By Ahmed Al-Jarallah Editor-in-Chief, the Arab Times
FROM the beginning of the regime of former US president Dwight Eisenhower until a few years ago, the American budget recorded significant deficit annually; so much that the volume of public debt rose to around $19 trillion. Undoubtedly, this affected the infrastructure of the world’s largest economy.
The scenario began to change only when President Donald Trump took over the reins of leadership. The man, in his capacity as an investor with direct link to problems in the domestic market, focuses on transforming his country to address the high rate of unemployment, economic stagnancy and incessant crises by restructuring it according to the needs of the society, especially in terms of increasing employment opportunities. The first thing Trump did after winning the presidential election was meet businesspersons, bankers, economists and industrialists.
After listening to their requests, he asked: “What do you want me to do as a way of cooperation towards solving problems without adding burdens on the public fund which could worsen the fragile economic situation?” After that, series of decisions were issued to protect and activate the private sector, such as imposing taxes on imported steel, aluminum and others which led to reliance on the domestic market as he was convinced that Europe and China were looting his country to increase the means of livelihood by reducing prices of goods and accumulating profits.
In the Arab world, the case is completely different, because the economic structure stands on a policy whose foundation relies on the State in everything. It restricts the private sector with series of constraints that prevent its growth. It is gradually killing individual motivation upon which the real economy stands. Arabs inherited this from the Marx’s model adopted by the revolutionary countries such as the Egypt of Abdul-Nasser. This model nationalized all sectors and put them under the government administration while acting under the principle, “Work within your ability and take according to your need.” Citizens became liabilities for the State without taking into consideration the production and its quality.
Unfortunately, this model spread to several GCC countries, especially Kuwait and Saudi Arabia. These countries transformed into consumer nations wherein citizens rely on government jobs while a large percentage of the national budget is allocated for salaries and the private sector, which should have been the backbone of the economy, is strained. In advanced countries, including some Arab countries such as the monarchical Egypt, individual initiative was the basis for renaissance during that era. Everybody knows the roles played by Tal’at Harb, Abdul-Latef Aburugailah and Al-Shebrawishi — the leading perfume manufacturer. After nationalization, manufacturing and agriculture went into coma for several decades due to the clout of influential people in the public sector that became a cavern for Ali Baba (thieves) to loot public funds.
Unfortunately, at a time that the economies around the world are inclining towards competitiveness and obtaining State support to facilitate business and movement of capital, ‘not-so-investor-friendly decisions’ are being implemented in Kuwait and Saudi Arabia. We do not find this in the United Arab Emirates, Oman and Bahrain. How many projects have been cancelled and terminated in Kuwait because of accusations hurled by MPs or officials against concerned institutions and companies executing projects or even ministers because they did not get a share of spoils from projects? How many projects have been called off because of image and reputation tarnishing campaigns waged by those who have suspicious goals and serve foreign interests more than internal interests? Businesses and manufacturers continue to be worried without any alternatives or encouraging incentives for investment. The same is happening in Saudi Arabia where factories have closed and investors have diverted capital outside.
For example in Saudi Arabia, the minister of labor was changed four times within a few years. And guess what? Decisions and laws changed along with the minister. This resulted in higher unemployment rate. If only the State listened to businesses people, because the relationship between the State and the private sector is based on understanding, not compulsion like what President Trump has done, the scenario would have changed completely. Not everyone who works in the private sector is a thief or greedy, as there are people with initiatives and long-term visions. Instead of issuing Kuwaitization or Saudization laws without reading deep into the nature of the society, as well as the market and its requirements which have made citizens reluctant to work; it is more important to encourage citizens to accept all types of jobs and train them in those professions. Without a doubt, there is an urgent need to review the approach to business in our countries. We should not succumb to the fabricated mistakes of those against the open economy.
We should emulate the European model where we do not find character and reputation assassination campaigns against business people and manufacturers, where workers’ demands are restricted to wage increases and more employment opportunities, and countries respond to those demands by presenting realistic plans and advanced laws. In view of the global trade movement and enormous capacities possessed by the private sector in Kuwait and Saudi Arabia, it is important for this sector to play a key role in providing more employment opportunities and reducing the burdens of the State. This will make the public sector agile like in developed countries, instead of burdening them with veiled unemployment. Citizens are directed towards working in the private sector after eliminating all hurdles. What we need in Kuwait and Saudi Arabia is to work seriously without undermining the important role of the private sector and imagining it as a set of oases for thieves. It is also important to stop troubling this sector with the factors that led to economic crises which seem to be almost chronic. Otherwise, we will fi nd out very soon that investors have gone to where they fi nd it easy to run a business, a businessfriendly environment with legal and moral support for them. By that time, the State will not be able to fulfill its obligations.