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Why does Yemen Matter?

In Yemen, the pressure is on both sides to move toward a negotiated settlement.

There are several different views in the U.S. on the Yemen War depending on who is making the pronouncement. One views the U.S. as supporting a naive and destructive effort by Saudi Arabia and the United Arab Emirates to restore the previous Yemeni regime. A second asserts that Yemen matters because of its geostrategic importance to the U.S. A third holds that the war is a mistake because it is a regional conflict between Sunnis and Shias that can have no positive outcomes for U.S. interests in the Middle East.

Bruce Riedel, writing in Brookings and elsewhere, has attempted to provide the basic facts about the Shia Houthi rebels, who are of course Yemeni, and why we are enmeshed in a conflict that goes back at least several generations. In a series of recent articles, he describes their origins and brings us up to date on how a seemingly backwater breakaway movement seeking autonomy in Yemen has become a surrogate of Iran in its sectarian warfare against member states of the Gulf Cooperation Council (GCC).

One key indicator of the strategic nature of the conflict was U.S. President Donald Trump’s  reference to Tehran’s role in Yemen, in remarking that the Iran nuclear agreement placed “no limits at all on its [Iran’s] other malign behavior, including its sinister activities in Syria, Yemen, and other places all around the world.”

In Secretary of State Mike Pompeo’s follow-up to the US withdrawal from the deal, he mentioned Iran’s role in Yemen. “In Yemen, Iran’s support for the Houthi militia fuels a conflict that continues to starve the Yemeni people and hold them under the threat of terror,” Pompeo said. “The IRGC [Islamic Revolutionary Guard Corps] has also given Houthi missiles to attack civilian targets in Saudi Arabia and the Emirates and to threaten international shipping in the Red Sea.” As one of the 12 conditions for restarting nuclear talks with Tehran, he noted, “Iran must also end its military support for the Houthi militia and work towards a peaceful political settlement in Yemen.”

Yet this Iranian assistance to the Houthis is seldom a news headline. Most often, reporting on the conflict highlights the humanitarian costs, with little effort to provide information on the contenders’ incentives to keep fighting. According to the United Nations, more than 10,000 people have been killed and over 53,000 injured in the conflict. This is in addition to 3 million who fled their homes along with countless others who are “living with the threat of mass starvation and disease, including the world’s worst cholera outbreak.”

With the news that US Special Forces are engaged in the southern border of Saudi Arabia assisting allied troops to locate and destroy missile sites aimed at targets in the kingdom, it is vital to take a broader look at the conflict, avoiding images that feed retribution rather than reconciliation, and dissecting efforts to bring about a negotiated settlement to the war.

As one commentator noted about Senate hearings on the U.S. presence in Yemen, “Senators certainly should be asking these tough questions, yet their narrow focus resulted in a missed opportunity to ask equally important questions about the opaque U.S. mission to fight terrorism in Yemen, which the Trump administration has conducted with growing intensity.” The same article pointed out that the Houthis are but one of the terrorist groups operating in Yemen: “In late 2017, United States Central Command (CENTCOM) assessed that the Islamic State’s Yemen presence had doubled in size over the last year and that it uses the country as a hub to direct attacks against America and its allies.”

The troubling challenge of accepting a scenario in which the U.S. is a “bad actor” is the means by which the Houthis spread their mission. Just as with areas under the control of extremists in Iraq and Syria, the Houthis have adopted their tactics to bludgeon local communities into supporting militant positions, down to inculcating young people with an intense hatred for the U.S. and its allies.

Every day, according to sources on the ground and interviews conducted in liberated areas, as well as confiscated schoolbooks, classes for local youths and Houthis begin with a chant called al-sarkha, with the goal of recruiting child soldiers. It goes: “God is great, death to America, death to Israel, damnation to the Jews; Islam is the answer.” It is repeated in schoolbooks, on flags, graffiti, stickers, and other media. To Houthi leaders, as with militants of past generations, Zionism and the U.S. are the key culprits manipulating Saudi Arabia and the UAE, who would otherwise be incapable of managing the war.

It is with this vivid scenario in mind that we need to balance the competing claims: The Gulf Arabs are determined to restore the previous Yemeni government, while the other side, led by Houthis trained in Iran, wants to set up their own emirate in what is now northern Yemen and southern Saudi Arabia. Since Iran has become the enabler of the Houthi rebellion, the war has become an existential issue for Saudi Arabia in the spiraling conflict between Sunnis and Shias.

Negotiated Settlement

The pressure is on both sides to move toward a negotiated settlement, perhaps by offering and financing an autonomous Houthi area in northern Yemen. The most recent UN resolution unfortunately calls for disarming the Houthis and leaving occupied areas before talks begin. A new resolution is needed that takes into consideration the physical and psychological obstacles to overcome. Former neighbors, now at war, need strong social, economic, and humanitarian support to put the past behind them.

GCC members have already begun the process of pledging aid to rebuild Yemen. Yet the path forward is not simply to disarm and join hands. As Osamah al-Rawhani, program director of the Sanaa Center for Strategic Studies, said, “The international community could show its serious commitment to achieve peace in Yemen by working towards a new UN resolution that pressures all sides to bring this conflict to an end.  Yemenis have suffered for so long.”

The longer the situation on the ground is not addressed effectively to stop hostilities, the more likely a generation of young Yemenis and Houthis will grow up to mistrust and label their counterparts as enemies. This has long-term consequences for Yemen, the Middle East, and U.S. stability and security objectives to protect the homeland and America’s allies abroad.

The Trouble with Black and White Perspectives

I spent a year in Yemen in 1974 as U.S. Peace Corps Training Director. It was a remarkable place, historically, culturally, and socially. It was the prototype of Arab tribal society. Since then, having worked in Saudi Arabia and elsewhere in the Arab world, I saw first-hand the contributions expatriate Yemenis played as shopkeepers, domestic help, semi-skilled labor, and builders of the local economy.

Looking today at the Houthi forces and their tactics of inculcating their ideological messages is difficult to reconcile with the gracious and accommodating people I experienced then. Usually, youth are enlisted as flag bearers, carrying on the customary role allocated by resistance movements to inoculate the young and marginalized into their ranks. When the al-sarkha is chanted, it reflects the creed of those who believe that a movement need only be in opposition to be credible. Often guided by an ephemeral vision of victory over an oppressor, it provides little in the way of a substantial prospect for peace and prosperity. Victory is all that matters.

When I lived in Yemen, it was a romantic location beyond description, with no running water, intermittent power, few Yemeni English-speakers, and the seeds of coming conflicts being sown daily. Much like Mali and the Western Sahara, there were pockets of tribes that resisted any central government role, demanding autonomy, and a fair share of the country’s few resources.

How a seemingly remote, inter-tribal conflict turned into the awful and desperate situation that is Yemen today can largely be attributed to external forces: Saudi Arabia and Iran being the most recent. They have infused their Sunni-Shia confrontation into the fiber of the life of Yemen, disrupting any opportunity for the initial agreements arrived at through a national dialogue to bear fruit. Iran enabled the Houthis to acquire the arms and discipline needed to join with former president Abdullah Ali Saleh to overthrow the democratically elected government and put an end to any aspirations for national reconciliation. They quickly took over some 70% of the territory, and, with an ISIS insurgency in the southeast of Yemen, ensure that the country would be damned into instability for some time.

This is not to excuse or justify the reactions of Saudi Arabia, the UAE, and the Arab Coalition battling the Houthis. Those transgressions are well publicized, if sometimes exaggerated. Those Arabs will eventually go home; there really is nothing to keep them in Yemen. What is of concern is how the Houthis are changing the character of the Yemenis, so that retribution trumps reconciliation and coming generations are imbued with norms that are hardly conducive to compromise and innovation.

As recounted in a recent publication,  “The Houthis originally sought an end to what they observed as efforts to marginalize Zaydi communities and beliefs; but their aspirations amplified both in magnitude and resolve in the wake of the 2011 uprisings (Yemen’s Arab Spring) and government collapse, and embraced a broader populist, dissident message to counter the establishment.” As the civil war wore on and control of territory and people moved back and forth between the combatants, the Houthis undertook re-education of the people and youth under their control both to reduce dissident voices and to build a generation of committed fighters.

They dusted off educational methods evolved from Mao’s China and Fidel’s Cuba to more recent versions adapted by Iran and Da’esh, to foster a behavioral outlook filled with an acute anti-Americanism and anti-Semitism. This view encourages youth to rage against the U.S. and Israel as the primary evil attacking Yemen by manipulating Saudi Arabia, the UAE, and other Arab countries and European allies.

But extremist ideology is only one part of the complex threat from this distant conflict. Yemen has a geopolitical prominence as the southern entrance to the Red Sea. The Houthis continue to threaten maritime transit of naval forces, oil tankers, and freighters. The threat to freedom of navigation and the world’s oil and commercial goods transiting the Red Sea via the Bab al-Mandeb Strait cannot be ignored.  Ironically, this is also not in Iran’s interests if it were ever to resume commercial shipping through the Suez Canal.

Iran has a long-term stake in stoking the Yemen conflict, both as the weak southern border from which to attack Saudi Arabia to expanding its footprint on the Arabian Peninsula. It continues to gain strength throughout the region via local militias trained and mobilized by Hezbollah and the Iranian Revolutionary Guard. Additionally, the Arab Federation for Human Rights found that the Houth­is have planted more than half a million anti-personnel mines in different parts of Yemen, not to mention mines in sea lanes.

These challenges — radicalized youth, aggression against Yemeni and Saudi civilians, missiles used against a range of land and sea targets, and the fundamental issue of what will happen to this lost generation of Yemeni young people who could be the next terrorist threats to the US and Europe — argue for a more concerted effort to reduce the violence, support revised and realistic UN efforts for a national reconciliation, and provide the ingredients for long-term, inclusive and sustainable solutions.

The U.S. must bring its influence to bear on Saudi Arabia, the UAE, and the Arab Coalition, as well as Russia, to bring the parties to the table with few preconditions.  Unfortunately, according to a UN report in January, “the UN Panel of Experts suggested that neither side’s leaders have suffered enough to make them compromise—in sharp contrast to their civilian constituents.”

There is never a fortuitous time for taking risks for peace. The international community must recognize that further delay at peace-making will only wreck more lives, spread even more catastrophe among the civilian populations, and harden positions beyond compromise. The time is now for responsible actions that lessen threats emanating from the Yemen war and its consequences for the youth and people of that country.

 

 

 

 

What’s At Stake in Lebanon’s Survival?

 

 Speculation continues to swirl around ‘what’s next?’ after Prime Minister Hariri’s return to Lebanon and the ongoing discussions among key players in and outside Lebanon. So it may be worthwhile to take stock of what’s at stake if Lebanon, as imperfectly as it operates, would become a failed state, i.e. looks more like Libya without even a modicum of central government authority and returns to a civil war with outside parties holding their contests for regional power inside Lebanon.

Of course the first question is survival as what? The status quo is certainly untenable with Hezbollah acting as a state within a state, Parliament divided among those who support an independent and secure country and those who welcome outside intervention, and those reluctant to stand for fear of losing their piece of the pie that is Lebanon. Add to that over 2 million refugees of uncertain status and the price of stability becomes astronomical.

Lebanon has never been a fully free and independent country, capable of defending its territory and preserving its institutions. But it certainly has been more free than it is today. Its survival depended on balancing the interests of national and regional players, whose agendas, often in competition, usually benefited from Lebanon’s role as a dynamic center of culture, business, tourism, and political discourse.

In broad terms, most analysts draw a direct line between Black September in Jordan, pushing Palestinian forces in exile to Lebanon, whose state within a state status precipitated the civil war and birthed Hezbollah, resulting in continuous and blatant foreign meddling that characterizes the current political morass. No wonder I go silent when asked to explain “what’s going on over there?”

The consequences of destruction and disabling 

Those who care about Lebanon want a free, independent, secure, and stable country that enjoys territorial integrity and a functioning government providing adequate services to its people. Yet, none of these qualities are assured in the current context where very little is certain except obscure outcomes. But we can point to what is on the doorstep if the regional competitions between Sunni, Shia, and Israel are not resolved without destroying Lebanon as collateral damage.

A failed state in Lebanon brought about by willful acts or unintended consequences of regional powers will have catastrophic outcomes – none of which support US interests or those of Israel, America’s primary ally in the region. To note only a few:

  • Instability along Israel’s northern border, which will require Israeli boots on the ground – an occupation army will yield no good outcomes over time.
  • War against Lebanon will make Christians, the backbone of the country’s social, economic, and cultural integrity, targets of opportunity for militias looking for scapegoats.
  • Lebanon which represents, one of the few successful bulwarks against radical Islam in the region, will be lost.
  • And the destruction and occupation of Lebanon will exert enormous pressure on our other ally, Jordan, which is also threatened by Syria and Iran.

The US cannot give a blank check to Israel to defend itself/attack Hezbollah as a proxy for Syria and Iran without considering consequences to America’s own safety and security, and its relations in the region. Consequences in the US of Lebanon’s failure cannot be overlooked. Heightened tension and warfare in the region will ratchet up domestic threats to the US, seen as the enabler of Israel’s disregard for Lebanese and Muslim lives.

Nor can the US stand by while Gulf Arab countries hammer Lebanon over the reality of Hezbollah’s paramount position in the government. Among the many unanswered questions emerging from the current crisis with Saudi Arabia are the many ways in which the Kingdom can undermine Lebanon through economic means, such as withholding funds from the Central Bank, cutting Lebanese imports, or deporting Lebanese workers or limiting their remittances, which are so crucial to Beirut’s budget.

To diminish the threat of state failure in Lebanon, the target of Saudi ire, Hezbollah, must decide if it is a Lebanese party or Iran’s proxy. It cannot be both. An accommodation, outlined in previous agreements and resolutions, to resolve its military status, now that its political role is demarcated, is central to returning Lebanon to a neutral position of disassociation that is its historical role. It is the ultimate win-win for the region.

As Tensions mount in the Region, is Lebanon in Danger?

I am concerned that cross-border and internal tensions are placing even greater burdens on Lebanon’s stability and independence. There is no mistaking that the deepening challenges engulfing Lebanon are due to its unique political composition and preferred policy of “disassociation” from regional conflicts, unfortunately more observed in the breach than in reality.

These tensions are real and numerous, including:

  • Internal concerns with refugees and Hezbollah’s military dominance,
  • Domestic issues surrounding the government’s performance and upcoming elections,
  • Israel’s increasing pressures on Lebanon to rein in Hezbollah,
  • Israel and the GCC’s hate-fest with Iran,
  • Iran’s manipulations in Iraq, Syria, and with Hezbollah,
  • And now, Saudi Arabia’s push to isolate Lebanon even further from it and other members of the GCC.

Lebanon is facing many obstacles to its stability, the most compelling is the specter of another conflict waged between Israel and Hezbollah. It appears that Washington is doing too little to keep the march to war from mobilizing. In Lebanon, US military and diplomatic officials have held extensive discussions with the Lebanese government, speaking warmly of the relationship with the LAF and support for Lebanon. However, this has not been carried through in Washington where a steady stream of media and panels has been discussing the next Israel-Hezbollah war and how it will decimate Lebanon.

When questioned about Israel’s goal is, the answer lies somewhere between a preemptive strike to eliminate Hezbollah’s arsenal that threatens Israel, sending a signal to Syria about stability along its border with Israel, to letting Iran know that Israel will destroy its proxy Hezbollah before it will allow Iran to enlarge its scope of influence from Tehran to Beirut.

This puts those who support strong US-Lebanon relations in a quandary, – how to support Lebanon’s territorial integrity, independence, and stability, which we believe are clearly US interests as well, while addressing the consequences of Hezbollah’s role in the country, which, we believe has both negative and helpful results. For example, the first response from Hezbollah upon hearing of PM Hariri’s resignation was to call for calm and continued cooperation in the government to stand fast against external pressures.

 So if brutalizing Lebanon is intended as a signal to Iran…why not go to the heart and head of the threat in Syria and Iran? Israel has already demonstrated that it knows where the weapons flowing to Hezbollah are being manufactured and transported, so it has identified the primary targets. It has also made it clear that it knows that Hezbollah has infiltrated villages in southern Lebanon and has fighters and supplies among the civilian populations. Aren’t there better means for reducing threats to Israel and to the Lebanese civilians than assaulting entire villages as Israel has threatened?

More importantly, there is a fallacy in looking for a military solution as that only guarantees that there will be no peace in the region. An Israeli military campaign in Lebanon – while it may mean no war now, it also means no peace ever for Israel. If Palestine continues, after 70 years, to be a core issue with Arabs and Muslims worldwide, it isn’t hard to imagine the highly negative impact of the destruction and occupation of Lebanon that will reverberate in the West as well.

Another misjudgment in targeting Lebanon and not the sources of instability in the region, is that an all-out assault brings the region closer to a nuclear Armageddon as Syria and Iran cannot ignore the consequences of a failed state in Lebanon. Another war in Lebanon may set off a civil war in the country between armed camps, while the Lebanese Armed Forces (LAF), the only non-sectarian stabilizing force in the country, will have the impossible task of restraining local militias from further chaos. Israel’s northern and northeast borders will be hotbeds of instability and conflict.

All of this, of course, plays directly into Russia’s goal of destroying American influence, restraining democracy, and promoting autocratic rule throughout the Middle East and North Africa. Is this what the US wants…more war, less stability, diminished influence, greater threats to our friends in the region, and promoting Russian ascendancy even more?

Tough Love Economic News Requires Array of Strategies

Jordanians are chattering about how the interim government is facing a number of difficult choices, none of which are of its own making. There is painful medicine for Jordanians in the prescription agreed with the IMF this past week, and people felt it immediately in prices paid for energy and power. No one argues that Jordan needs to take immediate steps to stop its slide into even lower growth, and there is little disagreement among leading Jordanian economists about how to move forward. However, medium and long term reforms will not do much to alleviate the pressure felt by consumers.

This is the dilemma facing oil producers and non-oil producers alike: How to bring about long-needed reforms that will ameliorate inadequate planning and decision-making by past leadership. One approach is HRH Mohammed bin Salman – high visibility, high energy, let’s take on entrenched interests approach while continuing to coddle citizens, which Saudi Arabia can afford to do.

On the other, there are Jordan and Morocco, balancing competing economic interests among potentially volatile political constituencies. Their way forward is constrained by internal and external factors that are not easily controlled. Morocco is in a more favorable neighborhood that encourages FDI and a more stable domestic political structure. Jordan faces both short and long-term challenges that are intertwined with all of their neighbors.

An article in The Jordan Times on the reaction to the IMF  tough love agreement noted, “This means there are more hard times ahead for Jordanians…the targets set by the government seem too difficult to achieve within the framework and the time schedule agreed on with the IMF.” The government is in a quandary inherited from the previous administration. With a public debt equal to 93% of the country’s gross domestic product, “and the stubborn problems of poverty and unemployment,” former finance minister Mohammad Abu Hammour blamed the fact that “There have been no real economic reforms over the past years in Jordan. Reforms should have been incremental, because they cannot be done overnight.”

The former minister said that the situation is already gloomy as exports dropped by 10% in 2015, foreign direct investments declined by 35%, and “unemployment rose to the unprecedented 14.2% mark.”

While Arab countries face similar dilemmas – a demographic bulge, inadequate education resulting in a mismatch between education and employment, and stagnant to slowing growth, the political dynamics of each country require avoiding a single remedy formula.

In Saudi Arabia the focus is on economic restructuring to promote jobs for men and women and soak up all those Saudis who are being educated abroad since there are few excellent universities in the Kingdom. This, of course, does not resolve the issue of those young people who are not university bound but still want jobs.

Jordan is different. It has no sovereign funds to bridge its economy to a brighter tomorrow. It hosts hundreds of thousands of refugees that have absorbed any spare capacity to deliver services. And it has to rely on infusions of foreign funds and loans to maintain its operations.

jordan flagSo what should Jordan’s government do? Given the obstacles of growing an economy burdened by providing services to citizens and refugees, here are three paths to follow, each with its own consequences. First, Jordan needs to cut government spending – always tough when there are so many vested interests in the current system. Secondly, Jordan needs to move more proactively to create a more business-friendly environment, promoting transparency, reducing corruption, and building public-private partnerships focused on short to medium term results.

One area that needs more emphasis is on convincing wealthy Jordanians at home and abroad to make significant job-creating investments in their country. Real estate aside, there must be more productive sectors for Jordanian, and Moroccan investors. Jordan and Morocco have wealthy citizens that could contribute to the country’s growth if they were incentivized properly. Investment capital is notoriously risk averse so this will take the most persuasive power of both monarchs.

Local investment funds, properly incentivized, can be quite powerful in the near term for targeting job growth for unemployed university graduates as well as those in the vocational/technical skills groups. When under- and unemployed youth believe that they can get jobs with wages for more than basic necessities, they will take advantage of many programs available to equip them for jobs in commerce and industry…but they must see a way forward.

Jordanian economist Hosam Ayesh summed it up best when he said “Increasing prices of water and electricity as of next year will push up the prices of many commodities. Citizens are always asked to tighten the belt, but shortly, there will be no belt to tighten.” Long days ahead.

Thinking Aloud About Islam and Work

Several years ago, I was part of a project in Saudi Arabia for the Ministry of Labor on restructuring curricula for the Technical Vocational Education and Training (TVET) sector. It was a very sophisticated effort including outreach to families and communities, revising the Qur’anic content in the syllabus to focus on work themes, and introducing widespread usage of English, innovation, soft skills, and problem-solving teaching methods in both the male and female programs.

It was, and still is an innovative effort to remake perceptions of the value of skills-based work as a career and contribution to the larger society. Recently announced plans to restructure the Saudi economy include a strong determination to have more Saudi men and women engaged in the workforce. This has been a theme since the 80s offset programs, Saudization (nationalization of the workforce) in the 90s, the nitaqat version unveiled in early 2011, and the new and improved nitaqat tied to the Vision 2030 reforms.

As explained by the Minister of Labor, Mufrej Al-Haqbani, “The government planned a new form of Nitaqat that would not focus merely on the numbers of Saudi nationals hired but also on factors such as women’s employment, the average pay of Saudi nationals, the ratio of the wages of Saudis to non-Saudis, and the sustainability of jobs occupied by local citizens.”

These same challenges exist throughout Arab countries, from Morocco to the Gulf, where many university graduates sit unemployed and underutilized due to a lack of market-ready skills, while hundreds of thousands of vocational and technical jobs are either filled by foreign labor or go vacant. Rates of unemployment among women are usually twice or more as those for men, and little or nothing is done to accommodate handicapped workers.

Women in a medical glove factory in Malaysia @hardrainproject.com

Women in a medical glove factory in Malaysia @hardrainproject.com

Muslim majority countries, especially in the Arab world, find it difficult to recruit labor willing to work in jobs unappealing for a variety of reasons: poor pay, lack of benefits, low social status, and poor working conditions are most frequently mentioned. Using Jordan as another example, a dichotomy is apparent. Jordanians waiting for the “right” job while Muslims from other countries show no hesitation to take manual technical and vocational jobs requiring very hard work without protections or future guarantees.

One could argue that for Jordanians, in their own society, there are constraints in the environment, such as social status or Islam that influences the choice of jobs. Yet that is not consistent with other Muslim countries whether one is looking at men working in the dye pits of Marrakesh or the women in Malaysia working in textile and industrial production lines.

One’s willingness to work may be affected more by local attitudes rather than other cultural considerations. In this regard, what Islam has to say about work is very instructive for both employer and employee in defining cultural values around labor.

My favorite passage on work from the Qur’an is “The Messenger of Allah (PBUH) shook the hands of a man on whom he found the effects of a rough manual labor, then said: ‘This is the hand that God’s love and His Messenger.’” And when asked what type of earning was best, “Prophet Muhammad (PBUH) replied, “A man’s work with his hands and every (lawful) business transaction.” (Al-Tirmidhi, Hadith 846) These passages remind me of my parents who immigrated to the US, ran their small businesses, always had vegetable gardens to tend, and believed that one learned important life lessons through honest labor.

Speaking about manual labor, the Prophet said “If any Muslim plants any plant, and a human being or an animal eats of it, he will be rewarded as if he had given that much in charity.” It is also written “Allah loves, when one of you is doing something, that he [or she] does it in the most excellent manner.”

The Prophet Muhammad (PBUH) also spoke directly to employers, “You should pay the laborer his wages before his sweat dries.” (Sunan Ibn Mâjah (2443) This addresses the central message of ethics in business, non-exploitation of labor, and justice – qualities both Islamic and universal. It is not surprising to find strong support for business and work in the Qur’an and hadith, given the revelations and the Prophet’s own honoring of labor and business as a community responsibility and benefit.

As governments throughout the MENA region look for effective means to motivate young people to acquire life skills built around technical and vocational capabilities, drawing on cultural and Islamic norms can be a persuasive entry point. Remembering too the responsibilities of employers to provide sufficient wages, respectful behaviors, and beneficial working environments should be promoted as both an obligation and good business sense.

 

[image from Slideshare.net]

Taking a fresh look at Morocco’s economic development

In the first two weeks of September, I’ll be writing my blogs from Morocco, which will give me a front row seat to see how economic growth is advancing given challenges internally and within the larger international business environment.

Several stories this past month provided greater details of the progress that is being made. There are three that are particularly interesting in that they point to the decisions Morocco is making about how to make its economy more globally competitive.

Growing Saudi-Moroccan business ties

This week, Saudi Arabia and Morocco launched a new round of projects to ratchet up the volume of business between the two countries. It should come as no surprise that the current trade balance favors Saudi Arabia because energy importer Morocco needs Saudi energy supplies to meet domestic demand.

The head of the Saudi-Morocco Business Council, Mohammad al-Hamady, noted that the total volume of trade between the two countries amounted to approximately $4.4 billion in 2011, with Saudi Arabia exporting far more to Morocco than it imports. He added that economic and trade relations between the two countries have been growing steadily, with Morocco becoming Saudi Arabia’s sixth-largest trading partner.

As part of its commitment to Morocco’s overall development, last year Saudi Arabia committed $1.2 billion over the next five years for investments, primarily in tourism development projects, making it the third largest investor in Morocco. Hamady believes that a major obstacle to greater trade is the lack of direct maritime transport lines between the two countries, and this was at the top of the agenda of the Saudi-Moroccan Business Council meetings in Jeddah this week.

Exploring for energy sources

CNBC and Reuters carried stories on expanding oil exploration projects in West and North Africa, with a special nod towards Morocco.

Ken Judge, the commercial director of Gulfsands, which had been active in Syria, said that “As you might imagine, after Syria what we’re looking for is some stability, and Morocco’s got terrific political stability, but it also has the best fiscal terms of any country in the Middle East and North Africa region.”

These efforts complement the expanding Moroccan focus on renewable energies, with RFPs for two more solar projects coming out shortly.

These opportunities and others, both trade and investment, are to be highlighted in the upcoming US-Morocco Business Development Conference to be held November 4-5, 2013 in Rabat.  Later that month, Rabat will host The Morocco Summit with a wide-ranging exploration of Morocco as a hub for inter-regional business across Europe, Africa, and the Middle East.

Young business leaders

BBC carried a very interesting video report that reviewed projects to advance the economic status of women in rural areas, where there is great need to overcome poverty and illiteracy in advancing women’s empowerment. The report details projects that are run by young educated women working to enable women with little education to become family breadwinners through commercializing artisanal crafts and other products for domestic and international markets.

Another story about youthful entrepreneurs recounts how several Moroccans worked for months before receiving their first rate-free loan for entrepreneurs to start up a food delivery service in Morocco.

Their key decision was to build a talented staff from scratch who then acquired their skills by constructing the company from the ground up. Youssef El Kachchani of www.doofry.com, the food delivery company, found great success in recruiting widely via the web and putting potential employees through a two-week intensive reading session before starting.

This was similar to the strategy used by Youssef El Hammal, who launched www.stagiaires.ma in 2012 to connect students with recruiters. He found that hiring recent graduates was better than employing ones with more experience because “they’re highly motivated and excited to learn. Because they haven’t been working for corporations, they’re still open-minded, creative risk-takers.”

So it should be an interesting time to catch up with what’s going on in Morocco. With a new government coalition being formed and an extensive economic reform agenda in the wings, it is a period of great anticipation that the economy will expand and create the jobs so badly needed in Morocco.

Worker incentives: Are MENA employee stereotypes shifting?

 In reviewing comprehensive strategies for closing the gap between education and employment—an unresolved agenda of the Arab uprisings—one area where there is no ready agreement is non-monetary compensation. Everyone acknowledges that money is the chief incentive for attracting employees, but there is a dilemma when taking a longer view of the “employee value chain,” that is, from graduation to employment to career, what matters for recruiting and retaining good workers? In looking for possible answers, there are clear differences between countries that have plenty of people and plenty of funding, such as Saudi Arabia, and countries that have plenty of people and limited funding, such as Morocco. In both countries, young people assert that they want to and are ready to work. Yet in both countries there are wide gaps in expectations between those with secondary and university educations, which preclude a “one size fits all” approach.

The case of Saudi Arabia

In Saudi Arabia, where hundreds of thousands of new jobs are needed annually over the next 5-10 years to fill employment needs of locals under 25, the clear preference is for white collar jobs, even though industrial workers are in high demand throughout the country. While there has been extensive research on the categories of jobs available to Saudis, the most difficult step—motivating young people to fill the potentially available slots, has yet to be taken.

The kingdom has a three-pronged approach: 1) pushing the private sector to hire more Saudis and provide incentives for companies to have in-house training programs; 2) upgrade government coordinated training programs to enable young Saudi men and women to acquire skills linked to the rising demand centers for employment; and 3) educate and motivate Saudis to take seriously employment as a career.

The majority of the general population as well as university graduates are female, who, while seeing a gradually growing number of workplace opportunities, are also facing a dwindling pool of eligible husbands. This fact impacts the career aspirations of both men and women and cannot be overlooked as a normative peg is promoting employment.  

 

The case of Morocco

Morocco has different challenges since its young people are attracted by both blue and white collar jobs but the labor supply exceeds demand, especially if potential employees are reluctant to relocate. University graduates who prefer government-related jobs are disappointed in that few are being chosen under the accelerated hiring program of the current government. Since it has limited funding, the government is incentivizing the private sector through subsidies and grants to train in specific sectors. This is especially important since government training facilities are limited in number and unable to carry the full burden of training across a range of jobs. While there is an increasing emphasis on entrepreneurship and start-ups, the overall environment for promoting new businesses is still difficult to navigate. There is a large pool of entrants into blue collar work if they can access effective training programs.

Non-monetary incentives

Given the challenges in both countries, another motivational tool is identifying non-monetary incentives that could be part of an effective recruit and retain policy. Offering some ideas are two articles. McKinsey & Company just republished a seminal article on the topic “Motivating people: Getting beyond money.” And IESE Insight published “Remuneration Tips for a More Motivated Workforce,” which covers a study conducted by this Spanish economic institute. Both are based on surveys done with a variety of companies, ranging from mid-size to large corporations.

The McKinsey article found that:

“…praise from immediate managers, leadership attention…, and a chance to lead projects or task forces—[are] no less or even more effective motivators than the three highest-rated financial incentives: cash bonuses, increased base pay, and stock or stock options. The survey’s top three nonfinancial motivators play critical roles in making employees feel that their companies value them, take their well-being seriously, and strive to create opportunities for career growth.” 

The IESE Insight article found that:

“variable remuneration schemes, although increasingly widespread, do not always achieve their main objective: to motivate people.” In these schemes linking benefits to company profits (however measured), the author found that the relationship between variable remuneration and motivation is too complex as “numerous factors that cannot always be controlled influence the equation.”

In the MENA countries, using Saudi Arabia and Morocco as examples, both the financial and non-financial motivators cited in the two articles are not common practice. Yet the McKinsey article noted that “…in developing markets…[respondents] cited employee motivation as a key reason for modifying incentives.”

The Way Forward

So where to begin? Promoting one’s initial job as an entry into a career will be a major culture change in how Moroccans and Saudis perceive employment. Too often, either the job in industrial settings has defined limitations, or traditional job security has meant that there was little turnover to allow movement upwards for young, talented employees. Senior management must become committed to integrating their traditional role as benefactor/bureaucrat with a balanced style that demonstrates appreciation for talent, initiative, and loyalty.

Both articles warn that nonfinancial compensation schemes must be fair, objective, and realistic to discourage employees from “gaming” the system by working for the reward and not the overall benefit of the company. Discussions about how to motivate through nonmonetary rewards are a very useful device for engaging employees, if the option for these benefits is available. In addition, until middle management and supervisors also adapt their behaviors to support a corporate culture that recognizes and rewards teamwork and respect for diverse skills, talents, and personalities, any incentive-based motivational program will be eroded by a “do as I say, not as I do” credibility gap.