Where do Arab countries stand in today’s global economy?
Taken together, the 22 Arab economies contain two-thirds of the world’s oil reserves. They also have a long entrepreneurial tradition and many highly-skilled people. These are among the solid reasons why the Arab countries have the potential for strong economic performance. Nevertheless, there are a number of factors that weaken their ability to integrate with the global economy, the first of which is the slow and sluggish course of economic integration & low Intra-trade and investments. This makes the Arab region more vulnerable to external crises, at a time when it is already suffering from structural obstacles as a result of this weakness by itself. This is besides lagging in pace with the Fourth Industrial Revolution, except for few countries, which is imminent to curb rising poverty and unemployment rates & to become a region that can create more value. This is very important, for it is the needed basis for sustained economic expansion. Without stronger, broad-based growth, how will Arab countries be able to create enough jobs which are likely to intensify? And without stronger growth, how will Arab countries have the resources to upgrade their economic infrastructure, address the problem of water scarcity, or meet the health, educational, housing, and other needs of their growing populations?
How do you assess the Arab countries performance in dealing with the current global economic challenges?
Responses to the present challenges are quite diverse. Certainly, it is encouraging to see that some countries in the region have made considerable headway in stabilizing, reforming, and opening up their economies. Yet, in 2022 all countries of the region are facing added pressures from climate change and rising prices, against a backdrop of uneven economic growth. Extreme heat, sustained drought, and the risks of water and food shortages could add to the burdens of multiple pressures.
The biggest challenge now is to make substantial progress in keeping up with digital technologies. A recent UN survey shows that contrary to global trends, the Arab region is still based on traditional skills and has not succeeded in attracting and creating future job skills, such as artificial intelligence, cloud computing, block chains, machine learning and other skills. If this continues, the opportunity for a successful structural transformation from traditional sectors may be missed, leading to deepening of structural unemployment.
How technology & climate change are affecting business in the Arab world?
The accelerated digital transformation & existential threat of climate change have profound impacts. Now digital communication & sharing of information are critical for every business. Today’s environment offers more ways than ever, and the technology available makes it faster, easier, and more efficient. AI is reshaping the world in business and consumer markets. Companies of all types, whether private, public, nonprofit, or startup, continue to recognize the bottom-line benefits of integrating digital work into their business. The rapid advance of technology will not slow any time soon. Businesses that fail to adapt will find themselves left behind, while the perceptive ones who learn to keep up will reap the rewards.
On the other hand, a large gap in climate finance is yet to be closed in order to meet the needs to green economies and to adapt to the inevitable impacts of climate change. Priority areas for adaptation include the water and agriculture sectors and coastal zones. Priorities for measures to cut greenhouse gas emissions include energy efficiency, renewable energy, public transport systems and waste management.
Given the current local, regional & global challenges, how can the Arab world achieve real progress towards Arab economic integration?
The Arab countries have not managed to tap the potential returns from intra-Arab economic integration in the form of faster growth and strengthened resilience to the impacts of economic crises that have their origins outside the region. The trade links between Arab countries remain marginal and are progressing rather slowly due to significant trade barriers that are stagnating PAFTA. The way forward is to adopt a realistic and gradual strategy that is armed with the tools of 4IR to achieve Arab economic integration that is essential to pool the diversified resources of all countries & generate more income and employment, boost investment and spur structural transformation toward more diversified and broad-based economic models. One major area to focus on is maritime trade. Investing in and managing maritime networks & maritime economic zones & industries in a regional setting may yield substantial gains. For instance, issuing licenses that are region-wide rather than country-specific could pool markets, and the resulting large markets could attract global players. In this regard, intraregional services liberalization initiatives are crucial & may require major privatizations and regulatory reforms of services, as the current providers of most services, which are necessary to a more regionally integrated approach, are public monopolies.
How do you see the future role of the Union of Arab Chambers & its member Chambers?
A new world has already emerged that thinks and demands differently. Chambers need to be local pillars & digital platforms for upskilling & boosting entrepreneurship, trade & investment to enable displaying their individual members on the global stage and engaging marketplaces with updated skills that will boost development. This is why the Union of Arab Chambers is now focusing on uniting forces with local, regional & global stakeholders to mobilize joint efforts for the sake of achieving tangible progress. This role is not limited to developing employment opportunities for Arab youth and Arab job seekers, but also targets speeding up reform, fostering the role of Chambers & promoting Arab economic integration on a sustainable basis. UAC notable initiatives include the “Arab Rally” to reward Arab youth digital startup innovators, “Josour” initiative with Escwa & the Union of Arab Banks for job opportunities, “Living Independently” initiative that is launched to guide Arab innovators to serve millions of disabled people of determination, in addition to the partnerships established to promote CSR.
Finally, I would like to say that the greatest support for Arab countries, or indeed for any country committed to reform, will not come from governments or international institutions, but–when the conditions are right–from the vast resources of the private sector, both domestic and foreign.
We have witnessed an increase in activity between UAC and Latin America, may you please elaborate on the matter (perspectives, plans and benefits)?
Latin America is considered one of our main destinations because actually one of the main obstacles facing growth and the development is the reliance on one destination and sector. Countries have major trading partners, which are the traditional trading partners, but there are many other potential trading partners. Also there are major trading sectors, and there are other potential trading sectors.
Latin America is one of the important destinations, because Latin America led by Brazil specifically considered a very strong economies size-wise, have a lot of products needed by the Arab region, and the opposite is correct. But this is not the story; the story is the strategic alliance due to the similarities in economic conditions. There we started discussing the topic of initiating economic zones in both sides, and we started to talk about Maritime linkages and Logistics linkages.
So Latin America is a good potential for us, which was ignored to a great extent in the vision of economic decision-makers.
Away from climate change, digital transformation and Blockchain, how can Arab countries mitigate the repercussions of the Russian-Ukrainian conflict especially when it comes to food security?
Shortening, the is geographic distance coming a little bit towards Europe, you have functions in the questions on the answer to which you sent us some aspects regarding the digital transformation and stuff like this but regarding the Ukrainian Constitution
Part of the story is our orientation towards Latin America, which happened, of course, before the War between Ukraine and Russia. This shows our vision to diversify by expanding to new destinations such as Latin America, China, India and some African countries. The objective is not just to secure food rather stability! That’s why we offered several proposals regarding grain hubs and logistic zones. So we started to talk about grain hubs to be located in different ports in the Arab region and to be linked with other ports in different places worldwide.
Diversification is the name of the game. The Reliance on one or two, or very few sources is not good. And as I mentioned earlier, the current geographical exposure concentration is the main problem
Till now, we were not suffering, even Egypt, is not suffering from the war till now since they have a grain storage for the following at least eight month. I believe that’s in the near future thing will be eased, since the blocked grains will be released therefore increasing supply and reducing prices.
But what happened must be considered a lesson and start diversifying as soon as possible, and our role is to keep pressing to achieve that.