February 18th, 2011
05:53 PM GMT
As an active observer and a consistent visitor of the Middle East, one asks a simple question: Why does it have to be this way?
I am not talking about Shiite/Sunni divides, the Palestinian/Israeli conflict or Iran’s growing influence in the region, but persistent and unacceptable levels of poverty in a region blessed with nearly half of the world’s oil and gas reserves.
First it was Tunisia, then Egypt, Yemen, Algeria, Libya and stretching into the Gulf with Bahrain.
There are major historical and cultural differences, of course, and even vast differences in per-capita income – Bahrain for example is high at $38,400, Yemen low at $2,500. But a few common threads can be found: the region’s youth lack opportunities, power is concentrated at the top and the inner circle around them, and most waited too long to embrace the winds of change brought on by globalization.
A small but influential group of business people from the region formed the Arab Business Council (ABC) within the World Economic Forum in June 2003. I attended one of its first major meetings, ironically, in Manama, Bahrain, in 2005, where the co-founders and architects of the initiative rang alarm bells about rapid birth rates and the need to create 100 million jobs by 2020. That number was not to lower unemployment but to only tread water in terms of double-digit jobless rates amongst the region’s youth.
During a series of panels and interviews and in our coverage on Marketplace Middle East, we consistently asked how it would be possible to create that many jobs in such a short span of time. In sum, the symptom was easy to identify, the remedy much more complex. The ABC talked of PPPs, public-private partnerships, accelerating reforms and opening up governments - especially the monarchies in the Gulf States – to a wider swath of the population.
In fairness, economic reforms have taken place. In Egypt, nearly $50 billion dollars flowed in as a result of lower taxes, labor reforms and the setting up of industrial zones and improved infrastructure.
A visit to Bahrain would clearly lead one to believe it earned a reputation as the “Switzerland of the Middle East.” Tax rates are fair, the labor force educated and meetings start on time. No wonder both of these economies grew during the global downturn, whether it was Egypt with 80 million people or tiny Bahrain with about 800,000 nationals.
But it would also be fair to say that reforms were started too late and have certainly not benefited everyone equally. While Emirates, Qatar Airways and now Etihad have set up large fleets, fly into first class airport hubs for travellers between Europe and Asia and connect the Middle East to the world, the region until very recently was bypassed by foreign investors. China and India were beckoning, as well as an ASEAN market of 600 million consumers in Southeast Asia.
To be frank, a potential market of 350 million consumers in the Middle East has not come together fast enough. Old rivalries amongst the region’s royals still persist and until this social media revolution kicked off the power brokers of North Africa have been (and some still are) unwilling to open up their economies and their societies to change.
During a wide-ranging interview with the Crown Prince of Bahrain two years ago, Sheikh Salman bin Hamad bin Isa Al Khalifa noted that change has to be managed.
In his words: “Change is never easy but I think it must be tackled with the right ambition, must be tackled with the right energy as well to achieve success.”
His answer pertained to a question on why some senior Sunni legislators were resisting efforts by the ruling Khalifa family to open up parliament to more of their Shiite counterparts.
The government - unusually for the region – has made efforts to put forth economic and political reforms, but in this new environment, with populations viewing their neighbors' actions online and on their TV set top boxes, the pace of the change in the recent past is proving too slow for a younger, educated generation which is not asking, but demanding more.
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