By Dahlia Kholaif

Hernando de Soto, the Peruvian economist who presides the Institute of Liberty and Democracy (ILD), said in a testimony before the Foreign Affairs Committee of the United States House of Representatives last May that the Arab Spring, which swept the Middle East and North Africa, was the result of economic constraints that drove hundreds of entrepreneurs to the streets in the hope of toppling the origin of constraints at “higher institutional levels”.

In his testimony to the congress entitled The Call for Economic Liberty in the Arab World, de Soto underlined the forms of constraints impeding entrepreneurs operating in the Arab world’s economic environment, including property rights restrictions, which he said prompted a number of Arabs, including Tunisian Mohamed Bouazizi to self-immolate in December 2010, sparking the Arab Spring.

In spite of the conventional wisdom in the west that ordinary Arabs did not want to be in the market, ILD’s research had found that MENA economies were “in the midst of a transition from a pre-market to a market order, and the crucial element to the success of that transition was giving ordinary people easy access to legal property rights.”

According to the ILD’s research into the history of economic growth, property rights “was one of the principal reasons why Western entrepreneurship has triumphed for the past 150 years.”  Entrepreneurship, he explained, is about “making valuable combinations” of persons and things. What allows entrepreneurs to do that, de Soto told members of Congress, is property and business law.

In his testimony, in which he was to showcase the economic causes of the unrest in the Middle East and North Africa and determine whether US investments ($1.5bn to date) have any chance of advancing democratic and economic aspirations, de Soto conveyed to his audience what it is like to try to do business in the Arab world, without property rights. “Imagine if Bouazizi reincarnated in your congressional hearing with a degree in institutional economics,” he asked his audience. Arguing the conviction of most policymakers in the US and Europe who saw Arab world revolutions as a problem, de Soto said unrest is “an unprecedented opportunity to remove the constraints to broad-based economic growth in MENA,” contributing to peace in a region.

The ILD, which is headquartered in Lima and has worked in the MENA region for the past 12 years, including 20 months investigating the underlying causes of the Arab Spring, is currently engaged with a number of Arab governments and private sector business organisations in the region to implement reform strategies tailored to their situations.