Economic Diplomacy for Peace in the Middle East

26.02.2017

The damages to the region due to violence have exceeded the capacity of any one party to manage the reconstruction portfolio alone, even with its allies. Therefore, there is a need for international cooperation to provide the necessary resources for rebuilding, noting that investing in these nations has become a global public good, especially in the areas of migration and the fight against terrorism and extremism.

Context, conditions, and prerequisites for an effective economic track towards peace in the Middle East

The context and conditions are currently suitable for launching an economic track in the Middle East peacebuilding process due to a number of elements. First, the conflict has reached a point of “diminishing returns” for parties involved; it is proving to be impossible for all parties to achieve their respective political goals and therefore the logic for finding compromise is sinking in, opening the road for possible settlements.

However, leverage and incentives are lacking. The economic track could serve this purpose, creating space for parties to compromise and reach a middle ground. In fact many, if not all of the parties to conflicts are looking for a way out; the economic track could be an exit from the dilemma and deadlock they are facing in the region.

Meanwhile, the damages to the region due to violence have exceeded the capacity of any one party to manage the reconstruction portfolio alone, even with its allies. Therefore, there is a need for international cooperation to provide the necessary resources for rebuilding, noting that investing in these nations has become a global public good, especially in the areas of migration and the fight against terrorism and extremism.

As an example, the challenge of single party reconstruction has manifested itself in Aleppo. Since the government recaptured eastern Aleppo, it has not been able to provide basic services to populations in neither the east nor the west. The economic reality on the ground is hindering military achievements, and it is clear that translating these achievements into political gains will require an economic component that is not yet available. Similar scenarios can be found not just in Syria but in almost every country experiencing conflict in the region.

Of course, other factors also contribute to why it is impossible for a single party, or a single international or regional entity, to rebuild the Middle East. These include diminishing oil revenues, the Trump administration’s isolationist policies, the refugee crisis, and hesitation in Europe regarding the right political moment to engage. For an economic track to succeed, the global community must work together. The suitable moment to do so has arrived as the rebuilding of Syria, Yemen, Iraq and Libya—and the region as a whole—can be a point of convergence between conflicting interests and the common reality of shrinking resources.

Meanwhile, while States’ budgets may be unable to finance the full cost of reconstruction, capital markets today have high liquidity and could serve as a basis for funding. Rebuilding thus requires very different governance structures and dynamics; countries marred by conflict may not have State institutions or markets that are mature, capable or transparent enough to manage rebuilding programmes based on private funding.

How international political economy can be conducive to containing terrorism and bringing stability

The international political economy is thus going through a moment that could be conducive for containing terrorism and bringing stability to the Middle East. This point of convergence needs to be developed, carefully elaborated and intertwined into the political track. The international community must focus on translating the Middle East’s reconstruction into a global public good, on integrating these efforts into the national interests of each of the regional international powers, and on making it an integral part of the balance of power in those countries.

Three major questions need to be addressed at the onset. What are the national visions for rebuilding in those countries? Is there a consensus around a national vision? Is there serious support by all parties to the conflict and the population at large for an inclusive reconstruction programme? The practical challenge of delivering services and creating jobs in the immediate aftermath of the conflict must also be considered. How can job creation and the delivery of services contribute to a participatory and inclusive democratization process and create stability?

The proposed structure for an economic track should combine the United Nations and its specialized agencies, the World Bank, the Asia Infrastructure Investment Bank, and other international financial institutions alongside the private sector—both domestic, regional and international, including capital markets. There has to be close coordination between the UN Secretariat (especially the Department of Political Affairs and the Department of Peacekeeping Operations) and the UN Special Envoys and Resident Coordinators in those countries to work both at the regional and country levels.

In sum, there is a clear need to complement political diplomacy by creating alternate incentives for peace. The alternative is an economic track within the political processes based on development and reconstruction diplomacy. This requires a complex and sophisticated approach to link economic international cooperation with progress towards UN Security Council Resolution 2254. Involvement of all parties is required as it is not enough for one side to adopt this strategy. The economic track must be based on inclusiveness and engagement from Moscow and Washington, Riyadh and Teheran, government and opposition groups. Economic diplomacy can turn conflict between parties into a conflict where these parties are one side, and the challenge of peace and reconstruction is on the other.

Views expressed are of individual Members and Contributors, rather than the Club's, unless explicitly stated otherwise.

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