The Arab Economic Summit is set to be held next week despite Israel's aggression on Gaza, Niveen Wahish looks at the agenda and sounds out expectations The decision is final: the Arab Economic Summit will be held as scheduled on 19-20 January in Kuwait. Ongoing massacres in Gaza and the failure of Arab leaders to come together against the Israeli aggression had initially cast doubt on whether it was the right time to convene. But this week Amr Moussa, Arab League secretary-general, assured a gathering of high-profile media representatives that holding the summit as originally planned was very important. "The issues that will be tackled by this summit are of no lesser importance than political issues," Moussa said. "We will not forfeit the reform and development of the Arab world on any political differences," he said in reference to differences that had kept an emergency summit on Gaza from taking place. "There are a lot less sensitivities on the economic front." On a similar note summit coordinator Mervat El-Tellawi pointed out to the same gathering that economic and social issues are the basis for Arab security. The issues on the agenda, according to El-Tellawi, "are not less important than war for the future of this nation." Nonetheless, Arab leaders will not be turning a blind eye to events. "It is a chance to discuss the current situation. That is essential and goes without saying," said Moussa. Such discussions are expected to take place on the fringe of the summit and will not form part of the agenda. While the summit has set for itself several broad targets, including boosting economic and social inter- Arab cooperation, increasing cooperation with other regional blocs, setting out programmes and mechanisms to activate comprehensive development strategies, it has major hurdles to tackle such as unemployment, deteriorating standards of living, weak inter-Arab trade and investment, the Arab brain drain and a weak infrastructure. The summit agenda will examine inter-Arab cooperation in the areas of trade and investment, infrastructure, education, health, unemployment and poverty. It will also scrutinise the effect of the financial crisis and coordinate how it can be dealt with. Furthermore, it will look at future challenges of reform and modernisation in the areas of food and water security, technology and scientific research, climate and energy. "Directing attention to reform and modernisation is a qualitative change in the way Arab leaders are thinking," said El-Tellawi. This summit is being marketed as different not only because it is the first summit to dedicate itself to economic and social issues and more than a year of preparation that has gone into making it happen, but also in terms of the involvement of the private sector, civil society and thinkers. Two days prior to the summit a forum will be held bringing these stakeholders together. The conclusions and recommendations of this forum will be presented to Arab leaders during the summit. Samir Radwan, board member and advisor to the General Authority for Investment and Free Zones, is satisfied that the summit will go ahead as planned. "The economy is just as important as politics and each should continue on its track," he said, pointing out that had members of the European Union let political differences get in their way, there would be no common market today. Still Radwan stressed the importance of political will in order to ensure this summit is a success. He believes that "amidst this global financial crisis we are in dire need of this gathering". He hopes that Arab countries will have learnt a lesson and will redirect their investment towards the Arab world. "The future of the nation lies within," Radwan said. Thus food security can be achieved, for instance, if we invest in Sudan. Mohamed Fahmi, vice-president for corporate strategy of Logic Management Consulting, also believes that rich Arab countries need to rethink how they deal with the mid-level to poor countries. As a businessman he lamented the fact that foreigners enjoy privileges in Gulf countries that Arabs do not across a broad spectrum ranging from entry visas to trade and right of establishment of companies. Moreover, as far as his line of business is concerned, he says that the transfer of knowledge from Arabs is not appreciated, while foreign expertise is preferred. In addition, Fahmi sees a need for institutional clarity, transparency and consistency if there is a real will to create economic integration. "Businesses need clarity to be able to plan 10 years ahead," he said. While the picture may not be rosy, Gamal Bayoumi, head of the Arab Investors' Association, likes to think positive. He says that much has been achieved in the process towards setting up a free trade area. "Today 17 Arab countries exchange goods at zero tariffs," he said. However, inter-Arab trade remains at 11.4 per cent of total Arab trade. This Bayoumi attributed not only to the fact that often non-tariff barriers are used to prevent entry of goods, but mainly because 70 per cent of what Arabs import is not produced in the Arab world to begin with. "This calls for a need to change the production structures; to produce heavy machinery, equipment, trucks and ships," he said, adding that the Arab world imports between $18-20 billion worth of food commodities annually. Bayoumi also underlined the importance of investing in agricultural countries such as Sudan, Egypt, Syria and Morocco as the Arab world's food basket. He does not believe that the summit adopting a series of projects is a solution. "We have to create the environment that would make projects multiply all by themselves," he said. Bayoumi wishes on the long term to see an Arab world where there are no borders and where not only goods, but also services are allowed to flow freely. To achieve that he pointed out that on the medium term Arab countries need to reform and on the short term need to tackle bottlenecks, and allow for mobility of individuals, facilitate investment, trade and labour movement. In fact labour is one of the most important issues experts believe need handling. Ahmed Galal, managing director of the Economic Research Forum, says that when Arabs talk about liberalisation, they generally refer to goods only. In his opinion Arab integration has been on the books for 50 years to no avail, they need to go about it differently to succeed. "If the Arabs want a rewarding agreement, they need to free labour and capital movement," Galal said. He pointed out that studies show that the gains from labour and capital movement are 25 times more than liberalisation of movement of goods alone. He questioned why Arabs are not seriously doing something about this particularly since it is already taking place but in a distorted and poorly-regulated fashion. The same goes for the flow of capital. "There is an imbalance between countries with excess capital, namely the oil-rich Gulf, and others starving for capital," he said. The latter needs each country to reform its investment climate. And Arab sovereign funds must take more interest in regional projects. In addition Galal believes that without creating institutions similar to those of the EU to oversee the implementation of the whole process, "nothing much will happen."
