Obama Says Development Key to Strengthening Democracy Movements
May 20, 2011, 12:22 AM EDTBy Julianna Goldman and Roger Runningen
May 20 (Bloomberg) -- President Barack Obama said economic development must follow political reforms in the Middle East and North Africa, promising aid for Egypt and Tunisia while warning leaders in other countries that repression ultimately will prove to be a losing strategy.
“Just as democratic revolutions can be triggered by a lack of individual opportunity, successful democratic transitions depend upon an expansion of growth and broad-based prosperity,” Obama said in a speech at the State Department in Washington intended to define the U.S. role in promoting freedom and economic opportunity in the region.
Obama also criticized the governments in Libya, Syria and Iran for turning to brute force to stay in power, and he called on leaders in Bahrain and Yemen to heed calls for reform.
Almost two years after he called for a “new beginning” with the Arab world, Obama sought to offer offered a fresh blueprint for the U.S. role in the Middle East and North Africa at a historic moment.
“America must use all our influence to encourage reform in the region,” Obama said in yesterday’s speech. “Our message is simple: If you take the risks that reform entails, you will have the full support of the United States.”
Shadi Hamid, director of research at the Brookings Doha Center, called the speech “disappointing.”
“It was passable but nothing new or surprising. No creative policy options,” Hamid said in a telephone interview. “It was a rehash” of past speeches and statements by Obama and Secretary of State Hillary Clinton.
Broad Audience
Shashank Joshi at the Royal United Services Institute, a policy research organization in London, said Obama tried to cover too much ground.
“It was almost an impossible balancing act designed to placate an enormous array of people -- Americans who saw him as indecisive in the face of the Arab Spring, Arabs in the region, protesters in the Middle East,” Joshi said. “It took on too much and will end up disappointing absolutely every one.”
Obama tied the broader transformation going on in the region to the need for resolution of the conflict between Israel and the Palestinians, which he said has “cast a shadow over the region” for decades.
For the first time, he called for a settlement based on the 1967 borders “with mutually agreed swaps” of land. He also said a future Palestinian state must be demilitarized. Other “core issues” such as the status of Jerusalem and the fate of Palestinian refugees must be negotiated, he said.
Pushing the Process
In an interview afterward with the BBC, Obama said negotiating the issues of territory and security may clear the way for accords on the other fundamental disagreements.
“If we make progress on what two states would look like, and a reality sets in among the parties, that this is how it is going to end up, then it becomes easier for both sides to make difficult concessions to resolve those two other issues,” Obama said, according to an excerpt released by the BBC.
Israeli Prime Minister Benjamin Netanyahu, who is scheduled to meet with Obama at the White House today, dismissed the 1967 borders as “indefensible.”
Obama compared the upheaval in the Middle East and North Africa to the American Revolution. He said democracy movements have accomplished more change in a matter of months than terrorists were able to achieve in decades.
“The events of the past six months show us that strategies of repression and strategies of diversion will not work anymore,” Obama said. “Two leaders have stepped aside. More may follow.”
‘Narrow Pursuits’
He said that for decades the U.S. has pursued key interests in the region, including countering terrorism, stemming the flow of nuclear weapons and standing up for Israel’s security along with pursuing Middle East peace.
While those goals remain important, he said, the U.S. “must acknowledge that a strategy based solely upon the narrow pursuits of these interests will not fill an empty stomach.”
The aid for Egypt includes $1 billion in loan guarantees through the Overseas Private Investment Corp. and cancellation of $1 billion in debt, about a third of what Egypt owes the U.S. An additional several billion dollars’ worth of financing for Egypt and Tunisia would come from multilateral development banks,
While the loan guarantees don’t require congressional approval, the debt relief is subject to authorization from lawmakers.
Egypt’s Debt
Egypt owes the U.S. about $3 billion and it costs the country as much as $330 million a year to service that debt. The U.S. last forgave Egypt’s debt in 1990 because of its participation in the first war in Iraq. The amount was $6.7 billion.
Aid to Tunisia has declined from $62 million in 1987 to $1.2 million in 2005. For next year, administration has requested $6.6 million from Congress, $4.9 million of that for military assistance.
Egypt’s 10-year dollar bonds rose, pushing yields to the lowest level since January, and the country’s credit risk dropped.
The yield on the 5.75 percent debt due in April 2020 tumbled 32 basis points to 5.88 percent at 1:38 p.m. in New York. The cost of protecting government debt against default for five years fell 30 basis points before Obama’s address.
Obama also said Syrian President Bashar al-Assad must choose to lead a transition to greater freedom or “get out of the way.”
“The Syrian regime has chosen the path of murder and the mass arrests of its citizens” in response to pro-democracy demonstrations, Obama said.
He also called on U.S. ally Bahrain to “create the conditions for dialogue” on the demands of anti-government protesters and for the government of Yemen to follow through on commitments to transfer power.
--With assistance from Catherine Dodge and Flavia Krause-Jackson in Washington. Editors: Joe Sobczyk, Mark McQuillan.
To contact the reporter on this story: Julianna Goldman in Washington at jgoldman6@bloomberg.net; Roger Runningen in Washington at rrunningen@bloomberg.net
To contact the editor responsible for this story: Mark Silva at msilva34@bloomberg.net
