29-JAN-02
"Another World" Could Be A Lot Worse
Anti-globalization demonstrators are attempting to reconstitute their crumbling movement this week in New York during the World Economic Forum meeting. Recognizing, perhaps, that the harsh anti-capitalist and sometimes anti-American rhetoric of past demonstrations would not meet with much success, these activists are employing the slogan: "Another World is Possible." They're right, of course. But they should think hard, because if their ideas went into effect -- restricting international trade and investment, and weakening institutions like the WTO, IMF and World Bank -- that other world might look a lot like the Middle East.
With a few exceptions -- Israel, Jordan, Turkey -- Middle Eastern governments have set an economic course very close to that recommended by anti-globalization groups. In a recent policy report, the Progressive Policy Institute's Ed Gresser notes a series of policies that have left the Middle East economically fragmented and isolated:
* More than half the region's countries remain outside the World Trade Organization; as a result, they are vulnerable to arbitrary trade discrimination, and the goods and services they would like to export receive little attention in global trade negotiations.
* Already painfully lacking in economic integration within the region, Middle Eastern countries have been further isolated by a long series of events dating back to the 1970s: the boycott of Israel, the Iranian revolution, the Gulf War, Libyan support for terrorism, and the Algerian civil war, to name just a few.
* The policies of individual countries remain restrictive, with tariffs commonly averaging 20 percent, non-tariff barriers like import licensing and restrictions on foreign investment are common.
The economic and social results of Middle Eastern resistance to globalization have been calamitous, and are especially striking when compared with the policies of regions like Central America and Southeast Asia, which have overcome long-standing internal and external conflicts in part by taking advantage of the world economy to stimulate job creation and growth.
Since 1980, as the population of the Middle East has grown by nearly half, its share of world trade and investment has collapsed. Twenty years ago, the Middle East had about one dollar in seven of world exports; now the figure is about one dollar in twenty-five. Today, Cambodia is a more successful exporter than Lebanon; El Salvador, with a population of 6 million, exports nearly as much as 65-million-strong Egypt. Since 1985, Singapore alone has received more foreign investment than the 22 Arab League members, Iran, Pakistan and Afghanistan combined.
This in turn means the region has been unable to create jobs and opportunity for a rapidly growing population. New apparel factories and semiconductor plants have enlivened modern Central America and Southeast Asia. But the stagnant economies of most of the Middle East are still typified by groups of young men sitting around city squares, unemployed and wondering whom to blame. Such an environment is one in which religious extremism and virulent nationalism find a ready audience.
Two practical points emerge from these facts.
First, American policymakers can recognize an option for the Middle East that remains untried.
American experts on the region often argue that the region's endemic tension and violence is rooted entirely in history, culture or responses to American foreign policy, leaving little hope for improvement. But problems rooted at least in part in mistaken economic policies can, with some effort, be fixed -- not, of course, as a substitute for the campaign against terrorism or the regional peace process, but as a complement to both.
Sen. Joe Lieberman, in his groundbreaking Middle East policy speech last month, proposed a way to help, in the form of a trade preference program for countries in the region committed to peace and reform, similar to the African Growth and Opportunity Act adopted in 2000. The idea would be to open American markets more fully to goods from these countries, helping them attract investment, create jobs, and thus reduce the appeal of extremism. It's an idea well worth trying, especially at a time when most people seem to have run out of ideas for the Middle East altogether.
Second, the anti-globalization activists assembling in New York should think again. They have at times raised problems -- of human rights, labor standards or environmental protection -- that deserve attention. But the experience of the Middle East shows that the closing of markets, the reduction of investment in developing countries, and the weakening of international economic institutions will probably intensify and multiply such problems.
Another world is certainly possible -- but let's make sure it isn't worse than the one we've already got.
Readings:
"Draining The Swamp: A Middle East Trade Policy to Win the Peace," by Edward Gresser, PPI Policy Report, January 18, 2002: http://www.ppionline.org/ppi_ci.cfm?knlgAreaID=108&subsecid=127&contentid=250059
"Winning the Wider War Against Terrorism," Speech by Joe Lieberman, January 14, 2002: http://www.ndol.org/ndol_ci.cfm?contentid=250015&kaid=106&subid=122
"Anti-globalization Movement Grinds to a Halt," by Edward Gresser, Editorial, January 18, 2002: http://www.ppionline.org/ppi_ci.cfm?contentid=250139&knlgAreaID=108&subsecid=127
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