This week the members of the G8 will hold their annual meeting in Deauville France, to discuss issues ranging from non-proliferation and counter-terrorism to the internet and transatlantic cocaine trafficking. Although these are all very important issues, the only agenda topic that matters is the ‘Arab Spring’ and how some of the eight wealthier nations in the world can help the people of North Africa and the Middle East.
The Arab world stands alone and excluded from the benefits of global trade and economic integration. The combination of authoritarian regimes (to suppress populist religious movements) and reliance on oil and gas exports for economic growth has produced weak and isolated economies conditioned on patronage and welfare and cut off from the global market. In hindsight, it was not that surprising that the ‘Arab Spring’ was sparked by persistent unemployment and the rise in global food prices.
Besides military and humanitarian assistance (which is hard to come by after fighting two wars in the past decade), the best thing the wealthy north can do for the Arab people right now is help them integrate into the global market… fast and sustainably! Now is the time for the G8 to link democratic developments with access to western markets, and promise and deliver the benefits of preferential trade to the people of those nations that embrace democratic values and democratic forms of governance.
As President Obama announced in his recent Mideast speech, “it’s important to focus on trade, not just aid; on investment, not just assistance.” President Obama outlined the U.S. goal of promoting a development model based on economic openness and competition, trade and integration to global markets, and financial stability that enables more employment opportunities for young people. Starting with Egypt, President Obama outlined a number of specific policies to facilitate these goals:
First, “relieve a democratic Egypt of up to $1 billion in debt, and work with our Egyptian partners to invest these resources to foster growth and entrepreneurship.” The U.S. intents to help Egypt regain access to global markets by guaranteeing $1 billion in borrowing that is needed to finance infrastructure and job creation.
Second, “create Enterprise Funds to invest in Tunisia and Egypt” modeled after funds that supported the transitions in Eastern Europe after the fall of the Berlin Wall. According to President Obama, OPIC will soon launch a $2 billion facility to support private investment across the region.
Third, “launch a comprehensive Trade and Investment Partnership Initiative in the Middle East and North Africa.” President Obama promised to “work with the EU to facilitate more trade within the region, build on existing agreements to promote integration with U.S. and European markets, and open the door for those countries who adopt high standards of reform and trade liberalization to construct a regional trade arrangement.”
The promotion and facilitation of a regional trade agreement should be at the forefront of any G8 initiative about the ‘Arab Spring.’ Let the revolutions sort themselves out, provide military and humanitarian assistance when possible, and then incentivize the growth of existing regional trade agreements, or the creation of new ones.
President Obama made the start by announcing some modest measures for helping transitioning economies of the ‘Arab Spring.’ Now all the G8 members must agree, jointly or independently, to provide economic benefits like debt forgiveness, investment facilitation, and most importantly market access and trade integration to any and all North African or Middle Eastern nations which take the necessary steps towards democracy.
