Fostering a vibrant private sector and fluid intra-regional trade in the Middle East will be vital in spurring the kind of growth that will create jobs and stem civil unrest, former US Ambassador to Egypt Anne Patterson said Tuesday.
The remarks came at a 25 February meeting of the newly-established Middle East Commercial Center in Amman, Jordan, organised by the US Chamber of Commerce. Patterson, currently serving as the US State Department’s assistant secretary for Near Eastern and North African Affairs, addressed around 200 regional business leaders and prominent government officials on the need for greater regional economic integration.
In her speech, Patterson pinned much of the blame for the recent instability in the region on a lack of viable opportunities for young people, deeming it “critical that governments provide positive alternatives [for them] – including educations that equip people with marketable, 21st century skills and jobs that offer hope and dignity for a better future.”
As it stands, she said, government economic policies have proved too top-heavy and inflexible to keep up with the pace of change, and discussion of alternative systems has been “muted.” Egypt’s creaky subsidy system was a prime example cited by the former ambassador, which she said “distorts economic choices,” consumes 20% of the government budget, and does not “directly help the poor.”
Governments alone, the assistant secretary said, are not equipped to address these challenges – or infrastructural deficiencies – and cannot rely long-term on assistance from foreign donors to “make up the gaps” in funding. Instead, she asserted, government should “support the building of a vibrant private sector to take on those responsibilities.”
Patterson also noted that while intra-regional trade represents “one of the most promising” potential sources of economic growth in the region, such activity has been “stifled” by tariffs and bureaucratic inefficiencies, leading to greater trade with Europe than fellow states in the region.
“In 2011, trade among Middle East and North African countries accounted for just 10% of total exports,” she said. “During the same period, intraregional trade totalled 25% of total exports within the Association of Southeast Asian Nations and 66% within the European Union. According to some estimates, this lack of integration costs countries around two to three percent of GDP across the board.”
Patterson accordingly stressed the need for easier movement of cross-border trade and investment, which would allow for smoother business integration; such freedom, she said, would help drive regional prosperity. This would also be applicable to energy and water needs, where the resulting boost in efficiency from regional cooperation, she said, could “lower costs for all.”
Meanwhile, Patterson said directing investment towards key industries could “boost an entire market’s productivity and competitiveness,” citing a recent US partnership in the West Bank with Palestinian tech firms that aimed to strengthen connectivity to global markets and knowledge centres.
This was one of several examples Patterson pointed to of American support for regional growth, which she said placed a heavy “focus on generating jobs”. Also noted were Qualifying Industrial Zones in Jordan and Egypt, allowing for duty-free exports to the US; the Overseas Private Investment Corporation, which has offered more than $400m in financing and insurance in Egypt; and support funds for budding entrepreneurship throughout the region.
In terms of facilitating intraregional trade, Patterson said the US is currently assisting customs authorities in expediting the way they process goods.
The assistant secretary also highlighted the potential economic benefits behind a potential Israeli-Palestinian peace deal, which she said would “substantially expand the GDP of both [countries] … encourage investment in the region and help the two countries become integrated players in the regional economy.”
Patterson is a veteran of the region, having served as economic officer and counselor to Saudi Arabia from 1984 to 1988 and US ambassador to Egypt from 2011 to 2013.
During the lead-up to the massive 30 June protests, she drew the ire of Egypt’s then opposition movements by saying that she and the US were “deeply sceptical” of the value of “street action” over the ballot box in enacting political change.
Following the ouster of former president Mohamed Morsi on 3 July, Patterson ended her term as ambassador in August, with Secretary of State John Kerry appointing David Satterfield to replace her temporarily, and nominating her for Assistant Secretary of State for Near Eastern Affairs.