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Saidi : Arab world must look to Europe economic future lies principally with next-door neighbors - The Daily Star

Central Bank official says leaders must develop plan or face US hegemony.

The Middle East will be subjected to US hegemony for coming generations if Arab leaders do not develop and implement a positive action plan for the region, according to Central Bank first vice-governor and former economy minister Nasser Saidi.“The EU is the only credible partner for the Arab world to achieve economic, financial and political reforms,” said Saidi at a the seminar, Economic Consequences of the War on Iraq, at the American University for Science and Technology in Beirut on Wednesday.

"This does not imply that the Arabs have to choose one side over the other,” he also said.

According to Saidi, the choice of the EU is natural as the Arab world has a direct impact on its next-door neighbors. Trade plays an important role and, most importantly, the EU is dependent on the region for 35 percent of its oil imports.“If the EU does not act on the Middle East now, it risks being sidelined from the decision-making process for good,” Saidi maintained. “This is their last chance to act following their failures on the Kyoto Protocol, the International Penal Court and agricultural subsidies.”

According to Saidi, an EU-Arab plan for the Middle East can start by addressing the economic, social, political and strategic challenges facing the Arab countries and especially some of the fundamental underlying causes of violence and terrorism. The plan should also be buttressed by a stronger political foundation to the EU’s cooperation with the Mediterranean as a strategic partner. Saidi called for the implementation of a new, re-invigorated Barcelona Process, and the supporting of modernization and reform forces in the Arab world.

According to Saidi, the plan should include a substantially augmented MEDA II program and the setting up of the proposed Euro-Mediterranean Investment Bank to increase the financing of regional infrastructures in the Middle East.“In 53 AD it was possible to walk or ride from Portugal to Morocco via the Roman roads,” said Saidi. “This is not possible nowadays, which goes to prove that we were better off 2,000 years ago,” he added.

Saidi called on Arab countries to accelerate the implementation of the multilateral trade agreement, the GAFTA (Greater Arab Free Trade Area) projected for 2005, and running in parallel with the creation of an Arab Common Market. Full harmonization of Mediterranean rules of origin should also be established.

“The EU should promote foreign direct investment by setting up a EuroMed Investment guarantee Agency (EMIGA) to create attractive investment environments,” Saidi said. “No guarantees means no investments,” he added.“Arab states must implement political, economic and financial reforms, especially in their public sectors and governance practices,” Saidi said. “Special attention must be directed to private sector development and job creation,” he added.

According to Saidi, investment in human capital is crucial as adequate education and skills are needed to face the challenges of international competition and integration. The gender divide, particularly discrimination against women, must be addressed to increase labor force participation.

Saidi called for a clear strategy to enter the information age and the establishment of Arab e-economies and e-societies. The Arab world, which makes up 5 percent of the global population, accounts for only 0.7 percent of internet users.

Saidi recounted his personal experience in trying to register a dot.com website in Lebanon.“As a highly placed government official who knows all the people, my domain name is still unregistered after four months of going through red tape,” Saidi complained. “And I still don’t know how much longer I will have to wait.”

The direct consequences of the Iraq war on Lebanon, which Saidi considers to be the least affected country in the Middle East, is the reduction of economic growth by 1 to 2 percent. A potential offset exists if Lebanon is allowed to participate in the reconstruction of Iraq.“Trade will suffer as imports will bear the impact of higher oil prices and exports will dwindle to Iraq and the GCC,” explained Saidi. “Remittances by Lebanese expats working in the Gulf will be reduced as well,” he added.

Lebanese products exported to Iraq during 1997-2002 consisted mainly of machinery, mechanical and electrical equipment (46.8 percent), chemical products (25.7 percent), base metals (5.9 percent) and foodstuffs (5.1 percent).“The negative impact is expected to be higher should the war extend to Syria,” Saidi added.“The Middle East is a critical crossroads, a point of conflagration and world instability,” said Saidi.

Beirut,04 22 2003
The Daily Star
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