At a series of working sessions that lasted until the early morning hours Friday, representatives of the Group of 8 expressed concern that the democracy movement in the Arab world could be “hijacked” by Islamic radicals if the West did not help stabilize the economies of the two countries that touched off the Arab Spring, according to two European diplomats who were present during the discussions.
Comparing the uprisings that are sweeping the region to the fall of the Berlin Wall, which eventually paved the way for a historic shift to democracy in Central and Eastern Europe, the group said in a communiqué that its aim was “to ensure that instability does not undermine the process of political reform.”
How much aid the Western powers would ultimately provide, and how effective any aid would be during volatile political transitions in the two countries, remained uncertain. The group’s official communiqué promised $20 billion, which would be a major infusion of funds.
President Nicolas Sarkozy of France, the meeting’s host, said the total could be double that. But he and other officials did not specify how much each country and international development agency would provide, and the Group of 8 countries have in the past made commitments that they did not ultimately fulfill.
Even so, the incomplete transition in the Middle East was a dominant worry at the meeting. Democracy, the leaders said, could be rooted only in economic reforms that created open markets, equal opportunities and jobs to lower staggeringly high unemployment rates, especially among restless youths.
“We’re seeing growth slow, budget deficits rise, in the case of Egypt, some foreign exchange reserves being lost,” said David Lipton, a senior director for international economic affairs at the National Security Council. “We and the countries both see the very high priority of keeping the countries stable so that the backdrop of democratization is one of economic stability rather than instability and chaos.”
That challenge has grown acute in Egypt since the fall of President Hosni Mubarak. Revenues from tourism, a mainstay of the economy, have plummeted by 40 percent, the new military government says.
Foreign investment has dried up. Factories are paralyzed by strikes. Meanwhile, prices for food and energy have surged, leaving people feeling deeply insecure ahead of crucial parliamentary and presidential elections in the fall.
“We members of the G-8 strongly support the aspirations of the Arab Spring, as well as those of the Iranian people,” the leaders, who discussed the situation with the prime ministers of Egypt and Tunisia here, said in the communiqué.
Officials said the aid would come from the member states of the Group of 8, which includes the United States, Japan, Canada, Britain, France, Germany, Italy and Russia, and from international organizations, including the World Bank, the International Monetary Fund and the European Investment Bank.
Officials cautioned that the projected $20 billion in aid from international financial institutions would come in phases and be contingent on democratic and economic reforms. The pledge, an aide to President Obama said, was “not a blank check” but “an envelope that could be achieved in the context of suitable reform efforts.”
There is a fear, shared by both the American administration and democracy activists, that plunking down large dollar pledges upfront would risk funneling money into the hands of institutions, including the Egyptian military, which could misuse or simply siphon it off.
Even such a large infusion is dwarfed by the scale of the two economies — $500 billion in Egypt and $100 billion in Tunisia. Mr. Sarkozy said that he hoped the total aid package would eventually reach $40 billion, including $10 billion from Saudi Arabia, Qatar and Kuwait.
Qatar is also urging its Persian Gulf partners to consider creating a Middle East development bank to help Arab states making a transition to democracy.
David D. Kirkpatrick contributed reporting from Cairo, Mark Landler from Warsaw and Ian Austen from Ottawa, Canada.
Article source: http://www.nytimes.com/2011/05/28/world/europe/28g8.html?partner=rss&emc=rss