Conference Looks for Lessons From Upheaval

To people who lived through the upheaval that followed the fall of the Berlin Wall, their experience provided lessons — as well as warnings.

Valdis Zatlers, the president of Latvia, pointed out the huge difference between Estonia, which at the beginning of the year joined the euro area, and Belarus, still a Stalinist dictatorship. “Twenty years ago they were at the same starting point,” Mr. Zatlers said during a panel discussion at the World Economic Forum on Europe and Central Asia on Wednesday. “Look at the different results.”

North Africa, as well as the economic challenges that continue to confront Eastern Europe and Central Asia, was a major topic of discussion during a one-and-a-half-day event in a former imperial palace, which was managed by the same organization that stages the annual World Economic Forum in Davos, Switzerland.

What can Egypt and Tunisia do to turn out more like Poland or the Czech Republic, rather than Kyrgyzstan, the former Soviet republic? In a measure of the misery that still prevails in Kyrgyzstan, the country’s president, Roza Otunbayeva, said Wednesday that one of her goals was to lift the country above its 164th place ranking, out of 178, on the Transparency International index of corruption.

“We want to be among civilized countries,” Ms. Otunbayeva said at the event.

There are some parallels between Eastern Europe in 1990 and North Africa today. Like Eastern Europe then, the North African countries were police states that needed to create democratic institutions from nothing.

Appearing on a panel with representatives from Libya and other Arab countries, Mr. Zatlers of Latvia warned that they could expect old elites to try to become the new elites. “In every society you have people who were more active in the previous society,” he said. “They are the first to participate. They want to keep power. We are still witnessing that 20 years later.”

The Eastern European countries were planned economies, while Egypt and Tunisia are nominally free market economies, but with a high degree of government intervention.

“The majority of business make their money by being close to government,” said Khalid Abdulla-Janahi, honorary chairman of Vision 3, an alliance of three investment banks in the United Arab Emirates.

Countries in the Middle East may have some advantages because they have more extensive trade ties than was the case in Warsaw Pact countries, as well as basic financial infrastructure like stock markets.

But North Africa faces some additional challenges. Eastern Europe bordered the wealthy countries of Western Europe and could benefit from trade and investment as well as direct aid. The prospect of joining the European Union served as a powerful incentive for political and economic modernization, a unifying goal for society.

“There was a much easier game plan — you turn to the European Union,” Peter Attard Montalto, emerging markets economist at Nomura International, said during an interview. North Africa, he said, “is a much bigger challenge.”

In the Arab world there is the destabilizing threat of Islamic extremism, as well as of meddling by countries like Iran or Saudi Arabia with no interest in promoting democracy.

East European societies tend to be aging and some are facing population decline, which can be a drag on economic growth and a burden for pension systems. The Arab world is dominated by people younger than 30. They are a potential source of entrepreneurial energy, and a huge pool of consumers.

“It is one of the youngest populations we have,” said Luis Álvarez , president of the emerging markets business of BT, the British telecommunications company, which offers services to companies in North Africa. “We see that as an opportunity for a large number of companies.”

But the young people also create political volatility. Mustapha Kamel Nabli, the governor of the Central Bank of Tunisia, warned that young people had high expectations after the country’s citizen revolution that would be difficult to fulfill.

“Young people want things to happen, but the economy is going down,” Mr. Nabli said during a panel discussion. Aid from institutions like the International Monetary Fund or European Bank for Reconstruction and Development is welcome but will not be enough, he said.

“We want private investors to come in and say they are willing to bet on our success,” he said.

Eastern Europe has demonstrated that, to some extent, a country’s fate depends on circumstances beyond its control, like geography, natural resources or size. Poland has benefited from its border with Germany and its domestic market of 38 million people. Kazakhstan has oil and natural gas and lots of land.

North African countries like Egypt and Tunisia, which do not have huge reserves of oil or gas, need to find economic niches to drive growth, Mr. Montalto of Nomura said. They could try to take advantage of business opportunities in sub-Saharan Africa, for example. Several speakers said they considered Turkey a stabilizing force.

But, like Eastern Europe two decades ago, representatives from North Africa said that they, too, were looking to Western Europe. European leaders and businesses should recognize that they have a strong interest in promoting economic development in countries trying to become democratic, they said.

“Libya is in the neighborhood,” said Tarik M. Yousef, a Libyan who is dean of the Dubai School of Government. “Libya matters.” Referring to the countries that after 1989 “built up almost from scratch,” he added, “I look to Europe for help.”

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