The political stability of the Arab world needs a long-term plan to increase economic stability and move away from dependence on oil as the major economic driver, while also addressing the region’s dangerously high unemployment, particularly among young people.
The proposed Arab Stabilisation Plan, ASP, would build a regional framework to promote infrastructure investment and create jobs. Taking its inspiration from the US-led Marshal Plan to rebuild post-war Europe, it would prioritise infrastructure projects on a national level and boost economic growth in countries such as Egypt, Jordan, Yemen, and Tunisia.
It would be important that the investment would come mainly from within the Arab world such as the Gulf countries, and the private sector, and not rely on external sources which lack the long-term will and commitment to make this work.
Speaking at the “Arab World Context” session on the first morning of the Annual Meeting in Davos, Majid Jaafar CEO of Crescent Petroleum made a strong case for the urgency of a long-term plan which is also large enough to make a serious difference. Other speakers included Salam Fayyad, former Prime Minister of Palestine, and Khalid Abdullah Janahi of Vision 3.
“We need quick and urgent economic action to address the issue of high youth unemployment in the Middle East and North Africa. Insufficient economic growth in the region has led to massive youth unemployment, in some areas more than 60 per cent. This is turning into a demographic time-bomb,” Jafar said.
“The recent fall in the oil price is also a warning that the region cannot be over-reliant on energy resources for GDP growth. We must create long-term sustainable economic growth. Employing our youth is the key to unlocking our true natural resource. We cannot achieve political stability without economic stability,” he added.
“In many cases the region has failed to build national identities let alone a regional one. It has failed to build inclusive and stable institutions, and above all failed to build private-sector driven competitive economies. There is plenty of capital in the region, but it needs a focused multinational effort to create regional trust and direct it into long-term infrastructure investments. This will create employment and sustain economic competitiveness,” Jafar concluded.
Jafar’s comments on the urgency of tackling youth unemployment are backed up by the World Economic Forum’s 2014 Outlook on the Global Agenda, which cites persistent youth unemployment as the number one challenge for the region in the year to come, ahead of managing political transitions and societal tensions.
It comments that “high levels of youth unemployment and a mismatch between education and the skills required by employers have led to a vicious circle, where economies stagnate and there is an over-reliance on extracted commodities”.