The Middle East in Transformation -- The BMENA Initiative and U.S. Foreign Policy

A Spirit of Change

We are here in a time and spirit of transformation.

For some, the metamorphosis is invigorating -- a welcome "Arab Spring." For others, the changes are alive with possibilities, but also pose uncertainties. A number are confused. After all, how does one prepare for a future of unprecedented freedom? There are doubters, too, and even those whose opposition has hardened into enmity.

Just pause for a moment to consider what has happened in recent months -- after years and years of the old order.

Last October, for the first time in the 5,000 year history of the Afghan people, Afghanistan held free presidential elections with universal suffrage. In short order, this September, the Afghans will elect their parliament.

In January, the Palestinians elected President Abbas, who is striving to create a democratic state at peace with his peoples’ democratic neighbor, Israel. The Palestinians will vote for their Legislative Council in July.

Also in January, over 8 million courageous Iraqi men and women braved threats from killing squads to elect a government that will serve, not oppress, and which will draft a democratic constitution for a new Iraq. Yesterday, I had the opportunity to meet with these new leaders, men and women of courage and conviction, patriots in the cause of a free Middle East.

And on Monday of this week, the Kuwaiti National Assembly granted full political rights to the women of Kuwait.

So the movement gains momentum.

In just a few days, the people of Lebanon will continue their drive to regain independence by selecting a new legislature and setting a new direction for a land of both great and sad legacies.

Egypt is now rewriting its constitution. President Mubarak took an important step in March by announcing that the Egyptian constitution should be amended to allow multi-party presidential elections for the first time. The decision on that announcement goes before the Egyptian people next week in a nationwide referendum. We encourage a fair contest for the parliament and presidency, with impartial observers. The world will watch with great interest as the Egyptians write their new election law, establish the election commission, and create novel expectations for democratic participation.

Morocco’s leaders are updating the country’s family code, guaranteeing equal rights for women, and demonstrating that Islam and modernity can go hand in hand. And here in Jordan, economic and political reform is moving ahead through the establishment of regional legislatures to encourage broader citizen participation.

These are incredible events. This is a vital moment for the broader Middle East.

The U.S. Broader Middle East and North Africa Initiative

In 2003, President Bush spoke of a new vision for peace and prosperity in the Middle East: "Old patterns of conflict in the Middle East can be broken," he observed, "if all concerned will let go of the bitterness, hatred, and violence, and get on with the serious work of economic development, and political reform, and reconciliation." Our ambition "is to bring the Middle East into an expanding circle of opportunity, to provide hope for the people who live in this region."

Liberty radiates first from the hearts and minds of individual men and women. In each country, the cause of freedom assumes a special shape. The United States appreciates and respects unique traditions, cultures, and courses of reform.

At the same time, we associate with universal aspirations -- for liberty, betterment for one’s family, knowledge, self-government, a hopeful future, and true security based on respect for the human rights of others.

To assist the countries of this region in pursuing their political and economic reforms, last summer President Bush led the creation of the Broader Middle East and North Africa initiative, or BMENA.

To emphasize that this BMENA initiative will be a centerpiece of America’s relations with the countries of this region, the President has asked me to supervise the development of a government-wide strategy to support political and economic reform from Morocco to Afghanistan. Principal Deputy Assistant Secretary of State Liz Cheney will coordinate this effort with me, overseeing our day-to-day efforts.

The U.S. BMENA strategy will integrate our initiatives for democracy assistance, free trade, investment incentives, private enterprise development, literacy and education, legal reform, civil society, and women’s empowerment.

One financial source to back this effort is the Middle East Partnership Initiative. This Partnership Initiative complements our larger AID programs by providing rapid assistance to innovative projects, especially "grassroots" reform efforts and "signature" items that may provide models in the region. Since 2002, the United States has contributed almost $300 million to this initiative, which at present sustains over 100 creative projects.

Working with our BMENA partners, the United States aims to customize efforts to support reformers in each country. We hope to work with the private sectors, both businesses and non-governmental organizations. We want to draw help from American companies, universities, associations, and non-profit groups. We will encourage Congressional-Parliamentary exchanges.

This engagement through BMENA will underpin our foreign policy relationships with countries in the broader Middle East.

The old days of a foreign policy characterized only by the meetings and machinations of "diplomatic statecraft" are past. The transformational diplomacy of the United States will integrate the political and economic reform efforts of BMENA into the core of our foreign policy. Indeed, this broader engagement is the foundation for America’s efforts to counter terrorism, forward peace processes, and strengthen security.

To be most effective, the reform initiatives need to be mutually reinforcing. Educational reform is necessary to meet demographic demands and the need for an informed citizenry participating in democracies. Open trade will help countries integrate productively in a globalized economy; the gains of economic openness will be greater under the rule of law and with a healthy, well-prepared labor force. A good climate for investment will draw capital, technology, and know-how; it will also help connect local economies with global sourcing and marketing networks. Support for private enterprise will enhance small businesses, start-ups, and employment. Women’s empowerment will help countries draw on the talents of all their people.

We will also encourage countries to employ the BMENA reform network to measure progress and share experience. In a few days, for example, Jordan will host the first BMENA Education Ministerial to consider a plan to implement homegrown education reforms and promote literacy.

Last December, Morocco hosted a "Forum for the Future" to highlight the BMENA initiative and suggest improvements. This November, Bahrain will host a second Forum that will invite governments to assess what is being accomplished and suggest what needs to be done.

This will not be an easy transformation. The pace of change is likely to spark resistance.
There will be some who want to maintain the status quo or even drag the region back into a darkness that abhors modernity and tolerance. But as President Bush has said, "When you stand for your liberty, we will stand with you. Democratic reformers facing repression, prison, or exile can know: America sees you for who you are: the future leaders of your free country."

Yesterday, in Iraq, I met Iraqi patriots who are turning to drafting a new democratic constitution for a free Iraq. But having failed to stop the elections or the formation of a new government that represents all of Iraqi society, jihadists and Baathists are turning to indiscriminate mass murder to try to divide that society. Zarqawi has made clear that innocent men, women, and children -- Muslim and non-Muslim alike -- are all targets of his hatred. Iraqis -- and the world -- are looking for Muslim leaders -- governmental and spiritual -- to condemn this horrible assault on the most basic humanity. These suicidal terrorists do not live to create -- or even to preserve a past: They die to destroy. It is up to you to decide whether they will destroy the soul of Islam, too.

The traditions of Islamic history can support a very different future. As Bernard Lewis reminded recently, Islam has treated despotism as evil. Its traditions emphasize consensual, contractual, and limited government based on the need for consultation by rulers. It was the imports of early modernization that included perverted tools of domination and repression to expand the state at the expense of Middle Eastern society. In that sense, the Baath Party reflected the dangerous "modernization" ideas of mid-20th Century Europe.

Today’s changes offer a different path. Countries in the region are combining the traditional spirit of consultation with the new information revolution. There is a new public debate. And there is a fast-rising sense of opportunities missed that could be gained.

Economic Progress

We are already making progress.

When I attended this meeting two years ago, I gave a speech on reawakening the Middle East’s vibrant past through global trade.

I referenced the historical antecedents of commerce in the region, beginning with the Holy Quran’s exhortation to "Let there be trading by mutual consent." And we discussed President Bush’s vision for a U.S.-Middle East Free Trade Area to be achieved through a customized approach, reflecting each country’s level of readiness and interest.

Consider the results over two years.

The U.S. Free Trade Agreement (FTA) with Jordan, enacted in 2001, was our first with an Arab country. Between 2000 and 2004, Jordanian exports to the United States grew from $63 million to $1.1 billion. The FTA has helped diversify Jordan’s economy and led to thousands of new jobs.

Behind these numbers are unique individuals. Ms. Lamma Abbassi’s small business produces skin-care products from the Dead Sea. Through the Jordan-U.S. Business Partnership, volunteers from Revlon, Estee Lauder, and other firms worked with Ms. Abbassi on product specifications, marketing, literature, and packaging designs.
As a result, Ms. Abbassi exported over $42,000 worth of products to America just in the month of January.

The next U.S. FTA in the region will be with Morocco. Completed last year and going into effect on July 1, new business opportunities are already emerging. NMC, a Moroccan company, quickly gained a $3 million deal with Tiffany for jewelry display cases. It then won the contract to cast the statuettes for the Emmy T.V. awards!
Even with the end of worldwide textile quotas, Fruit of the Loom recently announced it would open new operations in Morocco.

Other FTAs are close behind. The Bush Administration completed an FTA with Bahrain last September, and we will work for passage by the U.S. Congress. Bahrain wants to employ this FTA to spur its development as a regional hub for modern service industries. Last week when I was in Singapore, another U.S. FTA partner, I talked to Singapore’s leaders about Bahrain’s outreach to that island entrepot and pacesetter in innovation. As Bahrain’s planners have wisely determined, their economic network needs to extend beyond its home region, Europe, and the United States -- to East Asia and other markets. For the Middle East is part of a global economy, and the new FTAs of MEFTA are designed to assist your countries to compete worldwide.

The momentum for open trade has spread to other states in the Gulf. Late last year, I traveled to Oman and the United Arab Emirates to pave the way for launching FTA negotiations.

I took a tour of Dubai’s dynamic port, the third busiest in the world, and a working, practical symbol of the great potential of the region to revive its place as the world’s preeminent bazaar. In Oman, I felt the commercial traditions of a land whose cultural outlook is toward the sea and foreign ports. The Omanis pledged to expedite the FTA negotiations, and they have been as good as their word. Our work on an FTA with Oman is almost completed. We have also made good progress with the UAE.

We are pleased to have covered substantial ground with Saudi Arabia in its push to join the World Trade Organization (WTO), and Saudi Arabia is nearing its goal. We would like to bring Lebanon, Algeria, and Yemen into the WTO as well.

The new economic reform team in Egypt, led by Prime Minister Nazif, has created a promising environment for change, although the cabinet recognizes there is much work still ahead. The Prime Minister had an opportunity to discuss his reform plans with President Bush, Vice President Cheney, members of the U.S. Cabinet, and Congressional leaders during this week’s visit to the United States. Egypt intends to cut corporate and personal income tax rates by 50 percent. It has reduced the averaged weighted tariff rate from 14.6 to 9.1 percent. And Egypt has launched a major program of financial sector reforms, backed by U.S. assistance.

I was delighted that one of my last actions as U.S. Trade Representative was to bring Egypt and Israel together to create jobs and opportunity for both countries. We drew on the example of Jordan, which has been fast off the mark in using the U.S. Qualified Industrial Zone, or QIZ, program to expand employment and trade. So on December 14, in Cairo, we launched a QIZ program to free the way to the American market for many Egyptian exports with Israeli content.

As I left Egypt that December day, I took particular note of two local demonstrations reacting to our announcement. A small group of intellectuals protested cooperation with Israel. But a much larger assembly of workers complained that we needed more QIZs so they could be included too! That is why the United States is pursuing serious preparations with Egypt for a possible FTA: We want all Egyptians and Americans to improve opportunity through stronger ties of trade, investment, and business.

Our experiences with Jordan, Egypt, and Israel also point to the critical need to offer economic hope to the Palestinian people. The Palestinians already participate in a free trade regime with the United States through the U.S.-Israel FTA. The U.S. Congress has recently approved $200 million in supplemental aid for this year to support a development strategy for the Palestinian Authority, and President Bush is seeking an additional $150 million in assistance for 2006. This aid is designed to: foster agriculture and agribusiness; support home construction; finance roads and water treatment; add courthouses, judges, and prosecutors; back jobs and youth programs; and facilitate the cross-border movement of people and goods, among other activities.

We understand the critical need, working with others, to integrate this assistance with the disengagement and peace processes. There is no clearer example of the interconnection among security, economics, and democratic development.

Stepping back to survey the region as a whole, the World Bank has reported that economic prospects are on the upswing -- with 3.5 percent per capita growth, the highest rate in 30 years. But this rate is far below the growth rates in East Asia. Developing economies need to do better. There is much, much more to be done.

Complementary Political Reform

Even though the challenges of economic reform are extensive, sometimes they are perceived as "easier" than political reform. In fact, the two drivers of constructive change need to be considered in combination.

Dr. Mustapha Nabli, the World Bank’s chief economist for the Middle East and North Africa Initiative, recently explained that the lack of economic growth in the region has resulted in part from the inability of advocates to form coalitions to advance reform: "To unite for change, groups need certain central rights. They need access to information to formulate choices, they need the ability to mobilize, they need the ability to contest policies that are poor. But these rights," he continues, "are not present in the region."

Weak governmental accountability and the lack of public participation limits the abilities of business and civil society groups to become agents of economic reform. Corruption erodes the public’s sense of fairness; potential entrepreneurs are stymied by fears that the favored few will steal the fruits of their labor. Lack of transparency breeds distrust, undermining societal cohesion. All these political flaws weaken the social contract that spurs opportunity, hope, and faith in the future.

Although political change in the region is stirring, it has only begun to shake regimes out of their old patterns. Elections alone, especially limited ones, do not create democracies.

Countries need to create the framework within which people can build the public and private institutions of a civic democracy. The test of democracy is not just majority rule, but also minority rights and participation. The standard for democracy is not just the capability of the elected government, but also the quality of the free press, rights of assembly, and privacy protections outside the sphere of government.

The most recent edition of the Arab Human Development Report called political freedom "seriously deficient," undermining personal freedom, too. It pointed to prosecution of journalists, attacks on political activists and human rights advocates, official censorship, the lack of multi-candidate presidential elections, the abuse of minority rights, and the inequality of women.

Those who wish to advance prosperity should consider the costs -- both societal and personal -- of ignoring the need for mutually supportive political and economic reforms. For a time, one reform might advance without the other. But contrasts in progress create conflicts that interfere with, and even threaten, longer term success. The United States is committed to promoting both reform processes. We believe both are connected to our security and yours.

Progress on Education and Women’s Empowerment

Our societies must also look to the development of our most vital resource: our people.

I am delighted that Mrs. Bush will be speaking to you tomorrow on education and women’s empowerment.

King Abdullah has pointed out that in ten years 50 percent of the population in this region will be under the age of 18 years. Therefore, we decided that BMENA reforms also need to encourage local education initiatives. And when countries exclude women from education, work, politics, and the realm of ideas, they cut national potential by at least half.

The United States is challenged to improve school standards and students’ performance at home. So our contributions here can be best designed as catalysts for local commitments. With the spread of information technology, local efforts can be connected rapidly to global resources.

For example, the United States launched My Arabic Library as a public-private partnership to develop classroom libraries to foster independent reading, critical thinking, and analytical skills in young people. Beginning in September, this project will have helped bring more than 1 million new books to Jordanian, Bahraini, and Lebanese classrooms.

Here in Jordan, over 40,000 students have participated in the USAID-funded INJAZ entrepreneurship program, which enables students to set up and operate small but real companies. Last week I visited a similar project at a high school in Malaysia, backed by U.S. and local businesses. We are now expanding the idea to 12 other countries in this region. But local business support will be critically important. As Omar Alghanim, a Kuwaiti CEO and sponsor, said, "Now it’s in our hands. Are we going to take on the responsibility for preparing the next generation?"

The United States is also supporting the launch of an Arab Women’s Legal Network this summer to assist with professional development. Last summer, a U.S. Internship Program for Young Middle Eastern Women placed 42 women in Fortune 500 companies and law firms.

These are some encouraging examples. But there is a large, unfilled need for creativity and support. Perhaps some of the businesses that participate in the World Economic Forum can become partners in this transformation.

Conclusion

Change, although exciting, can also be intimidating, even frightening.

My country has a tradition of embracing change. The United States was settled by immigrants who risked great change to create a better future. New immigrants, including from the Mid East, continue to enrich America.

Our brief Constitution was drafted to permit adaptability and flexibility.

Our economy has encouraged competition to foster dynamism. Our businesses, at least most of them, challenge old habits that add costs and reduce service.

But Americans can also be troubled -- even fearful -- of change. We have our own inflexibilities, our structural rigidities, even our obstinate attitudes.

So the differences between America and the broader Middle East, perhaps appearing large at first, may lessen under closer scrutiny.

Together, we need to face the challenges of transformation. Together, we need to learn from one another and work with one another.

America will reach out to the countries of the Mid East as a respectful partner -- for peace, development, democracy, and hope.

We will celebrate your success, because it will be our good fortune, too.

That is the spirit of transformation we want to share with you.