It is no surprise that economics should dominate the discussions of the World Economic Forum on the Middle East during its last day in this Egyptian resort. What is suprising, however, was the frequency with which the same issues — from a looming bulge in population to the incredibly bitter price terrorism and violence continue to exact on the region — came to the forefront. Whether the issue was direct foreign investment or job creation or water usage. What it suggested was that the link between all these factors puts both the leaders and the people of the Middle East in the delicate position of having to make the right decisions for the way forward — if that way is expected to lead somewhere other than a dead end in a few decades.
Unemployment is a large concern, with literally millions of new jobs required in the coming years. Some delegates said tourism, a labor-intensive sector, could provide at least part of the answer. Global tourists are constantly searching for exotic new destinations, and the Middle East is a region filled with history, natural beauty and fascinating cultures. Mirette Mabrouk, publisher of Egypt’s Daily Star, noted that the region attracts only a few drops of the torrent of foreign direct investment pouring into the world’s other tourist destinations and wondered what could be done to change that. Delegates responded that terrorism, or at least the fear of terrorism, was at the top of the list of items sapping the potential of a lucrative Middle East tourism industry. Royal Jordanian Airlines President and CEO Samer A. Majali said the perception of danger may be more serious than the actual risk posed by terrorism or political instability. At the same time, he said, burdensome visa requirements and other travel restrictions discourage both investment and tourists. “It’s very hard to obtain visas,” Majali said. “The process is long and laborious throughout the Arab world. There are a number of different pieces that have to come together to enable easier access.”
Another roadblock for the tourism industry is literally roadblocks. “Simply making air or rail connections between Middle Eastern countries can be difficult, creating considerable disincentives for tourists accustomed to affordable and fast-paced travel packages,” said Reem Badran, CEO of Jordan’s Kuwaiti Jordanian Holding. “This regional dimension makes it imperative for countries to more closely coordinate their infrastructure investments.”
Other participants argued that sweeping reforms are needed - not just in the tourism sector, but across entire economies. Lower, flatter tax rates, sound fiscal and monetary policies and progress in turning key industries over to the private sector would help persuade investors, including those in tourism-related industries, that a country’s overall business climate has improved.
Although many government officials speak with pride of the progress that has been made in reducing red tape, speeding project approvals and strengthening legal protections, foreign investors aren’t likely to be impressed by arguments that things are much better than they used to be, argued Orascom Hotels and Development’s Chairman and CEO Samih Sawiris. “The outside world couldn’t care less where we are coming from,” the leader of the Egyptian giant said. “They’re simply going to look at where we stand on the key benchmarks they have set.”
According to him, countries that don’t make the grade in absolute terms won’t even be considered when investment decisions are made. “There are 170 other countries out there competing for funds, and if their performance is better, ours will not be acceptable,” Sawiris said. “It’s not enough to say you can do something in 15 days if someone else can do it in one.”
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Water is something that is never taken for granted in the Middle East, and governments make efforts to provide adequate resources in order to provide adequate supplies. Although some forecasters predict that future wars in the Middle East might be waged over water instead of oil, more credible are the concerns that the same types of economic concerns put present plans and practices into question.
“When we talk about water security in the Middle East, we do not have a supply problem with water for domestic and industrial use,” said John Anthony Allan, a geography professor from the UK’s School of Oriental and African Studies. “There is plenty of water for those uses, except in some of the Gulf countries, and they have the energy resources for desalinization.”
Allan said the real problem was economic. Approximately 90 percent of the region’s water consumption, he noted, is for agricultural use, but the economic returns on that usage are relatively low. To the extent countries can shift employment to other sectors, such as manufacturing and industry, they may be able to reduce water consumption while still achieving economic growth. Anthony Allum, chairman of the UK-based Halcrow Group, painted a less rosy picture of the region’s water needs, noting that recent surveys of regional government and business leaders have shown that most regard water availability as one of the Middle East’s biggest long-term economic problems. According to Mahmoud Abu Zeid, the Egyptian minister of water resources and irrigation, replacing the Middle East’s food imports with local production would require roughly 292 cubic km of water per year - more than the region’s entire current water supply. Dealing with these realities will require policy-makers to choose between competing priorities, such as financing water recycling and reclamation projects versus encouraging more efficient water use. These decisions, in turn, will determine where the most attractive business opportunities in the water sector will be found.
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For me, the World Economic Forum on the Middle East created both hope and concern. Among the 1,200 forum delegates were incredibly intelligent men and women, both young and old, who had a solid grasp of the challenges facing the Middle East and many suggestions about how to move the region forward to a prosperous future which we all dream of for our children and our children’s children.
Among the many recurrent themes, however, was the portent of a not-so-bright future, impeded by those who view these roadblocks to a prosperous future as their ramparts in a battle to preserve a way of life that can no longer sustain itself.
In a global community, we all become competitors for investment and development. There are no favored people in that community — only those wise enough to realize that the contest is not a battle with other nations but an internal struggle to best prepare their own nations for success. That struggle takes place on engineers’ drafting tables, students’ computer screens and in the critical-thinking minds of the people.
Those who turn gray manning those ramparts against change will watch their children sink into poverty, their standards of living slip and their nations take a place among the also-rans of the global community. Only then will they perhaps realize that they themselves were the enemy. Sadly, by then it will most likely be too late to do anything about it. That was the message from WEF 2006, Sharm El-Sheikh.
