20 - 26 September 2001
Issue No.552
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Al-Ahram Weekly Online 20 - 26 September 2001 Issue No.552 |
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Forging ahead
Now, more than ever, Arab countries have their eyes on economic integration and prosperity, but how many conferences will it take before figures speak louder than words? asks Niveen Wahish
Delegates from 35 countries met last week at the sixth Euromoney conference, titled "The Arab Financial Forum," to discuss everything from macroeconomic policies of individual Arab countries to the prospects for regional economic integration among Arab states as well as integration into the world economy. Although enthusiasm was subdued on the second day of the conference, following the events in the US, the organisers decided to continue with the conference. The Egyptian minister of economy and foreign trade, Youssef Boutros-Ghali best expressed the prevailing sentiment among conference delegates, "No matter who it is against, it is against all of us," he said. "We are looking towards a period of world economic slowdown, and this will not help things," Boutros-Ghali stressed.
One viewpoint which delegates shared was that the "region has fallen below its potential," as Armin Riess, division chief at the European Investment Bank (EIB) put it. In fact, figures cited by Richard Ensor, managing director of Euromoney Institutional Investor Plc. reveal that intra- Arab trade accounts for only 10 per cent of Arab countries' total trade. In comparison, trade among EU countries trade accounts for 63 per cent of the total trade by EU member-states, and trade under NAFTA accounts for 37 per cent of North American countries' trade.
Ensor pointed out that net capital outflows from the region have averaged $25 billion annually during the past 10 years -- a situation that is in stark contrast with Asia which has an average net inflow of $17 billion each year.
Riess of EIB attributed the Arab world's weaker performance to a lack of openness. He said that foreign direct investments look for free markets. He warned that multinationals will capitalise on the association agreements signed between the EU and Mediterranean countries, and will invest in the EU to gain access to Arab markets if countries of the region do not liberalise their economies.
The importance of integration into the world economy is another argument highlighted during the conference.
Lord Hurd of Westell, former foreign secretary of the UK, speaking at the opening of the conference pointed out that while experts disagree on how long the shadow of recession will loom over the world economy, there is a consensus that no one will escape its influence. He said that in such a context some countries have a tendency to erect barriers. "By doing so, the shadow of recession is more damaging and lasts longer." "If the upcoming effort to launch a new round of trade talks at Doha were to fail like the previous attempt in Seattle, we would be in a difficult situation," Hurd said.
However, Hurd stressed that there is a link between efforts to liberalise international trade and national reform. "Unless there is internal reform, countries, whose markets are open will not be able to cope."
In fact, internal policies were blamed by many speakers for the fact that foreign direct investment (FDI) is so limited in Arab economies and the reason intra-Arab trade is at a standstill.
Peter Goepfrich, chief executive officer of the German Arab Chamber of Industry and Commerce, pointed out there has been no assessment of Arab countries comparative advantage or of which products might be produced jointly. In the meantime, until such information is collected and disseminated, Goepfrich believes that "there is a long way to go to economic integration."
Michel Habib-Deloncle, chairman of the Franco-Arab Chamber of Commerce, expressed a similar view during one of the panels. He suggested that Arab industries need to diversify and improve the quality of their products and criticised the fact that Arab customers have a preference for foreign products, even if there is a local counterpart.
Another speaker, Ahmed Butti Ahmed of Dubai's Jebel Ali free-zone area underlined that it is the laws and barriers of Arab countries that hamper FDI. And he attributed poor product quality to manufacturers' failure to think globally.
But the picture is not all bleak. Participants commended the initiative by Egypt, Jordan, Tunisia and Morocco to create an free trade area (FTA) among themselves. Ian Boag, EU ambassador to Cairo described that initiative as a "building bloc towards a larger union."
That larger union is among the goals which Amr Moussa, secretary-general of the Arab League has set his sights on. Among his goals is the transformation of the Arab League into an effective regional organisation that expands its vision beyond politics into economics and technology. Moussa said in an address to conference participants that the Arab League is keen to reach out to Arab businessmen. Towards this end, the League is scheduling the first Arab economic conference, Arab Middle East and North Africa (AMENA), to be held 13-15 March 2002. The aim of the conference is to bring the Arab League into facilitating ties among its member countries' private sectors.
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