KUWAIT CITY: What is it that stands in the way of Arab economic integration? How can nations develop individually while simultaneously working towards the goal of Arab unity? Is the vision of a monetary Arab union realistic?
These were the tough issues tackled by the Arab Thought Foundation’s eighth annual conference (FIKR 8) held in Kuwait last week.
Titled “Integrating Arab Economies: Partners for Prosperity, this year’s FIKR conference set out to address the challenges facing the Arab world as it works towards economic development by bringing together policymakers, the private sector, NGOs, thought leaders and youth from around the region.
For a region that needs to create around 50 million jobs by 2050, to say that these are pressing issues would be an understatement.
Soliman Abdel Moneim, secretary general of the Arab Thought Foundation, opened the conference with a word about the importance of partnership, youth participation and corporate social responsibility in moving Arab economies forward.
He then gave the floor to Saudi Arabia’s Prince Khalid Al Faisal, chairman of the Arab Thought Foundation, who said, “This year’s theme is focused on the economy, especially after a crisis that has impacted everyone with varying degrees and brought economic theories and their implementation into question and review.
The global economic crisis has turned the fierce competition between major countries into cooperation and coordination in working towards economic recovery, he added.
Over two days, the panelists and participants discussed economic integration and trade protectionism; prospects for trade and monetary union; food security and global agriculture, Arab corporate social responsibility and the role the private sector plays in combining business priorities with social development goals.
Mission CSR
Topping the agenda was a session titled “Arab Multinationals and Corporate Social Responsibility, where panelists shared their experience with different CSR initiatives and their views about its effectiveness in their respective countries.
Egypt’s Naguib Sawiris, chairman of Orascom Telecom, argued that CSR is “about charity – a term which others disagreed with – and “our responsibility towards society.
He outlined four key areas that need to be addressed by CSR initiatives in the Arab world: health, education, environment and human rights (or advancing democracy).
Speaking to Daily News Egypt after the panel, Sawiris said supporting human rights in Egypt comes in the form of making donations to societies that work in the field.
On the status of human rights in Egypt, Sawiris added, “There is a big improvement coming from the base not from the government point of view. There is an increased determination by NGOs and individuals who have become very brave and are fighting for these rights.
“I don’t see the government changing the way of handling these issues, they have not changed but I believe that these human rights organizations are gaining ground.
Back on the panel, Etisalat Chairman Mohammed Omran said the Arab world is lagging and “more needs to be done towards social responsibility.
“CSR is old news, now it’s about corporate global citizenship, addressing issues that affect the world, such as climate change, he said.
“Education is vital to development, he added, and one of the main goals is to foster critical thinking within Arab society.
Sawiris, who got several laughs and applause for his bold statements, said there’s a sort of “envy towards the profits reaped by telecom companies. “Prosperity sometimes is viewed as a sin.the key is to take these profits and do something good, and you have to put in the time, not just money.
Besides the funding aspect of CSR, Sawiris stressed that the private sector should also play a role in crisis management, saying that they are more efficient and have better management skills than governments.
Even though there is at times a lack of vision, CSR is gaining ground in the Arab world, Omran said, and now there’s competition in that field.
Asked how effective it is to offer youth scholarships to study abroad, Sawiris said, “If we can’t change the curriculum in our countries, we can at least send them abroad on condition that they come back and apply what they learned at home.
So since these regional multinationals address the same issues with their CSR initiatives, why not pool these efforts and, say, open up an Arab university, asked the moderator.
“As Arabs, we don’t know teamwork, Sawiris answered bluntly. “Also, there’s a selfish component of CSR, and it’s competitive, reflecting on the company, so we can’t do it together.
Along the same lines, Khalid Abduallah Janahi, chairman of Bahrain’s Ithmaar Bank, said, “It’s better to compete in different areas because that way it benefits more.
“If our CSR programs are similar that’s proof that our countries face the same problems, Sawiris added.
Looking to Dubai
The panel then turned its attention towards Dubai, unanimously agreeing that the reaction has been exaggerated, ignoring the emirate’s fundamental strength and tinged with a not so subtle hint of envy.
“Dubai is vital.there’s freedom, infrastructure, investment, said Sawiris, and countries that have done nothing to grow their economies, staying on the safe side rather than taking risks, should not look at Dubai now and gloat.
“Leaders should focus on alleviating the problem in Dubai, investing specifically at this time.every crisis has an opportunity, Sawiris said.
Sawiris confirmed to Daily News Egypt that Orascom Telecom is eyeing investment opportunities in Dubai, but refused to give further details.
For his part, Omran said Dubai should be viewed as a CSR initiative, adding confidently that investors will come back because the infrastructure that was built, “unlike any in the Arab world, will remain.
Panelits on a session titled “Economic Growth and Investment also discussed the current Dubai saga at length, and touched on how the region can emerge stronger from the crisis through trade and investment.
Arif Naqvi, founder and group CEO of the UAE’s Abraaj Capital, said, “the reaction was overstated, unjustified and emotional.
Dubai’s crisis is one of “liquidity, not solvency, he said. The reality is that Dubai’s infrastructure has helped it become a gateway to the region, he added, and it will reap the dividend from its investments for the next 50 years.
“The debt crisis will be resolved in six months, he predicted, “Banks deal with restructuring debt issues all the time.
These international banks (to which the emirate is indebted) are the same ones that invested in subprime mortgages, and in Dubai they expect to be paid precisely on time and in full, he said.
Nahed Taher, founder and CEO of Gulf One Investment Bank in Bahrain, was quite critical of the way money is invested in the region. “For this region to grow, they have to think of wealth creation, not just wealth management, she said, “and sovereign wealth funds have to change.
For his part, Fraser Cameron, director of the EU-Gulf Forum in Brussels, said the region needs to change its image and the way it publicizes itself to potential foreign investors.
“The world views the Arab region as instable, economically and politically, he said.
Economic systems
Taher attributed the global economic crisis to greed, corporate failure, adding that both capitalism and communism have failed.
The bubble had to burst, she said, and it started with delinking the dollar from gold, and since the GCC countries peg their currency to the dollar, she wondered how the region’s investments are valued.
“Islamic finance principles should be applied, she added.
To that, Naqvi argued, “We wouldn’t have had this explosive growth if we had currency restrictions.
“Let’s not look back, he added, “economic cycles are part of human emotion.what we need now is more regulation to temper greed.
Cameron defended the reigning economic system, saying that only “parts of capitalism failed.
The time has come for the GCC to show the world that they can overcome difficulties, Cameron added, to find a good story to sell to the rest of the world.
Taher pointed to infrastructures as the least financed and most lucrative sector, creating $3 of profit for every $1 invested.
“Industry and infrastructure is key to regional growth, she said, adding that investing in real estate before industry is illogical. “Who will buy these properties, she wondered, if there’s no job creation.
The future for the region, she added, is in water, not oil.
Building infrastructure
The role of infrastructure in integrating Arab economies was discussed in a speech by Abdullatif Youssef Al Hamad, director general of the Arab Fund for Economic and Social Development.
Hamad highlighted the importance of building a road network and means of transportation to connect Arab countries; adding that there is a dire need to improve the region’s vital transportation sector.
He cited Egypt’s railway system, the second oldest in the world, which is used by 3 million people daily. “That is like moving around the whole state of Kuwait, he said.
Water and irrigation systems are also lagging, he said, and water will present a problem towards Arab economic development.
There are attractive investment opportunities in water desalination, a field in which Gulf countries were pioneers, he added.
Hamad also spoke on the importance of promoting internet penetration among Arab nations, which in total have around 7 million users, and keeping up the pace of growth in the telecom sector.
Part 2 of the FIKR 8 conference coverage will appear in Daily News Egypt next week.
