along a liberal and multi-vision path. Its tendency to accord acceptance to traditions without critical examination is not conducive to acceptance of differences in thinking and in values. And this has been reinforced by the failure of the nationalist secular regimes and the closed horizons of their dictatorial orders. There should be full awareness of these self- limiting factors in perceiving the future. However, these shortcomings should not stop the march towards Democracy. It is a false and historically invalid argument to say that Democracy needs special preparations; all peoples started from a zero point and learned by doing as they went along.


The challenges of the transition

The responses of the old regimes in both Tunisia and Egypt were the same. They acknowledged the shortcomings and the grievances and endorsed in principle democratic reforms. However, in both cases, the regime tried to play musical chairs by installing its old hands in power promising future reforms. This is obviously an attempt to go around the revolutions and contain their impacts. In Tunisia this was effectively rejected and Mr. Ghanoushi after shuffling twice the political deck, reformed his cabinet to include a big majority of new faces from outside the party of the old regime. Evidently, the future there remains in flux.
In Egypt, after four days of silence, Mr. Mubarak spoke at midnight to endorse the demands of the youth, fired his old cabinet and appointed, for the first time in thirty years, a Vice President in the person of the regime`s security chief General Omar Sulayman. Four days later, after demonstrations of millions all over Egypt, in a ceremony reminiscent of the last Roman Emperor at the entry of the Barbarians into Rome, he swore in a new cabinet, headed by the former Air Force commander. The new cabinet retained a majority of the old ministers and added several army faces. As the demonstrations continued, Mr. Mubarak appeared again to announce that he will not seek reelection for the sixth time but will continue to the end of his term (in 7 months) to supervise the reforms and called for the end of the “disturbances”. He also issued instructions to enforce the Courts decisions regarding the fraudulent election results, which had been ignored for three months. His speech was followed by two interviews on the official TV of the new Vice- President and the Prime Minister calling for dialogue about reforms under the aegis of the regime and within the limitations of time under the regime’s constitution.
Naturally, the only actual concession in all of this was that the President will not seek a new sixth term and his son will not succeed him. Everything else was a promise. But promises are meaningful only if there is trust, and that the 30-year-old Mubarak regime did not have.
Mubarak came under international pressure to quit, but he resisted these calls. The regime began to propagate that there are foreign hands involved in a conspiracy against Egypt. Unfortunate declarations by the Iranian leaders played into that. In an attempt to change the tactical situation, the business beneficiaries and elements in the security forces unleashed hired thugs to beat up the demonstrators and undermine public order. Counter demonstrations were also marshaled to show a split in the public opinion. This is all designed to gain time. However, they added to the accumulated mistrust, and the regime’s prevarications have made what could have been acceptable yesterday unacceptable today; Mubarak conceded too little too late. On the 11th of February Mubarak finally gave in and resigned handing over his authority to the Supreme Military Council.
The SMC had an auspicious start by dismissing the two houses of Parliament and forming a commission to look into the Constitution. It also declared its aim of handing authority to elected representatives in six months if possible. But it retained Mubarak’s last Cabinet. This means that the old regime’ s setup, laws and faces are still in charge. Of course, it takes time to clean up the state. Cleaning up the state, running the country by an interim government of experts which formulates a new Constitution and prepares and carry out free and universal elections are what is now needed. The revolutionaries must now develop their program, their leadership and their tactical aims and force a true transition by pushing the SMC along those lines.

Implications for the Arab Future
The revolts of Egypt and Tunisia and the ones following them, in Libya, Bahrain and Yemen, will have significant historical implications. It took the French revolution 26 years to settle, the Bolshevik revolution 12 years to steady its self. The Arab masses, led by their youth, seem to have triumphed and ushered the beginning of liberal democracy in a few weeks. When the fresh new wind will have swept the others, it is likely that the Arab revolutions will be the briefest in history. Unlike military coups or party revolts or declonialization movements, the Arab street moved into a new path with minimal bloodshed and no national fragmentation. The revolutionaries were peaceful, civilized and non-ideological. They aim to free man and better his conditions rather than transform societies and their governance into a new ideological state of being. These have been revolutions of modernization using the technologies of their age. They also constitute a new model for revolution: no leader, no ideological program and no organized popular bases, rather an accumulated popular demand for change.
The self-image of the average Arab has been for long warped by frustration and a deep sense of failure and thus low self-esteem. There were Arabs and outsiders who wrote books psychoanalyzing the Arabs and the Arab mindset. For the entire modern era, the West, in particular, and its self-satisfied elites, have considered the Arab uncivilized, untrustworthy, and prone to emotionalism and irrationality. In the last two decades, Islamists succeeded in adding another slur: that Muslims are violent, intolerant and a good many of them, terrorists. These revolutions will transform these caricatures and discourage stereotyping. Their results will in time remove failure from being a fixture in the contemporary Arab condition and psyche.
After the 1967 war and the demonstrated failure of Arab Nationalist regimes and their programs, Arab Nationalist consciousness became a hallow sentimentality devoid of tenability on the ground. The revolutions have startlingly shown that Arabs feel in common their tragedies and their triumphs and experience some kind of joint destiny. The revolutions cascaded from each other bringing the same slogans and weaving the same cry for salvation. Thus, we are witnessing the emergence of a new Arab dawn. It is one of many commonalities, but differences as well. It evokes an interdependent destiny in decentralized cooperation. The political systems of this new dawn must stand on the respect of the citizen, on his right to choose his governors and to call them into account. The revolutions are instructing the citizens that their social contract is based on citizens- sovereignty and not on state subjugation and that open and liberal democracy is what gives the expression of that. The way various strata of the society came together, means that all freedoms must be rooted in tolerating differences in ideas, values and traditions. There will be no governments above the people and in disregard of public opinion; nor will there be governments tolerant of privileges and corruption.
The street revolutions proved that successful economic and social performance is what determines the legitimacy and continuity of any government. Governments are there to serve their people and improve their economic well-being. The ushering of democracy in the Arab World with all types of freedoms will inevitably improve economic performance. Modern history shows that failure does not last long in democracies. Given the labor and capital resources of the Arab World, there is no reason that real GDP growth should not be three to four percentage points above the growth of the population. We are therefore talking about 6 to 8 percent growth per annum in real terms. To achieve this range of growth, which many other developing countries have done, women must join the labor force. As we argued above, such participation can add 1.2 percent to the secular growth of the GDP and can also diminish population growth as demonstrated in all comparative demographic data. According to statistical evidence on growth and unemployment, the Arab countries need some 3 to 4 percent growth in per capita income to tackle their unemployment problem.
In the longer run, the Arab world is called upon to invest heavily in education, knowledge and public health. This has been the secret of the success of the emerging economies like China, India, Malaysia, Brazil, South Korea and Turkey and before that the US and Europe. Education has quantitative and qualitative dimensions. The quality side has been missing in Arab education as shown above. The decision to shift resources from armaments, privileged patronage and budget subsidies to health and education imply a shift of some 6 to 8 percent of the GDP into such expenditures. This will only be possible under Democratic authority.
When achievement and success become apparent the spirit and the face of the Arab world will shift. A period of failed nationalist militarist and dictatorial governments over the past 60 years will have come to end. This part of the world will no longer be associated with wealthy Petrol Sheikhs riding dark Cadillacs and holding absolute power, or megalomaniac psychopaths: Gazzafi and Saddam, who bombard their own people, or incoherent half-educated leaders incapable of sustaining serious thinking. The Arabs will be ruled and represented by their betters and not by the adventurists of fortune and beneficiaries of accidents of history and their elites will participate in the public function.. The youth of the revolutions was the first installment of such a change; and what a difference in spirit, enthusiasm and hope that will make.
(Geneva, 23/2/2011)

*Professor of Finance and Economics, Webster University- Geneva; former director of the divisions of Economic Cooperation, Poverty alleviation and Special Programs, UNCTAD-Geneva; senior consultant to the UN system, the European Union and Swiss banks.
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