Oil And Gas Account For 90% of US Imports from Middle East, US Should Diversify And Strengthen Economic Ties Following Arab Spring

This discussion is a warm-up for the AIDemocracy 2012: Challenge Accepted conference, taking place April 14-15 on the campus of George Washington University in Washington, DC.

In May of 2011, the President wisely argued that “energy now needs to be channeled, in country after country, so that economic growth can solidify the accomplishment of the street. For just as democratic revolutions can be triggered by a lack of individual opportunity, successful democratic transitions depend upon an expansion of growth and broad-based prosperity.” Empirical evidence has borne out what we logically know to be true. Those countries that are able to build successful, open, and stable democratic societies, do so in large part by building strong economies with robust markets, expanded trade, and broadly-shared economic benefits.

US policy should be directed intensely toward the development of human capital, democratic institutions, broad-based economic opportunities, and the entrepreneurial culture needed to support a vibrant and democratic political life through out the Middle East and North Africa. Elections are not enough. Not by a long shot. The UN’s Arab Development Report makes clear that the economic changes needed to support these democracies are, in fact, quite revolutionary themselves. Before the Arab Spring, the “dominant form of the social contract in the region [was] one where the population resigns itself to lack of political freedom in exchange for provision of certain services and exemption from or low taxation.” The hard work of changing this culture will be done in large part by local stakeholders, but needs to be supported by a holistic strategy of US economic engagement.

Currently, Oil and gas account for over 90% of US imports from the region and US investment has been largely confined to the energy sector. Growing that economic relationship will be essential for addressing the fact that the next generation of Arab leaders and citizens have yet to realize the gains of globalization. Over 50% of the population in Arab countries is under the age of 30, yet they suffer the highest unemployment rate in the world, breeding discontent and frustration. Their energy needs to be channeled into productive economic opportunities so that they can support their families and develop a real stake is building and maintaining liberal, democratic societies.

Aid, like elections, is not enough. We must support a robust program of economic engagement that increases trade and develops strong, properly regulated markets. We should work to lower and eliminate barriers to trade, reduce corruption, create training and exchange opportunities for government officials, and provide the technical assistance needed to expand the opportunities for economic development. We must also work with these transitional countries to create a climate of openness and rule-of-law that fuels foreign and domestic investment, entrepreneurism, and popular civic engagement. At the same time, we will need to demonstrate patience with these young democracies. We should expect occasional road bumps and be prepared for their governments to reflect their diverse and particular societies and cultures. But we will need to resist calls to withdraw and disengage in response to setbacks like the NGO detentions in Egypt. If we desire to see the Arab Spring lead to long-term democratization and liberalization, we must become fully committed to implementing the economic policies that will make that possible.