AUSPC 2012: Arab North Africa Policymaking Concerns

21st Annual Arab-US Policymakers Conference – AUSPC 2012
Washington, DC
Thursday, October 25, 2012

POLICYMAKING CONCERNS RELATED TO REGIONAL GEO-POLITICAL DYNAMICS: ARAB NORTH AFRICA
Chair:
Mr. Christopher Blanchard - Middle East Policy Analyst, Congressional Research Service, Library of Congress.
Speakers:
H.E. Ambassador Ali Aujali – Ambassador of Libya to the United States.
Professor Paul Sullivan
Ms. Alexis Arieff – Analyst on Africa and the Maghreb, Congressional Research Service, Library of Congress.
Mr. Karim Haggag – Visiting Professor, Near East South Asia Center for Strategic Studies, National Defense University; former Director, Egyptian Press and Information Office in Washington, DC.
Dr. David Ottaway – Senior Scholar, Woodrow Wilson Center; former Washington Post foreign correspondent in the Middle East, Africa, and Southern Europe; author,The King’s Messenger: Prince Bandar bin Sultan and America’s Tangled Relationship with Saudi Arabia.
Commentator:
Dr. Néjib Ayachi - Founder and President, Maghreb Center.

[Remarks as delivered]

[Patrick Mancino] Ladies and gentlemen, we are about to begin. At this point in time, I’m going to call Mr. Chris Blanchard from the Congressional Research Service who is the chair of our session. Mr. Blanchard.

[Christopher Blanchard] Hello everyone. If you could please take your seats we’ll get this maybe penultimate or ultimate panel started. I know it’s been a long day, and we’ll appreciate your attention for this insightful and hopefully thought-provoking panel on Arab North Africa.

The current of change that’s still sweeping through the Middle East had its humble beginnings in the sub-region that this panel will address, Arab North Africa. The experiences of countries on the southern shores of the Mediterranean offer competing visions of the course that change may take in the broader region.

In Tunisia, we find an elected coalition government faced with security challenges and debates over fundamental constitutional principles, while economic struggles that helped motivate original calls for change continue.

In Libya, triumph and tragedy have marked a transition that has successfully produced Libya’s first elected government in nearly fifty years. But yet Libya remains haunted by the ghost of the Kaddafi era, its divisive legacy, and this new government has a long way to go to build its own capacities and assert national leadership.

Egyptians have taken the first steps beyond the political gamesmanship that characterized their early transition period. But President Morsi and his allies find themselves grappling with the responsibilities of elected power and balancing competing domestic and international demands.

In Algeria, we see the durability of broadly based forms of authoritarian rule, but looming leadership transitions and persistent economic challenges may place obstacles on the horizon.

And lastly in Morocco we see a potential model of negotiated change, with many questions still outstanding about the limits of royal power and the durability of compromise with elected individuals.

What do these different case studies teach us about the possibilities of lasting change in the region? How has each shaped the other? And how should policymakers respond to unique challenges each presents? Indeed, North Africa offers us a rich menu of interesting topics and questions to explore. To help us do that we are joined by the impressive panel of experts and practitioners that you see before you, and they’re all eager to share their experiences and insight. Their bios are available to you so I will keep introductions to a minimum.

In general we’ll proceed I think east to west, so across North Africa beginning with Egypt. I’ve asked our speakers to limit their remarks to roughly seven minutes in order to reserve plenty of time for your questions and answers. Dr. Anthony and the organizers as always have provided us with a series of thought-provoking questions, and as with previous panels question cards will be available to you.

So first I’d like to call on Mr. Karim Haggag, who is a visiting professor at the NESA Center at NDU and served as a career Egyptian diplomat with direct experience in Egypt’s diplomacy towards Middle East regional security, arms control, and non-proliferation issues. He’s also a veteran of the Egyptian Information and Political-Military Affairs Office here in Washington. So he offers unique insight into the delicate relationship Egypt’s new leaders find themselves maneuvering in. Mr. Haggag, thank you.

[Karim Haggag] Thank you, and I’d like to thank the council for this opportunity. It’s a pleasure to be here with you today. I’d like to focus my remarks on foreign policy, particularly the challenges facing the new Egyptian government in the foreign policy and regional security realm, but I’d like to set the context by talking a little bit about domestic policy.

And here let me just start out by what seems to be a paradoxical situation when assessing Egypt’s domestic landscape, because on the one hand on the level of politics we have truly momentous change in Egypt; however, on the level of policy I would argue that we have much more continuity than change.

On the level of politics the election of President Mohammed Morsi was truly a landmark event in Egypt’s political history. He was the first civilian elected to the office of the Presidency in Egypt. He is also the first Islamist to be elected as head of state in any Arab country in free and fair elections, and that the Islamist movement in question of course is the Muslim Brotherhood, by far the largest and most well-established Islamist movement in the world of Sunni political Islam. So truly momentous change on the level of politics.

However I would argue on the level of policy we have much more durability, much more consistency. And the reasons for that are numerous, and I don’t want to get too much into that – we can of course discuss this in the Q&A session – but just to point out that this is rooted in a number of factors.

First of all the resiliency of Egypt’s institutions – the military, the national security bureaucracy, the judiciary, the media – have all remained to a certain level very cohesive throughout what has been a very turbulent transition. Now all of these of course have afforded Egypt really a measure of stability that’s been lacking in some of the other countries that have undergone transition. We’ve heard of course about Syria, we will hear in this panel about Libya, Bahrain, all of these have went through very turbulent domestic transitions, but I think the resiliency of Egypt’s institutions have spared Egypt much of that.

We still are of course very much in the period of political transition. Despite the election of President Morsi we still have a number of milestones to complete in Egypt’s post-revolutionary transition.

There is still a new constitution that is being negotiated as we speak. That constitution will be put to a national referendum, followed by parliamentary elections.

Now, in all of this of course we have seen what has been at times a very polarized, or polarizing debate within Egypt’s domestic context between both the Islamists and non-Islamists forces, forces affiliated with the old regime, and forces affiliated with the new revolutionary groups that have emerged from the revolution. But there is still a recognition that consensus is key. I think there is a recognition that no party can govern by itself. There is recognition that no coalition of forces can form a supermajority that can govern Egypt in isolation from other political forces.

So I think that’s a very healthy sign, but again it accounts for the fact that there has been no radical departures when it comes to Egypt’s domestic or foreign policy. And it attests to what I think is a very healthy sense of political pluralism in Egypt.

Now the one area where we see this consistency most clearly is in the realm of foreign policy. We have the fundamentals of Egypt’s foreign policy orientation very much unchanged – the strategic partnership with the United States, Egypt’s commitment to the Egyptian-Israeli Peace Treaty – have all remained very much intact.

Contrary to widespread expectations following the overthrow of the Mubarak regime, there has been no radical shift in Egypt’s regional alliances. There has been no resumption of diplomatic ties to Iran. There has been no drastic change in Egypt’s policy towards the Hamas government in Gaza or the border regime between the Sinai and the Gaza Strip. There is a recognition I think on the part of the government of the need to leverage the network of relationships and alliances that Egypt has formed over the last three decades to deal with what is a very difficult economic situation domestically, and I will talk about that a little bit further on.

So we see on the level of foreign policy much more consistency and much more durability than any sense of radical change, as was the expectation following the outbreak of the revolution. Now, that does not mean that there will be no change. And I think what you do see on the part of the new government is a clear determination to reassert Egypt’s regional role that was seen to have been diminished under the former regime.

We have seen a much more activist foreign policy on the part of this President with numerous successive visits to China, reaching out to Europe, a visit to Iran in the context of the non-aligned movement, reaching out to Africa given Egypt’s interests there, Egypt’s water interests with the Nile Basin countries. We have seen a very bold initiative on Syria that we could talk about further. We see a clear signaling to break with the old regime when it comes to the perception of Egypt’s subordination of its national security interests to foreign powers, and this was a very strong perception generated by the revolution itself.

In all of this I think the approach of the new government will be driven by a clear sense of Egyptian national interests rather than any perceived ideological orientation. And the one area you see this most clearly is in the Sinai. And it was in the very decisive response by the new government to the crisis precipitated by the attack on Egyptian soldiers last August that led to the killing of sixteen Egyptian border guards at the hands of terrorist elements within the Sinai. We’ve seen in the aftermath of that a very clear, a very decisive response on the part of the government.

President Morsi ordering in the military to track down in a very wide-ranging sweep of the border areas between the Sinai and the Gaza Strip and Israel. Very clear action in shutting down the illegal tunnel trade between the Sinai and Gaza. All of these were very decisive actions to the point that the Hamas government in Gaza vehemently criticized President Morsi, calling him worse than former President Mubarak.

Now, in all of this I think the new government will face three key challenges, and I will wrap up very quickly.

First of all there is the challenge of repairing and rethinking old-alliance relationships. We see this in particular in the African context, given Egypt’s national security interests in the Nile Basin region. There will be a need to rethink Egypt’s relationship with the United States. I think both countries recognize the critical stakes in this very key relationship, but I think there is a recognition as well that moving forward much of the substance of that relationship will have to be revisited in a way that takes into account the interests of both sides.

Finally, all of this will take time. It will take time for patient diplomacy abroad, and it will also take time to forge political consensus at home. Now the problem is of course is we, or Egypt, lives in a region that is prone to crisis, and prone to crisis in a way that can intrude on Egypt’s domestic political context in a way that can force very difficult decisions for the government.

We see that potentially in Libya, in Lebanon, in Syria, a potential crisis in the Gulf. The one area where it will probably face an immediate challenge is in Gaza, and we’ve seen lately the recent round of violence – rockets from the Gaza Strip into southern Israel, a cycle of retaliation and counter-retaliation, Egypt again assuming its role in attempting to broker a cease-fire between Hamas and Israel. All of these things can potentially be explosive in a way that forces a very difficult decision on the part of the government.

The last point I will make is about the Arab-Israeli context. I think one of the unrecognized developments so far when it comes to the Arab Spring is that the Arab revolutions coincide with what is truly a fundamental transformation in the nature of the Arab-Israeli conflict, from a national conflict between Palestinians and Israelis to what seems to be an emerging ethnic conflict between Arabs and Jews.

The demise of the two state solution will pose a fundamental challenge to Egypt’s interests and Egypt’s stability, and I think if there is one potential challenge that Egypt will face in the foreign policy realm, I think it relates to what will be a very difficult development when it comes to the future of the Arab-Israeli conflict moving forward. Thank you. Let me stop there, and I would be happy to take your questions.

[Christopher Blanchard] Thank you, Karim.

Karim’s presented us with a framework to understand Egyptian relations with the United States and the world. That stresses maybe a bit more continuity than change, and reminds us to focus on Egypt’s rethinking of its alliances, counsels patience, and warns about maybe bumps in the road ahead on the Arab-Israeli conflict.

We move now to Libya, very much on everyone’s minds here in the United States as of late. And who better to present perspectives on that country than the Libyan Ambassador to the United States, Ambassador Ali Aujali. Ambassador Aujali’s decades of diplomatic service around the world and in Libya give him unique insight not only on Libya’s recent political changes, but into the deeper currents, challenges, and opportunities before the Libyan people as they look to their future. We’re pleased to welcome Ambassador Ali Aujali.

[Ambassador Ali Aujali] Good afternoon. Thank you very much to the National Council on U.S.-Arab Relations, Dr. Anthony. This occasion, it is one of the most [unintelligible] here in Washington, D.C. You bring all these scholars, and professors, and experts, and politicians from all over the world. Thank you very much for the invitation.

Well let me start by saying I’m very proud to be here today to talk a little bit about what’s happening in Libya, and what is our expectation, and what are our challenges.

I want to start with what happened in Benghazi on September 11, that we lost a great friend, Ambassador Chris Stevens. He is not only a friend, he is a tennis partner, and he is a champion, and he is part of the Libyan revolution. We lost him in a very criminal attack against the American Consulate in Benghazi. I want to extend my condolences and regret, I am sorry for his family and for the American people. It is sad that he is not around with us to see the democratic process taking place in Libya.

We have with support of the United States, of NATO, of the Arab countries to defeat the Kaddafi regime, which was in Libya for forty-two years. But the challenges are still great in front of us. We have security issues. Unfortunately the government is still not in control of the Libyan territories. We have a very long border. We have illegal immigrants. We have some terrorists. And we have some groups who are having weapons in their hands. How can we control them? How can we bring them under the umbrella of the government? This is need two things.

One is support of our friends who supported us during the war. And the second thing is that we have to take these people as much as we can under the umbrella under the government. We need to train them, the ones who are ready to work for the military or the Minister of Interior, and we have to find vacancies. We have to create jobs for them. This is a very long process. It will take time and patience, but unfortunately the expectation of the Libyan is very, very, very high.

This is – without security, without security we will not be able to do anything. We need the security as much as we can. Security is priority number one to Libya. We need the American companies to come back, and we cannot ask them to come back without the security.

Reconciliation among the Libyan people. Just the last few days we still have a great crisis in one of the biggest cities, one if the cities in Libya, which the national army have to deal with them.

This is another challenge. We have to bring the unemployment down. It is more than thirty, thirty-five percent among Libyan people.

Then this is all the challenge. We manage now to bring the oil to just about the level before the revolution, but Libya is depending only on oil and gas, and I think this is not what we want. The diversity of our economy is very important. We have to attract the investment. We have to attract the foreign companies to invest in Libya, but as I said before without security we will not be able to do that. Reconciliation among our people, it is also a big issue. Libya, it is a big country but with a small population with tribes, with history, and we need to heal them. Kaddafi unfortunately was using tribes against each other for his own benefits.

The challenges are great, but also the promises are great. There are opportunities for the Libyan people to build the country. The first thing we achieved is democracy. Now the election took place to elect the first congress in the Libyan history since 1969, and Mr. [unintelligible] he is one of them, now he was elected as a member of congress.

The Libyans now, they are enjoying the democracy. They are enjoying electing the people they want, but this also is not enough. The level, the standard of living in Libya is very low. I am working for the government for forty-two years. When I retire, my salary will be $400. I think you cannot feed even a dog here in the United States – what about one with a family to take care of?

And creating opportunities is very important, but I am optimistic because the people now, you see that they are standing for the democracy, they are standing for their future. And we have to, we have to be realistic for our expectations. But the government needs to supply the service. Education needs to be reformed. Political systems need to be reformed. Economy, it needs to be reformed. Everything Kaddafi left for us just .. destructions. In every Libyan city you find what Kaddafi left is destruction behind him.

I want to tell you that we are confident that we will achieve all our goals, but we cannot say we achieve all our goals just by what I am telling you now. The new government, the new Prime Minister was elected, and he has to present his government in the next few days. And there is a great responsibility for the new, for this new government.

I don’t want the United States, or our alliances, or our friends just to loose confidence, I want them to be confident in the Libyan future. The Libyans are very serious about their future. They sacrificed more than 25,000 young people and children and women were killed during the eight months of war.

Again the Libyan people who stand for Kaddafi, they stand for the terrorists also. The one who’s responsible for the action against the American Embassy are not the Libyan people. They are a small group of terrorists, but the Libyan people they went out to the streets, they demonstrated, they showed their support for democracy, they show support for their friends, and they’re committed to their democracy. We are optimistic that the region, which witnessed changes from Tunisia to Libya to Egypt, we will work together for the future for our people, for the future of our nation.

And we have to make a lot of changes in Libya, not only on the economic level, but also on the political level. Our relations have to be changed. We have more enemies before. We have no enemies at the present time. And then we have to look to how can we use our strategic location, how we use our resources, how we use our history to bring more investment to Libya, to bring more friends to Libya, and create the Libya that participates in the international community and plays a positive role in the world. Thank you very much.

[Christopher Blanchard] Thank you, Mr. Ambassador. You reminded us that security indeed remains the first priority for Libyans and for those looking to take advantage of the considerable opportunities that ultimately we know the Libyans in cooperation with the world will seize.

We’ll move now to Dr. Ottaway. He’s well known to all of us for his long years as a foreign correspondent for the Washington Post. He’s returned to the Woodrow Wilson Center as a Senior Scholar, and he’s currently preparing a book focused on changes underway in the Arab world. His recent travels and reporting from the region reflect his continued dedication to getting the story first hand, and we look forward to benefiting from his wise perspective. Dr. Ottaway, thank you.

[Dr. David Ottaway] Thank you, good afternoon. I was given a list of questions that I might address, and asked to talk about Tunisia in the list and – I think John drew it up – was far too long for a seven minute talk. So I chose two questions I wanted to address.

The first one is, is constitutional reform from the bottom up through coalition politics as is happening in several Arab republics likely to be more successful and enduring than reform from the top, vastly preferred by the Arab monarchies.

And the second question related to what extent do these reforms serve as a possible model for the monarchies, and particularly the Gulf Arab monarchies.

Now, in thinking about this issue what first struck me is that what’s happening in the three monarchies – I mean the three republics I want to talk about today – Tunisia, Egypt, and Libya. How different the paths are that each is following, but of the three I would say that Tunisia has been looked to as the country most likely to succeed, if there is a list like that.

As you look at Tunisia, there are – the way they went about it, the sequencing of reform steps is now regarded as a successful way to go about this transition process. They set up a constituent assembly first to write a new constitution, and that body elected an interim government. And the idea they wanted to spell out first, what the roles and powers of parliament, president, and government, and the relations among them, and then afterwards hold parliamentary and presidential elections.

Neither Egypt or Libya are following this path. But I think the most interesting thing I discovered in my visits to Tunisia was the role played by an institution at the very beginning of the upheaval and transition and flight of Bin Ali. By the high – this is the English translation – the high body for the realization of the objectives of the revolution, political reform, and a democratic transition. That’s actually the name of the body.

This was an incredibly inclusive group. It was not elected, it was appointed, and it kept getting larger and larger, and it included everybody from members of the family of Mohamed Bouazizi, the guy who as Chas Freeman said the spark that started the prairie fire across the Arab world. Members of his family all the way over to Aryanah with all the parties and political groups – I mean it was really incredibly inclusive.

One of the most interesting things that nobody – very few people realize anyway – is that at the very beginning of the Tunisian revolution there was an attempt by leftist groups to seize control of the process, sort of a leftist coup. And this body served to bring other groups and the leftist groups into this high body, and sort of moderate the furor and the attempt by these leftist groups to seize control. And I find this a fascinating bit of information that I’ve never heard discussed by anybody, and I know this all from talking to the head of this high body.

But the important thing was that because this high body succeeded and prevented a leftist seizure of power is that the beginning of the transition there was a civilian body including everybody, which lasted for ten months while they got the elections going for constituent assembly. And that stands in really sharp contrast to Egypt where you have the Supreme Council of the Armed Forces, the SCAF, taking over right away, and the whole process is different. So what’s really interesting is the different paths that Tunisia took from the other two.

And this was a relative success if you will. It was sort of the blessing that Ennahda only won 37 percent of the vote, 41 percent of the parliamentary seats out of 217, and they had to form a coalition government with two secular parties, which really moderated the whole process and forced consensus.

Now I won’t go into the details of how Libya and Egypt have changed, or navigating the process because you’re hearing it from other people. But the point is there is no Tunisian model replicable even among the other republics that are going through this process.

So what lessons do we learn from this kind of bottom up approach for the Arab monarchies, and are there any reforms that might be transferable, or that the monarchies think about following? And I think there’s one thing that they all share in common, and that is the monarchies and the republics are facing a very similar existential issue: the need for a new social and political compact between rulers and ruled, and they’re all going to have to do it.

Now the way the republics have gone about it is a very messy, conflictual, difficult way of going about it. But I think in the end they’re going to come out with a new compact. And the question is how are the monarchies going to come out with a new compact — political and social? And what institutions or reforms are we likely to see happen or replicated in the monarchies? And it’s very clear to me that the Shuras, the consultative, non-elected Shuras are slowly going to become elected parliaments with powers of some kind, which they don’t have now. And that’s.. I think is going to be the sort of key similarity in what’s going on with republics and monarchs.

The other thing the monarchies are going to have to deal with is the withdrawal of the royal families from running the governments. Morocco – and you’ll hear more about that shortly – has figured that out a long time ago, but in a number of the monarchies particularly in the Gulf the royal families are still trying to run the governments.

And particularly in Kuwait now you see this battle between Parliament and the Royal Family about who’s going to run – who the government’s going to be, and who’s going to appoint it. But I think the royal families are going to slowly retreat, and their Shuras that are appointed and non-elected are going to become elected and with some powers, and these are all reforms that you see happening even in the republics. Thank you.

[Christopher Blanchard] Thank you, Dr. Ottaway. That comparative approach I think is very helpful, particularly in light of obviously the wide concern about developments in the Gulf, but also what we heard from the last panel about Syria. Perhaps Tunisia may not be anymore seen as most likely to succeed, but a rules-first approach that’s inclusive and reflects the strengths of a bottom up approach may be replicable elsewhere.

We’ll move now further west to Algeria. My colleague, Alexis Arieff, serves as an analyst for Africa and the Maghreb with me at the Congressional Research Service. Her work there focuses on Morocco, Tunisia, and Algeria, and she’s actually just returned from a rather path breaking trip to the Sahel, so she may be able to share some perspective about the regional security concerns effecting the countries of interest to this panel. Alexis.

[Alexis Arieff] Thank you, Chris, and thanks to the Council for this very timely discussion. I’ve been asked to say a few words about Algeria, and in particular questions of anticipated leadership transitions, political dynamics, and Algeria’s role in regional security, which Chris touched on.

So to begin with, I would say Algeria remains a puzzle. There has been a lot of discussion lately among North Africa watchers about the fact that Algeria’s regime has maintained and remained stable despite dramatic change and transition on all sides. This has left Algeria’s leaders and even members of the public feeling isolated and at the same time to some degree vindicated as Algerian officials point to violence and uncertainty in Libya, Tunisia, Mali, to justify their general pessimism about regional political transitions and western intervention to topple Kaddafi.

Various observers have sought to answer the question of why Algeria has not had its own Arab Spring given evidently high levels of public dissatisfaction with the government system and leadership. There are undoubtedly several factors at work including Algerians’ memory of the extreme violence of the 1990s, which followed Algeria’s own democratic opening in 1988, which to some degree was mirrored by uprisings more recently in Tunisia, Egypt, and elsewhere. The complexity of the Algerian regime, which lacks a single all controlling boogeyman figure ala Bin Ali or Kaddafi, the availability of oil revenues to placate dissenters, and the savvyness of Algeria’s security apparatus, which allows space for free expression and political participation, and which in 2011 avoided excessive use of force in containing public demonstrations and rioting in Algiers.

While I think these are all plausible explanations and point to Algerian exceptionalism, as their own officials would say. I also strongly feel there’s a lack of reliable information on the diversity of views that Algerians hold of their government, of their system of government, of their history, and of their preferred path forward.

The inner workings of Algerian politics moreover remain opaque and a constant source of debate and speculation, even within politically connected circles in Algiers. So I think that analytic modesty is certainly called for and after all it would’ve been very plausible to explain away the possibility of popular upheaval in Tunisia in late 2010, for example.

Instead, I think we might ask what does instability look like in Algeria? There does not appear to be a sizeable appetite among Algerians for mass upheaval, popular upheaval. The state, meanwhile, has shown itself able to contain local unrest, has largely dealt with internal insurgency, and is able to subvert, or appears able to subvert and co-opt formal opposition.

What is it less equipped to deal with we might ask ourselves? What signs should we be looking for that would suggest or not a coming shift in the status quo? Do any Algerian forces or individuals enjoy sufficient popular credibility, that they are in a position to influence events from outside the system?

Algeria’s leadership is also poised for a potential significant transition, as Algerians naturally confront the generational shift that is taking place as members of the revolutionary generation either retire or pass away, having been the dominant force in politics for over half a century. It’s no secret that President Abdelaziz Bouteflika is aging and ill, and is widely expected not to run again when his term is up in 2014. He could even step down beforehand, and there are sort of persistent rumors to that effect. The battle to succeed him is on, among members of the political elite, but the outcome of that battle is certainly undetermined I think at this point.

Most observers expect the military to play some role in the choice of his successor, but the military has been subject to cultural shift over the last decade, and it too is potentially coming up to transitions among its senior ranks. The military Chief of Staff, General Ahmed Gaid Salah is in his eighties, while the mysterious and powerful head of military intelligence, the DRS, General Mohamed Toufik Mediène is in his seventies and is also rumored to be ill. Given the pace of events in the region over the last eighteen months, we should ask ourselves if we are able to continue expect that past practices will hold in the future, and also to interrogate our own assumptions of regime strength and capacity.

To transition a bit to regional security, as Chris mentioned, I was in West Africa last week including in Bamako, and I would note that there’s immense speculation and uncertainty in the region regarding Algeria’s stance toward the political security crisis in Mali. Algeria’s leaders – consumed as they are with internal jostling for position and related parochial interests, domestic security issues, and a general suspicious of Western motivations with regard to Mali, and Libya, and elsewhere – they have not articulated a clear approach to Northern Mali, where al-Qaeda and the Islamic Maghreb, and two associated insurgent groups are now active within a territory roughly the size of France that lies just across the border from Algeria.

Algerian officials have emitted conflicting signals as to their stance towards a proposed regional military intervention in Northern Mali, which not incidentally is supported by France and Morocco. Factors such as the opacity of Algerian high-level decision-making, the potential for competing interests within the upper reaches of the inner circles of government authority, as well as the current focus among Algeria’s political class on domestic succession issues are acting as a hindrance to Algeria’s own efforts over the past decade to position itself as a leader on regional security issues and counterterrorism. Algeria has reinforced security along its border with Mali, which actually started in 2012, in early 2012, following a terrorist attack in the southern garrison town of Tamanrasset, but has not been able to leverage prior arrangements on shared security in the Sahel to its political advantage.

There is hope in some quarters in the region as well as in Washington and Paris that Algeria could be induced to play a constructive role in this anticipated military intervention should it materialize. However, officials and observers within the Sahel are also skeptical as to Algeria’s motives, interests, and intentions.

I’ll leave at that, and perhaps we can touch on some of this in the Q and A. Thank you.

[Christopher Blanchard] Thank you very much, Alexis. You helped us understand perhaps the dog that didn’t bark, and perhaps gave us a framework for understanding whether that’ll be true in the future. And you laid out really an uncertain path ahead, and you helped illuminate the interrelation between Algerian domestic politics and regional security concerns.

We’ll wrap our panel with two overviews – the first provided by Dr. Paul Sullivan, who also joined us for the last panel. Dr. Sullivan is going to give us an economic sort of tour d’horizon of the region, and help us understand some of the sparks that help drive change and may yet derail it. Dr. Sullivan.

[Dr. Paul Sullivan] Well I’m not sure that I would agree that that dog may not bark sometime in the future. Algeria had its problems in the early 90s. Morocco has great unemployment. One of the issues that all these countries face is significant unemployment and the declining hopes of the youth. Karim said these things take time – yes they do, but I have great concern that the youth and many other people in these countries do not have patience for the time to let this work out. A paper I’ll be writing based on this is called the “Race Against Time: North Africa Economies.”

Before I give my talks just about anywhere I have to give a caveat: these are my opinions alone, do not represent those in the United States government or any other organization I might be part of. Therefore, now I can be a troublemaker.

I’m going to focus mostly on the post-revolutionary, post-dictatorship countries of Egypt, Libya, and Tunisia. I will focus more on Egypt, because I spent 20 years looking at the country, lived there for six years, and was there for six weeks during the summertime.

Algeria and Morocco have been peaceful, but don’t count on it. Algeria and Libya are net oil exporters and gas exporters. That can help them get back onto their feet if they do not focus too much on that. As the Ambassador said, Libya’s back to 1.4 million barrels a day. It’s almost miraculous given the history of many countries that have gone through things like this. Algeria produces about the same amount of oil as Libya, but it has about six times the people. So there’s a lot more people to spread that across. Algeria produces about three trillion cubic feet of gas per year, Libya about six hundred. If you do the math it’s pretty clear – about the equivalent billion cubic feet per person in both countries – and if everything was distributed nicely everyone would be well off, but I think we both know that’s not the way it is.

Egypt is a net oil importer. It is a gas exporter, but right now mostly LNG, because the pipelines aren’t exactly secure these days, and the pipeline to Israel has been shut. Most of Egypt’s natural gas goes to the demands of its 86 and growing million people. And it’s a growing demand for natural gas, because there are massive subsidies in the use of natural gas, which has made this situation unsustainable. Tunisia and Morocco are net energy importers, so they get hit with the increasing price of oil, as well as the increasing price of natural gas in the region. Unlike in the United States, natural gas in the region is going up.

All of these countries rely on energy subsidies, which are unsustainable in their budgets. They are frying their budgets on this, and the IMF has actually asked Egypt to control this. And if you take a look into the history of subsidies of Egypt, whenever the IMF has asked them to take subsidies off, there have been problems – ’77, ’87, you name it.

There is a chance for the United States to possibly advise on targeted subsidies for energy, but then again when we think about it, are we really good at that ourselves? Not really. If these subsidies are taken off in an awkward fashion or too quickly, there will be trouble in the streets. Much like the subsidies on bread or anything else, it’s a pocketbook issue. The revolutions were in many ways pocketbook issues. Unemployment, shortages of bread – remember the bread riots just before this whole thing started, and Mr. Bouaziz, what was his problem? Unemployment in a dreadful economic situation for most of the youth. Even though many people may say that the macro-economies of some of these countries are doing well, macro-economies do not point to the life of the youth. It’s the micro-economics of desperation.

Walk around Shubra, [Arabic place name], and Cairo, or the poorer parts of Algiers and you will see what I am talking about. A person who drove us to the airport, someone we’ve known for many years in Cairo was in tears. [Arabic]. No work. No work for him, no work for his son, no work for his cousin.

Egypt is trying to get back onto its feet as these other countries are after dictators that failed and failed again, and then they got hit with the revolutionary economics that most countries get hit with. There was a great deal of hope amongst the people in Egypt, Tunisia, and Libya that their economies will get back on their feet after this. Well that’s really not the way revolutions work historically. Usually there are difficult times, and they last for a long time.

Almost all of these countries need great economic reforms and deep, long lasting economic reforms. I’ve been trying to listen to what President Morsi and others are saying about economic reforms, and all I hear is confused ideology, and what I have seen is nothing. No reform. No change. No action. And unemployment is getting worse, and the kids are probably feeling less hopeful than even prior to the revolution.

Tourism is down. Of course some of the statements of the leadership of Egypt have not helped in that country. Suez Canal revenues are doing pretty well. I spent some time watching ships going through the Suez Canal. Inflation officially is okay, but this is not what I saw in the six weeks that I was in Egypt. There are huge pressures on the currencies of these states, most particularly the Egyptian Pound. Reserves in Egypt have dropped to one-third of what they were before the revolution. Potential food shocks are being taken care of by importing increasingly expensive food – wheat and so forth – again hitting the budgets further by importing expensive food and then subsidizing it. The food economics, and pretty much the entire economics at the micro-economic scale in countries such as Egypt and Tunisia are unsustainable. You can get money from the IMF, the World Bank, the Americans, the EU, the Chinese, and the Russians, but the system needs to change to make this sustainable.

Some villages have significant water problems. When I was in the countryside this summer in Egypt, six to eight hours of electricity was about all you got. Then of course there’s the traffic of Cairo, which the President said at one time he could cure within one hundred days. I’m not sure how that’s going to work. It needs investment and infrastructure, energy, water, transport, and more.

What these countries need more than anything else is not for the Americans to teach them about governance or to be schoolmarmish about how to run countries. They need clinics, they need improvements in their health system, they need jobs, they need roads, they need education, they need investment that produces jobs, not just buying land or buying up old factories to knock them down to turn them into apartment complexes.

There’s a great deal of opportunity for the United States and others to help these countries, but they have to focus on the real problems, not the problems that they think are the problems. Thank you.

[Christopher Blanchard] Thank you, Dr. Sullivan, for helping us be aware of some of the red flags ahead, understanding the resources that the different countries have to bring to bear to meet the considerable constraints and challenges they face, and also outlining an agenda for the future.

For our commentator on this panel – sort of another overview. Dr. Néjib Ayachi will be speaking. He’s the founder and President of the Maghreb Center, known to many of you – really the only American think-tank that’s exclusively focused on North Africa. His experience as a development specialist, but also his region-wide expertise make him well qualified to serve as the commentator today. So please welcome Dr. Ayachi. Thank you.

[Dr. Néjib Ayachi] Thank you very much. Thank you, Dr. Anthony, for bringing this together, this great event. Thank you for the invitation, and for allowing me to comment on the various presentations.

I would like to say a few things about – one of the questions posed by Dr. Anthony was is there a model that we can follow – can Morocco be a model also for other monarchies, but Tunisia. Can Tunisia also be a model? Can we follow that model?

And I would like to look at Tunisia in comparison to Egypt, for example, because there are several, quite a few similarities. You mentioned, Karim, the resilience of state institutions in spite of the revolution. You have the same thing in Tunisia. The state institution, state agency have survived, and they’ve preformed the usual service delivery function – water, electricity, etcetera, the school system was working more or less, the education system I meant to say, the health system as well, etcetera. So we owe that, I believe, the forced – we’re dealing with two nation states, I think one of the few nation states in the Arab world.

There’s a long history of state formation in Tunisia and Egypt. It goes back to the nineteenth century with reformists at that time. In both cases also the Islamists are in power. In Tunisia we have Ennhada which got there through a process very aptly described by Dr. Ottoway, and in Egypt as well.

You pointed out, Dr. Karim, you said that there is little change in Egypt. I’m under the impression that it’s the same in Tunisia as well, especially on the economic front. They came to power in Tunisia with an agenda basically to.. they didn’t participate in the revolution, they didn’t lead it, some people say they have hijacked the revolution – well they’ve been elected anyway, and have formed this coalition government with two secular parties. But they tried to inject as much as possible Sharia law in the constitution, but they couldn’t. They were opposed by various groups including in particular women groups, women groups mobilized against the Islamists in Tunisia, thank God.

And they wanted to … Sharia law, Sharia in the constitution. They had to give up on that. To criminalize the insulting religion – and it didn’t work. Sorry, I forgot the term for that, etcetera, etcetera. But they haven’t done much since then. And they certainly didn’t address the economic challenges that they were supposed to in Tunisia, and neither in Egypt.

To me the Arab Spring is also the outcome of a failed economic development model, one that has been suggested by yes, the IMF, the World Bank, the U.S. as well, and other major donors basically. What is needed now is a new economic development model that is more inclusive, that provides jobs to these millions, literally, of young people who are unemployed. Many of them have even got college degrees – they don’t find jobs. I have looked a little bit about what could be done in Egypt like that, in terms of inclusive development in the agricultural sector. Why not?

Let me talk to you about this very briefly. Egypt’s economy is of course as you know badly suffering from unemployment. It’s on the rise. According to the IMF projections, Egyptian economy, which had a real GDP growth rate of five percent in 2009/2010, is projected to only grow one or two percent in 2011, which is very bad. Because of this economic slowdown as well as the return of Egyptian migrants from Libya, unemployment – one of the main reasons for the Egyptian revolution that took place in early 2011 – is on the rise.

So to keep pace with demographic trends, Egypt needs to create at least 700,000 new jobs, new productive and sustainable jobs every year. With respect to geography, some of the poorest Egyptians live in rural areas, concentrated in rural, upper southern Egypt. Right around 56 percent of Egyptians live in rural areas. More than 78 percent of its poor and 80 percent of its extremely poor live there. The situation is particularly acute in Upper Egypt where 95 percent of Egypt’s poorest villages are located.

So this is why I mentioned the agriculture sector that can be used to create jobs. However, the rural economy at large and the agricultural sector indeed in particular have a strong potential to provide an inclusive development model. Agriculture is estimated to comprise at least 32 percent of the country’s total labor force and at least 14 percent of the total GDP. Not only that this sector includes some of the poorest in its value chain, but it also provides opportunities for otherwise marginalized groups such as women.

The agriculture sector in Egypt is one where women have a participation rate of 35 percent compared to a national workforce average of only 24 percent. So supporting what some economists call social entrepreneurship and inclusive business models – that’s what I recommend, would recommend – could be a strong vehicle for job creation and poverty alleviation, as well as rural development.

Given the failure of the existing mechanism provided by the market and only by the market, and the current state of solutions to … failure, another mechanism is undoubtedly needed, one that tests new ideas and also invests in existing models at work a little bit and have proven effective in order to increase their impact. Why not – thinking about launching, creating some kind of special fund for youth and youth employment to which oil-rich countries could contribute some.. ..in order to alleviate unemployment especially in the non-oil producing countries like Egypt primarily, Tunisia, and Morocco. In that case they could help, they could contribute to setting up, businesses to be setup that can be integrated back to Egypt into the agricultural sector and the agricultural supply chain, such as those in the food processing, agricultural waste management, handicrafts, and other domains.

So this is my suggestion – a very brief one – on how to alleviate the awful issue of youth unemployment, especially those young people who have college degrees and don’t have jobs. You know to create a business we need startup money, and this fund I was talking about can also contribute to financial and technically providing also the technical know-how to setup a business and run it, in addition to a little bit of money to start it.

You wanted me to say a few things about Morocco, do we have a few minutes?

[Christopher Blanchard] I think we’ll keep that for maybe a Q and A.

[Dr. Néjib Ayachi] Okay, the Q&A about Morocco which has not been addressed, but I really wanted to stress the economic causes of the Arab Spring that should be dealt with. Thank you very much.

[Christopher Blanchard] Thank you, Dr. Ayachi. So we’ll turn now to the questions from the panel, and a few of perhaps Dr. Anthony’s “how” questions. The first question is for Ambassador Aujali. We’ve heard a lot this afternoon about challenges facing Arab youth. What specific agenda items do you believe are or ought to be on the new cabinet’s agenda for helping Libyan youth seize the opportunities the revolution has presented?

[Ambassador Ali Aujali] Well I think in a country producing 1.6 million of crude oil and of a population less than seven million people that the unemployment is 30 percent. This is a very serious issue. This is one of the main issues for the new government to handle. We need a lot of training, we need a lot of opportunities. We need to create besides the oil another national resource. I think we have potential to be a very important country in the field of tourism. It is a great industry. We have 2,000 kilometers of the beautiful, warm water of the Mediterranean. And the main other issue is education. I think the education for the last four decades was one of the other, besides the others that was really destroyed. And we need a lot of training, we need to create opportunities among the people to give them more chance and more education. We have here about 1700 Libyan students, and we have in Europe another few thousand, but I think we need to give them more training, not only the students, but also in the government departments. The main thing I believe beside the oil industry, I think tourism is a good opportunity to create more jobs for the people. But before we do that we have to bring them comprehensive training in every field.

[Christopher Blanchard] Thank you, Mr. Ambassador. Dr. Sullivan – how would you assess the European and U.S. response to the economic challenges? Do you think there’s a coherent, cooperative policy that’s been put forward? And if not, what would you prescribe?

[Paul Sullivan] No. There is no coordinated policy or comprehensive, or even understandable it seems. Things are still trying to be worked out, and of course there are some questions here in the U.S. about where some of these countries might be going considering some of the comments by some of the leadership, and some of the internal activities such as the violence on September 11th, the attacking of our embassy in Cairo and so forth threw off a lot of people in this country to think about how to help Egypt.

There was a large delegation of businesspeople looking to invest in Egypt at that time. The timing could not have been worse. Is it important for the United States to invest in Egypt? For the private sector to invest in Egypt? For the government to invest in learning about Egypt? Absolutely yes. Is it important for the United States government to help Libya develop with the education that the Ambassador mentioned, in the clinics, in the investment, in the roads, in the alternative industries? Absolutely crucial to do this. We need to focus on this. It could help to have coalitions with the Europeans, but the Europeans are in a somewhat parlous situation right now. We need to keep an eye on the ball here. We may be in a moment of debt and deficit in this country, but with the natural gas and oil mentioned earlier today, all of this could be resolved.

We are coming back as a country. This whole business is over with in six to eight years if we do the right thing. We need to keep in play. Our private sector needs to keep in play. If we don’t we are going to lose big time. And my sense is in the intermediate period where the government can’t do all this, the private sector needs to step in, and the government needs to help them step in.

[Christopher Blanchard] Thank you for that. Okay so we only have a very few minutes left. We’re standing between you and a very nice reception, so I’ll ask both Dr. Ayachi and perhaps Alexis – how durable do you believe that the bargain, the sort of negotiated change model that Morocco is currently undergoing or experimenting is, and what obstacles or red flags do you see on the road ahead for Morocco? Thank you.

[Dr. Néjib Ayachi] I think it’s – you know it’s the same issue, I’m going to repeat it. It’s tied to economic development, to economic recovery, to economic development, to job creation. And apparently Morocco is going through an economic crisis. Its main partner is Europe, as you know. So they trade a lot with Europe. Europe is in crisis, so there’s less trade with them. So Morocco economically doesn’t, is hampered by that.

Originally the King of Morocco went on a tour to the GCC, to the Gulf countries to seek funding from Qatar, from Saudi Arabia, from other Gulf States. Apparently he was able to secure some funding, but unfortunately most of this funding goes to tourism, perhaps to some extent infrastructure, and real estate. It’s mostly speculative. It’s not productive. Little money is invested in creating jobs. Again, another development market should be indigenous. The Moroccans should be able to devise it themselves. A democratic Morocco with everyone involved, everyone on board at the local level. People can – with the help of experts like myself – can devise their own economic development model that is regionally locally grounded. And I think that would be the solution, but Morocco is in a relatively difficult situation now because of that.

[Christopher Blanchard] So Alexis, a difficult situation with economics as the determining factor?

[Alexis Arieff] I mean, I agree with that analysis. I think on a political level there’s also the question of how far the current situation can be extended, where you have a fundamental ambiguity about who is responsible for major decision making at the top of the state. Is it the monarchy? Is it the PJD-led coalition government? Is it sort of third parties who don’t hold formal positions? And I think that right now you see a situation where the Moroccan public is willing to sort of give the benefit of the doubt to both the monarchy and to the PJD, who both have quite a bit of .. who would both benefit from quite a bit of public good will. On the other hand, as these economic challenges persist, and as the political situation remains ambiguous, I think we can wonder sort of what lies down the road.

[Christopher Blanchard] Thank you very much. Well that brings our panel to a close. I’d like to ask you to join me in thanking our panel, our speakers.