March 3, 2007


The Opening Of Libya: Harvard professor Michael Porter is helping to restructure the economy, but skepticism abounds (Business Week, 3/12/07)

Entrepreneurs in Libya? Isn't this the pariah state where everything is run by so-called peoples's committees and until recently private property was severely restricted? The answer is that Qaddafi has wised up--at least partly. He began changing course a few years ago when oil prices were low. The Libyan economy was close to collapse after more than a decade of U.S. and U.N. sanctions brought on by his reckless actions, such as the 1988 bombing of Pan Am Flight 103 over Scotland. After the U.S. invaded Iraq and toppled Saddam Hussein in 2003, Qaddafi settled his differences with Washington and abandoned his weapons of mass destruction programs.

Since then, foreign oil companies have been piling into Libya, and Tripoli has started to revitalize the economy. Much of the progress is due to an unusual partnership with Harvard Business School professor and competitiveness guru Michael E. Porter, who is advising the Libyans through Boston consultancy Monitor Group. For the past two years, more than a dozen Monitor consultants have been working in Libya, studying the economy and running a three-month leadership program intended to create a new pro-business elite. So far, 150 Libyans have graduated. The people in the course "were real role models, starting businesses, contributing to society," says graduate Yazid el Shaari, an engineer at Canadian-Libyan joint venture Veba Oil Operations.

Porter was persuaded to take the job by Qaddafi's son, Saif al Islam. The former London School of Economics graduate student is a lean man who favors expensive European suits and Western-style economic reform. Since first meeting Saif at several dinners in London, Porter has traveled to Libya three times and met top government officials, including the elder Qaddafi. "I didn't take this on because this is a big economy," Porter said in an interview at Tripoli's glitzy Corinthia Hotel. "It was very symbolic. If this can be successful, then other countries will be able to change." [...]

None of this means Libya is likely to turn into a new Dubai. Libyan society, which has lived for decades under Qaddafi's revolutionary populism, probably isn't ready for that degree of opening. "To change from a socialist culture to a private culture is a big project," says Saleh Zahaf, a lawyer who advises would-be foreign investors. "It requires a generation."

Porter complains that reform ground to a halt last year after Monitor recommended a big commitment to education and training and investment in energy, tourism, trade, and construction. One reason: a backlash against proposed layoffs of public-sector workers. A planned privatization of a public-sector bank called Sahara also failed when investors rejected the government's valuation.

Qaddafi and his son needed more time to build consensus. Over the past year, they have gradually replaced hard-liners in the government. On Feb. 22, Porter joined Saif in Tripoli to announce the launch of a Libyan Economic Development Board designed to speed government decision-making and boost private enterprise. Saif also promised to more than double compensation for state employees, whose salaries have been frozen at low levels for years. (A typical engineer, for example, makes about $400 a month.) And while he wants to shrink the state sector by some 20%--or 180,000 workers--those who leave will be given three years' salary, plus loans of $23,000 to start businesses. "We need to change from a state economy to an open economy," Saif told reporters, "but without it being out of control."

The Sons of the Fathers: Saudi Arabia isn't the only Arab country where economic and political success hinges on succession. These Middle Eastern scions have been groomed to continue their family's rule. But are they as committed to reform as they seem? (Parag Khanna, September/October 2006, Foreign Policy)

What if Qaddafi proclaimed that President Bush is right? The Middle East needs more democracy. And Libya should work with Europe and America to promote human rights. Or what if Mubarak, in a secret visit to the White House, defended crackdowns on Egypt's dissidents to a crowd that included George W. Bush, Dick Cheney, Condoleezza Rice, and Stephen Hadley? Qaddafi and Mubarak did just that--that is, Seif al-Islam el-Qaddafi and Gamal Mubarak, the sons groomed to follow in their fathers' footsteps.

Qaddafi, Mubarak--and Assad, Mohammed, and Abdullah--are all names that won't disappear from the headlines for at least another 20 to 30 years, even after the men we associate with them fade from power. The sons of the rulers that have been either American puppets or the bane of American foreign policy for a generation or longer are coming of age--as new and aspiring leaders. And their lives may be a litmus test for the future of Arab democracy.

So who are they? The caricatures are well known: Jet-setting playboys with thuggish tendencies and Western diplomas. But, in truth, they tend to not be as eccentric and entertaining as their fathers. More important, they seem to be more aware of the rapid changes under way in the world. Indeed, rather than the postcolonial lineup of Arab strongmen, what is most striking about the next generation is that none of these sons even wants to wield the degree of power--or accept the responsibility for it--as their fathers did. Ironically, therefore, if democracy does take hold in the Middle East, it could very well be due to, rather than in spite of, the influence of these young scions.

For the heir apparents, there are already a few examples of relatively young men called to walk the fine line between the complacency of family expectations and the demands of democracy. Both Morocco's King Mohammed VI and Jordan's King Abdullah II have sat on their respective thrones for less than a decade, and there are signs that they will maintain the traditions that underpin stability while leading their societies into modernity. Mohammed sees himself more as a manager than an arbiter. And it's undeniable that Abdullah is pursuing social, economic, and political liberalization--even if in a top-down fashion. In the words of one Jordanian entrepreneur, Abdullah "is even willing to invest in his own opposition."

Arabs, Jews work together on peace, profit: Entrepreneurs team up at an Israeli incubator, focusing on products, not politics (Ken Ellingwood, March 3, 2007, LA Times)
Busy in a tiny laboratory, Kamal Khawaled thinks he has figured out how to fight tooth decay: with a chemical gel and a small dose of electricity. His hopes to adapt the treatment to make teeth whiter.

That may be a breakthrough, but Khawaled is part of what may be an even bolder experiment unfolding here in Nazareth's industrial zone. Officials and activists are trying to recruit Arabs like him into the biotechnology and high-tech industries, in which they have been sorely underrepresented. Their goal is to better integrate Israel's Arab minority into the nation's economy and improve its relations with Jews.

The center of the 5-year-old effort, which relies on government loans and private investors to nurture fledgling technology enterprises, is a business incubator in this predominantly Arab city. Amid the clatter of nearby car repair and tire shops, Arab and Jewish entrepreneurs are working side by side, hoping to turn futuristic notions into successful businesses and, perhaps, make a little peace in the process.

The incubator, called New Generation Technologies, or NGT, is a proving ground for a dozen start-ups with such names as Callarity and CapsuTech.

Posted by Orrin Judd at March 3, 2007 7:54 AM
Comments for this post are closed.