Options to Increase Arab Middle East Stability Through Economic Investment

Nathan Field is an Arabic speaker and a commentator on Middle East politics whose perspective differs from others in that it is based primarily on experience in the private sector in the Arab world, including two years as part of the management team on a U.S. one billion dollar engineering project in Saudi Arabia and five years building up and then selling a translation company called Industry Arabic.  Follow him on Twitter at @nathanrfield1 and read his other articles and expert interviews at Real World Arabic.


National Security Situation:  The unprecedented instability in the Arab Middle East consists of three major inter-related problems: the surge in disgruntled people attempting to migrate to the European Union (EU), the decades long but newly accelerating growing appeal of Islamic extremism, and the collapse of a once hopeful Arab Spring reform process.

Date Originally Written:  December 8, 2016.

Date Originally Published:  January 19, 2017.

Author and / or Article Point of View:  This article is written from the perspective of possible approaches to the Arab Middle East that might be taken by the incoming Trump administration.

Background:  The three aforementioned security issues are a logical symptom of the socio-economic weakness of the majority of Arab countries, with the exception of a few highly resource-endowed countries such as Qatar and the UAE that have relatively small populations.  In a ruthlessly competitive global economy, the economic pie is only large enough to provide status, purpose, and meaning to about 20% of the populations.  The other 80% of the population in countries like Egypt and Tunisia are not necessarily poor.  In fact, in many cases they may even have a university education.  But what this often means is that in practice, they are educated enough to know what is out there, yet also to sense that they have little chance of crossing into the 20%.  For this 80%, contrary to the views of many Washington D.C.-based foreign policy research organizations, elections offer little hope because they do not address the economic status quo.  This 80% is precisely the demographic that is at risk to embrace violent extremist ideologies and to seek to flee to the EU as economic migrants.

Significance:  Understanding the economic roots of the instability in the Arab Middle East is critical to formulating long-term solutions.  Traditional research into the instability in the Arab Middle East has minimized the role of economics.  In research, economics and politics are often compartmentalized and treated as two separate problems while in fact they are one and the same.

Many commentators on the Arab Middle East make the mistake of overlooking that democracy and universal human rights are at the very top of the Maslow Hierarchy of needs as matters of self-actualization and esteem.  Democracy and universal human rights can only come when there is enough of the far more important economic development so that a critical mass of the population can obtain purpose, meaning and basic status economically.  Only when that is achieved is it possible to obtain desirable democracy.

Option #1:  A significant new U.S. focus on promoting Lower Tech Entrepreneurship and Small Businesses, not Tech Startups.

Since 2011, the U.S. government has allowed the concept of entrepreneurship promotion to somehow come to exclusively mean Tech Startups.  The problem with Tech Startups is that by definition they seek to use technology to eliminate human labor.  Moreover, the types of people in countries like Egypt and Tunisia who are capable of being competitive in Tech Startups are generally from high socio-economic backgrounds.  Instead, the focus should be on promoting Lower-Tech and more labor intensive Small Businesses and Medium Businesses[1] in order provide opportunity to a greater percentage of the population.   

Risk:  The only risk is that the programs might not be effective.  Some funds may be wasted, but otherwise the consequences will be minimal on the basis that there was nothing to lose.

Gain:  If the programs succeed, they will create significant new jobs for those from the populations that need it most.  Yet even if they do not succeed 100%, they still send the message that there is hope and something to work for back home and may inspire economic migrants to return home. 

Option #2:  Increased emphasis on vocational education combined with targeted industrial development.

The dominant Arab Middle East education paradigm wrongly assumes a linear connection between the quantity of degree holders and new jobs thus economic growth has proven a disaster.  This education paradigm is only producing more disgruntled degree holders with higher expectations that are unlikely to be met.  As part of Option #2 the U.S. would strongly support the growth of vocational education combined with targeted industrial development[2].

The Philippines serves as a classic example of what is possible in targeted economic development.  The country went from having no presence in the call center industry in  1997 to being the global leader in 2012[3].  With greater vocational capabilities, Arab Middle Eastern countries will be in a better position to explore the development of new industrial activity and provide reasonable employment opportunities to the lower 80% of the population.  The Moroccan aviation industry serves as a Middle Eastern success story, showing how state-centric leadership plus strong vocation programs can lead to significant new economic status[4].   As a result of Morocco’s policy, over 50,000 very good jobs for Moroccan nationals were created.

Risk:  The biggest risk is that if Option #2 does not work then some money and effort will be wasted.

Gain:  The programs work.  Yet they still “gain” even if they do not work.  Spending new money to prop up some of these programs is still a huge gain, because it at least sends the message that there is something new in the works.

Other Comments:  None.

Recommendation:  None.


Endnotes:

[1]  Field, N. (2016, May 19). Not Just Tech: Entrepreneurship in the Middle East. Retrieved January 10, 2017, from https://timep.org/commentary/not-just-tech-entrepreneurship-in-the-middle-east/

[2]  Field, N. (2016, July 11). Stop Sending So Many Young People to University. Retrieved January 10, 2017, from http://www.al-fanarmedia.org/2016/07/stop-sending-so-many-young-people-to-university/

[3]  Lee, D. (2015, February 1). The Philippines has become the call-center capital of the world. Retrieved January 10, 2017, from http://www.latimes.com/business/la-fi-philippines-economy-20150202-story.html

[4]  Larmandieu, V. (2015, February 12). Morocco’s aviation industry spreads its wings. Retrieved January 10, 2017, from http://www.cnn.com/2015/02/12/africa/morocco-aviation-industry-spreads-wings/

Economic Factors Middle East Nathan Field Option Papers