When the world headed East

Dubai 2003 was an unqualified success for the UAE, but there was no mistaking the message that the wider region needs to undergo reform across the board.

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By  John Irish Published  October 9, 2003

|~||~||~|It’s done and dusted. The annual meetings of the IMF and World Bank (IBRD) caused quite a stir in Dubai. For months, the emirate prepared with bated breath for the first such meeting of its kind to hit the Middle East.

Every stone was checked, every street corner guarded and every VIP bed was carefully made to fit internationally recognised high standards. In all, there was no room for failure. Dubai welcomed the opportunity to position itself on the global map.

“Unfortunately in the Middle East, if there was no conflict, CNN, Al Jazeera and the BBC would go bust,” Mohammed Al Abbar, director general, Dubai Department of Economic Development said during one of the plethora of seminars. “I assure you there is a good story to tell. The majority of people are looking for real change. For that, people should look to Dubai as a real case study.”

Ultimately, while things ran smoothly, the event, in many ways, had more to do with where the Middle East stands on a global footing, than the nitty gritty of international finances and banking. Sitting through many of the seminars, the message was clear. Nothing new as such, but radical change at all levels of legislative, social and executive power must occur for the Middle East to move on. Much of that was stressed in four World Bank reports looking at governance, employment, the status of women and trade opportunities.

Meanwhile, James Wolfensohn, president of the World Bank, was quick to stress that Iraq should not dominate the five day agenda, while the local organisers, for obvious reasons, played down the significance of the Israeli delegation. Nevertheless, the murmurs in the pressroom and long corridors of the World Trade Centre were dominated with most hacks attempting to grab one of these groups.

In the end the Israelis did talk. “I am totally surprised that in the middle of this desert, in the middle of nowhere, there is an Arab government that has succeeded in doing the unbelievable, to create so much out of such a very small place,” Israeli Minister, Meir Sheetrit, told Reuters.

The Iraqis also talked, although only under the watchful eye of the Americans. Of course that’s not to say there was nothing else of interest. The Saudis attempted to tell the world about the Kingdom’s positive steps to attract investment and Prince Sultan bin Salman bin Abdulaziz, Saudi’s tourism chief, reiterated his 20 year plan, following May’s Arabian Travel Market. Likewise, the region’s water shortages briefly took centre stage, as did the growing industry of Islamic finance.

For those involved with the Middle East, it seems glaringly obvious that the World Bank report on governance merely stated what many intellectuals, governments and the average man already knew. The main crux was that regional governments fared worse than those in similar income nations with regard to promoting social and economic welfare.
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Topping that was the lack of government accountability, meaning that economic stagnation and lack of human development were more evident in the region.

The chitchat on the floor included calls to stamp out corruption, wasta (Arabic for nepotism) and introduce greater transparency. “It’s a decision taken by the countries, not the World Bank, and the citizens of countries. When they want it, they usually get it; when they don’t want it, they don’t get. It’s not something we can interfere with,” Wolfensohn said on getting rid of corruption.

Speaking of mismanagement, a whisper of discontent also came from the Palestinian Authority. An International Monetary Fund official let slip that an audit of the PA revealed that President Yasser Arafat had diverted US $900 million in public funds to a special bank account he controlled. While not denying it, Hanan Ashwari, former Arafat spokeswoman, denounced it, as an attempt to discredit Arafat.

But ultimately the whole political debate had an academic feel to it, rather than offering any illuminating practical solutions. The Arab intellectual elite tried hard to bring themselves to the fore. “I don’t think the Arab World can be changed by businessmen or military leaders,” Paul Salem, former professor of political science at the American University in Beirut and currently general manager of the Fares Foundation, told participants.

“The Arab and Islamic world needs to be changed through an intellectual approach, through universities, higher education and research.”

That’s not to say it was all negative; prominent bankers and government officials spoke positively. Mohammed Al Abbar pointed out to Arabian Business that just three years back nobody would have even been allowed to speak about reforms, adding that time was needed.

“The whole nation is young, so we have to preach the concept [of reform] first. Let people digest it, understand it, both the public and the governments. That’s what the world is asking for, it’s what the UN is asking for and what the public is asking for. I don’t think there is any way of going back [on reform].”

Surprisingly, the World Bank’s reports failed to look at the arms issue. With the Middle East spending millions on weapons, some cynics pointed to the West’s moral responsibility. “Unless you can make peace profitable, it will not work. The business community and the countries promoting peace and better governance are also the biggest arms dealers,” cried a voice in the gallery.
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The CEO of the National Bank of Kuwait, Ibrahim S. Dabdoub, in an opinion piece for the Lebanese Daily Star, agreed with this, but saw some light at the end of the tunnel. He pointed to an inevitability that some form of democracy in the region would eventually rein, particularly with the onset of the communications revolution making it harder to block access to information and knowledge.

“We had better have hope and courage to talk about what needs to be done, beyond the standard prescriptions of the International Monetary Fund and the World Bank that we all know too well. We need to look beyond that at what will make us able to implement economic reforms that are intended to make us more competitive and raise our level of development,” Dabdoub wrote for the Daily Star.

Likewise, many delegates touched on the reality that too many individuals are all too willing to rely on the state for subsistence, calling for citizens to become more financially independent. This is something that increased privatisation could partly resolve.
Better governance may well be the core to resolving many of the Middle East’s outstanding problems, but the World Bank also looked at several other factors that need serious tweaking. One was the low level of education and high level of unemployment in the region, which, many argue, creates an environment ripe for extremism to prosper.

According to the IBRD report, the Middle East and North Africa (MENA) region needs to create over 100 million jobs over the next 20 years. The catch is that this is more than the number of positions created in the last 50 years. “The Middle East’s economic future will be determined by the fate of its labour markets,” stressed the World Bank’s vice president for the Middle East, Christiann Poortman.

Indeed. With the labour force increasing by 3% each year and MENA already possessing an unemployment rate of around 15%, the challenge appears huge. Estimates say the total labour force will increase from 104 million in 2000, to 146 million by 2010 and a whopping 185 million by 2020. So what’s the solution? In the end, the report tells a familiar tale. Labour markets need to open up to the private sector; in oil producing nations, diversification of the economy is crucial.

Of course, the usual change in regulatory framework also pops up, so that the French-style bureaucratic red tape coupled with the Middle East-style administrative mayhem can wither away.

Compounding all this was the call for educational reform, so that future generations learn to adapt their practical skills to the working world rather than develop a ‘just pass attitude.’ Mohammed Tozy, professor at the University of Hassan II, Morocco summed up the current situation.

“The educational curricula in the Arab and Islamic world looks at heritage, history and traditions, but doesn’t look forward to give the individual a specific role,” he said. Currently half the region’s youth are unemployed, with Syria’s figure as high as 73%.
Let’s not forget the paradox illustrated in the IBRD’s report on gender and development in the region.

Often criticised by international organisations for its treatment of women, the Middle East, however, did see substantial progress over the last few years. Public health expenditure constituted 2.9% of GDP, while education reached 5.3% in 2000. Those two factors alone saw literacy among women rise to over 50% by 2000 and the decline in fertility rates from 6.2 children in 1980 to 3.3 in 2000. Despite this, women merely constituted 32% of the total workforce across the region.
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Those figures also differ drastically from nation to nation. Mohammed Al Abbar pointed to the UAE example. “Women’s emancipation is critical and entire economies dare not overlook the contribution of half the population. In Dubai alone, over 3,000 businesses worth nearly $3.5 billion [in annual turnover], are owned by women,” he added.
Unfortunately, that seems to be the exception to the rule, as Mustapha Nabli, theWorld Bank’s chief economist for the Middle East explained.

“There is a distinct gender paradox in MENA. By investing in women’s education, MENA countries have increased aspirations and ability to earn incomes, but the low level of female participation in the labour force means the region is not reaping the returns of this investment.”

In the end, what was the message from Dubai 2003? The emirate acquitted itself well, proving that an international event of this scale could take place in the region. However, ultimately, the coverage it was hoping for was somewhat muted in the international press as most of the major news organisations only covered glimpses of the regional issues. In a nutshell, the issues on the table may not have appealed as much as in previous meetings.

However, James Wolfensohn’s speech on the opening day of the annual meetings did show that on a global scale the World Bank was out to redress the balance between rich and poor. Rich countries, he said, spent US $56 billion a year on development assistance but $300 billion on agricultural subsidies and $600 billion for defence. Meanwhile, the poor nations themselves invested $200 billion on defence, “more than what they spend on education.” Words such as cronyism and corruption also filled the airwaves. Simply put, global reform is not happening fast enough.

“By the year 2015, there will be three billion people under the age of 25. They are the future and their expectations of us are high,” Wolfensohn said. “In their interests, it is time to take a cold hard look at the future. Too few control too much, too many have too little to hope for. There is no better time than now to join in a common effort to make a better world. You are the global leaders to make this happen.”

Actions speak louder than words. If the region can take on board the advice offered, maybe things really can change for the better. Likewise, if a gesture, albeit a symbolic one, such as Sheikh Mohammed bin Rashid Al Maktoum, Dubai’s Crown Prince and the UAE’s Defence Minister, shaking the hand of the head of the Israeli delegation can happen, then maybe, just maybe, the event did achieve something.
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