COVID-19 and the rise of public-private partnerships in the Middle East
US President Joe Biden last month pledged $4 billion to the global Covax scheme, which is attempting to distribute coronavirus disease (COVID-19) vaccines to 92 low and middle-income countries. This is ironic given his predecessor’s declaration of “America First” when it comes to jabs. It is important to point out that this declaration is by no means unique to the US, but it highlights the world’s major vaccine inequalities, with poorer nations left behind, particularly those with little to no medical research and production infrastructure.
Over the past year, recognizing that they fell into the second category, parts of the Middle East — but not Iran — have undertaken intensive efforts to address this glaring gap in their toolkit to fight COVID-19. While some analysts and scholars may argue that the economies of some countries in the Middle East are dominated by state-generated oil revenues, there has been a recent drive to increase the role of the private sector, particularly in Saudi Arabia, Bahrain and the UAE. The liberalization of foreign ownership regulations, more generous permanent residency rules, tax breaks and state subsidies have all been deployed to develop ever more attractive incentive packages for foreign companies to relocate. To some extent, this has been successful.
Back in 2016, the European Investment Bank published a report highlighting how poor support for business stifled innovation and constrained the development of private industry in the Middle East. This, the report said, was a key factor in why the region had a relatively small private sector — long a hallmark of states in the Middle East.
Nevertheless, five years and one pandemic later, there is now growing evidence that states have bolstered private innovation by partnering with, rather than holding back, companies in a coordinated effort to fight COVID-19.
The coronavirus pandemic, as with so many other aspects of life, has triggered an unexpected shift in the prominence of private companies. They have become crucial partners of the state. Look at the global vaccination program — it is only happening because of private-sector expertise, coupled with state backing and infrastructure. In Western countries, where this has been the norm for centuries, it is perhaps less of a phenomenon to marvel at. However, in the Middle East, it could signal the development of a truly new economic culture.
In the Middle East, countries with more limited experience of public-private partnership have enabled them on an unprecedented scale. For example, in the UAE, G42 Healthcare has led the way on developing clinical trials and vaccine production infrastructure, both firsts for a region that had precious little medical research capability prior to the pandemic.
Government support has been crucial in this unprecedented endeavor; clearly recognizing the long-term economic and social potential of enabling a company like G42 Healthcare to establish this previously absent infrastructure.
In Saudi Arabia, the Council of Ministers this month approved the Private Sector Participation Law (PSP Law), which seeks to modernize the country’s economy by increasing the private sector’s contribution to 65 percent of gross domestic product.
In Bahrain, collaboration between the public and private sectors has been critical in the development of its world-leading test and trace app “BeAware,” which is due to transform into one of the globe’s first vaccine passports — a path many other countries are likely to follow.
There is growing evidence that states have bolstered private innovation by partnering with, rather than holding back, companies.
Dr. Majid Rafizadeh
All these collaborations, with the state recognizing the need for private-sector support like never before, are perhaps the first signs of a loosening of state influence in Middle Eastern economies.
Of course, the Middle East is by no means the only region that boasts case studies of effective virus-related public-private partnerships. However, the long-spoken-of, but rarely acted-upon, desire for the private sector to play a greater role in the region’s economies may finally have experienced a decisive shift as a consequence of pandemic necessity. The benefits are clear to see — it is now up to individual states to ensure they don’t revert to past ways and reverse the progress made.
- Dr. Majid Rafizadeh is a Harvard-educated Iranian-American political scientist. He is a leading expert on Iran and US foreign policy, a businessman and president of the International American Council. He serves on the boards of the Harvard International Review, the Harvard International Relations Council and the US-Middle East Chamber for Commerce and Business. Twitter: @Dr_Rafizadeh