Two years on, the so-called Arab spring is now turning into a bleak winter.Governments have failed to deal effectively with the underlying cause of continued instability – chronic unemployment and a dearth of economic opportunities.
An international but Arab-led investment plan is urgently needed to deal directly with the job shortage and promote economic stability across the region. Taking inspiration from the Marshall Plan which the US adopted after the second world war to rebuild western Europe’s battered economies and shield them from falling to communism, the Arab Stabilization Plan focuses on job creation through critical infrastructure investments to achieve economic stability and prevent the rise of extremism.
The plan is a private sector led policy response developed by a team of development economists in consultation with regional governments, international institutions and business leaders from the Arab world. It envisages a multilateral economic plan focused on creating jobs through fast tracked, project-based investment, achieving significant returns for investors and countries alike.
High quality global journalism requires investment. Please share this article with others using the link below, do not cut & paste the article. See our Ts&Cs and Copyright Policy for more detail. Email firstname.lastname@example.org to buy additional rights. With the population of the Arab world set to increase from 355m to 500m by 2025 and a majority below the age of 30, 100m jobs will need to be created in the next two decades alone. Ironically, the underlying economic causes of the uprisings have been made worse; youth unemployment now exceeds 30 per cent in many countries and has reached a tipping point, with high expectations turning into dashed hopes. The turbulent political transitions have weakened the investment climate in what is now a vicious circle of weaker economies and greater instability.
High quality global journalism requires investment. Please share this article with others using the link below, do not cut & paste the article. See our Ts&Cs and Copyright Policy for more detail. Email email@example.com to buy additional rights. Despite that, the focus to date has been on bickering over new constitutions and elections with limited action in terms of economic policy, which has been restricted to short-term fiscal stabilisation through outside loans. Such loans normally just disappear on existing salaries and state subsidies, resulting in little new investment or job creation.
High quality global journalism requires investment. Please share this article with others using the link below, do not cut & paste the article. See our Ts&Cs and Copyright Policy for more detail. Email firstname.lastname@example.org to buy additional rights. Domestic policies and finances are hampered by burgeoning deficits and dwindling reserves and the prospect of the private sector acting alone to restore economic growth is dim. In order to ensure a safer transition and prevent further instability and the potential for extremism, there is now an urgent need for investment intervention over the medium term.
The World Bank estimates that the region already requires $100bn of infrastructure investments annually, in sectors such as transport, telecoms and energy. Infrastructure still only accounts for 5 per cent of expenditure in the region (compared with 15 per cent in China), but according to World Bank figures each $1bn invested in infrastructure could create 100,000 new jobs, particularly in the oil importing countries where the need is greatest. Yet investment levels have weakened in most Arab countries, with Egypt’s minister of planning declaring last month that foreign direct investment into the country was now “near zero”.
Directly investing the money into infrastructure projects and bypassing government coffers, would circumvent political wrangling and bureaucracy and enable quicker and tangible economic improvements in countries such as Jordan, Yemen and Egypt, and across north Africa.
With income growth from sustained high oil prices, the Gulf Co-operation Council states, which boast a vibrant corporate sector in need of investment outlets, are well placed to play a leading role as investor countries. Other investor nations and multilateral institutions could provide additional investment and technical assistance. The plan would help restore economic confidence, in addition to spurring internal private sector investment in the region.
A multilateral framework would ensure funds are managed, invested and governed through a transparent and co-ordinated mechanism, building upon global best practice. A governing board at ministerial level would have ultimate authority over policies and investment decisions, with an investment committee and team of technical experts to administer and manage the trust fund and provide due diligence on project proposals and results monitoring.
At country level, the national project development teams would be responsible for identifying national investment priorities with the host governments, including critical sectors for development and maximum positive impact.
While each country has its own set of priorities, supporting regional economic growth and reducing the underlying causes of extremism are goals that should be shared by all. Through a common regional investment platform, participating countries will be able to benefit through enhanced regional economic development, stability and security.