Last year, in
Islamic Financial Forum in Dubai, Brad Bourland, chief economist for Saudi American Bank (SAMBA), breached embarrassed silence that invariably enshrouds speakers in Middle Eastern get-togethers. He reminded assembled that despite decades-long fortuity of opulent oil revenues, nations of region - excluding Turkey and Israel - failed to reform their economies, let alone prosper.Structural weaknesses, imperceptible growth, crippling unemployment and deteriorating government financing confined Arab states to role of oil-addicted minions. At $540 billion, said Bourland, quoted by Middle East Online, combined gross domestic product of all Arab countries is smaller than Mexico's (or Spain's, adds The Economist).
According to Arab League, gross national product of all its members amounted to $712 billion or 2 percent of world's GNP in 2001 - merely double sub-Saharan Africa's.
Even recent tripling of price of oil - their main export commodity - did not generate sustained growth equal to burgeoning population and labor force. Algeria's official unemployment rate is 26.4 percent, Oman's 17.2 percent, Tunisia's 15.6 percent, Jordan's 14.4 percent, Saudi Arabia's 13 percent and Kuwait sports an unhealthy 7.1 percent. Even with 8 percent out of work, Egypt needs to grow by 6 percent annually just to stay put, estimates World Bank.
But real figures are way higher. At least one fifth of Saudi and Egyptian labor forces go unemployed. Only one tenth of Saudi women have ever worked. The region's population has almost doubled in last quarter century, to 300 million people. Close to two fifths of denizens of Arab world are minors.
According to Iranian news agency, IRNA, European Commission on Mediterranean Region estimates that purchasing power parity income per head in area is a mere 39 percent of EU's 2001 average, comparable to many post-communist countries in transition. In nominal terms figure is 28 percent. These statistics include Israel whose income per capita equals 84 percent of EU's and Palestinian Authority where GDP fell by 10 percent in 2000 and by another 15 percent year after.
Faced with ominously surging social unrest, Arab regimes - all of them lacking in democratic legitimacy - resort to ever more desperate measures. "Saudisation", for instance, amounts to expulsion of 3 million foreign laborers to make room for indigenous idlers reluctant to take on these vacated - mostly menial - jobs. About one million, typically Western, expat experts remain untouched.
The national accounts of Arab polities are in tatters. Saudi Arabia managed to produce a budget surplus only once since 1982. Per capita income in kingdom plunged from $26,000 in 1981 to $7000 today. Higher oil prices may well continue throughout 2003, further masking calamitous state of region's economies. But this would amount to merely postponing inevitable.
Arab countries are not integrated into world economy. It is possibly only part of globe, bar Africa, to have entirely missed trains of globalization and technological progress. Charlene Barshefsky was United States Trade Representative from 1997 to 2001. In a recent column published by New York Times, she noted that:
"Muslim countries in region trade less with one another than do African countries, and much less than do Asian, Latin American or European countries. This reflects both high trade barriers ... and deep isolation Iran, Iraq and Libya have brought on themselves through violence and support for terrorist groups ... The Middle East still depends on oil. Today, United States imports slightly more than $5 billion worth of manufactured goods and farm products from 22 members of Arab League, Afghanistan and Iran combined - or about half our value-added imports from Hong Kong alone."
Indeed, Jewish Israel and secular Turkey aside, 8 of 11 largest economies of Middle East have yet to join World Trade Organization. Only two decades ago, one of every seven dollars in global export revenues and one twentieth of world's foreign direct investment flowed to Arab pockets.
Today, Middle East's share of international trade and FDI is less than 1.5 percent - half of it with European Union. Medium size economies such as Sweden's attract more capital than entire Middle Eastern Moslem world put together.
Some Arab countries periodically go through spastic reforms only to submerge once more in backwardness and venality. Oil-producers attempted some structural economic adjustments in 1990s. Jordan and Syria privatized a few marginal state-owned enterprises. Iran and Iraq cut subsidies. Almost everyone - especially Lebanon, Egypt, Iran and Jordan - increased their unhealthy reliance on multilateral loans and foreign aid.
Young King Abdullah II of Jordan, for instance, dabbles in deregulation, liberalization, tax reform, cutting red tape and tariff reductions. Aided by a free trade agreement with America passed by Congress in 2001, Jordan's exports to United States last year soared from $16 million in 1998 to $400 million.
A similar nostrum is being administered to Morocco, partly to spite European Union and its glacial "Barcelona Process" Euro-Mediterranean Partnership. But, as everyone realizes, region's problems run deeper than any tweaking of customs code.
The "Arab Human Development Report 2002", published in June last year by United Nations Development Program (UNDP), was composed entirely by Arab scholars. It charts predictably dismal landscape: one in five inhabitants survives on less than $2 a day; annual growth in income per capita over last 20 years, at 0.5 percent, exceeded only sub-Saharan Africa's; one in six is unemployed.
The region's three "deficits", laments report, are freedom, knowledge and manpower. Arab polities and societies are autocratic and intolerant. Illiteracy is still rampant and education poor. Women - half workforce - are ill-treated and excluded. Pervasive Islamization replaced earlier militant ideologies in stifling creativity and growth.
In an article titled "Middle East Economies: A Survey of Current Problems and Issues", published in September 1999 issue of Middle East Review of International Affairs, Ali Abootalebi, assistant professor of political science at University of Wisconsin, Eau Claire, concluded:
"The Middle East is second only to Africa as least developed region in world. It has already lost much of its strategic importance since Soviet Union's demise ... Most Middle Eastern states ... probably do, possess necessary technocratic and professional personnel to run state affairs in an efficient and modern manner .... (but not) willingness or ability of elites in charge to disengage old coalitional interests that dominate governments in these countries."
