Africa, Development & Aid, Economy & Trade, Headlines, Middle East & North Africa, North America

POLITICS-U.S.: Mideast Reform Stresses Economic Liberalisation

Emad Mekay

WASHINGTON, Jun 2 2004 (IPS) - A U.S. proposal to democratise the Middle East on the agenda of next week’s meeting of leaders of the world’s most industrialised countries has metamorphosed into an economic blueprint for the region, with the World Bank and other financial institutions slated to play a central role.

U.S. National Security Advisor Condoleezza Rice told reporters Tuesday that the summit of the G8 (group of eight most industrialised nations), to be held in Sea Island, Georgia State Jun. 8-10, will break new ground “in areas related to the broader Middle East and North Africa, as well as our ongoing development agenda.”

G8 members Canada, France, Germany, Italy, Japan, Russia and the United Kingdom will attend the meeting, along with the European Union, which will be represented by the president of the European Commission.

Those leaders will be joined by heads of state from Afghanistan, Algeria, Bahrain, Jordan, Turkey and Yemen, but leaders of Egypt, Saudi Arabia, Morocco and Tunisia, some of the more influential countries in the Middle East, have declined Bush’s invitation.

Washington’s “Greater Middle East Initiative”, has been renamed the “Broader Middle East and North Africa Initiative”, and proposes to expand the bounders of the traditional Middle East to include non-Arabic speaking nations like Israel, Turkey, Pakistan and Afghanistan by relaying heavily on trade and business, backed by the G8.

“Promotion of intra-regional trade will be a priority for economic development of the Broader Middle East and North Africa,” says a draft of the proposal seen by IPS. The final version of the document will be unveiled at the summit Jun. 9.


After the Sep. 11, 2001 attacks on New York and the Pentagon, the administration of President George W Bush has signalled that one of its priorities is to reform the Middle East, from where all of the hijackers of the planes used in the suicide attacks originated.

“Ultimately, a new social and political environment must develop in the region, which is the source of most terrorist threats confronting the international community,” said Senator Richard Lugar, who heads the Senate Foreign Relations Committee, during a hearing on the plan on Wednesday.

The initiative is widely thought to be the brainchild of Alan Larson, under secretary of economic, business and agricultural affairs at the State Department.

“We are considering ideas like regional trade hubs and support for local chambers of commerce,” Larson told the hearing. He described the plan as “the longer-term task, the generational task, of supporting economic, social and political reform in the broader Middle East.”

In the short term the reform would include a micro finance initiative to increase funding opportunities for the region’s entrepreneurs, particularly women. It sets out to assist more than “two million potential entrepreneurs to pull themselves out of poverty through micro finance loans” over five years.

It would also establish a micro finance consultative group managed by the World Bank’s Consultative Group to Assist the Poor (CGAP), which would include the G8 nations and regional and international donors.

The blueprint says the G8 will support seminars for executives, especially women, to enhance their skills through programmes run in cooperation with local businesses and chambers of commerce.

The plan envisages a fund – paid for by the G8 – at the International Finance Corporation, the private sector arm of the World Bank, to provide loans for the region’s entrepreneurs.

It would operate by “leveraging existing expertise, experience and financial resources of the IFC”, and “encouraging the IFC to increase the focus of its regional investment portfolio on SMEs (small and medium-sized enterprises).”

The initiative also proposes an alliance between business leaders from the G8 and their counterparts in the Arab Business Council, itself a part of the exclusive business organisation, the World Economic Forum, based in Geneva, Switzerland. They would work jointly to press Middle Eastern governments to adopt economic changes and review and report on the “progress of reform”.

Under the plan, the G8 will also commit to pressing the region’s governments to “create fair, secure and well functioning property rights systems” and work to expand market-oriented financial instruments and programmes to combat money laundering.

The United States has also proposed a Middle East Free Trade Agreement (MEFTA) that would encompass all countries of the region. It already has bilateral trade agreements with Jordan and Israel and has just finalised deals with Bahrain and Morocco.

The latest initiative says the G8 will assist the region to remove barriers to investment as well as to promote trade, partly through technical assistance on how to join the World Trade Organisation (WTO).

Washington’s effort at Middle East reform has been met with scepticism in the region, with many leaders saying the plan would be imposed from the outside with little or no consultations with them.

But U.S. officials say they will continue to discuss their ideas with Middle Eastern governments, civil society groups and business leaders and that they realise that change must come from within.

“This is an opportunity for the G8 to offer an opening to states in the region to be involved in reform discussions and process with the G8. But what we’re quite aware of is that most of this is going to take place on the ground in the Middle East, not in the G8,” Rice said Tuesday.

“And so we will continue those discussions. This will be a very good discussion with some of the most reform-minded states in the Middle East,” she added.

 
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