Few of the revolts shaking the Arab world look likely to produce democratic governments in the near term. But even those states with the best chance of improving politically are facing a daunting economic challenge: Can new Arab democracies deliver the economic goods -- in time?
Most of the Arab rebellions -- in Libya, Syria, Yemen, and Bahrain -- have deteriorated into civil war, or regime-led violence. But the two countries with the best shot at democracy -- Tunisia and Egypt -- are paying a steep economic price for their upheavals. Tourism is down, labor unrest is up, investors are scared -- even as the jasmine revolutions raise popular expectations of better lives.
Tunisian Minister of Finance Jaloul Ayed worried out loud -- at the 2011 U.S.-Islamic Forum this week in Washington -- that Arab revolutions would stall "if democracy doesn't translate soon into well-being.
Legions of young Arabs -- in a region where 65 percent of the population is under 30 -- are unemployed, or can do little better than sell vegetables on the street.
As Secretary of State Hillary Rodham Clinton bluntly noted at the U.S.-Islamic forum: "Overall, Arab countries were less industrialized in 2007 than they were in 1970. Unemployment often runs more than double the worldwide average, and even worse for women and young people."
Moreover, Clinton added: "Arab countries, almost without exception, have some of the weakest anticorruption systems in the world." And corruption was clearly a driver of the Arab revolts, especially in Egypt.
When the Mubarak regime privatized industries in its heavily state-controlled economy, it handed them off at bargain rates to cronies of Hosni Mubarak's family. This created a super-wealthy elite, while vast numbers of people live without sanitation, safe water, or reliable electricity.
"We have a significant class of scavengers who skim off the top," says Nabil Fahmy, a former Egyptian ambassador to Washington now at the American University of Cairo. These are the kinds of complaints I heard over and over in February from the people gathered for demonstrations in Cairo's Tahrir Square.
I see little chance that Arab countries with huge oil wealth will move toward essential economic -- or political -- reforms, but I'm more concerned here with the countries that have the best prospects for transformation. In other words, can Tunisia and Egypt, which don't live off oil and have restored some stability, implement economic changes that meet their people's raised expectations? And how can the West help?
Tunisia, with its small, better-educated population and broader middle class, seems to have the best prospects.
As for Egyptians, I believe they are likely to be patient -- in the short term -- especially as they can look forward to democratic elections. The spectacle of Mubarak cronies -- and perhaps Mubarak and his sons -- being hauled into court, or even to jail, will buy time.
But circuses can't substitute for bread in the medium and long term. It's unclear how soon tourism will return. Many factory workers, eager to get some reward from the revolution, are striking for higher wages.
"I'm frightened about whether we have the resources to buy time," Fahmy told me. "We will grow only 2 percent this year because of the events. But we need 8 percent for at least seven to eight years just to make up for lost time and deal with unemployment.
"We need life support. We can't attract investment in the next six months."
So, Egypt needs immediate help. The U.S. has pledged $150 million in short-term assistance. Let's hope Arab gulf states, which have an interest in Egypt's success, pitch in.
But the real challenge will come in the medium and long term, when a democratic government will be judged by whether it creates jobs.
The answer -- as Turkey as shown -- is to construct a system that encourages entrepreneurs to start small and midsize businesses. Clinton stressed this week that the U.S. will work with Egypt and Tunisia to encourage foreign investment and will also establish enterprise funds to give such startups access to capital.
Clinton also advocated programs to expand Egyptian duty-free exports to the U.S., which is essential.
We've yet to see whether new, democratic Egyptian leaders will have the courage to press for vital economic changes. The corruption of the Mubarak regime has convinced many Egyptians that liberal economic reforms are a sham.
The future of Egyptian -- and Tunisian -- democracy depends on whether new leaders can give young people the better lives they fought for. For a fraction of what we spent trying to impose democracy in Iraq, we should try hard to help.
Source http://www.mercurynews.com/opinion/ci_17864790?nclick_check=1
Most of the Arab rebellions -- in Libya, Syria, Yemen, and Bahrain -- have deteriorated into civil war, or regime-led violence. But the two countries with the best shot at democracy -- Tunisia and Egypt -- are paying a steep economic price for their upheavals. Tourism is down, labor unrest is up, investors are scared -- even as the jasmine revolutions raise popular expectations of better lives.
Tunisian Minister of Finance Jaloul Ayed worried out loud -- at the 2011 U.S.-Islamic Forum this week in Washington -- that Arab revolutions would stall "if democracy doesn't translate soon into well-being.
Legions of young Arabs -- in a region where 65 percent of the population is under 30 -- are unemployed, or can do little better than sell vegetables on the street.
As Secretary of State Hillary Rodham Clinton bluntly noted at the U.S.-Islamic forum: "Overall, Arab countries were less industrialized in 2007 than they were in 1970. Unemployment often runs more than double the worldwide average, and even worse for women and young people."
Moreover, Clinton added: "Arab countries, almost without exception, have some of the weakest anticorruption systems in the world." And corruption was clearly a driver of the Arab revolts, especially in Egypt.
When the Mubarak regime privatized industries in its heavily state-controlled economy, it handed them off at bargain rates to cronies of Hosni Mubarak's family. This created a super-wealthy elite, while vast numbers of people live without sanitation, safe water, or reliable electricity.
"We have a significant class of scavengers who skim off the top," says Nabil Fahmy, a former Egyptian ambassador to Washington now at the American University of Cairo. These are the kinds of complaints I heard over and over in February from the people gathered for demonstrations in Cairo's Tahrir Square.
I see little chance that Arab countries with huge oil wealth will move toward essential economic -- or political -- reforms, but I'm more concerned here with the countries that have the best prospects for transformation. In other words, can Tunisia and Egypt, which don't live off oil and have restored some stability, implement economic changes that meet their people's raised expectations? And how can the West help?
Tunisia, with its small, better-educated population and broader middle class, seems to have the best prospects.
As for Egyptians, I believe they are likely to be patient -- in the short term -- especially as they can look forward to democratic elections. The spectacle of Mubarak cronies -- and perhaps Mubarak and his sons -- being hauled into court, or even to jail, will buy time.
But circuses can't substitute for bread in the medium and long term. It's unclear how soon tourism will return. Many factory workers, eager to get some reward from the revolution, are striking for higher wages.
"I'm frightened about whether we have the resources to buy time," Fahmy told me. "We will grow only 2 percent this year because of the events. But we need 8 percent for at least seven to eight years just to make up for lost time and deal with unemployment.
"We need life support. We can't attract investment in the next six months."
So, Egypt needs immediate help. The U.S. has pledged $150 million in short-term assistance. Let's hope Arab gulf states, which have an interest in Egypt's success, pitch in.
But the real challenge will come in the medium and long term, when a democratic government will be judged by whether it creates jobs.
The answer -- as Turkey as shown -- is to construct a system that encourages entrepreneurs to start small and midsize businesses. Clinton stressed this week that the U.S. will work with Egypt and Tunisia to encourage foreign investment and will also establish enterprise funds to give such startups access to capital.
Clinton also advocated programs to expand Egyptian duty-free exports to the U.S., which is essential.
We've yet to see whether new, democratic Egyptian leaders will have the courage to press for vital economic changes. The corruption of the Mubarak regime has convinced many Egyptians that liberal economic reforms are a sham.
The future of Egyptian -- and Tunisian -- democracy depends on whether new leaders can give young people the better lives they fought for. For a fraction of what we spent trying to impose democracy in Iraq, we should try hard to help.
Source http://www.mercurynews.com/opinion/ci_17864790?nclick_check=1
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