May 24, 2024

World Bank and I.M.F. Discuss Inequality in Middle East

Officials now describe the country as a cautionary tale. By focusing primarily on the country’s growth, the World Bank and other international bodies failed to notice widening inequalities. Now, in the wake of a revolution still shaking the region, the World Bank says Tunisia can serve as a model for a revised approach.

The bank announced this week that it would provide $500 million to the new government of the North African country in exchange for a package of reforms, including changes in how the government awards contracts and allows public access to information about public spending, shifts intended to foster a more equitable society.

Robert B. Zoellick, the bank’s president, said that he hopes to extend this new focus on “inclusive growth” to other Middle Eastern countries, including Egypt, where past rounds of reforms also have failed to lift people from poverty.

The question of how to improve the economic prospects of the Middle East has attracted significant attention at the annual meetings of the World Bank and International Monetary Fund being held here this week.

Everyone says jobs must be created. Everyone can explain what went wrong with the old strategies. Better answers are harder to find.

“The question is jobs, jobs, jobs,” Dominique Strauss-Kahn, managing director of the International Monetary Fund, said Thursday in a typical pronouncement. “What does it mean for most people around the world if you have a recovery in macroeconomic figures but it doesn’t produce jobs? The example is Tunisia.”

Mr. Strauss-Kahn, however, did not explain what should be done differently.

Nonetheless, nations and multinational groups are lined up with money in hand.

Secretary of State Hillary Clinton announced in February that the United States would set aside $150 million to provide assistance to Egypt.

The Overseas Private Investment Corporation, a federal agency that finances private projects in foreign countries, said in March that it would make up to $2 billion in new investments in the Middle East, on top of the $2.6 billion it has already invested in the region.

The European Bank for Reconstruction and Development, created to help finance the rise of market-based economies in Eastern Europe, is considering a request from Egypt to start lending on the other side of the Mediterranean.

Several multinational agencies convened Thursday by the United States and France to discuss the issue, including the I.M.F. and an arm of the World Bank, said in a statement that they had agreed to develop a regional investment strategy and have initial recommendations by the end of May

Businesses also are eager to take advantage of a new willingness on the part of some governments in the region to embrace foreign investors.

“We want to help people in those countries have a better life while at the same time, we’re in it to make money,” said Myron Brilliant, senior vice president for international affairs at the U.S. Chamber of Commerce, who recently traveled to Jordan at the invitation of the government to discuss investment opportunities.

Egypt’s finance minister, Samir Mohamed Radwan, told an audience at the Chamber of Commerce on Thursday that he knew exactly what was needed.

“It’s very simple,” said Mr. Radwan. “In the short term, I need cash.”

The Egyptian government also wants the United States to forgive about $3.6 billion in outstanding debts.

Egypt must pay the United States about $350 million each year, while the nation receives about $250 million in economic aid from the United States.

Mr. Zoellick, however, said on Thursday that international aid should not be just a question of money.

The lesson of recent events, he said, was that Middle Eastern governments need to become more accountable to their populations, providing genuine opportunity.

He referred to Mohamed Bouazizi, the Tunisian fruit vendor who immolated himself after the police seized his scales and slapped his face, to argue that economic development in the Arab world is being suppressed by oppressive bureaucracy.

“Keep in mind,” Mr. Zoellick said, “the late Mr. Bouazizi was basically driven to burn himself alive because he was harassed with red tape.”

“One starting point is to quit harassing those people and let them have a chance to start some small businesses,” he said.

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