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World Bank Chief Calls for Economic Reforms in Mideast

David Elkins

WASHINGTON, Apr 6 2011 (IPS) - World Bank President Robert Zoellick on Wednesday pressed a Middle East and North Africa in the midst of the “Arab Spring” to promote vibrant civil societies and urged international financial and development institutions to hold its client governments in the region more accountable, if sustainable growth rates and more integrated economies are to take hold.

After months of protest in countries from Tunisia to Bahrain, Zoellick argued that while appropriate economic policies will be a necessary component in rectifying the lack of jobs, dignity, and political freedom – factors driving popular grievances – they will not be enough.

“Our message to our clients, whatever their political system, is that you cannot have successful development without good governance and without the participation of your citizens,” Zoellick said.

“Some of that may be what we think of as politics, but most of it is also what we know is good economics; most of it is what we know is good for fighting corruption; most of it is what we know is good for inclusive and sustainable development,” he added.

Beginning in the mid-1990s, many Arab countries witnessed substantial gains in GDP growth and received larger sums of foreign direct investment before the global financial crisis struck in 2008, but in countries like Egypt with undiversified economies and rampant unemployment, macroeconomic growth was not reflected in the quality of life for its citizens at the beginning of 2011.

“The reasons for special attention to the Arab World seemed clear then and certain now: Apart from the oil sector, the region is poorly integrated into the global economy. It has the highest unemployment among developing regions; the highest jobless rates among the best educated; the lowest economic participation rates by women.” Zoellick said.


Along with the need for job growth, the expansion of national markets, and a more diversified economy, additional infrastructural investments that encourage cooperation between governments, the private sector, and citizens will be crucial in countries such as Egypt and Tunisia.

In the case of Egypt, the U.S. Department of State, in cooperation with members of Congress, has outlined a number of initial measures to spur economic development in the country, including the mobilisation of Overseas Investment Corporation and Export-Import Bank funds, a new U.S.-Egypt Enterprise Fund, and the creation of Qualified Investment zones from which “all parts of Egyptian society benefit.”

The World Bank outlined its plans yesterday for the Arab Financing Facility for Infrastructure (AFFI) – a joint venture with the International Finance Corporation and the Islamic Development Bank. AFFI is a new financing vehicle that will raise up to one billion dollars to spur investment in infrastructure development in the region, providing jobs and better access to transportation and communications networks.

“Infrastructure will be a strong driver for growth in the region and indispensable for the increasingly critical water and energy deficit in many of its countries,” Dr. Jafar Hassan, Minister of Planning and International Cooperation for the Hashemite Kingdom of Jordan, said in a statement Tuesday.

“Restructuring the risk-sharing mechanisms for the provision of private sector and development funding for such critical development and regional infrastructure programmes is a key priority in enabling governments and the private sector in advancing such projects jointly,” Hassan added.

With popular uprisings continuing throughout the region, only the Egyptian and Tunisian governments have given in to popular calls for their leaders to step down, underscoring the importance of an international community willing to assist, both economically and politically, those who have the courage to push for meaningful reform.

“Few can claim to have predicted today’s events in the Middle East and North Africa. We must be careful about what we assume might happen next. We must approach development with the same humility,” Zoellick said. “Will this be 1848, 1968, 1979, or 1989? Or will it be 2011, the year we learned that civic participation matters to development, and that, in addition to regimes, something more has changed.”

 
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