Obama’s Middle East Policy is Hurting our Economy

Obama’s Middle East Policy is Hurting our Economy


President Obama appears to be leading the United States out of the Promised Land. We are told that events in the Middle East have spiraled beyond the control of the U.S., that ourinfluence in the region is waning and that this is a good thing. Americans are supposedly content to take a diplomatic back seat, having invested too much blood and treasure in Iraq and Afghanistan, with little to show for it.  And, by the way, it’s rumored that soon we won’t even need Saudi oil.

Such an attitude is short-sighted in the extreme. The truth is that the Middle East will likely continue turbulent in the years ahead; the less we are engaged the less we can influence events. At the least, our commitment to Israel means we cannot walk away.

Moreover, our self-interest may suggest further engagement in the region. The countries of North Africa and the Middle East are fast-growing, and could become important economic partners for the U.S. – an opportunity that could forge not only greater stability but also deliver crucial future markets. Consider the demographics – those relentless but slow-moving determinants.  

In a shrinking world, the growing Middle East represents long-term opportunity. True, the Population Reference Bureau reports that the combined populations of North African and Western Asia countries (the latter includes Israel, Jordan, Saudi Arabia and other Middle Eastern countries, as well as Armenia and Azerbaijan) was only 451 million as of 2011. But, the growth rate in both regions is among the highest on earth; by 2050 the population of North Africa will have increased by 150 percent to 323 million, while that of Western Asia will grow by 170 percent, to 402 million. In 2050 those two regions will jointly host more people than a combined South and Central America, more than all of Europe and certainly more than North America, likely to have just 470 million people.

Moreover, the population is young, which presents challenges as well as opportunities. Just 5 percent of North Africa’s population is 65 or older; 31 percent is under the age of 15; the figures are similar for Western Asia. By contrast, 13 percent of North Americans are 65 or older, while just 19 percent are under the age of 15. Japan’s situation is dire, with 23 percent of the population topping 65. These figures have consequences.

In the U.S., the aging population means that our retirement and healthcare programs are our most intractable budget busters. Europe faces similar problems; the birthrate in every European country is below replacement level and Italy’s population has declined for five straight years. In Japan, the population is expected to shrink by 26 percent by 2050 and 30 percent by 2060. Russia’s population is on track to drop from 143 million to 107 million in 2050. Even China’s workforce will soon peak, at about one billion, before sloping south.

You have to wonder, who will be forming households, buying autos and appliances in the next few decades? For growth, you have to look at Asia, certainly, but also to the Middle East. 

The Middle East will not become important consumers, of course, without substantial economic development. That’s where the U.S. should be active, sowing the seeds of future demand and also reduced extremism. Does anyone doubt that having more than a quarter of the young people in Egypt out of work, and nearly 20 percent of the country living on less than $2 per day, is a combustible mix?

President Obama addressed such issues in his much-heralded Cairo speech in 2009, in which he vowed a “reset” with Muslims. The president promised a “new corps of business volunteers to partner with counterparts in Muslim-majority countries,” a new fund to support technological development, new centers of scientific excellence and new Science Envoys who would make the magic happen.

Unfortunately, there was little follow-through on these overtures. As one measure of our economic engagement, U.S. direct investment in Egypt, which grew from $0.2 billion to $6.4 billion from 2004 to 2008, sank to $1.4 billion by 2010. That was in part due to the recession, but it was not a trend that would build bridges.

For many reasons, including this lack of follow-through, our standing in the Middle East during Obama’s tenure has collapsed below that accorded the U.S. under former President George W. Bush. Imagine: in Egypt, according to 2011 polling by the Arab American Institute, 5 percent held a favorable opinion of the U.S., down from 30 percent in 2009 and 9 percent in 2008. Our popularity is below 2008 levels in every country surveyed but Turkey. Most shocking, we are viewed less favorably than Iran in most countries.

Polling shows that in Tunisia, Egypt, Lebanon, Jordan and even Saudi Arabia – jobs is the number one concern – just like the U.S. We could help. Even though we cannot afford a Marshall Plan for the Middle East, the private sector could be convinced that it is in their self-interest to promote joint ventures and investment in the region. 

Unfortunately, that would require leadership from President Obama, and outreach to the business community – a sector not embraced by this White House. Obama’s indifference to, and occasional antipathy towards the private sector is well known. What is less commonly understood is that it has handicapped not only our recovery here at home, but also our choices overseas.