Can the nations of the Middle East navigate this make-or-break decade?

HAFED AL-GHWELL October 31, 2021

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Contrary to numerous forecasts, the world’s emergence from the COVID-19 pandemic was never going to be a smooth transition back to pre-pandemic normality. Instead, energy crunches, supply-chain disruptions, chip shortages and the persistent threat of a rebound in cases of infection are threatening to throw the world into a tailspin.

As a result, the global climate-change agenda is at even greater risk, as it is premised on the world’s economies transitioning to renewables with as little disruption as possible.

However, suppose existing crises — such as global supply chains not recovering until 2022 or regular air travel not resuming for another half-decade — continue to complicate post-pandemic recoveries. In that case, it will imperil shared goals at a time when greater ambitions and bolder actions are needed.

The region and the rest of the world must not relent. Instead, we should view the current crises as an affirmation of the need to build resilience into supply chains, energy transitions and economic transformations, and foster deeper cooperation against common threats to preempt future global crises.

For all its challenges and vulnerabilities, the Middle East and North Africa region lies at the epicenter of these latest developments, given its unique geographic location, a monopoly on maritime choke points, fossil fuel endowments, sun-rich deserts, and relatively young populations, to list but a few.

However, tapping into this potential will require a different kind of leadership and engagement, given the deluge of complications — man-made or otherwise — that are pushing the world closer to the brink.

Previous governments and Arab-world societies had the relative luxury of postponing critical interventions for fear of upending longstanding social contracts built on tenuous compromises between disparate demographics, interests and influences. However, the landscapes in any future post-COVID-19 scenarios have shifted dramatically, hampering much-needed recoveries.

Improved public health is proving especially important for ensuring the sustainability of post-pandemic recoveries in economies that have lost nearly $200 billion since 2019.

Hafed Al-Ghwell

It has also forced a major rethink of accepted modes of solving intractable woes. The undeniable truth is that the region can neither delay responses nor gamble with the odds that the challenges of today are merely brief flare-ups rather than era-defining moments.

As a result, the questions and answers should not focus on when the negative impacts in this make-or-break decade will occur — they have already manifested. Instead, governments, key decision-makers and stakeholders in the Arab world must narrow their priorities to focus on how and what is attainable in the near term. Knee-jerk implementations of whole-of-society interventions that take several years to mature and deliver on their intended objectives will only exacerbate existing problems.

For instance, the pandemic-induced rush to strengthen social safety nets might have extended lifelines to the most vulnerable in COVID-sensitive sectors, but adding more unplanned expenditure to already strained public budgets crowds out other priorities to improve the quality of, and access to, essential public services such as healthcare and education.

Improved public health is proving especially important for ensuring the sustainability of post-pandemic recoveries in economies that have lost nearly $200 billion since 2019.

These kinds of uncomfortable trade offs also appear in plans to boost job-creating private-sector opportunities by loading the scales in favor of local talent over the region’s traditional dependence on expatriates or foreign expertise. On paper, it could help to reduce the region’s dismal youth unemployment figures, and even placate a surging populist movement sparked by a breakdown in the global consensus on labor, trade and investment as countries increasingly look inward.

Surging populism and nationalism are a serious concern given the region’s history of ceaseless conflicts, rivalries and geopolitical tensions, often fueled by cross-border sectarian allegiances that tend to be stronger than national ones.

Setting aside the obvious political and social ramifications, however, a mass exodus of talent will reduce the competitiveness of the region’s economies and the ability of governments to leverage large expatriate populations to attract foreign direct investment inflows at a very sensitive time.

After all, the region will need the expertise, and substantial human capital, to achieve planned reductions in fossil-fuel dependence, while boosting productivity and accelerating transformations to build domestic resilience to external shocks without sparking recessions.

Unfortunately, the region cannot hope to achieve such grand ambitions without revitalizing anemic private sectors that have been hobbled by archaic restrictions and constant undercutting by the preference of governments for insulating inefficient, and often corrupt, state enterprises. An empowered private sector is essential to unlocking the vast potential of disruptive innovations and breakthrough technologies, which require agile players untethered by a legacy of maladaptive thinking or practices.

If the region is to catch up with the pace of change in the rest of the world, governments must no longer resist or ignore the global economy’s wholehearted embrace of disruptive innovation as a driver of growth. Even without major policies, “change” has come and will continue to accelerate, creating new opportunities for agile entrepreneurs while undermining the business models of those resistant to that change.

Governments can facilitate these transformations by incentivizing the creation of new technologies and adopting innovative practices in the public sector and institutions, insulating entire societies from the worst shocks by being highly adaptive to change.

Unlike most other parts of the world, the Middle East is well positioned to reap a demographic dividend from its large youth population, should governments make the right interventions to accelerate the pace of innovation, attract investment and foster growth.

However, such ambitions need precise timing because the faster the world or the region innovates, the more likely it is for automation to wipe out traditional professions and completely redefine the concept of “work” in the future. If that is already a certainty, then a probable solution is investing in delivering high-quality education with revamped curricula to prepare students for a highly digitized world.

However, previous attempts at improving education standards have led to another headache for governments in the Arab world, where thousands of young people graduate from tertiary education each year, only to struggle to find jobs that match their skill sets and academic levels.

Worse yet, this growing problem not only compounds existing unemployment challenges, but will also be challenging to address given the current climate. Governments are, after all, faced with the difficult balancing act of keeping economies afloat by borrowing more. However, this has put pressure on future spending priorities when substantial funding is needed to meet climate goals, accelerate energy transitions, and lead whole-of-nation transformations.

The road that lies ahead is fraught with complex, often contradictory challenges that are difficult for even the most technocratic governments to navigate without risking an implosion at home or becoming prey to nefarious external interests.

Additionally, the longer it takes to address the day-to-day struggles of citizens, the more likely disillusionment and distrust will set in, making it even harder to implement even the most urgent of interventions. Where the public’s trust has dwindled, stagnant economies and an exodus of investors await.

Alternatively, where governments are held in some esteem, which helps maintain social cohesion and deliver an often elusive sense of security, the struggle lies in guaranteeing continued progress amid the current onslaught of external shocks.

• Hafed Al-Ghwell is a senior fellow with the  Foreign Policy Institute at the John Hopkins University School of Advanced and International Studies.

Twitter: @HafedAlGhwellDisclaimer: Views expressed by writers in this section are their own and do not necessarily reflect Arab News’ point-of-view

source https://www.arabnews.com/node/1958396

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