A recent Arab-authored report prescribes higher levels of inter-Arab investment to address acute economic problems in the region, but will governments act? Dina Ezzat sifts through the findings It was 40 years ago, in June 1964 that the Council of Arab Economic Unity (CAEU) began to promote inter-Arab trade and other measures with an eye on boosting Arab economies and improving living conditions for Arab citizens. The CAEU's regular report, issued earlier this month, indicates that these objectives are far from being realised and that Arab governments have to work much harder on economic cooperation if they wish to address the social ailments resulting from poor economic performance. Soaring unemployment rates in most Arab countries were particularly highlighted by the recent CAEU report. "We have to admit it, unemployment rates in Arab countries range between 15 per cent and 20 per cent. These are by no means acceptable rates, especially if we take into consideration the fact that some 60 per cent of those unable to find jobs are actually educated," said Ahmed Gewili, CAEU secretary-general. Speaking at a meeting at the Cairo headquarters of the Arab League earlier this month, Gewili warned that these disturbing rates are expected to increase "with three to four million Arab citizens failing to find jobs every year". According to the report's findings, Gewili declared that if Arab governments fail to adequately and promptly address this problem they will have 50 million unemployed men and women by the year 2014. This, he said, is going to be a major blow to all developmental efforts especially in view of "the unmistakable drop in [gross domestic product] GDP in most Arab countries since the 1980s, and an increase in inflation rates, which is a disappointment to the expectations of Arab peoples". According to the figures offered by Gewili, total Arab GDP for the year 2002 has come to no more than $717 billion, which constitutes a meager two per cent of the total global GDP, while overall inter-Arab trade for the same year stood at a limited $400 billion, which is about three per cent of total world trade. Increasing inter-Arab investments, an obvious objective of the CAEU, was prescribed by Gewili as the only way out of the unemployment syndrome. "Today, investments in Arab countries stand at a very limited $140 billion. We need to add at least another $70 billion if we wish to seriously accommodate the increasing demand for jobs and for higher living standards in our countries," Gewili said. According to the secretary-general, the CAEU is working out the final details of an "Arab Investment Map" (AIM: www.arabinvestmap.com ) in order to encourage Arab countries to increase their cross investments and to attract more foreign investments. The AIM will provide the details of investment opportunities and regulations in the member states of the CAEU. Other Arab countries not members of this Arab economic grouping are considering providing the CAEU with information about their investment opportunities to be included within the AIM. "We have often talked of the great economic opportunities of our countries, but often enough I meet with Arab investors or foreign investors who do not know enough about the opportunities of investment in the Arab world and this is why we need that AIM," Gewili said. Moreover, the AIM should help reduce inter-Arab competition over foreign investments and encourage a coordinated Arab investment policy that is more focussed on a complementary approach. "It is often the case that Arab countries could work together rather than against each other to attract foreign investments," Gewili argued. "In 2002 we launched the 'Integral Arab Economic Strategy' that should be implemented by the year 2020. This plan, that addresses the economic components of development, is in fact based on cooperation rather than competition among Arab countries," Gewili stressed. The secretary- general hopes the AIM will also improve the collective competitiveness edge of Arab countries. The AIM will be available on the Internet shortly, Gewili said; a move designed to give it exposure to as many investors and entrepreneurs as possible. But attracting more investments to Arab countries is not an easy task, warned Gewili, and certainly not a one that his organisation can handle alone. The CAEU is therefore counting heavily on trade and investment unions in the Arab world to encourage more businessmen to invest in Arab countries. It is also working with unions and representatives of private business to educate investors about the legal facilities provided for investment in Arab countries through a set of agreements on anti-dual taxation, investment protection and an investment dispute settlement mechanism. Gewili is also hoping that the Arab Free Trade Area, effective as of next year, will be another incentive for investors to come to the region and for Arab investors to bring more money back home. The clear commitment expressed by leaders at the Arab summit in May should, according to Gewili, be translated into concrete steps by Arab governments facilitating inter-Arab trade and investment. Along these lines, the CAEU is currently considering a proposal offered by Fayza Abul- Naga, minister of state for foreign affairs, to establish a CAEU commission to follow up on the implementation of Arab summit resolutions on enhancing inter-Arab economic relations. How far any of these plans will go, however, is open to question. Of the 22 member states of the Arab League, the CAEU includes only 12 (Jordan, Tunis, Sudan, Iraq, Saudi Arabia, Syria, Egypt, Lebanon, Libya, Yemen, Morocco and Kuwait). Moreover, as demonstrated by the CAEU meeting at the Arab League earlier this month, very few ministers of these member states usually bother to show up. Indeed, Jordanian Minister of Trade and Industry Mohamed Al-Haliyqa, slated to chair the meeting, excused himself and delegated Jordan's permanent representative to the Arab League to run the meeting instead. "The fact that very few ministers participate in the CAEU meetings is very disturbing, simply because it contradicts with the high prominence that we are supposed to be giving to economic issues at this point," Abul-Naga said. The Egyptian minister urged participants in the CAEU meeting to carefully examine the findings included in the report of Gewili and to draft a serious action plan that is consistent with the targets of economic cooperation adopted by the Arab summit and those of the CAEU, especially in relation to considerably increasing the volume of inter-Arab trade within the coming five years. The minister also suggested the establishment of an Arab Fund for Trade and Investment to facilitate this process. The report of the CAEU secretary-general suggests that these trade and economic targets are necessary not only to reduce the high level of unemployment in the Arab countries but also to address the development targets suggested by a 2004 World Bank report in relation to combating poverty, hunger, illiteracy and gender-based discrimination.
