The Arab Spring, Archaic Statist Laws and Entrepreneurship

As the Arab Spring turns two, job creation offers the key promise of success in post-autocratic societies. While other important lessons could be gleaned from the unprecedented Arab upheavals, economic growth is the most shining one. Unless Washington and other Western capitals understand the criticality of the economic factor and assist in fostering an entrepreneurial environment in these societies, the lofty promise of the Arab Spring will quickly dissipate.

Job creation and economic growth are the litmus test of the success or failure of the Arab Spring. The economies of Egypt, Tunisia, Yemen, and Libya have not rebounded from the upheavals of 2011. The new governments remain bogged down in domestic political tumult and endless debates over the role of Islam in governance. They have yet to provide a hospitable environment for entrepreneurship and innovative start-up initiatives.

Democratic governance will not succeed until the new governments are able to provide jobs to their young job seekers. Arab societies will prosper when the youthful generation, men and women, believe they can attain a hopeful economic future. Political dignity cannot be sustained if the economy remains anemic with high unemployment rates among youth.

Last year the World Economic Forum judged the Middle East North Africa region would need to create 75 million jobs in the next decade just to keep employment with current levels. The private sector, not government, is the primary engine that could attain such an ambitious goal.

New enterprises will not grow if archaic statist laws in Egypt, Libya, Tunisia, and Yemen remain inhospitable to free market enterprises and continue to shackle potential investors. Young entrepreneurs who are willing to take risks in harnessing innovative technologies to start new businesses must have the freedom to explore regional and international avenues in search of capital for their projects without oppressive state interference in their activities and foreign connections.

According to the World Bank, job creation opportunities exist in many fields including transportation, restaurants, health care services, energy and water, commerce, care giving and childcare, printing and publishing, and consumer goods manufacturing.

The good news is that the failure rate of new start-ups in Arab countries in the past half-decade has been relatively small. What is particularly encouraging is that women now own and manage numerous enterprises in the region, ranging from traditional textiles to manufacturing. Maintaining this trend requires a new relationship between the state and the citizenry. Government accountability, transparency, and freedom to do business should underpin the new social contract as post-autocratic societies transition to democracy and private enterprise.

The entrepreneurial environment in the Arab world is currently ripe for growth and expansion. Technology, passion, and people power are driving youthful enterprises in all kinds of fields. Wael Ghoneim, the famed Egyptian Google executive who played a pivotal role in mobilizing for Tahrir Square in January 2011, said the newly acquired freedom to “imagine, dream, and innovate” was at the heart of the rising entrepreneurial spirit among the youth in the Arab world.

A fundamental challenge facing the new governments in the next five years, however, would be to dissuade bright, creative, entrepreneurial Middle Eastern youth from leaving their countries and seeking opportunities in Europe, North America, Australia, and other developed countries. A serious brain drain will be detrimental to the economies of the Arab world.

Economic resurgence offers the West numerous opportunities as well. Enterprising Arab youth have begun to explore new start-up opportunities, which require capital, investment risk taking, freedom from state control, and opportunities to travel abroad.

Western governments will be well advised to maintain a small footprint in domestic Arab economic development. Economic linkages, however, could be done through engaging credible, indigenous civil society and business organizations. Examples of these organizations include Abraaj Capital, ArabNet, and WAMDA. Young Arab entrepreneurs know very well that if they want to dream and create, they will have to connect with their counterparts in the US and other Western countries.

As we move beyond the second anniversary of the Arab Spring, Washington’s long-term relations with the region could become grounded in new concepts of stability and security that are defined by the private sector and entrepreneurial communities of interest. Policy and intelligence analysts should deepen their expertise in the domestic dynamics in new Arab societies. Relying solely on old analytic assumptions often misses the boat, as the failure to anticipate the Arab Spring has shown.

Photo: Passengers wait to board a train at Sadat Station in Cairo, Egypt. Credit: Asim Bharwani/Flickr

Emile Nakhleh

Dr. Emile Nakhleh was a Senior Intelligence Service officer and Director of the Political Islam Strategic Analysis Program at the Central Intelligence Agency. He is a member of the Council on Foreign Relations, a Research Professor and Director of the Global and National Security Policy Institute at the University of New Mexico, and the author of A Necessary Engagement: Reinventing America’s Relations with the Muslim World and Bahrain: Political Development in a Modernizing State. He has written extensively on Middle East politics, political Islam, radical Sunni ideologies, and terrorism. Dr. Nakhleh received his BA from St. John’s University (MN), the MA from Georgetown University, and the Ph.D. from the American University. He and his wife live in Albuquerque, New Mexico.