Five months after the long winter of Middle East repression was broken by the unexpected Arab Spring that saw the rapid overthrow of long-entrenched rulers in Tunisia and Egypt and uprisings in Libya, Yemen, Bahrain and Syria, the initial giddiness and euphoria have dissipated.
Such raw emotions, after all, can only be sustained for so long before the mundane and complicated realities of everyday life reassert themselves. Now those realities will be staring the leaders of the Group of 8 in the face in Deauville, France, as rudely and as stolidly as if they were seated at the conference tables.
Popular imagination has been transfixed by the Arab uprisings as parables about the wages of political repression and control; about cultures of corruption and cronyism; and about millions of young and disenfranchised people clamoring for dignity and a better future. But a less appreciated facet is now emerging as perhaps the most vital: The economies of these countries and of the Arab world in general are some of the least integrated into the global economic system.
Business and political leaders in the region, and many in the West, say that the Arab Spring holds the hope of real change but that without economic activity to sustain it, the recently ignited light of political change could flicker or be extinguished altogether.
?If we let them get bogged down in economic difficulties,? said Alain Jupp�, the French foreign minister, referring to Egypt and Tunisia, ?the political transition will be threatened.?
Hence, the World Bank?s announcement on Wednesday that it was willing to provide up to $6 billion to help Egypt and Tunisia weather declines in tourism and other industries. The money is intended to seed a broader package of international support for the two countries? post-revolution governments.
While the outcome of the celebrated revolutions there have been relatively black and white, the results elsewhere have been murkier, with President Bashir al-Assad holding on in Syria, repeated false starts at reconciliation and resolution in Yemen, and Libya torn by a civil war that increasingly appears to be a stalemate.
It?s not that these countries are notably poor. In fact, Egypt and Tunisia had both seen modestly rising living standards and decent education for many of their young people. But with the exception of the Gulf emirates and, to some degree, Saudi Arabia, few Arab states are fully a part of the global economy. And those that are a part of the global economy have not yet faced the push for democratic reform from the street.
Other than national oil companies and the sovereign wealth funds of the Gulf states, the nations of the region have no leading multinational companies, no globally dominant or even significant financial institutions, and no centers of innovation or education. Few of the countries are hospitable to foreign businesses or foreign trade, including from other Arab countries.
The result, which analysts and economists say is predictable, is that foreign businesses rarely look to the region as a place to invest. And that isolation from the global economy is a vicious cycle, breeding further isolation.
Egypt, for instance, attracted only $5 billion to $10 billion in foreign investment over the past five years; Tunisia, with its much smaller population, attracted less than $2 billion a year. I.B.M. alone makes nearly $10 billion in a month. Not surprisingly, Saudi Arabia led the region in attracting foreign investment, yet as the richest country in Arab world with billions in oil revenue, it arguably has the least need for it.
While some business reports show that doing business in the Arab world has become easier in the past few years, the same could be said of almost everywhere in the world save for outliers like Myanmar, Iran and parts of sub-Saharan Africa. And according to the International Finance Corporation, only 3 of the 20 Arab economies surveyed rank in the top 50 globally in ?ease of doing business.?
Neither India nor China rank highly, either, but India has a vibrant internal investment and commercial market, and China leads the world in the pace of building new infrastructure and in the sheer scale of foreign investment and business activity. Meanwhile, an inordinate amount of economic activity in the Arab world is generated by the state. And, unlike in China, the state has a poor record of putting capital in motion in productive ways. State spending more likely goes to food subsidies and make-work programs than to cutting-edge infrastructure or technology, say economic analysts.
Yet the politics of the region continue to impede economic change ? and analysts expect that to happen again in Deauville.
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