Robert Hormats: An Economic Perspective on the Arab Spring

January 30, 2012

On January 23, 2012, the Stimson Center hosted a panel discussion as part of a new project “Pathways to Progress: Peace, Prosperity and Change in the Middle East,” a joint initiative between the Stimson Center and the George C. Marshall Foundation. The initiative seeks to understand the dynamics propelling change in the Arab world and develop an integrated approach to address the many opportunities and challenges now facing the region. The opening panel featured Mona Yacoubian, Director of the Pathways to Progress project, and the George C. Marshall Foundation’s Olin Wethington, who served  as an Egyptian elections observer with the International Republican Institute. Ambassador Thomas R. Pickering then introduced the afternoon’s keynote speaker, Robert D. Hormats, Under Secretary of State for Economic Growth, Energy, and the Environment. Stimson Center President and CEO Ellen Laipson moderated the event.

In her remarks, Mona Yacoubian emphasized four key aspects of the Arab Spring uprisings: 1) the protest movements constitute  a watershed moment for the region,; 2) three trajectories of change are apparent: peaceful popular uprisings (Egypt, Tunisia), violent uprisings (Syria, Yemen, Libya), and  preemptive government reforms (Morocco, Jordan); 3) Egypt and Syria will exert a disproportionate influence over the region’s future; and 4) significant challenges could derail the region's transitions including heightened sectarian tensions, widening socioeconomic divisions, civil war, and resurgent authoritarianism. Yacoubian said the Pathways to Project initiative seeks to distill the ethos of the Marshall Plan into an Arab context  by focusing on regional economic integration; engaging the region’s organic entrepreneurialism; emphasizing multilateral cooperation and partnerships; utilizing a holistic whole-of-government approach; and maintaining an open dialogue with actors in North Africa and the Middle East as the region continues its transformation.

Olin Wethington discussed his recent experiences observing Egypt’s parliamentary election, addressing post-election governance as well as the country’s economic outlook. Wethington predicted that the Muslim Brotherhood will seek to end Egypt’s tradition of an all-powerful presidency but maintain a strong interest in the election's outcome. He added that although the Egyptian military may not nominate a candidate, the military’s interests will have to be accommodated in the selection of a viable presidential candidate. Turning to Egypt’s economic prospects, Wethington opined that no parties in the recent parliamentary elections offered a vision for economic growth and job creation. To end the country’s current economic malaise, he suggested there must be a return to the rule of law; settlement of wrongs committed during the Mubarak era; a parliamentary coalition with the capacity to govern; and acceptance of emergency foreign assistance by Egypt’s new government. Lastly, Wethington asserted the effort to restore stability to Egypt is primarily a domestic issue, rather than a matter of ensuring sufficient international support.

In his keynote address, Under Secretary Hormats noted that the historic events of the past year had shattered many “myths.”  These misconceptions include notions that governments can hold onto power without recognizing or responding to the aspirations of their people, violence and conflict are the only pathways to  change , and economies concentrating wealth in the hands of a few can lead to inclusive growth. Emphasizing that the United States must steadfastly support the region’s ongoing political and economic transition, Hormats cautioned that the U.S. cannot impose its values and ideas, insisting that change must instead come from within the Arab world. He highlighted components of economic development necessary to sustain the region’s recent social and political gains. Those key elements include stimulating economic growth through the development of small- and medium-sized enterprises; reforming the educational system to foster scientific innovation and better prepare young people for existing jobs; decreasing nations’ reliance on natural resource exploitation as a primary component of economic activity; and restoring stability to the region’s crucial tourism sector, which has been heavily damaged by recent unrest.      

In terms of engaging the region going forward, Hormats discussed the idea of a Marshall Plan for the Middle East, noting that certain aspects of the Marshall Plan for Europe can be transposed to the region. In particular, he cited the precedent established by the Marshall Plan in creating greater regional integration and encouraging internal reforms within rebuilding countries. He went on to highlight the various ways the G8’s Deauville Partnership might also help bring stability to the region, such as through the creation of a trade and investment platform to facilitate he region’s economic integration.  Hormats concluded by stating that despite resource constraints,  the United States and the global community must creatively use available financial instruments to assist transitioning Arab countries, an approach that has already begun yielding positive results in Tunisia and Egypt.

Mona Yacoubian is available to discuss the Pathways to Progress initiative, as well as ongoing developments in North Africa and the Middle East. If interested in arranging an interview, please contact April Umminger at the Stimson Center at aumminger@stimson.org .