World Economic Forum on the Middle East

Putting Diversity to Work

Dead Sea, 18-20 May 2007

Report
This publication is also available in electronic form on the World Economic Forum website at the following
address:

World Economic Forum on the Middle East report:

http://www.weforum.org/summitreports/middleeast2007 (HTML)

The electronic version of this report allows access to a richer level of content from meeting, including
photographs, session summaries and videos of selected sessions.

The report is also available as a PDF:

http://www.weforum.org/pdf/summitreports/middleeast2007.pdf (PDF)

Other specific information on the World Economic Forum on the Middle East, Dead Sea, 18-20 May can
be found at the following links:

Meeting News www.weforum.org/middleeast

Session Summaries www.weforum.org/middleeast/summaries2007
Photographs www.pbase.com/forumweb/middleeast2007
Programme www.weforum.org/middleeast/programme
Interviews www.weforum.org/middleeast/indepth
Partners www.weforum.org/middleeast/partners
Videos www.weforum.org/middleast/videos

The views expressed in this publication do not necessarily

reflect those of the World Economic Forum.

World Economic Forum

91-93 route de la Capite
CH-1223 Cologny/Geneva
Switzerland
Tel.: +41 (0)22 869 1212
Fax: +41 (0)22 786 2744
E-mail: contact@weforum.org
www.weforum.org

© 2007 World Economic Forum

All rights reserved.
No part of this publication may be reproduced or
transmitted in any form or by any means, including
photocopying and recording, or by any information
storage and retrieval system.

REF: 050607
Contents

Page 2
Preface

Page 4
Summary

Page 6
Industries of the Future

Page 10
Peace, Stability and International Relations

Page 14
Society and Change

Page 18
Putting Diversity to Work in the WorkSpace

Page 21
Acknowledgements
2 | World Economic Forum on the Middle East
Preface
The World Economic Forum Annual Meeting in Davos in
January warned of the increasingly “schizophrenic” global
economy, with strong growth being threatened by sharp
imbalances and high risks. The same characterization could
be applied to the Middle East in this crucial year for the
region. An unprecedented and sustained oil boom is being
leveraged to bring about dramatic growth and development,
focused in the GCC countries, but spilling across much of
the region. And yet, this astonishing economic success story
is playing out in the shadow of, and often in close proximity
to, the staggering violence in Iraq, a breakdown of law
and order in the Palestinian territories and the growing
tensions concerning Iran.
How can we understand and reconcile these two faces
of the Middle East? What are the current risks mitigation
strategies being pursued by the regional and global
leadership? How can the diversification of the region’s
economies be better understood? How can cultural,
national and religious diversity be turned from a source of
tension into a source of strength?
Such questions were at the heart of the discussions during
this year’s World Economic Forum on the Middle East,
which took place under the theme “Putting Diversity to
Work”. The record number of participants themselves
encapsulated this theme, being drawn from 56 countries,
and including government, business, civil society and religious
leaders, and youth. The programme was structured
around three sub-themes: Industries of the Future; Peace,
Stability and International Relations; Society and Change.
The rapidly changing business environment in the region
was reflected in a series of sessions that focused on the
emerging high-growth and high-potential sectors. These
include Islamic Finance, Insurance, Green Energy and IT.
The discussions offered an insight into how the economies
of the Middle East might look in 10-15 years time, as oil
reserves diminish and diversification becomes key to
economic survival, as it is already in many parts of the
region. How to diversify successfully, led by the private
sector, remains an important question for the region.
The meeting took place against the background of renewed
violence in the Palestinian Territories to the West, and
continuing bloodshed in Iraq to the East. Jordan has
arguably more at stake in promoting peace and stability
than any other country in the region. As His Majesty King
Abdullah II mentioned in his opening address: “We, in Jordan,
are doing all we can to build the momentum for peace. We
know success is not, and will not be, easy. But we also
know peace is attainable.” His Majesty paused the question
that will be at the centre of attention for the coming decade:
“What about the day after peace?” asked H.M. King
Abdullah Ibn Al Hussein of the Hashemite Kingdom
of Jordan
These words resonated through all of the discussions
that took place at the Dead Sea. The Forum fulfilled its
purpose as a neutral platform for dialogue at a particularly
sensitive time for the region. The participation of the
Iranian government in discussions on Iraq and other
issues at a senior level was a significant breakthrough.
Senior Israeli and Palestinian representatives discussed
the immediate needs of the situation on the ground. And
the US was represented by a delegation of Senators and
Congressmen who were offered the chance to exchange
views face to face with leaders from the region.
Learning to live together in a diverse region applies to the
internal workings of societies in the Middle East as much
as it does to international politics. The importance of
education and the role of youth was once again
emphasized. While the establishment of the Sheikh
Mohammed Bin Rashid Foundation with a US$ 10 billion
endowment took the headlines, important work was also
advanced at the grassroots level through the active
participation of organizations such as Injaz and groups of
Arab students from across the region.
Participants came away not only with a sense of optimism
for the region, but also with the awareness of the need
for sustained commitment to progress. Never has the
Forum’s role in bringing communities and countries
together, promoting understanding, and celebrating
diversity been more vital for the future of the Middle East.
The World Economic Forum would like to thank the Co-
Chairs of the meeting: Hans-Paul Bürkner, President and
CEO, The Boston Consulting Group; Fadi Ghandour,
President and CEO, Aramex International; Khaldoon Al
Mubarak, CEO and Managing Director, Mubadala
Development Company; Saeed Al Muntafiq, Executive
Chairman, Tatweer; Linda Rottenberg, Co-Founder and
CEO, Endeavor Global; R. Seshasayee, Managing
Director, Ashok Leyland; Sir Martin Sorrell, Group Chief
Executive, WPP.
Sherif El Diwany Daniel Davies
Director, Middle East Associate Director,
Middle East
3 | World Economic Forum on the Middle East
Executive Summary
The World Economic Forum on the Middle East
returned to its home in Jordan, where the meeting
was first held four years ago. More than 1,200
business, government and civil society leaders from
56 countries convened by the shores of the Dead Sea
to discuss how to turn the region’s diversity – long a
source of conflict and confusion – into a powerful
advantage to achieve peace, stability and growth.
Jordan’s King Abdullah Ibn Al Hussein called on
participants to begin thinking about “the day after
peace” when the Middle East will need to address
such pressing issues as water management,
infrastructure development and, most importantly, the
creation of jobs for the 200 million people of the
region who are under the age of 24. “I urge you to
start the dialogue, a dialogue of action, that can
inspire and lead our region forward,” the King said. “I
urge you to ask yourselves: what about the day after
peace?”
Participants took His Majesty’s profound challenge to
heart. In sessions that focused on industries of the
future – private equity, technology, Islamic finance,
renewable energy – they discussed how the Middle
East could diversify its economies and create new
wealth-generating opportunities beyond oil.
Participants also examined the social changes playing
out in the region, particularly those driven by the
burgeoning ranks of young people, the emergence of
entrepreneurs and the empowerment of women.
By focusing on the future and the great potential of
the days after peace, participants put the political
issues – the lingering disputes and the seemingly
intractable conflicts – in proper perspective. These still
pose tremendous challenges of course but if there is
the will and desire to achieve what all the people of
the Middle East want, then they can be surmounted.
Concluded Klaus Schwab, Founder and Executive
4 | World Economic Forum on the Middle East
“ I see the World Economic Forum on
the Middle East as signalling to the
“
world that the leaders from the region
are ready to take their fate into their
own hands.
Klaus Schwab, Founder and Executive Chairman, World
Economic Forum
Chairman of the World Economic Forum: “I see the
World Economic Forum on the Middle East as
signalling to the world that the leaders from the region
are ready to take their fate into their own hands.”
They must. While dialogue can take time, the region
does not enjoy that luxury. The plain fact is that across
the region, people are dying from needless violence,
destruction and disease. Action is of the essence. As
King Abdullah put it: “This is our year of opportunity –
opportunity to end violence, opportunity to make
peace, opportunity to build the regional economic
powerhouse of tomorrow. The future begins here and
now.”
The theme of the 2007 World Economic Forum on the
Middle East was “Putting Diversity to Work”. Sessions
and workshops were organized under three sub-
themes: Industries of the Future; Peace, Stability and
International Relations; and “Society and Change”.
Industries of the Future
The Middle East is at an inflection point as several
business trends are reshaping the economies of the
Middle East. These include the growth of the Internet,
the expansion of private equity investment, and the
emergence of entrepreneurs who are driving
diversification away from oil.
• The future of the Middle East will depend on its
people not on its oil. The key to the region’s
success will be the creation of new jobs for the
millions of young people entering the workforce. The
region will need entrepreneurs and small companies
to promote the growth of new, dynamic industries.
• Educational reforms are essential to programme in
important socioeconomic change that reduces the
dominance of governments and family-run
conglomerates.
 “
“ I urge you to ask yourselves: what
about the day after peace?
H.M. King Abdullah Ibn Al Hussein of the Hashemite
Kingdom of Jordan
• The current oil boom, while generating spectacular
wealth and swelling government coffers, is also
fuelling the region’s transformation. Investment is
coming into the region, not flowing out of it as in the
past.
• But many of the new jobs being created are low-
skilled and labour-intensive, while too much new
investment is going into real estate. The Arab
world’s commercial culture remains stunted, based
for the most part on patronage rather than merit.
• The growth of information technology, private equity
investment and Islamic finance could push
economies in the Middle East to become more
efficient and more equitable.
Peace, Stability and International Relations
It is impossible to discuss the Middle East without
addressing its thorny politics. The Arab-Israeli conflict,
the infighting among Palestinians, the civil strife in Iraq
and Lebanon, and other clashes in the region have
bolstered perceptions that the Middle East is in
turmoil.
• The Arab League’s reaffirmation of the Arab peace
initiative in Riyadh, Saudi Arabia last March, signals
a fresh attempt by Arab nations to offer a unified
proposal for settling their conflict with Israel. An
Israeli response could lead to progress in
negotiations.
• The emergence of Iran as a more influential player in
the region may usher in a call for a comprehensive
security regime that reflects the new balance of
power.
• The uncompromising political posture of paramilitary
groups such as Hamas and Hezbollah pose
enormous challenges to governments and peace
negotiators on all sides of the Arab-Israeli conflict.
• Time is of the essence. If conflict continues,
moderate voices will lose ground, allowing
extremists to gain popular support.
• The Middle East must look beyond its conflicts and
disputes and consider plans and ambitions for the
crucial days after peace. The region must turn its
diversity into an advantage and follow the path of
success that many emerging nations in Asia have
followed.
Society and Change
Social change in the Middle East has often been
undermined by fundamentalism and even extremism.
To secure its future in the world of globalization, the
region must progress towards more openness,
tolerance and freedom.
• The Middle East cannot become economically open
while remaining socially closed. With a young
population, economic inclusion and social
empowerment of women, youth and those of
diverse cultural backgrounds are critical goals.
• All societies in the region must set themselves free
from dogma and religious radicalism.
• Businesses must play a more active role in
defending pluralism.
• Business, government and civil society actors
should make fuller use of the region’s indigenous
leadership to empower its women and its youth.
• Greater investment in education and initiatives to
support youth are essential to create new
opportunities and promote the social transformation
of the region.
5 | World Economic Forum on the Middle East
Industries of the Future
“ The role of Islamic banking is to
create value in society. It’s about
venture capital, about making
financing business opportunities into
more meaningful economic activities.
Rasheed Al Maraj, Governor of the Central Bank of Bahrain
The rapid growth of Islamic finance is just one of
several business trends reshaping the economies of
the Middle East. The explosion of Internet-enabled
cellular phones among the region’s predominantly
young population, as well as the disciplines imposed
by private equity investors, is fuelling the rise of an
Arab entrepreneur to challenge the dominance of the
oil sheikh.
“The Middle East is at an inflection point,” said Shirish
Saraf, Managing Director at Abraaj Capital Limited, a
private equity firm based in the United Arab Emirates.
“The first was during World War I when the region’s
boundaries were defined. Today we’re looking at an
inflection point where social and economic change is
going to take centre stage.”
That the Middle East must diversify away from oil is no
secret. “The future of this region will not depend on
oil,” said Rachid M. Rachid, Minister of Trade of Egypt.
“Oil will be the curse of this region; the future of this
region will be its people.”
6 | World Economic Forum on the Middle East
“ “ If the Middle East is going to play a
role consistent with its wealth, it
needs to employ some of the
techniques that have been employed
by private equity in the West and
make its companies and economies
more efficient. If it fails to do so, then
I’m afraid the Middle East will not play
“
the role it deserves to play in the 21st
century economy.
David M. Rubenstein, Co-Founder and Managing Director,
Carlyle Group, USA
More specifically, people with jobs. Renewable energy,
tourism, call centres: all have been mentioned as
possible alternatives for creating the 100 million jobs
the Middle East needs by 2020. Whatever industries
take root, the region will need entrepreneurs and small
companies to make them grow. “We have to really
have a strong focus on entrepreneurship, on creating
the infrastructure for innovation,” said Gordon
Graylish, Vice-President, Intel Europe, Middle East and
Africa, Intel Corporation (UK), United Kingdom.
Educational reforms offer a politically palatable way to
programme in such socio-economic change. But the
next generation of skilled job entrants is destined for
disappointment if reforms are not accompanied by
changes in the way information and capital flow. In the
Middle East, this means reducing the dominance of
governments and family-run conglomerates.
Patronage networks must be supplanted by
competitive financing so that wealth is allocated more
efficiently and the disenfranchised are given
opportunities to become part of a new middle class.
This transformation is already underway thanks to the
region’s current economic boom. High oil prices and
growing trade are generating spectacular wealth.
Unlike in the last oil boom, much of that wealth is
staying in the region, swelling government coffers and
generating jobs that have pulled the unemployment
rate down to 11% from 14% five years ago. “In the
past, investment was going outward, but now
investment is coming inward,” said Khaldoon Al
Mubarak, Co-Chair of the World Economic Forum on
the Middle East; Chief Executive Officer and Managing
Director, Mubadala Development Company, United
Arab Emirates. “It’s a dramatic change.”
But even as average incomes have risen by 75%
across the Middle East in the last five years, progress
has been uneven. Many of the new jobs being created
are low-skilled, labour-intensive jobs. Too much new
investment is going into real estate. Inflation is high
and inequities are growing.
The Arab world’s commercial culture remains stunted.
For many jobseekers, therefore, the civil service still
offers the best option, reinforcing a sense of
entitlement and sapping the region’s work ethic. “This
whole notion of corporate culture requires the creation
of an Arab cultural value system based on
meritocracy,” said Saeed Al Muntafiq, Co-Chair of the
World Economic Forum on the Middle East; Executive
Chairman, Tatweer, and Chairman of the Board,
Young Arab Leaders, United Arab Emirates, “rather
than where you come from and who you are.”
Information technology has proved a great leveller of
these kinds of divisions. And in the past six years, the
Middle East has experienced among the world’s
fastest rates of Internet adoption. But overall Internet
usage remains below 20% and most Internet users
are under 25 years of age. Arabic content on the Web
is limited and governments routinely block content
they deem politically or religiously objectionable. Some
call for governments to promote Internet adoption by
requiring students to have a personal computer or by
subsidizing access.
Others say the region is likely to bypass the PC
altogether in favour of Internet-enabled cellular
phones. In some countries, cellular penetration is
already over 100%. “We see a leapfrogging taking
place in faster growing markets through mobile
technology,” said Sir Martin Sorrell, Co-Chair of the
World Economic Forum on the Middle East; Group
Chief Executive, WPP, United Kingdom.
Islamic Banking Market Share by Country/Region
GCC countries expected to play prominent role in Islamic banking
60%
Islamic banking as percentage of all banking
50
40
30
20
10
0
GCC Bangladesh Pakistan Malaysia Indonesia
2000 2005 2010F
Source: Standard Chartered
7 | World Economic Forum on Latin America
“ In the past, investment was going
outward, but now investment is
“
coming inward. It’s a dramatic
“ We see a leapfrogging taking place in
faster growing markets through
mobile technology.
“
change.
Sir Martin Sorrell, Co-Chair of the World Economic Forum
on the Middle East; Group Chief Executive, WPP, United
Khaldoon Al Mubarak, Co-Chair of the World Economic Kingdom
Forum on the Middle East; Chief Executive Officer and
Managing Director, Mubadala Development Company, United
Arab Emirates

Another catalyst for change comes from the private
equity funds being lured to the Middle East by the
latest boom. Once mistrusted as corporate raiders
from the West, private equity firms found few
opportunities in a region where families and
governments were loath to sell for fear of losing face.
Now governments are more receptive to privatization.
And family-run conglomerates can use private equity
firms to spin off non-core assets or navigate the
transition from one generation of ownership to the
next. Whatever the company, private equity firms can
help it introduce more professional management or
expand into unfamiliar markets.
Private equity has another advantage: unlike bank
financing, its direct investment approach jibes well
with Muslim restrictions on usury. Shariah forbids
paying or earning interest, so conventional banking
has been off-limits to many Muslims. In the past
decade, though, the advent of savings accounts and
bonds that yield returns without interest has created a
US$ 400 billion industry growing roughly 20% a year.
Now Islamic institutions are also moving into private
equity.
Islamic Nations' Stock Market Returns
The Saudi market has had some success but gave back gains in 2006

Most importantly, private equity firms provide a source 800

700

of funding whose only prejudice is profitability. “If the 600

Index (100=Jan 2003)

Middle East is going to play a role consistent with its 500

wealth, it needs to employ some of the techniques 400

300

that have been employed by private equity in the West 200

and make its companies and economies more 100

0
efficient,” said David M. Rubenstein, Co-Founder and Jan
2003
Apr
2003
Jul
2003
Oct
2003
Jan
2004
Apr
2004
Jul
2004
Oct
2004
Jan
2005
Apr
2005
Jul
2005
Oct
2005
Jan
2006
Apr
2006
Jul
2006
Oct
2006

Managing Director, Carlyle Group, USA. “If it fails to do Saudi Arabia (Tadawul All Share Index)
Malaysia (KLCI composite)
so, then I’m afraid the Middle East will not play the Indonesia (Jakarta SE Composite)

role it deserves to play in the 21st century economy.” Source: Analysis based on data from Datastream and Bloomberg

8 | World Economic Forum on the Middle East


“ The future of this region will not
depend on oil. Oil will be the curse of
“
this region; the future of this region
will be its people.
Rachid M. Rachid, Minister of Trade of Egypt
Islamic finance is also promoting the Muslim middle
class by popularizing Islamic insurance products that
help free savings for more productive uses. Taken
together, Islamic finance is helping to allocate capital
more efficiently in the Muslim world. By hewing to
Koranic virtues of enhancing social equity, therefore,
Islamic finance stands to level the playing field in a
more constructive way than the jihad ever could. “The
role of Islamic banking is to create value in society,”
said Rasheed Al Maraj, Governor of the Central Bank
of Bahrain. “It’s about venture capital, about making
financing business opportunities into more meaningful
economic activities.”
The Gulf Cooperation Council (GCC)
countries and the World:
Scenarios to 2025
The GCC Countries and the World: Scenarios to 2025
Gulf Cooperation Council (GCC) countries are reaping benefits from oil
and gas reserves that have generated considerable wealth from 2001 to
2007. Yet, with this wealth comes a host of challenges that could divert
GCC countries off the path of sustainable prosperity. A new World
Economic Forum report examined these internal and external pressures
and presented the results in three scenarios – not predictions –
representing possible paths for the GCC through to 2025. The scenarios
are the utopian vision of the Fertile Gulf, the more realistic Oasis (with its
built-in regional instability) and the grim Sandstorm.
Participants in the World Economic Forum on the Middle East examined
The GCC Countries and the World: Scenarios to 2025 in an interactive
session. They were asked the same two questions which formed the basis
of the study: 1) Can the GCC develop and implement a vision to steer
itself towards economic diversification and sustainable prosperity? and 2)
Can the GCC integrate effectively into the global context? The answers to
these questions were examined against the backdrop of regional
instability, and governance and reforms in the economies of Bahrain,
Saudi Arabia and United Arab Emirates.
From the best-case to worst-case scenario, they considered education
reform fundamental to address the GCC’s weak skill base and its low level
of R&D and innovation, as well as its dependence on oil. They also
analysed the challenge of regional instability: How to best avoid pitfalls as
the GCC passes through a potential “chaotic transition to uncertainty.”
Khaldoon Al Mubarak, Co-Chair of the World Economic Forum on the
Middle East; Chief Executive Officer and Managing Director, Mubadala
Development Company, United Arab Emirates, said that GCC education
reform will determine the region’s future. There is a concerted effort to
create a transparent and competitive economy, noted H.E. Sheikh
Mohammed Bin Essa Al Khalifa, Chief Executive, Bahrain Economic
Development Board, Bahrain, and Young Global Leader. “Across the
region, strong efforts are pushing diversification and investment. The more
we link with the international economy, the more it will reduce our security
concerns. We need to compete together as the GCC to show the world
we don’t live in a war zone. The purpose of development is to improve
people’s quality of life. Education gives people the tools to adapt and to
make the right decisions to get there,” he said.
The report is the result of an 18-month research process involving over
300 experts from the Gulf countries, and beyond, led by the World
Economic Forum in partnership with the Economic Development Board of
Bahrain, the Executive Affairs Authority of Abu Dhabi and the Olayan
Financing Company in Saudi Arabia.
9 | World Economic Forum on the Middle East
Peace, Stability and International Relations
“ Arab countries have adopted a
unanimous and collective initiative
offering the hand of peace to Israel.
“ “
Amre Moussa, Secretary-General, League of Arab States,
Cairo
It is impossible to consider the future of the Middle
East without delving into its thorny politics. Passions
run high on all sides. This was certainly evident at the
World Economic Forum on the Middle East where
some sessions were marked by fervent debate over
the situation in the Palestinian Territories, the role of
Iran, and US policy and management of the war in
Iraq. Yet, even as participants amply demonstrated
the value of open and constructive if often
impassioned discussion, violent conflicts raged across
the region – in Gaza, in Iraq, in Lebanon. Bloodshed
too is not in short supply in the Middle East.
There were many opportunities for lively diplomacy at
the Dead Sea – the gathering of the G11 middle-
income developing nations, an informal meeting of
political and economic leaders, and various sideline
bilaterals that are part of any World Economic Forum
meeting. Still, it was evident that the region’s
internecine politics remain its biggest challenge. The
Arab-Israeli conflict on all its fronts, the infighting
among Palestinian factions, the civil strife in Iraq since
the American-led invasion, and the Lebanese
government’s clashes with militant Islamist groups – all
these troubles make graphic headlines around the
world, bolstering perceptions that the Middle East is in
turmoil, if not chaos.
10 | World Economic Forum on the Middle East
Iran was and is always a part of the
solutions to the crises in the region.
We are not talking about the
“
elimination of any nation or country.
Manouchehr Mottaki, Minister of Foreign Affairs of the
Islamic Republic of Iran
Amid the gloom and despair, can the Middle East
resolve its conflicts and achieve stability? Wishful
participants put a great deal of hope in the Arab
peace initiative that was based on Saudi Arabia’s
proposal in 2002 and reaffirmed by the Arab League
at its summit in Riyadh in March 2007. The proposal
calls for Israel to withdraw from disputed territories, to
recognize an independent Palestinian state with East
Jerusalem as its capital, and to agree to a “just
solution” for Palestinian refugees. In exchange, the 22
Arab League countries would recognize and normalize
relations with the state of Israel.
“Arab countries have adopted a unanimous and
collective initiative offering the hand of peace to
Israel,” said Amre Moussa, the League’s Secretary-
General. Israeli Vice-Prime Minister Shimon Peres,
who was on a plenary panel with Moussa, announced
that Israel would respond “as soon as possible” to the
Arab plan. “We are ready to sit down with whomever
you want – the Saudis, the Arab League – and we
shall try to air out the differences between us,” Peres
declared. But, he added, “you cannot send us a
document and say take it or leave it.”
“ We are ready to sit down with
whomever you want – the Saudis, the
Arab League – and we shall try to air
“ “
out the differences between us.
Shimon Peres, Vice-Prime Minister of Israel
There were other pointed exchanges that highlighted
the urgency of a substantive dialogue to find the
course to stability throughout the region. Some
expressed concern over the role of Iran and more
specifically its position on a two-state solution to the
Palestinian-Israeli conflict, Tehran’s influence with
militant groups in Iraq and other countries, and its
relations with its neighbours across the Gulf were also
matters of strenuous debate. “We want neither an
American hegemony nor an Iranian hegemony,” said
Abdulaziz O. Sager, Chairman of the Gulf Research
Center in the United Arab Emirates. “Iran is a country
without aggression,” Iranian Minister of Foreign Affairs
Manouchehr Mottaki maintained. “Iran has always
been part of the solution in the region.” At the
meeting, Mottaki proposed that Gulf countries join in a
regional security arrangement. He also said that Iran is
willing to share its atomic energy technology with its
neighbours to allay fears that the nuclear programme
is for anything other than civilian purposes.
Chief Palestinian negotiator Saeb Erekat put the stark
challenge as passionately as anybody. Warning that
the prolonged conflict was tearing apart the
Palestinian social fabric, he stressed that the lack of
progress in the peace negotiations was quickly and
severely undermining the authority and support of
If we leave things in this region to
conflict and war and try to resolve
issues through guns, then this region “
is doomed, and we will go through the
21st century in darkness.
Saeb Erekat, Head of Negotiations Department, PLO,
Palestinian National Authority, Palestinian Territories
moderates such as Palestinian Authority President
Mahmoud Abbas. “Get rid of the occupation if you
don’t want to see Al Qaeda and extremism,” Erekat
advised. “If we leave things in this region to conflict
and war and try to resolve issues through guns, then
this region is doomed, and we will go through the 21st
century in darkness.”
But that grim fate need not be inevitable. Jordan’s
King Abdullah Ibn Al Hussein pointed out one
powerful and irrefutable truth: the people of the region
want peace. He proposed a bolder, more compelling
approach to solving the decades-old political puzzles
that have prevented peace. “Israelis and Palestinians
from all walks of life tell us they need and want an end
to violence,” said King Abdullah. “There is a new
international will to resolve the crisis; it is no longer
just a regional problem. It is in the interest of this entire
region – and indeed the world – that we succeed. As
we look to that day, we need to begin asking a new
question: what about the day after peace?”
11 | World Economic Forum on the Middle East
“ We could not have been able to
achieve what we have in Afghanistan
in the last five years without the
“ Our Palestinian brothers have to stop
fighting not just with each other; I
would also call them to stop fighting
presence of the international
“ Israel with military methods. It is a
community and the cooperation of our shame that we point our wrath and
neighbours anger at our fellow Arabs and Muslims
“
in a more deadly manner than we do
Hamid Karzai, President of Afghanistan
at our enemies.

H.R.H Prince Turki Al Faisal Al Saud, Chairman, King Faisal

Indeed, it is perhaps by looking beyond peace that the Center for Research and Islamic Studies, Saudi Arabia
region will achieve it. Peace should not be an end but
a beginning. And neither should its elusiveness be an
obstacle to social and economic progress. New
Russia and Brazil have achieved such a take-off, with
industries and enterprises are emerging that are
no way to go but forward, he argued. “In the Middle
driving the diversification and restructuring of
East, I’m not sure we’ve got there yet.” Sorrell’s
economies and creating new opportunities for
prescription: more optimism and ambition. “It’s about
entrepreneurs and young people who want change
will and desire,” he concluded. In much of Asia, while
and openness rather than the status quo and
enmities from history may still lurk in every corner, the
stubborn radicalism. These developments are the
will and desire for economic growth, peace and order,
main source of the optimism that led many
and the eradication of poverty have for the most part
participants to predict that, despite the conflicts, the
overwhelmed the poison of politics. Can the Middle
Middle East is on the verge of renewal. Rather than
East follow the same path to success?
dwell on the clashes that arise from diversity, they
contend, many are turning diversity to their advantage.

Meeting Co-Chair Sir Martin Sorrell, Group Chief

Executive, WPP, United Kingdom, reckoned that the
Middle East has not reached the point where the
momentum of economic progress is irreversible.
“ For the first time, the Arabs have
taken control of the peace agenda.
The Israelis should understand that
China, India and other emerging markets such as
the Palestinians do not represent a
threat to them. It is the Arab states
“
that hold the key to security in Israel.

Marouf Bakhit, Prime Minister and Minister of Defence of the

Hashemite Kingdom of Jordan

12 | World Economic Forum on the Middle East

 COMMITTED TO
IMPROVING THE STATE
OF THE WORLD
Middle East@Risk
A Global Risk
Network Briefing
in collaboration with the Gulf Research Center
Middle East@Risk report released at World
Economic Forum on the Middle East
The Middle East is a focal point for global risk and its mitigation. This
is true of geopolitical risks, but also other risks that define our era –
energy security and climate change – and of risks relating to global
economic imbalances. Participants examined the impact of global
risks at the Middle East meeting. The new Middle East@Risk report,
released by the Forum’s Global Risk Network in collaboration with
the Gulf Research Center, provided the basis of the discussion at the
Dead Sea.
The report looks at potential consequences of several major global
risks on the Middle East and deep dives into four: a global asset
price collapse, a Chinese economic hard landing, a retrenchment
from globalization, and geopolitical and geostrategic instability. None
of these are predictions, but plausible scenarios for the future.
While a global asset price collapse might negatively impact
commodities markets, Mustapha K. Nabli, Chief Economist and
Director, Middle East and North Africa, World Bank, Washington DC,
argued that it is unlikely that such a collapse would be precipitous,
nor would it have a significant impact on domestic markets.
Domestic markets in the region would even survive if the dollar
collapsed. However, increasing inequality between and within MENA
countries poses a real but under-observed threat.
China’s economic health impacts that of the region as a whole, said
Abdulaziz O. Sager, Chairman, Gulf Research Center, United Arab
Emirates, and others. The panel agreed that China and India’s
growth, along with increasing oil consumption, is good for the MENA
countries. But there was worry over a sudden slowdown hurting the
region.
Certainly, the geopolitical problems posed by the conflicts in Iraq and
the Middle East, along with US-Iranian tension, threaten to stunt
MENA growth. Mahmood Sariolghalam, Professor of International
Relations, National University of Iran, Islamic Republic of Iran,
downplayed his country’s extraterritorial intentions and claimed that
the so-called “Shia Revival” is often overestimated. Any tension with
the US, he claimed, would largely be played out in Iraq, and not
extended to other countries in the region.
The region’s primary risk is a “triple deficit,” said Sundeep V.
Waslekar, President, Strategic Foresight Group, India. A deficit of
democratization combines with a deficit of development and all lead
to a dignity deficit, often manifested in instability and violence.
World Economic Forum Launches Israeli-
Palestinian Business Council
The World Economic Forum launched the Israeli-Palestinian
Business Council in a special ceremony at the World Economic
Forum on the Middle East at the Dead Sea. The Council,
consisting of some of the foremost business leaders in Israel and
Palestine, will advance the relationship between the two business
communities and, ultimately, assist the region to move towards
durable peace and coexistence.
“The World Economic Forum has always believed that social
progress goes hand in hand with economic development – the
two are inextricably linked. Bringing business communities
together in this region is a crucial step in helping to bring about
and cement peace in the longer term,” said Sherif El Diwany,
Director and Head of Middle East at the World Economic Forum.
“We are mindful of the deep rift and difficulties governing the
relationship between Palestinians and Israelis. However, the
business community has a lot at stake if a political stalemate
continues,” said Walid Najjab, Palestinian Co-Chair of the
Business Council. “Our people expect us to continue investing in
our national economy and create more jobs; we have social and
economic responsibilities, we cannot ignore our responsibilities,
and we will highlight these responsibilities to our partners in the
Council and the international community at large via the World
Economic Forum,” added Najjab.
“The business community in Israel is sensitive to all issues in our
environment. As business people, we are not dealing with political
issues and solutions, yet we feel an urge to be positive elements
of change and hope. If the World Economic Forum helps us to
continue to be more active on the world stage, our message
should not then be ignored or belittled,” said Amos Shapira, Israeli
Co-Chair of the Business Council.
The Business Council consists of 10 Founding Members from
both the Palestinian and Israeli business communities. It is
expected to attract a wider membership base of business leaders
from both communities in the weeks and months ahead.
13 | World Economic Forum on the Middle East
Society and Change
“ Multiculturalism needs more than a
nudge, and multinational corporations
are well positioned to give a shove. “ “
Doing so is not just morally correct –
although it is – but is also profitable.
H.M. Queen Rania of the Hashemite Kingdom of Jordan,
Member of the Foundation Board of the World Economic
Forum
Too often in the Middle East and North Africa, societal
change has met with resistance, and resistance has
quickly devolved into ideological radicalism. For the
region to enjoy peace and prosperity in an increasingly
interconnected world, it must progress towards
openness, tolerance and freedom.
“It is not enough to look over the development
indicators each year and to exclaim in surprise at the
region’s situation and the fact that it ranks among the
lowest positions at the international level,” said H.H.
Sheikh Mohammed Bin Rashid Al Maktoum, Vice-
President and Prime Minister of the United Arab
Emirates, Ruler of Dubai. “We have to arm ourselves
with courage and work quickly and seriously, to tackle
the reasons that put our region behind the rest of the
world and our era.”
The Middle East cannot become economically open
while remaining socially closed. Most of the region’s
people are under age of 30, most are female and,
increasingly, many are immigrants. Therefore, the
economic inclusion and social empowerment of
women, youth and those of diverse cultural
backgrounds remain vital goals. “We are on the brink
14 | World Economic Forum on the Middle East
It is not enough to look over the
development indicators each year and
to exclaim in surprise at the region’s
situation and the fact that it ranks
among the lowest positions at the
international level. We have to arm
ourselves with courage and work
quickly and seriously, to tackle the “
reasons that put our region behind the
rest of the world and our era.
H.H. Sheikh Mohammed Bin Rashid Al Maktoum, Vice-
President and Prime Minister of the United Arab Emirates,
Ruler of Dubai
of new Middle East – new, young, entrepreneurial,
empowered,” said Khaldoon Al Mubarak, Co-Chair of
the World Economic Forum on the Middle East; Chief
Executive Officer and Managing Director, Mubadala
Development Company, United Arab Emirates. “The
social fabric is changing.”
Yet, many changes still need to occur. Open societies
begin with open minds. The converse of openness,
radical Islam, at times seems ascendant. While some
participants drew from Islam’s history to prove that the
faith can accommodate progressive thought; others
called on leaders to resist the lure of religious
nationalism. “If society is not secular, it is unhealthy for
religion,” said David Rosen, President, International
Jewish Committee for Interreligious Relations, USA. “If
you do not have freedom of choice, then the religion
itself is not worth the principles upon which it was
 “
“ If society is not secular, it is unhealthy
for religion.

David Rosen, President, International Jewish Committee for

“ Optimism, urgency and a sense of
responsibility are sentiments I walk
away with. This is our opportunity to “
Interreligious Relations, USA take this optimism and try to do
something about it.

Saeed Al Muntafiq, Co-Chair of the World Economic Forum

founded.” Olivier Roy, Senior Researcher, Centre
National de la Recherche Scientifique (CNRS), France,
agreed: “In a pluralistic society, social equality should
be based on citizenship.”
The economic benefits of inclusive societies are
manifest, and the private sector must play an active
role in defending pluralism. “Multiculturalism needs
more than a nudge, and multinational corporations are
well positioned to give a shove,” said H.M. Queen
Rania of the Hashemite Kingdom of Jordan, Member
of the Foundation Board of the World Economic
Forum. “Doing so is not just morally correct – although
it is – but is also profitable.”
Business, government and civil society actors must
also make fuller use of the region’s native labour pool.
MENA countries have the world’s highest rates of
female and youth unemployment. According to an Al
on the Middle East; Chairman, Tatweer; Chairman of the
Board, Young Arab Leaders, United Arab Emirates
As was the case at the 2006 World Economic Forum
on the Middle East, participants expressed consensus
that the MENA youth bulge represents the largest
challenge – and the biggest hope. 180 million young
people trump even the Gulf’s hydrocarbon reserves as
the region’s most impressive – and volatile – resource.
“They are the new roots of everything that is growing
in the region and we need to involve them in
everything we do,” said H.R.H. Princess Lolwah Al
Faisal, Vice-Chair of the Board of Trustees and
General Supervisor, Effat College, Saudi Arabia. Sadly,
Al Faisal added, “young people are looking at death
instead of life.”
Youth Employment is a Global Issue
Youth employment lags in the Middle East and North Africa

Arabiya survey, 71% of Arab youth are forced to look 80%

1995 2005

abroad for job opportunities. For the region’s women,

Youth employment as a percentage

70
of yourth population (aged 15-24)

40% of whom are illiterate, development indicators 60

1995
50 2005

have recently inched forward – with the notable 40

exception of Iraq; but retrograde gender attitudes 30

stunt real progress. Still, a few brave women hold out 20

10
hope – and some already see change. 0
Middle East and
North Africa

Central and Eastern

Europe (non-EU) and CIS

South Asia

Developed Economies
and EU

Latin America/Caribbean

World

South-East Asia and

the Pacific

Sub-Saharan Africa

East Asia

“It’s happening so fast, it’s breathtaking,” said Nimah I.

Nawwab, Poet and Writer, Saudi Arabia; Young Global
Leader. “Not many people know about it; it is not
being reported in the media. But it’s happening.” Source: ILO

15 | World Economic Forum on the Middle East

The biggest challenge of all will be to fill the predicted Finally, closing the meeting, Bassem Awadallah,
deficit of 80-90 million jobs over the next two Director of the King’s office and Deputy Chairman,
decades. Increasingly, those young people who have King Abdullah II Fund for Development, announced
the ability to leave go to the West; those who cannot the creation of the King Abdullah II Award for Youth
emigrate are often left in hopeless poverty and Accomplishment, which the King will first bestow
explosive frustration. “Young people want to meet when the Forum returns to the Dead Sea in 2009.
their basic needs, like buying a house, getting
married: but even this is not being achieved,” said “Optimism, urgency and a sense of responsibility are
Abdullah Al Fouzan, University Professor, King Saud sentiments I walk away with,” concluded meeting Co-
University, Saudi Arabia. “We are facing a time bomb.” Chair Saeed Al Muntafiq, Chairman, Tatweer;
Chairman of the Board, Young Arab Leaders, United
The World Economic Forum on the Middle East in Arab Emirates. “This is our opportunity to take this
Jordan yielded several thoughtful strategies – and a optimism and try to do something about it.”
pair of royal commitments – to harness the potential
of the region’s youth. While consensus emerged that
regional educational facilities need to be improved and Youth and Opportunity
made more business-friendly, many participants called (% of population under 15)
for the next step: connecting young people with jobs
that keep them at home.
Yemen 48.7
Rick R. Little, President and Chief Executive Officer, West Bank/Gaza 46.1
ImagineNations Group, USA, explained one such Iraq 41.4
model in South Africa. There, his organization, through Saudi Arabia 39.1
local partners, has set up what he called “one-stop Syria 38.3
shops” throughout the country, where young people Jordan 38.0
can be advised by a counsellor, and assisted in finding Oman 37.2
suitable jobs. Young entrepreneurs can even access Egypt 35.2
microcredit. Such a programme, Little said, would be Iran 32.6
ideal for the Middle East, where a survey showed Libya 31.3
employment is youth’s top concern. Lebanon 29.6
Bahrain 29.2
Putting a good deal of his money where participants’ Israel 27.9
mouths were, His Highness, Sheikh Mohammed bin Qatar 26.6
Rashid Al Maktoum announced the establishment of Kuwait 26.1
the Mohammed Bin Rashid Al Maktoum Foundation. UAE 25.8
The US$ 10 billion dollar initiative – the largest of its
kind in the Arab world – will fund research universities Source: The World Bank
and centres, provide scholarships to worthy students,
and support media and publishing in the region.

16 | World Economic Forum on the Middle East

Education and Youth
With 180 million youth, the human reserves of the Middle
East are even more impressive than the hydrocarbon
reserves. Yet, to harness the potential of this resource,
leaders stress that considerably greater investment in
education and employment opportunities must be made.
Two answers to these calls were made during the World
Economic Forum on the Middle East at the Dead Sea.
The first was the groundbreaking announcement by His
Highness, Sheikh Mohammed bin Rashid Al Maktoum, Vice-
President and Prime Minister of the United Arab Emirates
and Ruler of Dubai. In a special address to participants, he
launched the Mohammed Bin Rashid Al Maktoum
Foundation, a US$ 10 billion initiative to promote human
development and provide hope and opportunity by investing
in education and the development of knowledge in the
region. The Foundation will source and manage research
programmes and centres and provide scholarships,
leadership programmes and research grants. “The
Foundation’s mission is to invest in knowledge and human
development focusing specifically on research, education
and promoting equal opportunities for the personal growth
and success of our youth,” said His Highness.
The second answer was the creation of the King Abdullah II
Award for Youth Achievements in the Arab World. “The
award embodies His Majesty King Abdullah Ibn Al Hussein of
Jordan’s vision to enhance the potentials of the Arab youth
and support their innovations, excellence and creativity,” a
Royal Court statement said. The first award will be presented
to the winners at the World Economic Forum on the Middle
East in 2009 at the Dead Sea. It will then be awarded on an
annual basis. A board of trustees – including Klaus Schwab,
Founder and Executive Chairman of the World Economic
Forum; Khalid Toukan, Jordanian Minister of Education,
Higher Education and Science Research; Arif Naqvi, Vice-
Chairman and CEO of Abraaj Capital; Al Muntafiq, CEO of
Tatweer Saeed; and Carly Fiorina, Chairman of the Fiorina
Foundation – will determine the winner.
Photo: http://www.pbase.com/forumweb/image/79002979
http://www.pbase.com/forumweb/image/78973712 OR
http://www.pbase.com/forumweb/image/78973751
17 | World Economic Forum on the Middle East
 Putting Diversity to Work in

the WorkSpace

The WorkSpace – the workshop with a difference – A High-Stakes Negotiation

draws out the collective intellect and creative
capabilities of participants to explore concrete
opportunities for improving the state of the world.
In a dynamic
simulation exercise in
the WorkSpace
“ We have the ability to
hurry history and not
“
take 100 years to go
At the World Economic Forum on the Middle East this session “Leadership in
year, participants in the WorkSpace were given the Diversity”, leaders somewhere.
chance to think outside the box, stretch boundaries from business, politics
and “put diversity to work” in a series of four and society explored
workshops. Participants were encouraged to explore the emotional dynamics of negotiations to gain
new ways to approach some of the most pressing insights into leading more effectively in a diverse
issues they face in the region: becoming better world. Participants were divided into groups, or
leaders amidst diversity, encouraging an “clans,” and then entered into a negotiation to find a
entrepreneurial spirit, and nurturing the talent of solution to save the
tomorrow. They were also asked to envision the
Middle East in 2015.

What is in store for the day after peace in the

“ If in a silly game the
world explodes then
“
we are in deep
world. The
representatives of each
clan vigorously
defended their
Middle East? trouble. positions, but after
three rounds of
Among the highlights from the WorkSpace was the negotiation, they failed
breakthrough to reach an agreement. During the debrief,

“ We have to be
responsible for what
we can do in our own
experience of designing
and filming a session fit
for television. The World
Economic Forum, in
space. I’ll go back and collaboration with BBC
try and do a bit more
“ World, designed and
ran the workshop “A
about making the world New Middle East – Is It
a better place. Possible?”, which was
facilitated by the BBC’s
Main Presenter Nik
Gowing. The session was filmed for future broadcast
to the network’s 200 million viewers. In co-designing a
WorkSpace session instead of the usual debate, BBC
World encouraged the free flow of ideas and
exchange among peers in an informal and uncensored
environment. Gowing pushed participants beyond
“ We need smart VCs
just as much as good addressed this question
entrepreneurs.
their comfort zone not only to imagine a Middle East
of 2015 that would be steady and thriving
economically, but also to explore the things they could
do differently now to reach that goal. Participants
worked in breakout groups to define their vision of the
future of the region for 2015 in the political, economic
and social arenas. After sharing their group work and
engaging in a dynamic discussion with Gowing,
participants agreed the unique process was
worthwhile, highlighting that they appreciated having
“a chance to dream a little and think of steps on how
to implement the dream.”
participants analysed their experience from an
emotional perspective, discovering the need to
acknowledge and address not just feelings in conflict
management but also the strategies that can help
resolve conflicts “
more effectively.
“ In a negotiation,
reason is not enough.
You have 50
million dollars in cash. Which idea will you invest
in?
What does it take to kick-start an entrepreneurial
initiative in the Middle
“ East? Participants
in the interactive
WorkSpace session
“Empowering
Entrepreneurs”. Participants created new venture
capital (VC) companies in their breakout groups before
evaluating several business cases and making
investment decisions. The viability, sustainability and
industry of a business were the most popular criteria
used by the VCs to evaluate potential investments. As
a group, participants discussed the importance of the
ecosystem of entrepreneurship, in particular the
impact of entrepreneurs as role models and the
signals that VCs send to society through the
investment choices they make. The moment of great

18 | World Economic Forum on the Middle East

 surprise occurred when participants found out that the workshop, participants were thrown into the future
entrepreneur from one of the cases they evaluated and asked to imagine a time when the Middle East
was among them. His ranked the highest in the World Economic Forum’s

“ Trying things out is
important. Allow for
some things not to
“
work and then try
again.
It is the year 2020 and the Middle East has the
best education ecosystem in the world.
participation gave the Global Competitiveness Report on Education.
group the unique Encouraged to “think big and dream,” participants
chance to discuss the worked in groups to describe this bright future from
real implications of different perspectives of education levels and stages
entrepreneurship in the
region, complementing
of development of the education system. The groups
also reflected on possible ways to reach this future
their experience during vision, discussing the main barriers and the strategies
the scenario exercise. to overcome them. In the final group discussion,
participants brainstormed the critical success factors
required to move towards
their vision for 2020. They
agreed that a critical
milestone will be to
overcome the challenges to
“ Our future system
prepare
“ a better
citizen, a global
will

In the highly interactive WorkSpace session “The the implementation of

Future of Talent”, proposed strategies. By the thinker.

“
business leaders, Our destiny depends end of the session, the
education ministers, group had bonded over their
educators and students on strengthening common passion for
engaged in a scenario-
driven exercise
“
education in the education, and together they strongly urged for a
strong commitment, across the Arab world, of
designed to encourage
Middle East. governments and other leaders to place education at
new thinking on ways the top of their agendas.
to improve education in
the region. During the
20 | World Economic Forum on the Middle East
Acknowledgements

The World Economic Forum wishes to thank the following companies as Partners or Supporters of the World
Economic Forum on the Middle East, Dead Sea, 18-20 May 2007:

Strategic Partners
ABN AMRO Bank
Bahrain Economic Development Board
Booz Allen Hamilton
BT
The Boston Consulting Group
CA
Cisco
Dubai Holding
HP
Intel
Kudelski Group
Lehman Brothers
McKinsey & Company
Merrill Lynch
Microsoft Corporation
Nike
PepsiCo
Saudi Basic Industries Corporation (SABIC)
Siemens
SK Group
UBS
WPP

Regional Partners
Abraaj Capital
Agility
Alghanim Industries
Arab Bank
The Carlyle Group
EFG-Hermes
Emaar Properties
National Bank of Kuwait
The Olayan Group
PADICO
Saudi Oger

Meeting Supporters
Alshaya Group
Aramex International
Consolidated Contractors Company (CCC)
International Bank of Azerbaijan
Orascom Telecom Holding

Official Carrier
Royal Jordanian Airlines

21 | World Economic Forum on the Middle East

Contributors

Peter Torreele is Managing Director of the World Economic Forum. Sherif El Diwany is Director, Head of Middle
East, at the Forum. The World Economic Forum on the Middle East was under his direct responsibility, with
Daniel Davies, Associate Director, Global Leadership Fellow, Middle East; Denise Burnet, Principal, Head of
Events and Meeting Coordinator; Amal Mbarki, Community Relations Manager, Middle East.

Samantha Tonkin, Senior Media Manager at the World Economic Forum worked with Wayne Arnold,
Alejandro Reyes and Benjamin Skinner to produce this report.

The World Economic Forum would like to express its appreciation to the summary writers for their work at the
meeting. Session summaries are available at www.weforum.org.

Associate Principal, Editing: Nancy Tranchet

Design and Layout: Kamal Kimaoui, Associate Principal, Production and Design

Photographs: Bashar Bakhit, Zahran Zahran, Atallah Mousa, Nader Daoud

24 | World Economic Forum on the Middle East

The World Economic Forum is an independent
international organization committed to improving
the state of the world by engaging leaders in
partnerships to shape global, regional and
industry agendas.

Incorporated as a foundation in 1971, and based

in Geneva, Switzerland, the World Economic
Forum is impartial and not-for-profit; it is tied to
no political, partisan or national interests.
(www.weforum.org)