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WEF EXPLORES REGIONAL CHALLENGES
BY RÉHAB EL-BAKRY
The World Economic Forum (WEF) returned to Sharm Al Sheikh this year under the theme “Learning from the future.” The Geneva-based organization’s regional forum for the Middle East, last held in the Red Sea resort city in 2006, drew representatives of governments, the private sector and think tanks from around the region – and the world.
With over 1,500 delegates on the guest list, organizers were eager to try a new format. Simultaneous work sessions and roundtables were designed to allow for more interactive dialogue, while special sessions discussed global scenarios and their consequences for the region.
In closed sessions, forum delegates sought ways for the present to learn from the future, whereas previous meetings aimed to learn from the past. “We wanted to try something different this time around, where we have developed three different possible scenarios for the global future and we are asking delegates to discuss what are the decisions that we need to take today in order for these scenarios to become a reality,” explains André Schneider, the WEF’s managing director and chief operating officer.
The WEF posited three scenarios for the world in 2025. The first is a “hyperlinked world,” where advancement in technology and infrastructure facilitates development of the information technology sector. Businesses, governments and citizens access information, obtain services and conduct transactions remotely. Due to the nature of the hyperlinked world, geography and regions are no longer of any significance.
The second scenario is a “sustainable world,” where rapid industrialization and strains on natural resources take center stage. Food and water shortages continue to define the way the world functions and influence the role of the Middle East region. Environmental challenges force changes to the way industries, governments and citizens operate.
The third scenario is a “multipolar world,” where the center of the global economy rests in the East. Investments flow from the new economic powers of the East to other parts of the world, putting the Middle East in the center of the international investment map.
While delegates engaged in dialogue behind closed doors about the possibilities and challenges the region could face adjusting to the different scenarios, open sessions featuring regional and international speakers highlighted the challenges currently facing the region on the political, economic and social levels.
As is the tradition with WEF meetings, the list of speakers read like a who’s who of the international, regional and local communities. The forum kicked off with speeches by Egyptian president Hosni Mubarak, US president George W. Bush and the King of Jordan, Abdullah bin Hussein. The three leaders highlighted their concerns for the region and described the global changes that are impacting the lives of individuals in the region and the world. While their speeches set different priorities for the region, they were in agreement that the biggest challenge to the Middle East’s stability and development is – not surprisingly – the Israeli-Palestinian conflict. “A comprehensive peace, and a sustainable and fair resolution to the Palestinian-Israeli conflict... is the key to stopping international terrorism,” Mubarak stated.
The politics of the region dominated many of the sessions, particularly issues related to the Israeli-Palestinian conflict, Iraq and Iran. Arab leaders emphasized that resolving these conflicts would stabilize the region and promote economic growth.
On the economic front, Mubarak saw the greatest challenge to the region in the form of rising food prices. Much of the blame for skyrocketing food prices, he said, falls on countries that are using grain – a staple foodstuff to millions in the developing world – to generate biofuels for their cars. “We can’t allow millions to starve because of the unavailability of food, or [support] increasing prices of food that result from the production of biofuel by a few countries,” he said. “The international community must bring this to an end.”
Bush disagreed, arguing that each country has to determine its own energy policies in order to protect the environment and to make fuel available at prices that suit its own needs.
The issue of rising food prices and inflation was a recurring one during the three-day conference. The price of basic foodstuffs has nearly doubled during the past year, led by sharp rises in cereal crops such as wheat, corn and rice. Rising food prices have caused runaway inflation in many countries in the Middle East, and have generated a public outcry as salaries fail to keep pace with cost of living increases.
But the primary causes of inflation vary from country to country, analysts said. In countries with high per capita income, such as those of the Gulf Cooperation Council (GCC), inflation is mostly the result of the economic boom these countries are experiencing as a result of high oil prices, which has provided excess liquidity. Other countries in the region, such as Egypt, are experiencing high inflation due to rising international commodity prices.
“Inflation is being imported,” said Youssef Boutros-Ghali, Egypt’s finance minister. “To combat it, we cannot use traditional tools. But this doesn’t mean we cannot adjust [policies] to protect lower-income citizens.” He argued that countries in the region need to accelerate economic liberalization and adopt prudent economic policies in order to combat poverty and close the gap between the rich and the poor.
The sentiment was echoed by Mohamed ElBaradei, director general of the International Atomic Energy Agency (IAEA), who believes that poverty is the biggest threat to the region and that it is the responsibility of government, the private sector and civil society to work together to alleviate it. “Poverty, to me, is the most powerful weapon of mass destruction,” he said.
The private sector was called on to participate in resolving many of the regional and national issues that were raised in the sessions. It was also deemed integral to solving the poverty issue. Participants wondered, however, whether businesses in the region had recognized their role, or even cared.
Egyptian prime minister Ahmed Nazif pointed out that the while some members of the private sector in the region have come to realize that their investment in society is an investment in their own future, the concept of corporate social responsibility (CSR) is still poorly understood. Members of the business community often donate money, but they rarely engage in sustainable activities that go towards bettering and developing the community in the long run, he said.
“There are a lot of companies that engage in charity, but that is part of the problem – it’s charity that may not help the development [of the economy] in the long term,” Nazif said. He urged more members of the private sector to get involved in the long-term development of their communities. “Private businesses have to be engaged in this. No one can take care of the whole package.”
This year’s regional forum ended with recommendations for further engagement by all actors involved in order to help the region achieve stability and economic growth. Problems must be addressed quickly, as the ever-changing world will not wait for the region to play catch up.
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THE LEARNING CURVE
One of the biggest issues raised during the World Economic Forum’s regional meeting in Sharm Al Sheikh last month was education reform – an area where the region continues to lag behind the rest of the world. Experts have consistently identified education reform as a priority for the region with the emphasis placed on the need for better-trained teachers, more relevant curricula and the further inclusion of women.
Members of the Middle Eastern business community pointed out during the WEF meeting that many graduates from schools and universities in the region do not possess the skills needed by the private sector. Fadi Ghandour, founder and CEO of Aramex International, a global transportation and logistics firm, cited a recent McKinsey survey of university graduates working in 400 companies in the Middle East. “They found that 63 percent [of those surveyed] lacked basic skills for their jobs, 57 percent lacked practical skills and 48 percent lacked communications skills,” he told Business Monthly. “If the region is going to create 100 million new jobs, the private and public sectors will have to work together to improve education dramatically.”
He also noted that the survey found that those who become teachers are typically those who finish in the bottom 25 percent of their graduating class, a fact that he saw as a reflection of the state’s apathy in selecting who will teach future generations. “We have dropouts teaching our children. This is unacceptable and has to change,” he says. Moreover, governments in the region must exert more effort to identify the skill sets demanded by businesses and include the appropriate training in their curricula, Ghandour says.
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