Arab World Experts at Economy Forum Call for Reform

The head of the Arab League said Wednesday that Arabs were angry and frustrated and "the name of the game is reform" — a call lent urgency by turmoil of recent days, when a corrupt regime was overthrown in Tunisia and several people died in anti-government riots in Egypt.

Arab League's Secretary-General Amr Moussa, who is Egyptian, spoke to reporters at the annual meeting of the World Economic Forum in Davos, where a panel of Mideast economic experts convened separately to tackle the same question — and generally agreed the region needs better education, more transparent regimes, and cleverer business strategies.

The issue that set off controversy at the closed session had to do with one characteristic the region's diverse countries generally share: the absence of genuine democracy. Audience members pushed the idea but the assembled experts seemed more skeptical — and, tellingly, most would not be quoted on the issue.

One exception was Ennis Rimawi, a Jordan-based managing partner of Catalyst, a private equity firm specializing in energy and water technology.

He said the efforts by Dubai to build a global financial center had inspired progress in other Gulf states, in clean energy, research and development and other areas. The Gulf was poised to be "an economic powerhouse (with) a spillover effect in the poorer countries ... I'm very optimistic with the current leadership in place, largely in the (Gulf)."

One panelist said the region needed strong but "benevolent" leaders — ones who would allocate resources fairly and transparently and nudge societies toward progress. It was the failure to sufficiently provide for the people this way that doomed the authoritarian leadership in Tunisia, he suggested.

Another argued democracy was not part of Arab culture, with its respect for elders, tribalism and patriarchal traditions.

A third suggested democracy was desirable — but not before the public was better educated and would not vote along tribal lines.

Rimawi said Mideast nations should key on areas where they might naturally dominate, and identified three: the purchase of oil- and gas-related technical services needed by its main export industries, desalination-related business to resolve the water shortage, and solar energy to exploit the abundance of sun.

But seizing these opportunities will be difficult under existing circumstances: Panelists noted that the Arab world lagged badly behind other regions in key innovation indicators such as patents per capita, and was generally seen as faring poorly in contract enforcement.

There was widespread agreement that the main problem was education.

"Many people have degrees but they do not have the skill set," said Masood Ahmed, director of the Middle East and Asia department of the International Monetary Fund. In part, this is because schools were turning out graduates prepared for work in the public sectors that dominate many of the region's countries — and not for driving a vibrant private sector more likely to innovate.

"The scarce resource is talent," agreed Omar Alghanim, a prominent Gulf businessman. The employment pool available in the region "is not at all what's needed in the global economy."

Ahmed said another problem was that most of North Africa's trade — some 80 percent — was with Europe, a region that was growing far slower than Asia and other parts of the world. For the region to better its current growth rate of some 4 percent — insufficient to leap out of the widespread poverty,

especially given high population growth — it needed to diversify its industries and export markets.

There were disagreements on whether the region's dirigiste economies were working. One panelist noted Dubai's government-mandated drive to create a world city inspired other regional states, while another said that the Arabs as a whole would never prosper in the "Twitter generation" until people were empowered and entrepreneurs freed of bureaucracy.

In his comments, Moussa said the Arab world was in flux.

"There is turmoil in the Arab world for so many reasons, internal as well as regional, and even international," he said. "The Arab citizen is angry, is frustrated. That is the point. So the name of the game is reform."

Former U.N. Secretary-General Kofi Annan, who was also attending the Davos forum, agreed that "the solution is reform." But he warned that leaders might fear that "if you open the door just a little, you cannot control it again."

"I hope they will take the right decision and move in the right direction" and "not clamp down," Annan said, adding that he expects what happened in Tunisia "to have repercussions even beyond North Africa."