Arab leaders came up with great ideas and encouraging promises in the Arab Economic Summit held last week in Riyadh. They want to offer better economic and living conditions in all Arab countries which they aim at turning into one harmonious and successful economic bloc whose people would live in prosperity and find jobs.
But let us try to apply those ideas on the reality of the Arab world. Can we establish an economic unity in which billions of investments, goods, and jobs flow between the two biggest Arab countries—Egypt and Saudi—which together make up half the economy of the Arab world?
The answer is, “Of course not,” not because trade between the two countries is in any way modest, for it exceeds seven billion dollars and is the biggest between any two Arab countries. The reason is the huge difference in the economic structure of the two sister countries despite geographical proximity and religious and genealogical ties. Egyptian President Mohamed Mursi said in his last visit to Riyadh to attend the summit that the two countries are “one tribe.”
Saudi Arabia is a capitalist country whose economy depends on oil. It is industrially active and its products have made their way to the Egyptian markets. Saudi has a huge surplus of money, but it is always cautious in using this money and makes sure to invest it where guarantees are offered even if the revenues are low. Most importantly, Saudi suffers from deep problems that undermine its economic structure, on top of which is unemployment, the weak impact of education, and total dependence on cheap labor in all production sectors like industry, construction, and services. Add to this the scarcity of land owing to monopoly on huge swathes of land that are consequently not dealt with in the stock market and whose prices witness a remarkable hike. Businessmen and investors also complain of bureaucracy, especially Saudis since their foreign counterparts are protected and sponsored by certain entities. The judicial structure also suffers from corruption and weakness. However, Saudi enjoys political stability and is home to a big consumer market that, investors argue, could make up for some of the previously-mentioned problems.
Egypt, on the other hand, has a mixed system, for it has not totally gotten rid of the socialist system that prevailed during the time of late President Gamal Abdel Nasser and has at the same time a deformed capitalist system that was associated with the former and is currently in the purging stage so that it can go back to the rules of market economy that detaches itself from the ruling regime. Egypt is home to massive human resources comprised of trained labor and administrative expertise, yet lacks money and stability. The last factor drove the little money that was available outside the country and the new government is currently trying to talk departing businessmen into coming back and remaining ones to invest after they were accused of being “thieves” and “remnants of the former regime.” But things got mixed up as the opposition, including revolutionary powers, allied with those businessmen against the ruling Muslim Brotherhood, but when they made sure that the Brotherhood is there to stay, they started exploring the capitalist privileges they can offer.
Egypt suffers from corruption, bureaucracy, and slow justice. It also has a public opinion that is generally antagonistic to capital partially owing to ideas that are remnant of the Nasserist era and which accuse foreigners of wanting to suck the country dry and partially owing to the corruption of the Mubarak era in which the president and his family and men turned Egypt into their own private economy.
In Saudi, some factories shut down because the government decided to raise the price of foreign labor and others are threatening to follow suit and transfer their businesses abroad. But the situation in Egypt is much more dangerous, disastrous in fact, since thousands of factories were closed because Egyptian laborers demanded higher wages, but businessmen, who are not used to laborers’ strikes and protests, did not respond and said that doing so would weaken their competitive abilities and that the government should facilitate funding processes at a time when foreign currency was becoming more scarce.
All the above demonstrates that both countries need to undergo reform before reaching the stage integration and highlights the necessity of applying all the decisions taken in the Riyadh economic summit from enhancing the role of Arab expertise so that successful investments can be made available to all through doubling the capital of Arab investment funds to activating investment agreements that aim at protecting investments and making Arab countries attractive for investors. Being preoccupied with local economic challenges does not mean overlooking the objectives of the summit and the way it strives towards a joint Arab renaissance. On the contrary, joint work helps in the transfer to expertise for the purpose of finding solution and creates a competitive environment between brethren as well as opportunities for mutual profits. Talk about integration in the Arab world is real and not just propaganda. Here we have oil, energy, and investment expertise and there we have human resources. The circumstances are now more suitable for achieving a joint integration, for the Arab Spring has added a pressure factor on Arab leaderships and which can be summarized in the concept of transparency and accountability. Now there is a fierce opposition that asks, explores, and judges and in case partisan opposition is not there, the people have now become capable of powerfully expressing their opinion and of comparing their situation to that of others and it is no longer possible to keep them in the dark.
The economic summit
Let us remember the conditions that led to initiating the Arab Economic Summit two years ago in Kuwait, where the first round was held. The summit was the result of the first UN report on human development in the Arab world, released in 2002. The report shocked the Arab public opinion as well as Arab leaders, some of whom tried to ignore it, underestimate its impact, and question its credibility. But writers, intellectuals, and researchers insisted on discussing it and saw that it offered an opportunity to look into the deteriorating conditions of the Arab world. The report offered the intelligentsia a chance for running away from politics in the pre-Arab Spring era where they were persecuted for speaking their minds. But what they wrote flew to the popular conscience so that it became a major incentive for the people to make their voice heard and their anger known. Because of this report, citizens knew, with numbers for the first time, that they are at the bottom of the world’s development lists whether in employment, education, books, translation… and life.
Because of this report and the atmosphere it created, the first Arab Economic Summit was held in Kuwait and the second in Sharm al-Sheikh in 2011. Both summits focused on economy and constituted a late admission that it was high time to concentrate on human life and that empty rhetoric about independence, resistance to imperialism, the liberation of Palestine, and the blessing of stability is no longer capable of abating the anger of deprived citizens. But the previous summits had no impact because they continued this state of separation between governments and people. They probably offered some kind of psycho-therapy for leaders who want to absolve themselves of blame in front of their people through telling them that they have tried.
This time people want action and not words. They want jobs and results in numbers. They will start holding their rulers accountable even before the next summit is held in Tunisia in two years’ time.
This article first appeared in al-Hayat on Jan. 27, 2013.
(Jamal Khashoggi is a Saudi journalist, columnist, author, and general manager of the upcoming Al Arab News Channel. He previously served as a media aide to Prince Turki al Faisal while he was Saudi Arabia's ambassador to the United States. Khashoggi has written for various daily and weekly Arab newspapers, including Asharq al-Awsat, al-Majalla and al-Hayat, and was editor-in-chief of the Saudi-based al-Watan. He was a foreign correspondent in Afghanistan, Algeria, Kuwait, Sudan, and other Middle Eastern countries. He is also a political commentator for Saudi-based and international news channels.)