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“Markets, Civil Society, and Democratic Change in the Middle East”
Hudson Institute
Wednesday, October 2 10:00 AM
1015 15th St NW #600 Washington, DC 20005
The Hudson Institute hosted a panel discussion entitled “Markets, Civil Society, and Democratic Change
in the Middle East” on Wednesday, October 2. It was moderated by Husain Haqqani, the Hudson Senior
Fellow and Director for South & Central Asia programs; and featured Abdul Wahab Al Kebsi, Regional
Director for Africa and MENA at the Center for International Private Enterprise; and Isobel Coleman,
Senior Fellow and Director of the Civil Society, Markets, and Democracy Initiative; Director of the
Women and Foreign Policy Program.
In his opening remarks, Hassan Haqqani contemplated the possibility of free markets promoting
democratization across the Arab world by posing the question: “to what extent can free markets and
the encouragement of a free market economy help change society?”
Abdul Wahab Al Kebsi began by outlining three myths of Arab economies.
1. A market economy relies on the existence of private enterprise.
2. The business community is a monolith
3. Government hinders market economic growth
Elaborating on the first myth, Abdul Wahab spoke of the illusion of what appears to be wealth in Egypt
saying, “there is a lot more than there used to be 10, 20 or 30 years ago.” Yet, he noted that, along with
this economic growth, Egypt has experienced an increase in poverty due to the lack of economic
inclusivity. Abdul Wahab expressed no surprise of the inability of macro-economic growth to result in
raising the standard of living in Egypt as macro-economic growth was mainly driven by privatizing
Egyptian state owned companies. However, privatization did not lead to the development of a market
oriented economy which is most capable of further driving the economy.
On the second point, Abdul Wahab divided the business community into state owned industries, crony
capitalists, and the entrepreneurs which make up the informal sector in the Arab world. He highlighted
differences between the different entities of the “business community” highlighting that each entity has
different and even conflicting interests.
Lastly, Abdul Wahab opposed the notion that government involvement impedes the development of a
strong market economy. He maintained that, “without the government providing the proper legal and
regulatory environment for growth, making sure there is anti-trust laws so we don’t have
monopolies, [protecting] consumer rights, and [enforcing] the rule of law,” a healthy market economy
can never develop in Egypt. Abdul Wahab argued that economic rights and civil rights are granted and
protected by the same institutions since, “the same infrastructure that insures democracy and
democratic behavior also insures a market economy.”
Isobel Coleman began by pointing out that the Arab Spring was mainly staged across the non-resource
countries of the Middle East due to strong economic grievances. She asserted that, since the toppling of
long time dictators, the Middle East “has been going through an economic crisis”. Coleman saw the
absence of democratization and political instability as major impediments of economic growth saying,
“the war in Syria is hurting Turkey’s economy, Lebanon is very fragile, and Iraq has not rebounded”
especially since many of the Arab economies rely heavily on tourism and foreign direct investment.
However, she left room for optimism saying that “if you look at countries that have gone through deep
reforms, they have more often come out of crisis than out of a period of growth” continuing, “Brazil,
Mexico, their reforms came out of the Latin American debt crisis, Indonesia really came out of the
Asian financial crisis.”
Coleman pointed to the many untapped resources in the Middle East which could be used to advance Arab
economies. She pointed to Egypt, “where more than 50 percent of employment is in the non-formal
economy and 80 percent of entrepreneurs operate in the informal economy.” Their limit to the
informal sector makes those businesses impossible to enhance and develop. She also agreed that resources
should be diverted away from the “bloated and inefficient subsidy system” and towards investment in
the private sector. Additionally, she was perplexed by the youth bulge being perceived as “scary” when
in fact it is an opportunity for growth since “youth offer so much potential.” Asserting that these
potentials can only transform into realizations through a market economy she feared that countries would
“throw the baby out with the bath water,” in reference to Egypt where privatization and market reforms
are seen as corruption tools used by Hosni Mubarak and the National Democratic Party.
Coleman went on to emphasize the role that an effective civil-society can play in facilitating such
transformations by “holding the government accountable for what it said it was going to do”
mentioning Indonesia “where civil-society played an active role in fighting corruption.” Civil-society
is able to demand serious institutional changes such as budget transparency so that “you can track where
the money goes and how it is spent for greater accountability.” Coleman expressed deep concern over
what seems to be an attack on NGOs, especially in Egypt, where many such institutions have been
targeted.
The question and answer section of the panel discussion mainly focused on the role of culture and
education in supporting or obstructing economic and political progress.
The moderator directed the first question at Abdul Wahab asking him “why Saudi Arabia imports skilled
labor although it maintains an educated and unemployed labor market?” Abdul Wahab responded,
“since the Arab revolution of Nasser students were trained to become good government employees
instead of respond to a market need,” meaning students are not able to meet those needs. Abdul Wahab
also discussed the obstacles of reforming the educational system as it has developed into an incredibly
political and security related institution.
Hassan Haqqani asked the panelists to elaborate on the extent to which the Turkish experience with
privatization and neo-liberalization provides a model for the Arab countries of the Middle East. Isobel
Coleman commented that Turkey’s willingness to embrace a market oriented economy was shared by the
Muslim Brotherhood in Egypt; while, the military looks to preserve a state centralized economy. Abdul
Wahab cautiously agreed with Coleman’s conclusion in fear of oversimplifying the comparison between
the two countries. Abdul Wahab clarified that “back in the 1940s and 1950s Egypt and Turkey were
similar, you could compare them but over the past 70 to 80 years things have changed dramatically”
referring to the dramatic political, economic and social changes that occurred over the last few decades.
He accentuated the difference saying, “Turkey’s number one export to Europe is cars, not fruits and
vegetables.” He continued, “Turkey is an industrialized country that went through a democratization
process” and asserted that “Islam in Turkey is not Islam in Egypt.” He supposed that Arab countries should
“emulate the process of reform that took place in Turkey not the end result.”