Forget endless wars, try enduring hope: Unlocking the potential of the Middle East

The prospect for Middle East stability remains bleak. Despite President Donald Trump’s meeting with Bibi Netanyahu at the White House, where he unveiled his “Deal of the Century,” there remains virtually no hope for Israeli-Palestinian peace. In Iraq, Iranian-backed militias just rocketed the U.S. embassy. Yemen is one of the greatest humanitarian disasters of our time. Lebanon is witnessing widespread demonstrations in Beirut. Syria remains embroiled in an endless civil war after protesters marched into Damascus to challenge the brutal Bashar Assad regime nearly nine years ago. 

Domestically, neither the Democrats nor Republicans are focusing on a viable Middle East strategy. In the run up to the 2020 elections, presidential candidates are still debating the basis of the Iraq War launched a generation ago — a moot discussion now. Further, despite Trump’s campaign promise to extricate the U.S. from the endless wars in the Middle East, in early January he sent more soldiers to the region. Clearly, U.S. foreign policy needs a hard reset.

America’s economic power is the best strategic alternative to advance national security, reduce risk, and unlock the potential of the next generation of Arab youth.

Four “greenshoots” can help chart a path in the decade ahead:

First, Middle East risk-takers and global entrepreneurs can serve as models for those willing to break the traditional mold and unleash the region’s inherent human capital. For example, in 1999 two young Palestinian-Jordanians, Samih Toukan and Hussam Khoury, founded Maktoob, an Arabic language email service. Ten years later, the founders sold their company to Yahoo for $175 million. Another extraordinary entrepreneur is Fadi Ghandour, a Jordanian-Lebanese entrepreneur educated in the U.S. who founded Aramex, the largest package delivery service in the Middle East and Africa. In 1997, Aramex became the first Arab-based international company to trade its shares on the NASDAQ stock exchange. Now, Ghandour is a philanthropist and startup investor in the region. Lastly, CBS’s 60 Minutes recently featured Bashar Masri, a Palestinian-American dreamer who is building Ruwabi, the first new city in the West Bank in a thousand years. These entrepreneurs and many others are building the counter-narrative to the despair so often associated with the region.

Second, interconnected markets create an upcycle of opportunity while closed markets accelerate violence. To elaborate, in early 2006, the Israelis evacuated settlements in Gaza and a few in the northern West Bank near the city of Jenin. The Bush administration implemented opposing policies in Gaza and Jenin.

In Gaza, the Bush administration applied economic pressure against Hamas, a designated terrorist organization, with the intent that Hamas would yield to the pressure and either moderate or fail. The result: Hamas remains in power; Israel and Hamas have had three violent wars, and Gaza hosts a lost generation of youth.

Jenin stands in contrast. As the Bush administration was closing down Gaza, it was opening a northern West Bank crossing point that allowed Palestinians to trade with the world. This policy was successful; increased Palestinian trade has reduced unemployment in Jenin from reportedly 50 percent in 2003 to below 20 percent now. Not only have these robust trading channels generated sustainable opportunities for small businesses, but local governance and security improved. Although in 2003 Jenin was the center for suicide bombers, today a local Palestinian company, Canaan Fair Trade, now exports top shelf organic olive oil from surrounding farms to Whole Foods in high-end markets.

Third, government and private sector leaders need a big vision. The former CEO of CISCO, John Chambers, set the benchmark for private-public sector partnerships after 9/11’s wake. He made an early commitment to help provide the training and capital necessary to create skilled tech jobs in Palestine and Jordan. King Abdullah of Jordan then seized upon this partnership, leveraged the talent of young Jordanians, and launched the King Hussein Technology Park. This smart city development provides an incubator space for scores of startups, approximately 50 multinational tech firms, including Microsoft, Dell, Oracle, LG Electronics, Ericsson, and early stage venture capital. In the first five years, this tech hub has attracted $175 million in investment and created 3,600 jobs. Clearly, leveraging talent works most efficiently when governments and businesses build effective partnerships.

Finally, private market investment (with targeted public incentives) can catalyze human capital growth. Regional merger and acquisitions, while nascent compared to the global economy, are on track to set another record year in 2020. There are recent examples of success, including Uber’s purchase of the Middle East rideshare company Careem for $3.1 billion and Amazon’s purchase of the e-commerce platform Souq for $580 million. Even in the most forbidding markets, private capital coupled with intrepid non-governmental organizations can drive positive results. Google partnered with Mercy Corps to set up Gaza Sky Geeks which incubates and accelerates outsourcing startups in Gaza City. In the decade ahead, private capital, not donor funds, will generate opportunity for the next generation of Arab entrepreneurs.

Despite these greenshoots, business, community and government leaders must take three concrete steps.

First, market solutions must engage women. Middle East firms, particularly in the tech or services industry sectors, are often not priced competitively when compared to South Asian or Eastern European firms nor are they as innovative as high-end businesses in the U.S. and China. The region cannot afford to exclude half of its human resource base if it wants to compete globally. Investors, buyers, startups can simply add gender as a key performance indicator — not to drive social outcomes but to deepen its talent pool in the globalized economy.

Next, governments must improve the regulatory environment for risk takers and investors. Except for the United Arab Emirates (UAE), the rest of the Middle East is not conducive for business. The World Bank ranks the UAE 11th in its global Doing Business Report with Morocco as a distant second (ranked 60), Syria (179), Libya (186), and Yemen (187) are simply inhospitable to transformative growth. But past performance does not have to be the death knell for the next generation. Jordan demonstrated that it is politically possible to improve the business environment by enacting a series of economic reforms over the past year. These regulatory changes helped create jobs, increase tax revenue, and attract investment. As a result, the World Bank recognized Jordan as one of the top 3 ‘business climate improvers’ in 2020. The rest of the region has the opportunity to model Jordan and the UAE.

Finally, an education system that undervalues critical thinking skills will stifle market competitiveness. The former World Bank chief economist observed that “reorientation of the region’s education system…  is essential for boosting entrepreneurship and jobs.” Outside of Israel, the top-rated university in the Arab region, King Saud University, is ranked a dismal 426th globally. However, both the UAE and Qatar are showing signs of promise by partnering with leading U.S. universities — including New York University in Abu Dhabi as well as Georgetown University and Carnegie Mellon, among others, in Doha. To unleash talent, governments must address the education gaps from kindergarten to the university system today.

The Middle East will remain a strategic interest for the indefinite future. Yet, there is a growing demand for a foreign policy reset where the U.S. minimizes the blood and treasure of war but projects power through economic diplomacy and statecraft. In this reset, the U.S. will be better positioned to seize the enormous opportunities in energy, water, agriculture, and health technologies that will re-shape society. As a less militarized but more robust economic power, America can support the aspirations of the next generation by leveraging capital and technology to drive enduring hope.

R. David Harden is managing director of the Georgetown Strategy Group and former assistant administrator at USAID’s Bureau for Democracy, Conflict and Humanitarian Assistance, where he oversaw U.S. assistance to all global crises. Follow him on Twitter at @Dave_Harden.