Time for a U.S. Regional Strategy in the Middle East

May 25, 2014 Topic: Post-Conflict Region: Middle East

Time for a U.S. Regional Strategy in the Middle East

"The major threats in the Middle East today are regional in scope, transcend state boundaries and defy state-specific solutions."

But the Saudi-Iranian relationship doesn’t exist in a regional vacuum. Turkey also aspires to play a constructive role in areas of mutual interests, possibly even reinforcing an improved Saudi-Iranian relationship. Like the other two major players, it also faces significant threats, but also opportunities in the region. With Prime Minister Erdogan’s foreign and domestic policies seriously challenged, in part due to the crisis in Syria, the loss of Egypt’s former president, Mohammed Morsi, as a regional partner and his own heavy-handed tactics at home, Erdogan will be looking for alternative solutions to major problems facing the region and a renewed role for Turkey. Moreover, with the possibility of a thaw in relations between the United States and Iran, Turkey has the potential to act as a strategic bridge between the two countries. Both the United States and Iran, and even Saudi Arabia and Iran, or certain powerful players within each of these countries, might find it less politically risky to channel certain matters of mutual interest through Turkey, than to work publicly with one another.

Pillar Two: Adapt to Regional Trends

Pillar two of the strategy is subtler and requires the United States to adapt to, and not just try to shape, events in the region. Adaptation is not a sign of strategic weakness for the United States. Part of strategy involves using trends and historical forces that may be resistant to control to one’s advantage. The regional trends that U.S. policy makers should note are the rebalancing of regional power due to state weaknesses in Syria and Iraq and the prospects of a more regionally engaged Egypt over the medium term, notwithstanding the country’s current economic woes.

As for Egypt, Abdel Fattah el-Sisi, likely to become the country’s president in the next election, visualizes himself more like former president, Gamal Abdel Nasser, who in the 1950s and 1960s played a large regional role, than Hosni Mubarak, who was much more risk-averse and domestically focused. When Egypt starts to climb out of its current economic malaise, the United States should expect it to play a larger role on the regional political scene. And given that it is likely to surface from its political and economic troubles before Syria and Iraq stabilize, it will have the opportunity to play such a role. This could be a positive development for regional stability, and for the interests of the United States and Israel, as a more active Egypt could serve as an Arab counterweight to Iran, as it reintegrates into the region and its own economy strengthens, as well as to Turkey.

The U.S. relationship with Egypt depends on keeping this broader regional perspective in mind. Given its centrality, the United States must work as closely as possible with Egypt’s elected government to help it address the country’s serious economic woes, and even its challenges in the Sinai. This is not to suggest that the United States should resume full military ties with Egypt or form a Mubarak era-like alliance with the country. But with all of the other unstable areas in the Middle East, neither the region nor the United States can afford a destabilized or fragile Egypt or an Egypt that feels compelled to lean more heavily on an already emboldened and aggressive Russia.

The current Egyptian government’s crackdown of the Muslim Brotherhood and its other antidemocratic actions make this a politically difficult line to walk for the United States. But disengagement and withholding U.S. aid is unlikely to compel the current Egyptian government to reverse course. Engagement, on the other hand, aimed at stabilizing Egypt’s economy, has the potential to soften the government’s political positions over time.

One should not infer from a strategy of working with Egypt, or for that matter, Turkey, Saudi Arabia, or Iran, that the United States should, or even could, form hard-wired, Cold War types of alliances with any of these countries. Given the lessons of the Arab Spring, none of these countries will have the appetite or domestic support for unconditional adherence to U.S. policy or interests. So there needs to be a rethinking in Washington about the types of diplomatic capabilities that will be required for this new strategic approach. The change necessary will be to develop a greater capacity for leveraging issue-specific, shorter-term, shifting coalitions, rather than leaning on more permanent relationships. On some issues, the United States may align itself with Iran, Turkey, Saudi Arabia and Egypt, while on other issues it may find itself on the opposing side of one or more of these countries. It will be the United States’ diplomatic capacity to pivot and use its power to form coalitions, which will determine its success or failure with these new regional strategies.

Pillar Three: A Coordinated Economic Recovery Plan

The third pillar of the strategy involves leveraging the influence the United States has regionally, as well as in international financial and political forums, to create a long-term, integrated economic-recovery plan for the region. The strategy should start with Egypt, but subsequently be extended to Syria and other countries and territories in the region at serious risk. The rationale is that without a positive economic horizon for the countries in the region, particularly those that have had their political and economic foundations shaken by the Arab Spring, no political stability can be sustainable, and no political strategy can be successful.

The Arab Spring erupted and then spread across the region because of political disenfranchisement, but the rage was fueled by economic privation, economic inequalities and the lack of economic opportunities. Drilling down deeper into the problem, one of the contributing drivers of the early protests in Tunisia and Egypt was the lack of employment opportunities for many highly educated youth, particularly women. The region’s overall unemployment remains the highest in the world. Youth unemployment has reached 28 percent, which according to International Labor Organization, is about twice the global average.

In addition to the daunting unemployment figures, another structural problem that contributes to regional instability is the widening disparity in income and wealth within countries, not to mention between the very rich countries in the Persian Gulf and the rest. And making the effect of the disparities worse, in many countries of the region, poor allocation of scarce resources crowd out much-needed expenditures in community improvements and infrastructure; gaps, which, in some areas like Lebanon and Gaza, get filled by nongovernmental organizations or armed groups like Hezbollah and Hamas, respectively, fueling a cycle of violence and economic devastation.

So what is the appropriate role for the United States to play in addressing these problems? The United States should be clear at the outset that the value it adds is not primarily its pocketbook. The United States has neither the financial capacity, nor the domestic support to launch a sizable “Marshall Plan” for spurring economic growth for the Middle East on its own. But the United States is in the unique position of having the diplomatic clout and sophistication to corral all of the stakeholders required to solve many of the region’s current and looming economic problems. And it has the ability to provide much-needed leadership, and help integrate and rationalize the various pieces of an economic package.

Let’s be clear. It isn’t a shortage of aid to the region that is the missing piece of the economic puzzle, but rather the lack of an integrated strategy that seriously addresses the economic woes, strengthens the economic fundamentals in individual countries, and leverages the international community’s leadership and resources to improve regional outcomes. In fact, transfer payments to countries most in need, like Egypt, have been flowing. Since President Mohammed Morsi was deposed last year, Saudi Arabia and other Gulf Cooperation Council (GCC) countries have transferred over $12 billion to Egypt’s coffers, and the International Monetary Fund (IMF) and World Bank have been active in the country as well. But much of the money transferred to Egypt from the GCC countries went to funding subsidies, rather than being invested in areas that would create long-term sustainable growth.

Leadership and coordination of effort is where the United States can provide the most help and develop the greatest traction. While specific economic policies and intricacies are beyond the scope of this article, and when outlined, would have to include country-specific elements, but possess a distinctive and compelling regional economic framework, we can identify several core priorities of a visionary, comprehensive, regional economic strategy.

First, the United States needs to use its convening power to bring together the wealthier countries of the region, namely Saudi Arabia and other GCC countries, to lay out the outlines of an economic plan. Such a plan should include a commitment to coordinate a high-level economic commission involving the World Bank, the IMF, the World Trade Organization (WTO), the United Nations and other relevant international and regional development agencies, which can work with the governments in the Persian Gulf countries in a coordinated and collaborative manner to put together a multi-year, regional development agenda.

Second, such a plan would present the framework for an economic fund to support regional as well as country-specific development projects. The United States could facilitate development of such a vehicle with regional and international bodies through its leading role in them. The fund would focus on economic measures for opening up employment opportunities, as well as address decaying infrastructure, such as deficiencies in roads, electricity, water and sanitation. But while these measures are important, to make a real dent in unemployment numbers, the private sector in many countries of the region, Egypt in particular, needs to be revitalized. Instruments like the “catalyst fund”, recently created by the International Finance Corporation (IFC) of the World Bank Group, with participation of governments of advanced economies and emerging economies as well as strategic investments on the part of Sovereign Wealth Funds (SWF) of the Gulf Cooperation Council countries should be integrated into this strategy.