The first post is by Masood Ahmed, head of the IMF’s Middle East and Central Asia Department, on how to build on the optimism of the Arab Spring and create a more vibrant economy in the region. The Middle East and North Africa has many strengths on which to build: a dynamic and young population, vast natural resources, a large regional market, and an advantageous geographic position with access to important markets. The blog hopes to encourage debate and offer analysis and potential solutions on economic issues, while providing Arabic commentaries on global topics.

The new Arabic-language blog complements the IMF’s English-language blog, iMFdirect—the Fund’s global economy forum.

Some have called this movement the “Arab Spring” or the “Arab Movement,” however, the “Arab Renaissance” is more befitting since for the first time in generations the overwhelming majority is willing to question the powers of authority.  Respective peoples are no longer willing to stand idle and take direction from one ruler or one family of rulers.  For so many years the gap between the have and have-not has grown in the two regions by leaps and bounds, thus making it more difficult, if not impossible, for the average person or family to grow and enjoy the financial security that only a handful have monopolized.

There are two schools of thought dominating the events of the recent months in the region.  First are those who look at the series of events from a suspect point of view that the peoples’ movement could very easily be hijacked by “Radical Islamist” groups.  They point to the 1979 revolution in Iran and the adverse results which were, and to this day are still being felt around the world.  Although this is a valid concern and a sad reality, one has to keep in mind that in the past 32 years the world has been changed dramatically by information technology, and therefore, it seems unlikely that any such group could usurp and retain power.

Case and point, when the Iranian Revolution took place, technology did not play a significant role in it by any means.  Thirty two years ago the “internet” was known by only a very select few researchers and engineers, and no one could have envisioned the host of other IT advancements that we readily have available today.  Back then the youth did not enjoy instant access to the events taking place in their neighboring countries, let alone countries on the other side of the world, which made it easy for groups with ominous intentions to keep the public in the dark and thus capitalize on the dissatisfaction of the people and direct events to their own advantage.

Without getting into too much detail about the Iranian Revolution, we can fast forward to the events of late and the second school of thought, which pivots on the youth of today.  The Tunisian movement is the epitome of today’s “Youth Movement”.  With access to information covering every aspect of life imaginable, people can make better judgment calls and avoid pitfalls such as we have seen before.  No longer is the new generation willing to stand by and watch the quality of their lives deteriorate.  They see and understand how the rest of the world is moving forward with dizzying speed as they are losing any hope of a better future. Therefore, empowered by information technology and a willingness to sacrifice their lives if necessary, there is great hope among both the youth and the repressed masses of effecting drastic change and attaining a more promising future. Meanwhile, the oil-producing countries in the region are well aware of the fact that they possess finite amounts of oil that coupled with today’s rapid advancements in technology has put them between a rock and a hard place.  The situation is even direr in non-oil producing countries of the region.  In short, one can say that the writing is on the wall, and these governments are faced with the harsh reality that in today’s world ruling with an iron fist is no longer tolerated.

Hence, the beginning of the “Arab Renaissance” will lead to more “open” and more “democratic” systems to be put in place.  With the promises of financial aid from the G8/G20, nations of the Middle East and North Africa have a chance to bring themselves more in line with the rest of the developed world.  This will encourage virtuous influxes of capital, ideas, and businesses into the long suffering region.  An abundance of manpower desirous of gainful employment, in concert with available natural resources and a strategic geographic location, will prove to be a powerful combination which can only serve to enhance the prosperity and the stability of the region.

Special feature written by Simon Tash, an independent advisor to TradeFlow21.

The share of jetliner deliveries from Boeing Co. and Airbus covered by export guarantees has risen to almost 35% from a historic average around 20%, reaching a a record level of roughly $20 billion in guarantees in 2009 and likely the same amount in 2010, according to the Journal’s sources.

The companies that received the government guarantees say the subsidized financing has kept production steady during the recession; critics say the financing has artificially inflated jetliner production during the crisis and distorted competition.

This past October, 24 major airlines from the home countries—among them AMR Corp.’s American Airlines, British Airways PLC, Delta Air Lines Inc. and Germany’s Deutsche Lufthansa AG—joined up to lobby their governments to restrict export guarantees.

And in November, the Aviation Alliance (11 carriers ranging from Ireland’s Ryanair low-cost Holdings PLC to first-class Emirates Airline and Etihad Airways of the United Arab Emirates), a rival group that benefit significantly from the guarantees, launched a campaign to defend the government financing.

The new agreement would make this government help more expensive and less attractive, introducing market forces in the form of quarterly  adjustments based mostly on prevailing interest rates. Neither airline group is thoroughly satisfied with the draft.

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Al Rio, contributing editor

2) Primacy of DP World: Dubai World’s marine and port subsidiary, DP World, maintains deep-water terminals in over 30 countries from the Americas to Asia. It is simply too valuable a commodity (commercially and politically) for the government to abandon to creditors in courts. DP World’s port presence across the globe is central to the UAE’s identity and prestige.

3) Capitalism 2.0: The Dubai crisis was an inevitable and necessary step in the maturation process of an emerging free-market economy. Sheik Mohammed bin Rashid Al Maktoum’s undisciplined approach to development, coupled with investors who naively assumed their bets were covered by state revenues derived from oil, created conditions that plunged the Emirate $80B in debt. Despite the poor timing of Dubai  World’s announcement of a standstill just prior to the Muslim holiday of Eid al-Adha, Dubai and its flagship company should emerge from the crisis with a new sense of purpose and propriety. Abu Dhabi will likely take the lead in helping Dubai restructure its financial institutions and reshape its strategic thinking as part of a wider effort to regain a measure of market integrity and public trust.

4) Human Capital: Dubai’s “oil reserves” are its people. They are educated (77.9% literacy rate), able, and multi-lingual with commands of Arabic, Persian, English, Hindi, and Urdu. The  serious, sophisticated investor recognizes this as a key attribute in any successful venture. Human capital is the critical “X factor” on a balance sheet.

For information on the latest global economic competitiveness ranking and how the GCC ranks (note Saudi Arabia moved up to #13 this year and is knocking on the door for a top-10 spot), see Doing Business 2010: Saudi Arabia nears goal; UAE climbs ranks.

clipped from www.thenational.ae Diplomat warns US firms are losing edge RIYADH // The new US ambassador to Saudi Arabia yesterday warned American businesses to wake up to the fact that they are losing their edge in an increasingly competitive Saudi market. Ambassador James B Smith, a retired air force general, also told his audience of about 100 US company representatives that it was time for both Saudis and Americans to “rethink some opinions” of each other forged in the wake of the September 11 terrorist attacks. Noting that many US companies are “on the sidelines waiting to see what’s going to happen in Saudi Arabia”, he added: “My message back to them is: What’s happening is the train has already left the station. You are losing market share to India, China, Russia and if you don’t move you’re never gonna catch the train.”

As for Saudi Arabia, the Kingdom moved up two spots to number 13, surpassing Iceland and Japan, respectively, while inching closer to a coveted top-10 spot. The Kingdom is striving to become a top-10 competitive economy by 2010 (which coincides with next year’s Doing Business). TradeFlow21 managing partners Lewis Nescott and Steven Towns recently met with officials at the Royal Embassy of Saudi Arabia and had a very productive discussion — including the unequivocal significance of the Kingdom’s “10 x 10″ goal. See the next edition of Trade and Transactions, TradeFlow21′s monthly e-newsletter, for more details. (Contact us for a free subscription.)

Meanwhile, the United Arab Emirates continued its impressive climbing of the rankings in recent years, moving up 14 spots to number 33. Among Gulf Cooperation Council (GCC) members, only Saudi Arabia and the UAE improved their competitiveness in the ranking. While other GCC members also instituted reforms, the global landscape is quite competitive and therefore, on a relative basis, they lost some ground.

Following is a list of select countries with their 2010 rankings and year-over-year change.

Top-10
1. Singapore
2. New Zealand
3. Hong Kong, China
4. United States
5. United Kingdom
6. Denmark
7. Ireland
8. Canada
9. Australia
10. Norway
* Among the top-10, all were unchanged except a switch in places between the U.K. and Denmark.

GCC
13. Saudi Arabia (+2)
20. Bahrain (-2)
33. United Arab Emirates (+14)
39. Qatar (-2)
61. Kuwait (-9)
65. Oman (-5)

“BRIC”
89. China (-3)
120. Russian Federation (-2)
129. Brazil (-2)
133. India (-1)

1)      demands the cessation of hostilities between Israel and its neighbors, including the creation of a sovereign Palestinian state as the only viable means of resolving the Palestinian question

2)      requires a U.S. policy that summarily rejects those in all quarters who use division and discord as a means of maintaining their “competitive advantage” in the region

3)      dictates that economic development, through investment and trade, be embraced as the preferred path to establishing a more stable, secure world for all

In his long-awaited speech on American-Muslim relations today in Cairo, President Obama responded, arguing that

1)      “America will not turn our backs on the legitimate Palestinian aspiration for dignity, opportunity and a state of their own”

2)      “as long as our relationship is defined by our differences, we will empower those who sow hatred rather than peace…conflict rather than cooperation…this cycle of suspicion and discord must end”

3)      “on economic development, we will create a new corps of business volunteers to partner with counterparts in Muslim-majority countries…I will host a summit on entrepreneurship this year to identify how we can deepen ties between business leaders, foundations and social entrepreneurs in the United States and Muslim communities around the world”

Thank you, Mr. President.  The partners of TradeFlow21 will join you in the cause to build a prosperous, secure Middle East through commerce and trade.  Let us now begin our work.

Necessity demands the cessation of hostilities between Israel and its neighbors, including the creation of a sovereign Palestinian state as the only viable means of resolving the Palestinian question.

Necessity now requires a U.S. policy that summarily rejects those in all quarters who use division and discord as a means of maintaining their “competitive advantage” in the region.

Necessity dictates that economic development, through investment and trade, be embraced as the preferred path to establishing a more stable, secure world for all.

For over 60 years, the Middle East, which is comprised of over 20 nations spanning Northern Africa in the west to Southern Asia in the east, has been defined by conflict and oil. This is a new era. Real GDP non-oil growth in the region, which is projected to expand by more than 3.5 percent this year, suggests that Middle Eastern nations are actively pursuing commercial diversification as they seek to become full partners and competitors in the global economy. It also presents tremendous export opportunities for companies who want access to an emerging market of 500 million consumers.

The world is waiting for President Obama to signal a new turn in U.S. – Middle East relations where strategic alliances are built principally on commerce and trade. The partners of TradeFlow21 welcome such a change as both vital and necessary.