Yes, Egypt and Tunisia definitely could. Libya, in turmoil, is still a question mark.
I’ve spent a decade working with high profile Middle Eastern investors and there is no doubt the region has some daunting problems. But its also got some really impressive strengths.
Case in point, it’s a deep sea of capital and its deeply capitalist. This was how Dubai rose from a Tunisian and Egyptian-type city to a modern metropolis within 10 years.
There is no reason why this can’t happen again elsewhere (hopefully with a little less speculation).
Egypt is located just 30 minutes from 60% of the world’s oil and 45% of its natural gas. It is also just down the road from some of the world’s leading investors. It was this capital and these investors, the Waleeds and Olayans of Saudi Arabia and the Mubadalas and Emaars of the UAE, that fuelled Dubai’s meteoric rise in logistics, real estate and banking.
The good news is that these same GCC investors could do the same for Egypt, Tunisia and maybe even Libya.
First, they view these places as their home markets and they are quite comfortable with limited rule-of-law environments (in a way European and American investors are not). Second, Dubai’s hyperactive bankers and lawyers now enable capital to move quite freely within the region (perhaps too freely) so structuring the investments is relatively easy. Third, even the decayed infrastructure is not that much of a deterrent. GCC investors are equally good at building shopping centres and water treatment facilities (the GCC is the project finance capital of the world). If they chose to, they could start deploying billions in capital this year.
The bad news is that both Tunisia and Egypt, and especially Libya, have three serious hindrances to such capital flows: perceived instability, limited private property rights, and “3 c’s” governments (chaotic, corrupt, and crony). These are all deal-breakers for attracting large GCC dollars and unfortunately, these are deeply entrenched problems that can only be solved over time.
The way around this is to blatantly copy Dubai. Launch special economic zones that sit outside the entrenched politico-bureaucratic system. Copy the Jebel Ali Free Zone and specific developments such as Dubai Internet City and Dubai Media City in which foreign investors have clear property rights and favourable government policies. These zones also place foreign businesses and their capital beyond the reach of government officials, which is critical.
There is no reason why Egypt, Tunisia and maybe even Libya cannot follow Dubai on a rising economic path. Political freedom is still an unknown in the Middle East, but the roadmap to economic freedom is now proven and can be copied. Remove the current deal-breakers, bring in a few high profile GCC investors and then focus on incremental, but gradually increasing successes. Successful private sector projects will quickly create confidence and naturally open the doors to the region’s vast sea of petrodollars. That’s how you create another Dubai and not another Yemen.
NOW WATCH: Briefing videos
Business Insider Emails & Alerts
Site highlights each day to your inbox.