Isobel Coleman

Democracy in Development

Coleman maps the intersections between political reform, economic growth, and U.S. policy in the developing world.

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The G8 and Arab Democratic Transitions

by Isobel Coleman
May 27, 2011

Heads of state and world leaders arrive for the G8 summit in Deauville, France, May 26, 2011 (Yves Herman/Courtesy Reuters).

Yesterday at the G8 meeting in France, the big announcement from the assembled leaders was the launch of the “Deauville Partnership” (referring to the seaside resort where the meeting was held) to support democratic transition in the Middle East through increased economic engagement.

The Deauville Partnership picks up where Obama’s speech on the Middle East last week in Washington left off, with a promise to support “partnership countries” (Tunisia and Egypt being the first two) in the “economic and social reforms they will undertake, particularly to create jobs and enshrine the fair rule of law, while ensuring that economic stability underpins the challenge of transition to stable democracies.”

Echoing Obama’s speech, the Deauville Partnership commits to working with Middle East governments on economic reform—particularly on improving transparency, governance and accountability. It also reiterates Obama’s call to foster more regional and global integration on trade. But economic reforms and trade agreements take a long time to structure and even longer to generate tangible economic gains. The Middle East needs immediate assistance. In recognition of this, the G8 leaders called upon the multilateral development banks to mobilize significant resources in support of Arab countries struggling their way to democracy.  While some news headlines declared that as much as $40 billion has been pledged to promote economic stability and growth in region, how much of that is actually new money is not clear. Earlier this week, the World Bank announced up to $4.5 billion in new lending to Egypt and an additional $1 billion for Tunisia. The European Investment Bank said it would provide another 6 billion Euros by 2013. The G8 also called upon the European Bank for Reconstruction and Development (EBRD), which has focused on rebuilding the economies of Eastern Europe in the post-Cold War period, to extend its geographic reach to the Middle East. The EBRD has indicated that it could extend up to $2.5 billion in new loans to the region. The IMF has said it could make as much as $35 billion available in loans, but some of that has already been announced.

Given the domestic economic challenges facing the leaders of the G8, these new multi-billion dollar commitments to the Middle East reflect the deep concern they share about the vulnerability of the democratic transitions taking place. The European leaders of the G8 understand that economic meltdown in North Africa puts enormous demographic pressure on them. Already, Italy and France are experiencing waves of desperate refugees from Tunisia and Libya. The longer the unrest continues, the more likely the immigration problem is to explode. More broadly, the Deauville Partnership recognizes that economic engagement is the best way for G8 countries to help coax the Arab transitions in positive directions. Whether these new commitments are sufficient to make a difference remains to be seen. The IMF released a new report at the G8 meeting estimating that the oil-importing countries of the Middle East could require as much as $300 billion to meet their external and fiscal financing needs just in the next two years. The Deauville Partnership, and all these other commitments, are helpful, but only a start.

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