Theoil industry significantly impacts the entire region, both through the wealth that it generates and through the movement of labor. Most of the countries in the region have undertaken efforts to diversify their economies in recent years, however.
Policies advocatingMiddle East economic integration aim to bring about peace, stability, and prosperity in theMiddle East, which they believe can only be sustained over the long run via regional economic cooperation.[1]
Former U.S. Secretary of StateWarren Christopher said that, "Governments can create the climate for economicgrowth...[but] only the private sector can produce a peace that will endure."[2]
The next stage, afterbilateral andmultilateral relationships have been established, will entail formation of regional industries through the cooperation of internationalbodies and independent international consortiums. At this point, the regional economic process will be upgraded and the new reality, in which business precedes politics, will be instituted. Ultimately, the Middle East will unite in a common market after we achieve peace. And the very existence of this common market will foster vital interests in maintaining peace over the long term.
Following the Israel–Jordan peace treaty in 1994 s series of Economic Summits were organised, to promote regional economic development and economic cooperation with Israel.[3]
The first Economic Summit was held inCasablanca, Morocco, on 30 October to 1 November 1994.[4]
The second was held inAmman, Jordan on 29-31 October, 1995[5]
The third was held inCairo, Egypt on 12-14 November 1996[3]
The forth was held inDoha, Qatar on 16-18 November 1997[3]
Following the 1997 conference, the Middle East peace process suffered a serious setback due toBenjamin Netanyahu government's policies that alienated the Arab countries (namely the refusal to work towards establishment of an independent Palestine State), which refused to discuss economic cooperation with Israel unless it made some concessions. As a result no more summits were held.[3]
In the 1995 summit the actions agreed included:[6]
The establishment of a Bank for Economic Cooperation and Development in the Middle East and North Africa will be established in Cairo.
The establishment of a Regional Tourism Board, the Middle East-Mediterranean Travel and Tourism Association, to facilitate tourism and promote the region as a unique and attractive tourist destination.
The establishment of a Regional Business Council to promote cooperation and trade among the private sectors of the countries of the region.
The formal inauguration of the Economic Summit Executive Secretariat, which is located in Rabat and works to advance the public-private partnership, promoting contacts, sharing data and fostering private sector investment in the region.
Despite many attempts sinceWorld War II to promote economic integration and political cooperation among states in the MENA region, economic interactions have remained limited. The scale of regional merchandise trade is limited, amounting to a mere 7–8% of total exports and imports. (For comparison, regional trade inEurope amounts to about 60%.)
Capital transactions have also been relatively limited, with the exception of large official flows from the oil-exporting economies to other Arab countries, particularly after the1973–4 and 1979–80 oil-price increases. Financiers estimate that up to US$2 trillion in investable assets originate in thePersian Gulf region, the bulk of which is parked abroad, often as AmericanTreasury bills and in places likeSwitzerland andLondon.[7] Increasingly, however, Arabs are investing in their home region; governments are also spending billions on infrastructure and national investment agencies are looking for opportunities.
Tourism and other non-factor service-flow patterns have been quite segmented. Some countries—primarilyEgypt,Jordan,Lebanon,Morocco andTunisia—have received substantial tourist flows from MENA countries. For others, particularlyIsrael, political and security considerations limit regional tourism.
Labour flows have been important, taking the form of:
Palestinian labour working inIsrael. In the 1990s, these flows have been subject to major restrictions and there has been recent substitution of Asian labour for Arab labour in both cases. MENA does not have the kind of labour mobility found, for example, in theEuropean Union, where the citizens of one country have theright to work in others.
Other than the GCC andOPEC, there has been little in the way of regional economic policy coordination.
Arabic,Persian,Turkish,Kurdish andHebrew, are the main languages spoken in the Middle East by over 400 million people; English and French are common supplementary languages.
Council of Arab Economic Unity: Established in 1964, with the ultimate goal of achieving complete economic unity among its member states. An intermediate objective ofcustoms union has been set for 2015.[9]
Economic Cooperation Organization: Established in 1985. The common objective is to establish a single market for goods and services inWest Asia, like the European Union.
U.S.–Middle East Free Trade Area: Established in 2003 by the United States, this aimed to gradually increase trade and investment in the Middle East by assisting countries to implement domestic reforms and protecting privateproperty rights.
Governance: Good governance attracts capital. Some Middle Eastern countries such asSaudi Arabia have made positive steps in reforming theirjudicial systems or adapting theircapital market laws to international standards. Building efficient and capable public institutions needs to be a priority.
Raise competitiveness levels of these economies. This can be achieved through overhauling and aggressively investing in the region's education system. If the education policies of the region deliver unwanted skills to the market, international investors will not be keen to come in, especially in the services sector.Unemployment runs as high as 40% in at least seven Arab nations.[9]Social investing should be planned in order to produce moreentrepreneurs, engineers, scientists, andMBA graduates and expand themiddle class.
Raising competitiveness also entails accelerating theprivatization programs, trade liberalization, investing in theinfrastructure, deepening and linking capital markets and uprootingcorruption.
Facilitate the usage and penetration ofnew technologies. This would enhance the free flow of ideas, information and harness the forces of entrepreneurship. New technologies spur innovation and increase productivity which investors seek.
Linked to this is increasing the freedom of the press and media which provides checks and balances against governments and business. New technology and freedom of the press would have a particular impact on youth and would encourage participation in the definition of future strategies at national and regional levels. Cooperation among Middle Eastern countries would be enhanced, advancing towards the knowledge economy. Increasing the use of new technologies would also reduce bureaucratic hurdles often cited by businesses as deterrents to investment.
^Christopher, Warren (1 December 2004).Prosperity in the New Middle East: Building the Structures of Peace, remarks made at the 1994 MENA Economic Summit. Casablanca, Morocco.
^Anne Beal, E (1999-11-01). "Financing National Pride: The 1995 MENA Economic Summit in Amman".Political and Legal Anthropology Review.22 (2):27–40.doi:10.1525/pol.1999.22.2.27.JSTOR24510863.
