Arab business forum urges reform to stem unrest

Reuters, Monday 24 Oct 2011

Fundamental reform is needed to abolish crony capitalism and satisfy the younger generations driving the Arab world's uprisings, say World Economic Forum attendees in Jordan

Jordanian Queen Rania speaks during final day of the World Economic Forum annual meeting (Photo: Reuters)

Arab rulers have responded to popular uprisings with handouts and subsidies, but time is running out for the fundamental reform needed to meet the aspirations of millions of young people for economic security and political freedom.

That was the theme articulated by many of the businessmen and politicians at the World Economic Forum in Jordan.

Some also argued that old business models based on nepotism and crony capitalism must be abandoned to satisfy a younger, tech-savvy generation driving unrest in the Arab world.

The two-day weekend meeting explored new economic options for a region gripped by one of its biggest upheavals since colonial powers carved up the old Ottoman Empire in the 1920s.

"You feel the influence of the Arab Spring and the lack of time. There is a prevailing impression that the private sector is tied with the regimes. So we are seeing an effort to show that it is independent and serious about building ties with the youth," Palestinian businessman Kamel Husseini told Reuters.

"Public commitments are being announced to support entrepreneurship and help solve the unemployment crisis. We have to give youth a platform," he added.

Unusually, this World Economic Forum meeting tried to do just that, inviting 19-year-old Yemeni activist Nidaa al-Qudsi to address the assembled executives and politicians.

"Since I was born I've had the feeling that I have no future because I'm not the daughter of someone important in government or business. We have a right to be patient no longer," said Qudsi, whose impoverished country has been racked by months of protests demanding the removal of President Ali Abdullah Saleh.

Bassem Awadallah, a former Jordanian finance minister whose economic liberalisation policies helped promote a decade of growth, said reforms across the region had proven flawed because they were not accompanied by democratisation.

He said Arab revolts had "brought into sharper focus the profound implications of the region's youth bulge" -- people aged under 30 form 75 per cent of the population in many nations.

A report on Arab competitiveness, released by the Forum on Sunday, said only structural reform could remedy "root causes for the current events" -- and create work for an estimated 2.8 million youngsters entering the region's job market each year.

Proposed reforms range from improving infrastructure and education to creating transparent capital markets and ending ethnic or religious discrimination in labour markets.

Even in oil-rich Saudi Arabia, whose royals have embarked on a $130 billion spending spree to head off discontent, 30 per cent of youngsters under 25 have no jobs, the report said.

This is on par with Tunisia, the cradle of Arab unrest. Revolts have toppled the leaders of Tunisia, Egypt and Libya this year and threaten to unseat those of Syria and Yemen.

Youth underemployment stands at 25 per cent in 14 Middle East and North Africa nations, versus 17 per cent in high-income OECD countries, the report said. The gap was much wider for women.

Arab economies are also plagued by "high levels of undue influence and corruption", it said.

"Sustainable job creation is further hampered by the disproportionate weight of the public sector in the region's economies," the report said, adding that Egypt's public sector accounts for 70 per cent of non-agricultural jobs.

It said the region only has 0.6 new firms per 1,000 working age people, compared to about four per 1,000 in the OECD.

"Reducing unemployment will have to focus on three groups that are disproportionately affected -- the young, the educated and women," the report said.

Mohammad al-Barwani, chairman of an Oman-based holding company, said governments should assume a solely regulatory role, including in state-dominated sectors such as oil.

"A young, Facebook-carrying generation is asking, 'What are you going to do to create jobs for us?'," he said.

Middle East peace envoy Tony Blair, one of a number of international statesman at the conference, said that unless ordinary Arabs see tangible progress in their daily lives over the next three years, "there will be a huge popular backlash".

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