Development Dilemma

Oft criticized for imposing their own agendas on developing countries, the world's leading international monetary institutions are engaged in critical reflection, specifically about how initiatives have failed large parts of the population in the Arab world.

At a one-day conference sponsored by the World Bank in Washington DC, World Bank President Robert Zoellick spoke of the need to focus more on long-term good governance in attempts to alleviate poverty.

"Many of the underlying grievances and triggers of these unprecedented events are economic and social in nature, though they've taken on a political form," Zoellick said. "They…will not go away just because one government fell, or one leader replaced another."

At the same, the World Bank sees a chance to right some of the wrongs of the past.

"We have to give it a shot," World Bank Vice President for the Middle East and North Africa Shamshad Akhtar told Deutsche Welle. "We have to understand that we have to listen to people. It's complicated to get advice from people who may not agree amongst themselves. But I'm cautiously optimistic."

But after revolutions in Egypt and Tunisia, and the ongoing uprisings in Yemen, Bahrain and Libya, a full-blown strategy is a long way in the offing.

"We're in wait-and-see mode," the spokesman for the World Bank's Berlin office, Steven Jouy told Deutsche Welle. "We have to see what the new governments do because we need stable governments as partners."

Therein lies one crux of the problem. Historically, the World Bank has worked with - critics might say propped up - Middle Eastern leaders with little or no accountability to the people they governed.

Corrupt governments meant that developmental aid did not reach the people for whom it was intended. And economic misery, just as much if not more than desire for political change, has inspired the protests and uprisings across the region in the past few months.

The problem in figures

Money alone is not the problem. The World Bank, for instance, committed $3.5 billion (2.46 billion euros) to the Middle East and North Africa in 2010.

At the same time, per capita gross national income in the region was only $3,594 and unemployment, especially among young people, was far higher than the world average.

Fifty-six percent of World Bank aid to the region goes to financial- and private-sector development. But it hasn't had a significant trickle-down effect to ordinary people - in part, say critics, because of the orientation of the World Bank and the International Monetary Fund themselves.

"One problem is that they ignored the social impact of the policies," Hamed El-Sa'id - a professor at Manchester Metropolitan University in England and the co-author of a book on the World Bank and the Middle East - told Deutsche Welle.

"They said it was not their role," Sa'id explained. "The result was a massive increase in both poverty and unemployment. That was compounded by the fact that the World Bank and the IMF dealt with corrupt governments and were subject to influence, especially from the US. So they were less strict with pro-US regimes."

Good money handed out to bad governments, as the World Bank and the IMF have found out, does not alleviate poverty or lead to political reform.

"There's a broad consensus that we should reinstate a governance agenda more forcefully, and that we need to decide what that entails," Akhtar said. "We're choosing to focus on the economic governance agenda."

But perhaps there is another way around the problem of governance.

Middle East Marshall Plan?

In an article published late last month, the Dean of the Columbia Business School in the US used Egypt to illustrate what he feels has gone wrong in many parts of the Middle East.

"There are only 663 listed companies, for a population of 83 million," Hubbard wrote. "The missing middle - small and medium scale business - is Egypt's main economic problem. Education over recent decades has developed a deep pool of skilled labor among the young, but without a thriving local business sector, the Egyptian economy can never absorb young workers."

Hubbard suggests a kind of Marshall Plan for the region, emphasizing loans to local businesses and requiring that countries institute reforms to allow business sectors to function - something that implies political change toward better governance.

"I think it's a very good idea," Sa'id said. "In the past governments in the Middle East have been part of the problem, and that's why so many of them have lost legitimacy."

The World Bank, too, is broadening its focus.

"Our modus operandi has changed," Akhtar said. "We're not just talking to governments, but to other segments of society to gather their impressions of what went wrong. And we will be involving them in the designs for programs and involving them with the government. Governments will have to get used to this."

Still, there are limits on how much well-meaning organizations can bypass state structures.

"You can't work anywhere without governments, and there's no development without good governance," Sa'id added. "In the past the NGO sector tried to bypass governments but it didn't work. Some of them were even accused of being terrorists."

For better or worse

What is clear is that many countries in the Middle East are at a crossroads, where the path taken could be positive or negative. And both the region itself and the West need to adapt with the times.

"Things could get better, or they could get worse, too," Sa'id said. "It depends on what happens in the Middle East, and on whether good governance comes about. Change of this sort in the Middle East would give Washington motivation to change as well. Otherwise why should they have that motivation?"

Those sentiments seem to resonate at the world Bank itself.

"There's been a lot of soul-searching within the bank," Akhtar explained. "Events are moving pretty fast in the region, and it's important to realize that while people have been able to achieve this change, they also need to be more organized."

In other words, the experts say it may well ultimately be the people in the Middle East and North Africa themselves who determine whether Western developmental aid is in future better directed toward governments that will spend it where it was intended to go.

Author: Jefferson Chase
Editor: Rob Mudge