Obama to announce major plan for economic development of Middle East Thursday

Neil Munro White House Correspondent
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President Barack Obama is set to announce a government-directed plan for economic development in the Middle East that emphasizes the role of Western multinational organizations, but that also sidelines the role of companies, ignores the new democracy in Iraq and downplays regional cultural, tribal and religious practices.

“We’re going out of a decade of great tension and division, and now, having wound-down the Iraq war and having taken out Osama bin Laden, we’re turning the page to a positive future for the United State in the region,” said a senior administration official during a 25-minute press briefing on Wednesday that did not include any mention of Islam, the tribal cultures of the region, democracy in Iraq, or the word “company.”

The plan, which Obama will include in his Thursday speech on Middle East policy at the Department of State, calls for at least $2 billion in debt-relief and loan guarantees to be delivered to Egypt, Tunisia and other countries via non-profits, funding agencies and universities.

Obama’s economic agenda for the region will have four pillars, said the officials. Non-profits, think-tanks and universities will help provide better “economic management,” international aid will boost countries’ financial stability, international agencies can help foster “a strong private sector,” and trade-negotiators can help establish regional trading zones, said the officials. “We will galvanize support from the international community… [and] the multinational organizations will have a huge role to play here,” said one White House official.

However, previous aid has had modest effects. Since 1950, the United States provided almost $4 billion to the U.N. relief agency that has fed and housed the Arabs who fled from Israel in 1948, according to an August 2010 report by the Congressional Research Service. Those Arabs have yet to be integrated into Syria, Lebanon, Egypt or Jordan.

Following the signing of the Oslo agreement between Israel and Palestinian groups in 1993, the U.S. has supplied over $3.5 billion in aid to Palestinian groups, the CRS report said. But this month, the Arab government on the West Bank of the Jordan river  announced a power-sharing deal with the Muslim Brotherhood’s Hamas affiliate, which has repeatedly cited religious reasons for its efforts to destroy Israel, and which has repeatedly ignited battles with Israeli defense forces. Hamas currently controls the Gaza Strip.

From 1971 to 2001, the U.S. also donated $25 billion to Egypt, $2.4 billion to Jordan, $470 million to Lebanon and $703 million to Palestinian groups, according to a June 2010 CRS report.

The three administration officials who gave the briefing repeatedly stressed the impact of economics in Egypt and Tunisia, but did not mention the widespread calls for rule by Islamic parties, such as the Muslim Brotherhood in Egypt. “The political movements for non-violent change are rooted, in part, in a lack of [economic] opportunity in the region,” said one official.

In practice, non-economic cultural factors are central to the region’s economic difficulties. For example, Egypt’s dictatorial rulers deregulated the state-controlled economy, so jump-starting the economy by 2004. The country’s economy grew by an average of 7 percent in 2007, 2008 and 2009, and by an average of 5 percent in 2010 and 2011. “Growth in Egypt has picked up steadily since 2004… making it one of the Middle East’s fastest-growing economies,” according to a 2008 report by the International Monetary Fund.

But that economic growth was partly offset by the rapid expansion of the country’s youth population. The expansion was allowed by the arrival of Western health care in the 1960s. Yet women in many Middle Eastern countries — unlike Europe, Latin America and much of China — have yet to reduce their birth-rate, partly because the local culture limits their education and ability to work. In Egypt, 33 percent of the country’s 82 million population is aged less than 15, compared to 23 percent of Tunisia’s 10.6 million population and 20 percent of the United States’ population of 310 million, according to the CIA’s World Factbook.

The officials hinted at the regional cultural and religious factors, such as the limited number of women who work outside the home. The countries differ in their access to oil and their “pace of economic reform… [but] what all those countries share is the untapped population of their people,” said one official.

The officials also tiptoed past the local tribal cultures, which endorse bribery by setting loyalty to extended family networks above a requirement to obey the larger community’s laws. Financial aid, said one official, will be tied to “very strong safeguards against corruption.”

Officials said economic aid will be funneled through international funding-agencies, such as the London-based European Bank for Reconstruction and Development, which is owned by 61 nations. The bank helped Eastern European countries rebuild their economies after the the United States and Europe won the Cold War in 1989. But that transformation was greatly eased because those countries had shared in Europe’s economic, cultural, scientific and legal development for more than 500 years.

In the Middle Eastern countries of Egypt and Tunisia, said one of the officials, “we will ask the [bank] to play a similarly transformative role.”