The other Arab crisis: The economy

ALEPPO, Syria, Oct. 21 - Aleppo is said to be the oldest continuously inhabited city on earth. For centuries, Arab cities like Aleppo, Baghdad, Cairo and Damascus were the centers of world trade, strung like pearls along the ancient silk road.Here the caravan routes converged, bringing cinnamon and black pepper from India, cloves from Zanzibar and yellow saffron from Spain. But that golden age of Arab economic power has long ceased.

THE FINEST SILKS and brocaded fabrics from faraway China; lapis lazuli from Afghanistan; rubies from Persia; gleaming gold from the tropic heart of Africa; and smokey amber from the frozen shores of the Baltic all once found their way to these thriving markets.

Arab rulers built a prosperous Islamic empire stretching from Morocco to the Himalayas at a time when European markets were primitive, based on barter. Arab merchants developed sophisticated financial instruments to facilitate their far-flung trade.

A glittering civilization flourished. The Arab lands were foremost in the world in arts, sciences and learning.

Today, Aleppo’s great marketplace is still bursting with life and color and commerce. But the Arabs are no longer the middlemen of world trade they once were. The great wave of globalization and trade expansion that swept the planet in the 1990’s left this place — and much of the rest of the Arab world — virtually untouched. At the dawn of the 21st century, Arab economies are in crisis.

“The Arab world, basically, has not kept up with the global economy. If one looks at indices of economic policy developed, for example, by the World Bank, what you’ll see is that the Middle East/North Africa region actually ranks lower than Sub-Saharan Africa, and has actually made less progress in the last decade in economic policy reform than Sub-Saharan Africa,” says Marcus Noland of the Institute for International Economics in Washington.

THE NUMBERS TELL A STORY OF DECLINE

Excluding oil, the combined exports of all 22 Arab countries are worth about $40 billion annually — less than that of Finland.

The combined gross domestic product of the Arab countries is $531 billion — less than that of Spain.

Labor productivity has been declining steadily since the 1960’s.

“In Arab countries, per capita income grew at one half a percentage point per year over 20 years. This is scary. It tells us that it will take every Arab citizen 140 years to double his or her income. citizens of other regions can do this in 10 years,” says Rima Khalaf Hunaidi of United Nations Development Program.

With the rest of the world rushing to develop an information based economy, the Arab countries have fallen far behind. The region ranks dead last in the world for the number of Web sites and Internet users. Only 0.6 percent of Arabs use the Web.

The Arab world translates only 300 books written in other languages annually — one fifth the number that are translated into Greek. Most Arab regimes exercise press censorship and ban controversial works.

With a rapidly growing population — 40 percent of all Arabs are under age 16 — the educational system in many countries is far below world standards. “In the Arab world, population of 283 million, we have around 43 percent of the adult population illiterate, which means we have 65 million adults illiterate. We have one of every 2 women who can neither read nor write. We have very low expenditure on research and development and we have a problem with the quality of education,” says Hunaidi of UNDP.

BEHIND THE ECONOMIC CRISIS

Most experts cite the socialist, centrally planned systems that Arab regimes adopted in the 1950s. While some countries have taken tentative steps toward opening their economies, the legacy of heavy-handed state control persists.

“These are really heavily state dominated economies which have never been forced to reform and the reluctance to reform at base is a fear of loss of political control,” says Noland.

Arab regimes say their poor economic progress is primarily due to the long and costly confrontation with Israel.

“The countries of the region, all of them, have embarked on very expensive defense budgets due to the fact that there is a war situation in the region,” says Adnan Omran, Syria’s Minister of Information. “If this situation is to prevail for a long time again there is no country in the region which can be immune from more disastrous economic results.”

Now, with the bloody Israeli-Palestinian conflict continuing with no hint of a solution, and the Bush administration pushing ahead with war plans against Iraq, Arab economies and the Arab people face more turmoil, more uncertainty, and little reason to hope for a better future.

The Associated Press and Reuters contributed to this report.