Doing business in various countries of the region, both on an individual and institutional basis, is faced with mounting challenges in varying degrees. These challenges include, but are not limited to, the resistance posed by civil society, parliamentary elites and average citizens to work with business figureheads, as well as the fear of involving criminal or corrupt forces into politics.
In general, the challenges faced by business figureheads can be explained as follows:
Lobbying
1. Civil society’s resistance to doing business with individuals assuming ministerial positions. An example of this phenomenon includes Tunisian businessman Khalil Ghariani turning down a position as the Minister of Public Service and Governance on March 2, 2017, after having been nominated for the post by Prime Minister Youssef Chahed. The move was followed by protests held by the Tunisian General Labor Union – the second largest central union in the country – that rejected his appointment. Ghariani was a member of The Tunisian Confederation of Industry, Trade and Handicrafts, a position that involved defending the interests of business people, and sought to lay off thousands of employees.
Ghariani’s decision to step down may help calm the tension between the Tunisian General Labor Union and the government, which hopes to make fundamental reforms in the fields of civil service and banking in order to obtain the second installment of its frozen IMF loan. Parties opposed to the Prime Minister accused the government of attempting to privatize the public sector by cutting 10,000 jobs, following former Minister of Public Service and Governance, Abid Briki’s decision to resign. Tunisia is not a unique case as several countries of the region have resisted business figures filling government positions in anticipation of conflicts of interest.
Promoting Mutual Benefit
2. Some societal forces object to the expanding political role of business people, evident in their growing interest in running for parliament. This was highlighted in the increasing numbers of business people running for the Algerian Parliament in the upcoming May elections. The move reflects an erosion of traditional barriers between money and politics, reducing opportunities for other candidates and party members, academics, and professionals. Algerian business people are tangibly striving toward an alliance with politicians, and vice versa.
Despite the fact that the last parliament (2012-2017) did not involve prominent parliamentary wins for business people, their influence emerged more clearly in the process of preparing financial laws governing investment. For this reason, the first few months of 2017 witnessed an increase in interest among business people in filling parliamentary seats for a new five-year term subject to renewal. The most prominent Algerian businessmen campaigning in the upcoming parliamentary elections include Bahauddin Tlipe, Honorary President of the football club, Union Sportive Médinat d'Annaba (USM,) and Abdelkadir Azimy, owner of the largest investments in the food industry.
Incomplete Reconciliation
3. Societal and parliamentary opposition to reconciliation with business people affiliated with previous political regimes, represented in the parliamentary division precipitated by the December 2015 Economic Reconciliation Act in Tunisia. Opposition forces coordinated a protest against reconciliation with business people suspected of involvement in corruption and money laundering (Chapter 61 of the 2016 Finance Act), and Transparency International called on the Tunisian Parliament to refrain from ratifying the bill. If passed, according to the organization, the law would encourage corruption, as well as the embezzlement of public funds.
Despite this, in May 2016 representatives of the ruling coalition parties in Tunisia approved a draft law on economic reconciliation with business people associated with the Zine El Abidine Ben Ali regime after successive Tunisian governments froze the activities of a number of business people. These actions resulted in the country being deprived of investment projects, deepening the economic crisis. Despite this, voices within civil society organizations and the media continued to believe that this law would enshrine impunity, despite the fact that the corruption of Ben Ali’s business contacts was one of the major reasons behind the “Jasmine Revolution.”
Double Taxation
4. Armed militias confining business people’s activities. Reflected in Yemen’s Houthi forces imposing a siege on business people who practice commercial activities in the areas under their control. This became clearer at the end of February 2017, when members of the Sanaa Chamber of Commerce and Industry hinted that they would relocate to other areas that offered investment opportunities.
Thus, the temporary capital of Aden has come to represent the most suitable alternative for Yemeni business people after the Houthis took a series of measures to stifle domestic economic growth and exacerbate destitution across parts of the country in order to fund acts of subversion through militias. Imposing double taxation led to dramatic price increases after moving to levy additional customs fees collected at sea and land ports.
Burden-sharing
5. Financial attrition to support the survival of authoritarian regimes. This applies to the business people who support the regime of Bashar al-Assad in Syria. Assad’s regime is based on its alliance with armed forces, security services, and members and personnel of the Baath party and the business elite, which explains Assad’s ability to maintain power both during the pre-revolutionary period prior to 2011 and throughout the ongoing civil war of nearly six years. The latter has required serious engagement in the economics of war.
In this context, the Assad regime resorted to taking financial and economic resources from business people in order to survive. In addition, the regime established militias to form “privileged networks” woven during the era of Hafez Al-Assad. Under his regime, significant gains were achieved through huge private economic projects, which explains the absence of influential defections among the ranks of the prominent business people, especially in light of their belief that the armed opposition is not capable of overthrowing Assad, combined with fears that a new political system in Syria may oppose their interests.
Hybrid Networks
6. The existence of links between business people and various criminal groups, as witnessed in Syria after the 2011 revolutionary movement, the restructuring of the economic elite in various states and the crystallization of links between conflicting parties, trade groups, and criminal networks imposed by the economy of war through the systematic looting of the country’s capabilities and wealth. This phenomenon was evidenced through specific indicators such as antiquity theft, control of oil fields, and the smuggling of fuel, arms, people, and goods. As a result, a war economy has become the dominant economic activity in most areas of Syria.
Over the past five years, the new economic elite has also expanded the scope of its activities by establishing beneficial relations with those operating in illegal fields of work in Europe and North Africa in the context of besieged areas which relies on making urgently needed goods available to besieged civilians. This system allows for the purchase of goods from businesses and merchants who bring commodities to the borders, allowing the army and armed fighters to impose royalties and control product distribution to civilians. All of these parties are profiting from illegal trade, making the system difficult to dismantle after the conflict ends.
Frameworks of Partnerships
7. The revival of joint business councils in light of the difficult economic situation in Syria. Over the past two years, the Syrian government has moved to revitalize business councils (established in 2009 and dissolved in 2013 following a breakdown in communications between Syrian investors and their counterparts across the world) in order to benefit from investor relations abroad. The goal of the councils are to mitigate the impact of economic sanctions and to open doors for Syrian exports. This is key following both the imposition of Western sanctions on Syria and the departure of a significant group of Syrian business people from the country, with capital flowing to neighboring countries in search of safe havens for investment.
The government was able to establish a number of councils with Iran, Russia, Belarus, China, Armenia, and Ukraine, and intends to continue forming more, especially with countries that Damascus enjoys solid political relations with and represent strong economic powers (i.e. various Asian and Latin American countries). The Syrian Ministry of Economy and Trade has identified a group of goals, most notably including support for trade cooperation and economic exchange between Syria and friendly states, as well as strengthening economic ties.
A piece of the “reconstruction pie”
8. Contributing to the reconstruction of collapsed states, as the issue of business figures participating in the reconstruction processes following armed conflicts in Arab countries has emerged at international forums. For example, the cost of reconstruction in Syria is estimated at $400bn, and some of the BRICS countries have proposed the idea of establishing a bank for the reconstruction of the country. It is anticipated that the countries that supported the Assad regime in its war against the armed opposition, such as Russia, Iran, and China, will eventually win such contracts, reducing the opportunities for business people from neighboring countries such as Lebanon, Jordan, and Turkey.
In an interview with Al-Sharq Al-Awsat on March 29, 2016, Dr. Osama Kadi, President of the Syrian Economic Task Force—an independent consultative body selected by the Friends of Syria Group to represent Syria in planning its post-war economy and reconstruction efforts—indicated that the reconstruction of Syria is the responsibility of Syrian business people. However, the main risk is that the same group of people who plundered the national economy in the past, both directly and through intermediaries, would be involved in reconstruction. Furthermore, the Syrian regime gave monopolistic concessions through which they were able to amass considerable wealth that made it extremely difficult to compete at the domestic level in terms of capital. An economic elite exists, with some old and new elements, which form the nucleus of reconstructing post-conflict economies.
New Thresholds
9. Investment risks in new economies. Especially following the shaping of an approach to employ the financing capabilities of Moroccan business people to invest in African countries that support the Polisario Front, which supports the Sahrawi people’s right to self-determination. King Mohammed VI was accompanied by a significant delegation of business people during a tour of Africa that included Ghana, Guinea, Zambia, Cote d’Ivoire, and Mali. These countries support the Polisario Front and the Sahrawi people’s right to self-determination. The tour was aimed at supporting opportunities to hold economic forums between Moroccan business people and their counterparts in African countries in order to support small farmers and industrial cooperation, and revive investments in tourism, transport, and renewable energy.
Suspicions of Corruption
10. Suspicion of involvement in corruption cases. One of the most prominent cases is that of the Israeli police gaining possession of voice recordings in which Prime Minister Benjamin Netanyahu was to receive money in exchange for granting business people certain concessions that Haaretz referred to as Case 2000 on January 8, 2017. These mutual concessions strengthened criminal suspicions held by the police and former Prime Minister Ehud Barak who both demanded that the current Prime Minister step down.
A similar situation emerged before the March 2015 elections in which Netanyahu signed a deal with the owner of a media organization to obtain favorable media coverage. This was in addition to Netanyahu receiving gifts from the Israeli businessman, Arnon Milchan for eight years in exchange for a visa to enter the United States. However, the police interrogation of the Prime Minister did not result in an indictment, as Israeli law forces any member of government, including the President, to step down if formal charges of corruption are made. Netanyahu considered these targeted attempts to topple the Likud government.
Double Chances
Overall, groups of business people in the Middle East face domestic challenges, impact the performance of conventional roles, in addition to new opportunities that appear both through enhancing political influence or through passing financial reconciliation laws. The seismic changes witnessed by the region took their toll on conditions for business people, both positively and negatively, especially with respect to growing economies of war, investment in new areas, hopes to obtain a slice of profits from the reconstruction of crumbling Arab states, and participatory roles with international companies subject to the influence of regional and international forces.
