Arab fund’s influence

Press, 28 November 1977, Page 16

Arab fund’s influence

From the “Economist,” London

Arab unity is alive and well and working very hard in Kuwait. Not in the numerous pan-Arab organisations affiliated to the Arab League which have their headquarters in Kuwait, but in the two floors of meticulously maintained offices that house the Arab Fund for Economic and Social Development. The fund began in 1973 as an offshoot of the Arab mutual defence pact; it was a deliberate attempt to build up Arab economic strength to complement Arab military muscle. Its success since then is largely due to the vision and drive of its director, Mr Saeb Jaroudi.

Mr Jaroudi insists, correctly, that the fund is much more than a loan organisation. Yet it is the procedures obtaining in its loan operations, and the prestige they have gained it. that have enabled the fund to move forward on several other ftonts. These procedures are linked to two key words, botii of which are somewhat inaccurately used by the fund’s operators in the usual economic gobbledygook they employ as their lingua franca.

The first procedure is that the fund "identifies.” by which is meant that it locates or isolates projects that need to be implemented, as well as bottlenecks that need to be removed. This means that the fund does not simply wait for governments to pronose projects that need finance but takes the initiative by making its own proposals.

It is thus, to some extent, steering Arab economic development on its own lines. Second, the fund’s contribution to a project “catalyses,” that is, it attracts or induces other contributions usually much larger than those of the fund itself. Thus the fund’s adoption of a fertiliser scheme in Egypt and port development in Algeria drew in outside financing three times the size of the fund’s contribution. This is the usual percentage. Out of the total contribution of 600 M Kuwaiti dinars (about $2000M) for about 40 projects, the fund itself has raised 230 M dinars. The other contributions come not only from the Arab governments and other Arab development funds but from several United Nations agencies, the World Bank, the Ford Foundation, and the governments of Britain and Italy, while cooperation under discussion with the Netherlands, Germany, Canada and Australia.

When the fund associates itself with a project it virtually takes over its execution, however small may be its own financial contribution. It directly supervises feasibility studies, tendering, contracting and the quality and the timetable of work. It makes no bones about why it needs to take over: “The weakness of the civil service structure in many Arab countries has made their administrative machinery unable to cope with the urgent needs of development.” Too true, not to mention corruption. Therefore the official bureaucracy has to be tactfully sidestepped. Most loans go to basic infrastructural schemes, and nearly half go to the least developed Arab countries — Mauritania, Somalia, the

Yemens, and Sudan. Another of the fund's main objects is to forward the economic integration of the Arab world. It has laid down a solid foundation for this by producing what is called "the joint, programme.” This is a vast array of research and technical assistance schemes costing SI9M to be spread over six years from 1975; the fund has contributed half the capital. Apart from the inevitable schemes for improving communication and transport links there are some unusually imaginative ideas. These include studies of the Arab brain drain, and of Arab manpower, a pan-Arab computerised airline reservation system, the sharing of information on Arab natural resources supplied by satellites, and an Arabic adaptation of the educational television programme, Sesame Street Another of the fund’s activities is what it calls its Investment Servicing and Promotion Unit, which “identifies” investment opportunities in the Arab world for private or institutional investors. About 100 projects have been scrutinised, but the response from Arab capitalists has not, so far, been encouraging.

The most ambitious single scheme initiated by the fund is its programme for agricultural development in Sudan. After the imposition of the Arab oil embargo during the 1973 war, there were threats that if the embargo was ever reimposed, the United States would retaliate by cutting off American exports, especially food, to the Arab world. So the Arab fund started looking around for alternative sources of food supplies and found one in Sudan.

The target for 1985 is to increase the production of wheat five times, of sugar six times, and double the present supply of meat, fish, grains, oilseeds and fruit and vegetables. The cost of this first section of an even bigger programme is estimated at 780 M Kuwaiti dinars. It was such an enormous undertaking that it had to be institutionalised and panArabised. Thus was created the Arab Authority for Agricultural Investment and Development in which at least 13 Arab states have already agreed to participate. Its capital was fixed at 150 M dinars, of which 76 per cent has already been subscribed. And all of this action springs from an organisation that started less than five years ago and is run from an office with a small staff of just 45 professionals.