Advancing U.S. Business in Middle East Mutually Beneficial for Regional Stability, Says Ros-Lehtinen

Statement

U.S. Rep. Ileana Ros-Lehtinen (R-FL), Chairman of the Subcommittee on the Middle East and North Africa, made the following statement at a subcommittee hearing entitled, "Promoting U.S. Commerce in the Middle East and North Africa." Statement by Ros-Lehtinen:

"The Middle East and North Africa is a region rife with conflict, instability, insecurity and uncertainty -- as the events of the Arab Spring have shown us. But it is also a region with potential if some of those nations take the necessary measures to step out from the uncertainty and instability, and institute reforms and develop democratic institutions that can bring them back into the global economy.

The Middle East and North Africa as a region accounts for about five and a half percent of the world's total population -- a population that is one of the fastest growing in the world - but its economic output falls short of expectations, contributing just over 4% of the world's GDP. In terms of U.S. direct investment, the Middle East and North Africa region as a whole accounts for just 1% of the nearly $5 trillion of outward U.S. foreign direct investment. Those numbers are incredibly lopsided, but that means that there is room to grow and to expand. But it can only be done if many of the countries in the region implement much needed political reforms, economic reforms and rule of law reforms.

Local businesses and foreign businesses alike run into rampant cronyism, protectionist policies, corruption, regulatory burdens that stifle economic growth and take away the incentivize from those seeking to do business in the region. This makes it difficult not only for the governments themselves to invest in infrastructure and integrate themselves in the global economy, but it also makes these countries undesirable for foreign direct investment, which in turn exacerbates their economic struggles and their inability to reduce their already high unemployment numbers, and the cycle continues.

This is a region that continues to significantly underperform in terms of economic output relative to its total population. That means they become overly reliant on outside foreign assistance. And one of the largest providers of foreign assistance is the United States, because these countries are behind in instituting democratic reforms.

In fact, the only democracy in the region is our close friend and major strategic partner, the democratic Jewish State of Israel. It's probably no coincidence then that Israel enjoys the economic benefits that few countries in the region do, and that is why it is a great environment for American businesses to operate and thrive in. But Israel is not the only country in the region with whom we have strong ties -- we have free trade agreements with five countries, including our partners Israel, as I mentioned, Jordan ,and Morocco. And there are others which we can continue to seek ways to expand our trade and investment opportunities.

Is our policy too concentrated on security matters and not enough on trade and investment opportunities? We need to find ways for American businesses to help the economies of the region grow. If we can do that, we can gain more leverage and we can help to promote and support democratic reforms. We need to work to help foster more hospitable, positive environments for American and other foreign businesses because it is important that we transition from aid to trade.

Increased trade with the region will help to strengthen their economies. The aim should not only be for American businesses to create opportunities and more American jobs, but to do the same for other countries in the region to help them become more economically sound and less dependent on our economic assistance. This has been one of the missing pieces of the puzzle from the Arab Spring across the region -- we need to find ways to spur privatization, investment, economic growth in these countries through democratic reforms.

If we can get those countries more involved in the global economy, we may have a chance to see more countries like Tunisia on the path toward democracy and maybe finally see less conflict and greater stability. So today we are here to discuss ways in which we can work to reach a mutually beneficial position for U.S. businesses and the countries of the Middle East and North Africa through increased investment and trade."

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