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A coalition of NGOs is opposing the proposal (in President Obama’s speech last week) that the EBRD begin lending and other operations in Egypt and Tunisia and elsewhere in the Middle East if and when new democratic governments emerge.  It’s a proposal Lawrence MacDonald and I applauded last week (here).

Here’s the excerpt from  the NYTimes news article:

But a coalition of 28 nongovernmental organizations and the Central and Eastern Europe Bankwatch Network, a regional group that is based in Prague and monitors international financial organizations, has urged the bank’s shareholders not to approve the expansion. It is premature to make commitments for financing from the European Bank for Reconstruction and Development for the Mediterranean region “when it is by no means clear what kind of governments will follow the recently overthrown regimes,” the coalition said.

I wonder about this logic.  The “kind of governments” that will follow will almost surely be squishy and frail – as was and is still the case in the former Soviet Union. It could take several decades for Egypt to look like Poland – and it might take longer (Belarus). The point would surely be to support the economic reformers inside the new governments that will be working to dismantle insider corruption and introduce competition and other reforms – and to encourage private investment in new enterprises that will help create the constituency for openness (the Internet, trade in goods as well as ideas, a regulatory system that ensures social media can flourish, a free press, an independent central bank and judiciary.  It will be risky; there will be stumbles (Ukraine).  Without the hope of actually joining the EU, open access to the U.S. and EU markets might not be enough.

But good government does not appear like manna from heaven.  It is everywhere a work in progress.  Outside help may matter little or not at all.  But as in the case of Pakistan, it looks to me like a sensible investment – for those who’ve brought us the Arab Spring and for America too.

Disclaimer

CGD blog posts reflect the views of the authors drawing on prior research and experience in their areas of expertise. CGD does not take institutional positions.