Exporting the E.U.

September 24th, 2009

The Arab world faces a future catastrophe. Oil is literally the only thing keeping the region’s economies afloat. But this dependence leads to rampant government corruption and economic instability. And what’s worse, one day the oil wells will run dry. When that happens, the region will plunge into poverty of never-before-seen proportions, which will feed Islamic terrorist groups that threaten the United States. In order to avoid this catastrophe, action needs to be taken immediately.

The Arab world consists of a people bound by a common language, culture and religion. They are separated, however, by borders arbitrarily drawn by Western imperialists after World War I, and constant foreign intervention has prevented the development of competent political and economic institutions. But history has shown that when the Arab world is united – as it was during the Ottoman Empire and earlier during the reign of Mohammed and the Caliphates – it flourishes.

So leaders of the international community should focus on uniting the fragmented Arab states by encouraging economic integration in a manner similar to that of the European Union, which not only facilitated the economic rebound of post-World War II Europe, but has also brought peace to a region that until WWII, was constantly at war with itself.

Leaders of the international community can encourage integration by making a coordinated effort to make the billions of dollars in aid they give to Arab states subject to their leaders taking concrete steps toward integration. They could further reward Arab leaders who take such steps by eliminating tariffs on their country’s exports and by offering them lucrative arms deals – a move that may attract the rich, relatively stable yet tiny Arab states like Qatar, Kuwait and the United Arab Emirates.

The goals of integration should include the removal of all tariffs on Arab exports, the adoption of a single Arab currency and monetary policy, a common Arab tariff on foreign imports, the privatization of most Arab industries, and the opening of borders to allow the free movement of goods, labor and capital.

And as economic integration translates into economic growth, Arab governments could gradually introduce an income, consumption or property tax to replace oil profits as their main source of revenue. This shift would add an element of responsibility to the government’s use of its funds, resulting in more and better social programs and reducing the rampant corruption that plagues Arab governments.

The advantages for Arab states are endless. Integration would promote the growth of budding industries (like solar energy) by opening them up to a bigger market and giving them access to more resources, which would result in the diversification of the oil-based Arab economy. It would also give Arab states access to more sea routes, which would especially help landlocked Jordan and Iraq, who would then face lower transportation costs and could be more competitive in international trade.

And finally, as Arab governments recognize the benefits of economic integration, they may find it necessary to engage in political integration, as has been the case with the E.U. And with this political integration would inevitably come democratization.