Instability and low oil price drive inclusive policies

24 February 2016

Old and young leaders alike recognise need for change

Arab disunity stands in stark contrast to Iran’s steady, disciplined progress toward the achievement of its long-term strategic objectives.

This is one of the key observations articulated by a recent policy paper published by the Beirut Institute. The paper’s recommendations have been distributed and presumably read by most if not all policy makers across the Arab region by now.

The rising regional instability and low oil prices, with all the bad news they bring in terms of fiscal deficits, lower spending and job losses, might just be the perfect opportunity to bring together Arab leaders and policy makers to put into action many recommendations that should have been adopted much earlier.

The strategic recommendations articulated by the paper include participation in de-escalating the active conflicts in Libya, Yemen, Iraq and Syria and improving relations with Iran. The rest tackles the need for greater operational integration among the Arab states ranging from identifying time-bound joint, regional goals and objectives; rapid formation of a joint Arab military force; creation of a Greater Arab Free Trade Zone (Gafta), and establishment of an Arab Customs Union. The other important recomendations include focus and investments on innovation, research and development, education, women empowerment and youth inclusion.

Cohesive political and economic objectives, the paper argue, will help inspire allegiance especially among the youth and help promote a prosperous and secure Middle East region.

“I found no major disconnect between the most senior government decision makers and the Arab youth leaders, some of who just got out of university,” says AT Kearney’s Director for Global Business Policy Council Rudolph Lohmeyer, referring to his consultations with Arab leaders as part of the Beirut Institute 2015 summit.AT Kearney supported the Beirut Institute in developing the policy recommendations that the paper presented.

According to Lohmeyer, the key decision makers at the highest level of leadership in the Arab world agree that the old economic models focused on developing capital assets particularly fossil fuel reserves must now shift to include developing human and intellectual capital, which entails focusing future investments on technology and innovation.

While all the recommendations look good and promising if adopted, Saudi’s Prince Turki al-Faisal, who is also board member of the think-thank, stressed it is now time to put these recommendations into action.

So far the pace of policy shift differs from one country to another, with the pace somewhat inversely proportional to the contribution of oil revenues to a city’s or state’s wealth. The UAE leads the region in terms of an explicit focus on innovation, with Sheikh Mohammed bin Rashid al-Maktoum launching an AED2bn ($544m) fund in late 2015 to help convert innovative ideas into actual projects.

Overall, the sustained low oil prices is expected to push the non-oil sectors primarily construction, travel and tourism, retail and services into the spotlight, and these sectors will now have to turn to technology and innovation to increase efficiencies and deliver growth.

 

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