Courtesy Reuters

Advancing Peace in the Middle East: The Economic Path Out of Conflict

The Arab-Israeli conflict has defied peaceful accommodation, let alone resolution, for more than 50 years. Wars have been fought, people displaced, land occupied, law and order disrupted, economies shattered, and a cauldron for terrorism permitted to boil. Yet the United States and the Western world have never fully employed an essential resource that they could bring to the search for peace: economic development, which creates regional opportunities for trade, investment, and jobs.

One might question the value of embarking on an effort in the Middle East before a comprehensive political settlement has been reached. However, the experience of businesspeople, more comfortable with risk-taking than are diplomats, shows that economic interaction often leads to political adhesion. Examples can be found in western and eastern Europe and increasingly in Asia. Politics follows commerce because commerce provides mutual benefits across the broad expanse of the population, regardless of race, color, religion, or ideology. Economic interaction creates opportunity for the investment of talent and creativity and multiple avenues for individual self-fulfillment.

Getting agreement on the stabilizing potential of economic development is easy. Translating that agreement into actual progress on the ground is tough as long as conflict and antipathy scar the region. A recent report from the Council on Foreign Relations, titled Harnessing Trade for Development and Growth in the Middle East, provided a push in the right direction. The report drew a connection between international terrorism and "the misery and hopelessness engendered by economic backwardness and stagnation." It saw the promise of a better life as both a key remedy to the appeal of terrorism and a path toward resolution of the Arab-Israeli conflict.

CROSS-BORDER PROSPECTS

Harnessing Trade recommended a series of steps to liberalize trade, encourage greater private investment, and improve public services and government administration in the countries of the Middle East. It also proposed using the World Trade Organization and trade agreements with major global economies as instruments of domestic reform. Needed now is a task force to advance the report from its broad principles to regional projects; these projects, in turn, will require capital, talent, and cross-border agreements. Eleven such initiatives should be pursued.

Three concern exploitation and sharing of natural resources. First, undeveloped gas reserves off the coast of Alexandria could be piped into Egypt and across the Negev Desert into Israel. This gas would not only supply a power source but could also be used as a raw material for chemical and pharmaceutical product development.

Second, access to water is a growing problem in the Middle East, and one that could fuel continued regional conflict if not resolved. One useful project would thus be the construction of a water pipeline, long promoted by the international contractors Brown and Root, from Turkey to the Litani River in Lebanon and the Jordan River.

And a third project would combine the phosphate reserves in Jordan, Tunisia, and Morocco with the sulfur in Iraq and the urea and potash plentiful throughout the region to produce and export massive quantities of di-ammonium phosphate fertilizer, including to countries in neighboring Africa.

Other initiatives should capitalize on the Middle Eastern states' common interest in export promotion. A regional export council, for example, could be created in Haifa, Israel, to generate markets abroad for agricultural products and to provide guidance on packaging, labeling, and advertising. And a textile fashion council in Tel Aviv could promote the export of clothes that feature fabrics, styling, and tailoring from throughout the region.

A regional tourist authority should be created to rate hotels and facilities and to merchandise tours. The region abounds in attractions such as the Holy Land, Petra, Babylon, Jidda, Carthage, the Dead Sea, Baalbeck, Damascus, Aleppo, Cairo, Tyre, Sidon, Beirut, and the mountains of Lebanon.

Another promising area, after resource development and export and tourism promotion, is scientific research. Medical research, already pioneered by the Weizmann Institute, should be expanded to attract research fellows from neighboring Arab countries. Research projects could be undertaken with medical facilities throughout the region.

Turning to the environment, research and development talent available in Israel and Egypt should be coupled and deployed to find additional water sources and to perfect the technology of desalinization. The technologies used in a variety of climate-enhancement projects, such as flooding the Qattara Depression in northwestern Egypt, also hold great potential for all of Arabia and North Africa.

The Middle East needs to attract capital to exploit the region's petrochemical potential. Petrochemical facilities already exist from Casablanca to Abu Dhabi. So do spinoff industries in chemicals, plastics, salt derivatives, and pharmaceuticals. With additional capital, they could flourish.

The establishment of regional development banks in Beirut, Dubai, or Bahrain, with participation by major international finance agencies, could more efficiently mobilize investment and help allocate resources where investment returns are highest. Regional development banks could operate in a manner similar to the lending programs of the U.S. Small Business Administration. Private banks, monitored by the development banks, would identify and qualify local business entrepreneurs and shoulder the riskiest 20 percent of loans. The other 80 percent would be at the risk of the development banks.

Middle Eastern oil exports would receive a major boost from greater commercial engagement between the countries of the region and Central Asia, which could facilitate the flow of oil and gas from the Ural Mountains and Kazakhstan to world markets. The United States now has a priority interest in economic development in Afghanistan and Pakistan, and the juxtaposition with the Middle East is part of the critical equation.

INVESTING IN PEACE

Executing these programs requires defining the mission, enlisting support and commitment, and providing opportunity for talented people in the region. They desperately await leadership from the global investment community.

The daunting task is to translate these visions into working realities that emphasize a promising future instead of a painful past. With such realities in place, people could work, learn new skills, and extend their talents. Support for secondary education and universities would mean greater access for more applicants. Commercial interaction with the rest of the world through trade or tourism would expand horizons and encourage tolerance of diversity.

Language skills are abundant and hospitality is traditional in this region, the birthplace of three great religions that preach peace and goodwill. Yet peace and goodwill flourish only when people have hope and a vision of better lives for their children. Violence and acrimony take over when people believe things cannot get worse and they have nothing to lose. Without economic development and investment, there is no hope and no vision of better lives ahead.

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