CAN GAZA become the economic equivalent of Singapore for the Middle East? It seems hard to believe after the many cataclysmic events in the Middle East over the last three decades. Nevertheless, the occurrences that have been similarly dramatic at the international level have caused the discarding of many preconceptions about what is possible.
Some of the Middle East and North Africa continues to fit the image that was shaped in the trench warfare between the Arabs and Israelis. Islamic fundamentalist radicals, still intent on pursuing the Palestinian cause--without the Palestinians if necessary--are active in a number of countries, most notably Algeria and the rural areas of Egypt. Both have been the scene of fundamentalist attacks on foreigners with the explicit intent of driving them and their influences out.
Conservative Islamic governments pose a second challenge in the Middle East. The Saudi monarchy continues to hold to values of an earlier century, excluding women from business and full participation in most aspects of society. Not only are females lost as valuable contributors to the economy, but foreign businesses in which they play significant roles are less acceptable and less able to function well in Saudi society.
Most problematic is the resistance to democracy and full participation in the economy in conservative Middle East societies. Saudi Arabia rests on its oil laurels, which may continue to finance the government for some time to come, but other oil states are on the rise and, eventually, there will be alternative fuels. The conservatives' limitations on participation and the underpinnings of democracy--education, a free press, the confrontational process of new ideas--sooner or later will result in an inability to create, making the society a sluggish server system that delivers or assembles, but doesn't invent. The authoritarian and repressive atmosphere results in a restrictive regulatory and taxation environment, cumbersome commercial representation requirements, visa restrictions, tenuous property rights, and general political uncertainty. All these are direct threats to foreign investors.
Yet, Gaza as a potential Singapore remains there. John Lyden, writing in World Trade magazine, points to the growing demand for services, product, and investment in most of the Middle East. Morocco and Tunisia have young workforces eager to get involved in the fast-moving and demanding technological industries that have captured the imagination of Asia. Despite the Islamic fundamentalists, Egypt is a large market with a political system that is reasonably stable, a sophisticated society, and an economy open to the goods and services of the West. Kuwait quickly has rebuilt its infrastructure and is back in the global economic game. Lyden describes the United Arab Emirates as the best places to do business in the region: "U.S. businesspeople rate Dubai very high--on infrastructure, law, and Western ambiance."
Moreover, some of the Middle East's historic trouble spots seem to be recovering from a half-century of various obsessions. …