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Since its establishment in 2009, the CMI has striven to promote effective, sustainable, and mutually complementary development policies in the Mediterranean region. It does so by creating opportunities for policy makers, planners, academics, and market actors to generate, share, and implement knowledge, analysis, and know-how. One of its key objectives is to identify and fill critical knowledge gaps in the interest of shared regional prosperity. The Center for Mediterranean Integration was created by a memorandum of understanding signed by six states (Egypt, France, Jordan, Lebanon, Morocco, and Tunisia) and two international financial organizations (the World Bank and the European Investment Bank). Other institutional partners include the Agence Française de Développement, the Caisse des Dépôts et Consignations (France), the German Society for International Cooperation, the UN Development Programme, the Forum Euroméditerranéen des Instituts de Sciences Économiques (FEMISE), the Plan Bleu (United Nations Environment Programme), and the City of Marseille. The CMI is first and foremost a pragmatic platform from which countries can discuss ideas and processes likely to help build new institutional and political arrangements and facilitate informed public policy and decision-making. For this purpose, the CMI draws on a vast range of institutional and independent expertise and resources from think tanks, training institutions, and centers of excellence. Five clusters of work are being developed: (i) urban and spatial development; (ii) environment and water, (iii) transport and logistics; (iv) skills, employment, and labor mobility (including youth issues); and (v) knowledge economy, innovation, and technology. Each of these clusters, with its component programs and activities, contributes to knowledge generation, capacity building, and training. Knowledge generation takes the form of country and regional studies, policy notes, scenario-based analysis, economic tools and methodologies, and analytical frameworks. Capacity building and training are advanced through knowledge sharing, technical assistance, and advocacy for reform. The CMI aims at developing communities of practice in which partners from the northern and southern rims of the Mediterranean focus on common development matters and tackle the most critical and pressing challenges currently faced by the region. In so doing, the CMI promotes economic prosperity and political democracy in the Mediterranean. For a list of all CMI publications visit: www.cmimarseille.org © Center for Mediterranean Integration 2011 Any use of CMI content should be accompanied by a suitable acknowledgment.

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Foreword

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Introduction

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Part I Empowerment of Youth and Women

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Civic Participation and Economic Opportunities Advancing the Empowerment of Women Strengthening Communities for Development

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Part II Employment and Entrepreneurship

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Better Matching Skills and Employment Building a Just and Fair Economic Environment Labor Regulation and Corporate Social Responsibility

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Part III Regional Integration

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Toward Convergence and Regional Integration Transition to a Genuine Knowledge Economy Enhancing Circular Migration for Development

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Conclusion

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References 32

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Decades of discontent turned in January 2011 into the Arab Spring of hope for democracy and popular empowerment, creating new opportunities for long-awaited political change and socioeconomic reform in the wider Mediterranean region. As different as the country situations are, and as dynamic and volatile as current events remain, the opportunity for transformation and integration in the region presents itself to us today in an unprecedented way. While a strong demand for democracy, human rights, and constitutional change has been at the core of the 2011 protests, the demand for dignity—in the form of better education, better jobs, and parity for women and girls—was also a key inspiration and cannot be ignored. The need for change was long held back by poor governance and by a private sector made sluggish by favoritism and privilege rather than energized by the creative forces of competition. Gaps within and between Arab countries gradually became unacceptable to a young generation fully aware of its potential, a generation tired of waiting. This young generation is the transformative force that will drive growth and development in the years to come.

The first requirement for effective regional transformation and integration is more and better jobs for women as well as men, for young people as well as old, for rural dwellers as well as city residents. Nothing is more empowering than a job, and nothing shows successful competitiveness better than creating jobs. Unleashing the aspirations, creative forces, and strengths of Arab youth will enhance the potential for economic growth, social justice and cohesion, and human fulfillment. If those aspirations are stifled and unemployment worsens, greater destabilization is almost sure to follow. Of all the present challenges, gender and the knowledge economy must be given higher priority on national and international political agendas. Women of the region can no longer be a confined and untapped resource. Creating jobs requires greater investment in knowledge-related sectors and renewed emphasis on how to develop competitive, high-productivity, and sustainable economies. Trade is also crucial to economic modernization and diversification, as it brings new opportunities for growth, investment, and innovation—across the Arab region, with Europe, or with the rest of the world.

Our world has become so interdependent that the dual process of transformation and integration can succeed only within a more ambitious framework of cooperation and development. With the commitment of unprecedented resources by major multilateral institutions to this historical dynamic of change, exceptional opportunities to build such a framework have emerged. There is scope for much stronger interaction between all those willing to build a new future together.

Beyond the Arab Spring: Civil Society Speaks for a Common Future is the product of a series of discussions hosted by the CMI at the Villa Valmer in Marseille on 5–7 June 2011. The discussions took place within the framework of the Forum for the Future Second Civil Society Workshop on the theme of “Transformation and Integration in the Broader Middle East and

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North Africa Region (BMENA).”1 Although the CMI facilitated these discussions with civil society representatives as part of the G8’s Deauville Partnership, the following report does not speak for the CMI founding members and partners; rather, it conveys the main messages raised by the participants during the workshop. The civil society organizations that participated in the workshop formulated 36 recommendations. These are featured in this report under three broad themes, namely: empowerment, employment and entrepreneurship, and regional integration. All of the organizations expressed their support for the Arab Spring, emphasizing the necessity to safeguard freedom, human rights, and democracy and asking the G8 countries to give equal, unbiased, and consistent support to the democratic transitions. They urged inclusive economic strategies that create jobs and contribute to the fight against poverty. They welcomed the Deauville Partnership and urged a break with past practices in favor of democracy, transparency, and accountability. Building on these recommendations and more broadly on the work conducted by the CMI since 2009 on all of these fundamental themes, this report relays deliberations and proposals from civil society actors to facilitate and support the ongoing dialogue with governments. It was prepared by Myriam Benraad, a policy officer at the European Investment Bank, and Olivier Lavinal, an operations officer at the World Bank based at CMI. Additional contributions were received from Nada Tarbush, Tamer, Taha and Slim Hassairi. The report was designed by Loraine Falconetti, communications officer at the CMI, and edited by Steven B. Kennedy, a World Bank consultant. The CMI would like to thank the G8 copresidents—France and Kuwait—for entrusting the CMI to reach out to civil society organizations on both rims of the Mediterranean. Special thanks go to Christian Masset, Paul-Bertrand Barets, Nadia Sartawi, and Michel Roche of the French Ministry of Foreign and European Affairs for supporting the opening of new opportunities and platforms for dialogue. The CMI is also grateful to all of the civil society representatives who participated in this workshop and contributed its substance and inspiration. At this time of unprecedented change, it is hoped that Beyond the Arab Spring: Civil Society Speaks for a Common Future will offer a strong basis for renewed and constructive dialogue and cooperation between governments of the BMENA region, civil society organizations, and the international community as a whole.

Mats Karlsson, Director of the Center for Mediterranean Integration

1 The Broader Middle East and North Africa Region (BMENA) Initiative was first launched in December 2004 at the Forum for the Future in Rabat. It is a multilateral development and reform plan aimed at fostering economic and political reforms in a broad geographic area of countries stretching from Morocco to Pakistan, which here also includes the G8 nations.

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The events that have shaken the Mediterranean since January 2011 are not only a watershed for countries like Tunisia and Egypt, but for the Arab world as a whole. Those events are exceptional in a region that has long been considered politically immutable, naturally prone to violence, and marked by ever-weaker governance, increasing social malaise, and enduring strife. Although uncertainties remain about the evolution of several countries in the region, Arab populations have shown that they yearn for dignity, shared prosperity, and democracy to take the place of deprivation, corruption, and authoritarianism. The Arab Spring was not anticipated. Nor did anyone foresee that, in a matter of weeks, the region’s face and destiny would forever change. And yet many of the causes of this historical change were well known and should have been warning signs. Citizens across the region had already made clear their desire for fairly distributed growth and a consistent rule of law. They want corruption to end. They want transparent and accountable governments. Most important, they want the opportunity to shape their own destiny. The fulfillment of these aspirations will be complex and unpredictable, but the present momentum is a unique chance to open a new era of democracy and peace. Immediate challenges include the rapid creation of jobs for youth and women, the need for broadly based growth, the expansion of access to quality education, and the imperative of more inclusive and accountable governance with greater participation of civil society in the political process. How these challenges will be tackled will have wide-ranging repercussions in the countries of the Broader Middle East and North Africa (BMENA) and throughout the world. More than ever, the international community will have to be innovative in its approach to the region and in the methods it uses to close the gaps that have haunted the region for so long. Accomplishing the goals of transformation and integration will require a renewed framework for cooperation and development. In 2011, all major international institutions committed unprecedented resources, both financial and technical, to this historic dynamic of change; exceptional opportunities opened up; and much stronger partnerships are now possible between all parties willing to build a new future together. Initiatives like the G8’s Deauville Partnership provide opportunities for knowledge-sharing and finance. The CMI, whose work was recognized at the founding of the Deauville Partnership, is well placed to respond to the challenges of the Arab Spring through its unique ability to advance regional integration and to draw upon expertise and resources likely to serve its member countries’ interests on all priority issues: regional development, local governance, and bottlenecks to job creation. Throughout 2011, the CMI hosted a series of high-level policy discussions that built on global expertise and studied lessons learned. Because of that work, it was mandated by the Deauville Partnership to lead the preparation of an action plan for enhanced trade and foreign direct investment in the Mediterranean. Drawing on the expertise of the World Bank, in partnership with the Islamic Development Bank and all other relevant stakeholders across the region, the plan will propose short- to medium-term recommendations. Within the framework of the Deauville Partnership, the CMI has also been tasked to facilitate and enhance the dialogue between governments and civil society on issues of political and

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economic reform and human development. This was precisely the objective of the regional workshop that the CMI hosted at the Villa Valmer on June 5–7 under the framework of the G8-BMENA Initiative and the VIII Forum for the Future. Entitled “Transformation and Integration in the BMENA Region,” the workshop considered the socioeconomic challenges facing the region and discussed the creation of a forum in which civil society organizations could reflect on reforms needed to ensure that future growth would be equitable and would create jobs. The Forum for the Future is organized every year to support the voices calling for reform through the BMENA region. France and Kuwait were the co-chairs of the VIII Forum, which closed in Kuwait in November. In addition to the workshop just mentioned, the Forum preparation process consisted of two regional workshops designed to elicit recommendations from civil society organizations. The first workshop, dedicated to gender equality, was held in Kuwait on May 4–5. The other was organized on September 17–18 in Marrakech. The June workshop at the Villa Valmer provided an opportunity for representatives of civil society to voice their concerns, debate views, and share concerns. Among the key messages that emerged from that workshop are that the people of the region demand equal opportunities to participate in the governance process, including the rights to representation, to assembly, to public debate, and to recourse. The voices of women, youth, and local communities must be part of the public debate. Employment and entrepreneurship have emerged as paramount in widening access to decent jobs and creating new income opportunities. Tackling these issues will depend on the labor market’s ability to match skills and employment, on the capacity of societies to build a just and fair economic environment, and on the willingness of large firms, notably multinational corporations, to embrace the principles and practices of corporate social responsibility. Ultimately, dynamic and sustainable growth will be achieved only through the convergence of the economies of the region, through efficient labor markets and coordinated migration policies, and through a sustained commitment to building a true knowledge economy. The intensity of popular demands in the region and the magnitude of the changes required to meet those demands are strong incentives for the international community to manage the processes of transformation and integration, guided by an innovative vision of how development should be pursued. The growing practice of democracy and the involvement of individuals, institutions, and organizations at all levels of society are key attributes of a development approach that is effective, inclusive, transparent, and accountable. The CMI will continue to facilitate the exchange of views among all those with a stake in the region’s future. Built on a unique multipartner governance, the CMI provides a pragmatic and mutually respectful platform in which the countries of the region can discuss and learn. This process can pave the way toward new institutional and political arrangements and facilitate informed and effective public policy for sustainable human development.

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Over the last decades, the countries of the Middle East and North Africa (MENA) region have made notable progress on the empowerment of youth, women, and local communities. Yet the region still has a long way to go toward full inclusion of youth and women and in the promotion of local development. As shown in 2011, Arab young people—now about two-thirds of the region’s population— lack access to economic opportunities, quality education, recreation, and political participation. Combined with rising expectations brought about by education and the information revolution, this lack of access has created an unbearable frustration, clearly demonstrated in recent events. Similarly, despite breakthroughs in improving human development indicators for women, gender-based inequalities are still strong in the region, contributing to women’s social, economic, and political exclusion. The opportunity cost of this exclusion is significant in terms of present and future GDP—and the human and social costs are even larger. If the work aspirations and the creative strengths of youth and women can be freed, the result will be higher growth, greater social cohesion, and deeper human fulfillment. Empowerment also springs from local development. The local level is the natural level from which citizens can express themselves; it is the theater of greater empowerment, as demonstrated by recent events. Citizens are demanding greater participation through the reinforcement of community institutions for self-management and self-regulation, and through the enhancement of their integration into revitalized local governments. Community-driven development encourages local participation and ownership and creates new opportunities for sustainable development.

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As a concept and as an approach, “civic participation” is not new to the societies of the region. Many of the political changes undergone by those societies in contemporary history were the result of the national uprisings and strong civic engagement of populations. During the 1950s and 1960s, civic participation was enabled by the growth of a dynamic civil society made up of socioeconomic and intellectual elites, opposition parties, student associations, labor unions, and ordinary citizens. While a majority of those civic movements emerged at the time as a direct response to upheavals in the political sphere, their focus has always been the defense of elementary rights such as education, security, income, social protection, justice, and democracy. Nonetheless, for more than three decades, the participation of civil society in the political debate was precluded by the authoritarian regimes established after independence. With leaders remaining in office indefinitely, and through a pervasive system of security forces, restrictive laws, and state control over every aspect of life, civil society organizations were barred from any form of expression and remained weak and fragmented. Cracks in the authoritarian structures of the state began to appear only in the late 1990s and early 2000s, as waves of popular discontent brought citizens into the streets to call for freedom and reform in defiance of the ruling elites. Since the beginning of the Arab Spring in December 2010, what has united Tunisians and Egyptians, as well as Libyans and others, is the demand for democratic governance through public accountability and robust civic participation. The Arab Spring has also been driven by a generational factor. Young people facing economic uncertainty and unemployment have struck back at political oppression using new technologies and social media to declare their aspirations. The young want a say in political issues, through the ballot box to be sure, but also by becoming part of new institutions—parties, parliaments, and local governments. Accommodating those reasonable aspirations requires an enabling environment in which citizens can express their needs freely and openly and governments act transparently and are held accountable to their people. If the present momentum is not to be lost, civil society must be reinforced through rapid and concrete measures. The Arab Spring has shaken common assumptions and revealed the existence of a forceful, proactive, and organized civil society and of a new Arab generation that went unheard for too long. This generation, the pillar of democratic change and social transformation in the MENA region, will provide the independent space needed to reform relations between the society and the state.

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Civil society representatives urge governments of the G8 to: Engage civil society in empowerment processes as full-fledged partners rather than

participants. Allow them to set the tone and take an active role in designing policy. Create an enabling environment in which they can develop leadership skills and financial means.

Implement empowerment strategies integrated both “horizontally” (i.e., covering a

range of sectors from education and training to health, etc.) in order to ensure sustainability, social cohesion, and return on investment; and “vertically” (i.e., bottom up) so as to respond to local needs voiced by youth. Strategies should promote a participatory and socially responsible economy and encourage youth participation in local development. Enhance opportunities for socioeconomic mobility of youth.

Establish effective democracies ensuring dignity for young people, the lack of which was the root cause of the Arab Spring uprisings. Spread transparency and accountability with the help of new technologies (notably Web 2.0), which give youth open access to information within the decision-making process. Share knowledge on successful democratic transitions to sharpen citizens’ understanding of how to build successful democracies.

Allow youth to participate in decision-making, for example by having youth

representatives help draft youth-related policies within the current socioeconomic transformation processes. Encourage civil society organizations to train them to take on that role.

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The status of women in MENA countries has improved substantially in the past few decades thanks to generous public spending on health and education. This policy turn has yielded remarkable results, with a rise of the average literacy rate for women across the region, additional enrollment in primary school, and greater participation of women in higher education. Women in MENA countries are living longer and healthier lives, their life expectancy having increasing by ten years since 1980, largely owing to better healthcare and a fall in maternal mortality. But these measures have not fully bridged the gender gap or translated into equal gains in employment and political participation. The MENA region thus falls considerably short on indicators of women’s economic participation and empowerment. While the rate of participation of women in the labor force has increased rapidly in MENA over the last three decades, it still ranks among the lowest in the world. Similarly, women’s presence in the political arena and their influence on public policy are more limited in MENA than in any other region. Women remain a largely confined and untapped resource, and the MENA region accounts for the world’s largest gender gap, with unemployment rates far higher for young women than young men. Although women make up as much as much as 60 percent of university students in Tunisia, regionally they represent only 30 percent of the labor force, with a widely accepted view that these rates are attributable to social norms and disadvantageous policies. Gender inequality—meaning differential access to opportunities and security for women and girls—is therefore a fundamental issue, as illustrated in 2011 by the massive mobilization of women during the Arab Spring. What recent events also show is that rapid population growth in the region has created a generation of young men and women who tend to be better educated than their parents and who therefore have higher expectations and aspirations. In terms of capability, women are increasingly on par with the men of their generation. These women and men are likely to adapt their views of their respective roles in the family and to seek equality in the private and public spheres, in order to cope with the changing economic reality. Women must be offered greater access to opportunity and economic security. A gender agenda must consist of four broad policy areas including review of the legislative environment to ensure that women benefit from equal rights granted by laws and under national constitutions; a more supportive infrastructure (child care, transport, water, and telecommunications) to facilitate women’s participation in the public sphere; continued attention to education, particularly to provide women with relevant market skills; and reform of labor laws and regulations to reflect the region’s new development model and the need for job creation in the private sector. Linking gender equality with good governance implies greater inclusiveness of women in institutional decision-making and accountability to ensure fairness and equality.

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Civil society representatives urge governments of the G8 to: Reaffirm women’s rights, notably those embodied in international conventions that

stress the equality between men and women and the prohibition of violence against women, and make sure that they are integrated into national legislation. Set up call centers for women who suffer physical abuse.

Promote a mentality change in the way communities view women’s roles, starting

from a young age. Through new media, raise awareness about women’s rights throughout society.

Promote women’s participation in decision-making at all levels (notably legislative,

executive, civil society, media) and give them tools—such as scholarships for high-quality education and research in science and technology—to be active and financially autonomous economic actors. Build women-friendly infrastructure, such as nurseries, that facilitate women’s role as mothers and free up their time for work. In rural areas, free up women’s time by, for example, making energy readily accessible to them. Impose a quota of 40–50 percent for employment of women in the private sector.

Unleash women’s entrepreneurial potential by giving them access to various

mechanisms (cooperatives, microfinance initiatives) and the capacity and tools to use them.

Set up international networks of bodies that work on gender-related issues, so that

they can link up and work as a vehicle for implementing these recommendations.

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The need for local citizens to come together to meet the challenges facing their communities is of immense importance. Lately, local communities throughout the region have taken on a greater role in providing services and planning for future needs. In response to the pressures and changes in their communities, concerned groups have emerged to shape and guide the development process, while organized local residents have played an instrumental role in identifying new development options in localities that historically had few such options. Community-based action in these and other settings is crucial to community development and to the social and economic well-being of local populations. Over the last decades, MENA countries have made noticeable progress in local development. Initiatives were launched to strengthen and empower local communities. However, the MENA region still faces the local-development challenge of social cohesion, especially between urban and rural areas. Lack of social cohesion frequently results in conflict which, if not managed properly, imperils further development. While local development cannot guarantee peace, it may mitigate conflicts. The Arab Spring has reminded us of the need for a new development paradigm that is sensitive to local differences. Urban and rural community institutions and governments need strengthening. MENA societies have a high degree of social organization and networks of solidarity. However, many have also endured the socioeconomic costs of violence that has caused destruction, loss of life, and poverty, while distorting development priorities and undermining national cohesion. At the same time, rapid urbanization and modernization have weakened the traditional institutional structures of communities. Those institutions are no longer able to fully mitigate tensions, especially in the context of rapid population growth, high unemployment, and a depleted natural resource base. In order for citizens to play their part in development and to reduce the risks of conflict at the local level, community institutions of self-management and self-regulation need to be strengthened and better integrated into revitalized local governments.

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Civil society representatives urge governments of the G8 to: Promote an “inclusive process” for local economic development, mobilizing civil

society organizations along with other local actors within an adapted legislative framework that builds the competencies and financial resources of those organizations and actors. Build the capacity of local actors so that they can undertake local development initiatives. Coordinate the local-level projects and actions of international organisms to ensure harmony with national and local initiatives. Set up performance indicators. Give priority to the most vulnerable groups.

Base decentralization on coherent socioeconomic considerations and

administrative divisions, rather than along religious and ethnic lines. Ensure that certain preliminary conditions are in place for decentralization to be

possible and successful: a governance system based on the rule of law and having a transparent budgeting process, a strong anti-corruption strategy, and transparency in the disbursement of foreign funds. Decentralization must be promoted within a comprehensive development strategy embraced by the central government.

Adopt a “top-down, bottom-up approach” whereby information is shared mutually

between local communities and the central government so that all may better understand the challenges facing different actors and the available mechanisms of action.

Provide funds to scale up local programs developed by local actors that have been

shown to work through pilot projects (“evidence-based programs”). Concrete projects could include offering incentives to members of local communities to change their behavior in ways that allow them to improve their standard of living and respond to local needs. Design financial tools that support sustainable livelihoods in sectors such as agriculture and manufacturing.

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A crucial challenge in the region is to create more and better jobs to answer the call of youth for economic opportunity coupled with accountable governance. Rates of unemployment stand at around 10 percent, and youth unemployment is at nearly 25 percent. Women, especially the young, face very high rates of unemployment. Many countries in the region have achieved relatively high levels of education, The challenge now is to provide good jobs to this large pool of educated young people as well as to the unskilled who continue to make up the majority of the unemployed. One of the reasons for unemployment is the “skills mismatch,” with skill supply not matching the demand for skills, particularly among university graduates. Hence, improving the quality of education and skills training for today’s job market is a key challenge. Vocational training and tailored education must be used to equip youth with the skills and competencies needed to find jobs and, more broadly, to make them active and prepared players in the transition towards a knowledge economy. In addition, entrepreneurship plays a crucial role in development. Small and medium enterprises, in particular, have been shown to contribute greatly to job creation. It is thus important to unleash the untapped potential of the private sector, both formal and informal, to develop an entrepreneurial culture rooted in trade and integration. To do so, a necessary condition is to establish an open and fair economic environment free from corruption. The critical features of such an environment are transparent and accountable institutions and the rule of law. The economic environment in the region has suffered greatly because the key to success for entrepreneurs was based on connections or privilege rather than creativity, persistence, and competition. The lack of competitiveness in the private sector has led to low levels of private sector investment and job creation. To counter this trend and improve the economic environment, both the public and private sectors can play a role. Governments can increase transparency, accountability, and quality of service in public agencies, while reducing conflicts of interest between the public sector and private interests and reinforcing regulatory institutions. In return, the private sector can develop stronger links with governments in designing, implementing, and evaluating tailored reforms. Against this background, a wider and deeper sense of corporate social responsibility is needed to develop goods and services in tune with the needs of the marginalized. Going beyond core business practices and motivations based purely on profit to take into account social engagement involves a focus on public-private partnerships (PPP), social investment, and transparent and responsible business engagement in public policy dialogue, rule making, and institution-building. Corporate social responsibility also requires stronger labor regulations that enable states to promote civil liberties and compel companies to respect workers’ rights.

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Of all the challenges facing the Mediterranean region, one of the most important is the creation of more and better jobs. Youth unemployment rates vary substantially across the countries of the region, ranging from 15 percent to 45 percent. Job creation has not kept pace with growth in a labor force swollen by women and young people. Young women, in particular, face high rates of unemployment (estimated at 40 percent in both Egypt and Jordan). The direct opportunity cost of youth unemployment in the Arab world is estimated at up to US$50 billion a year. To redress that unsustainable situation some 80 million jobs will have to be created by 2030.

As regards job creation, many countries in the region have achieved relatively high levels of educational attainment, but the challenge is now to provide good jobs to new graduates. To equip people with the new skills and competencies needed for a transition to a true knowledge economy, MENA countries need to further reform the nature and content of their education systems.

With few exceptions, MENA countries also remain isolated from the global economy. Economies are heavily skewed toward oil and commodity exports. More generally, MENA countries must prepare to tackle major challenges related to water, energy, food, and climate change. Some countries (including Egypt, Jordan, Lebanon, and Tunisia) face an additional short-term problem: a difficult fiscal situation and the need to implement consolidation measures to increase their fiscal space and capacity to manage shocks.

As governments reduce their fiscal deficits, more knowledge is needed on how to optimize investments in various domains in order to develop competitive, high productivity, and sustainable economic activities. There is a strong need to unleash the potential of the private sector to contribute to the development of a more entrepreneurial culture and to create jobs.

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Civil society representatives urge governments of the G8 to: Invest massively in the reform of education systems (most notably secondary

education, higher education, and vocational training) to enhance quality by:

a. Reforming higher education and vocational curricula to increase the employability of graduates as well as those who leave the educational system before receiving a diploma.

b. Developing, in cooperation with employers, apprenticeship courses in technical and professional schools and selected university branches.

c. Introducing vocational modules (soft skills) at all levels of education. Strengthen and develop the links between the education system and the private

sector (through representative employers’ and business organizations) to improve the employability of graduates. Links can be forged through systematic and institutionalized consultation of the private sector to improve curricula and content in postsecondary and vocational institutions.

Promote the mobility of students in the region through the creation of an investment fund (drawing inspiration from the Erasmus program in the European Union) that will enable international student mobility and employability. The mobility program could be given the symbolic title “Ibn Battuta,” after the 14th-century Berber who wandered the Islamic world for 24 years.

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In 2009, MENA countries felt the shock of the global economic downturn, primarily because their growing integration into international trade had exposed them to the effects of the slowdown. The shock aggravated existing inequalities. Until late 2010, the region was on track for a recovery from the crisis. Growth accelerated to nearly 4 percent in 2010 from 2 percent in 2009, driven mainly by the region’s oil exporters. Nevertheless, the slow growth equilibrium did not generate enough jobs for the growing labor force. The Arab Spring made it evident that economic growth and gradual economic reform would not be able to anchor the democratic transition unless they created more and better jobs for the rapidly growing labor force and were accompanied by social policies to protect the most vulnerable. For growth to be sustainable, it must be inclusive and broadly shared, not captured by a privileged few. Endemic corruption has been an affront to the dignity of citizens, and the absence of transparent and fair rules has undermined inclusive growth. Close to 60 percent of managers believe that the rules and regulations as they appear “on paper” are not applied consistently and predictably. In this period of turmoil and uncertainty, a socially inclusive agenda will not survive in the absence of economic and financial stability. It is vital to contain rising fiscal imbalances, growing debt, inflation, and capital flight which, if not stopped, will undermine confidence and derail the pursuit of a new social agenda and political process.

Thus far, governments of the MENA region have responded to political developments—and higher commodity prices—with fuel and food subsidies, civil service wage and pension increases, cash transfers, tax reductions, and spending increases. While some countries are able to do this safely, for others it is straining public finances and debt levels. Food and fuel inflation are also spilling over into core inflation. The Arab Spring provides an opportunity to lay the foundation for socially inclusive growth and a just and fair economic environment in which each country of the region finds its own path for change that can ultimately be more broadly owned.

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Civil society representatives urge governments of the G8 to: Promote the rule of law as the focal point of the economic strategy, an essential

guarantee of a fair and competitive economic environment through (i) an independent system of justice, (ii) freedom of expression, (iii) freedom of the press, and (iv) freedom of association. Corruption, nepotism, unearned privilege, and the collusive intertwining of political and economic power continue to be serious problems afflicting the region, problems that obstruct the economic environment and limit opportunities for growth.

Ensure that international development aid to Arab countries come with the

precondition that the state uphold the rule of law, transparency, accountability, free access to information, freedom of expression, and ongoing efforts to fight corruption and nepotism. The mechanisms driving this aid should respond to the same principles of transparency and accountability. G8 countries should eliminate tax havens and related transactions in order to fight corruption at the regional and international levels.

Support (through public financing and capacity building measures) the development

of a strong, independent media in Arab countries that can act as a watchdog for the rule of law. In conjunction with these efforts, independent media regulatory agencies should be created in these countries. Transparency and access to information by the media and civil society should be legally guaranteed.

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Labor laws regulate interactions between employers, employees, and their representatives—unions and employers’ associations. Beside regulating employment relations, labor laws establish a conducive environment for the creation of employment opportunities and social dialogue. Labor regulation is an important cornerstone for a favorable investment climate, which in turn is an essential determinant of foreign direct investment and job creation. In most MENA countries labor laws have been shaped by features of the social contracts established after independence. Each country has its own history of labor regulation development, with various labor market conditions and contrasting legal and social security systems. Labor laws date back to the 1950s and 1960s, and increased exposure to international market forces has had a clear impact on labor relations, constraining countries such as Egypt, Morocco, and Jordan to revise their labor codes to better adapt to international trade, enhance labor mobility, and attract foreign direct investment. Labor laws protect worker’s rights in the region, as collective bargaining is not widespread. Depending on the country, trade unions are either state-controlled or independent; some do not represent workers effectively. MENA countries have generally had a single, often compulsory, trade-union structure. Strikes have long been illegal, and workers had few ways of challenging the power of the state or private employers. Most workers in the region remain unprotected against unemployment risks. Corporate social responsibility is a salutary complement to regulation of the labor market. More companies and countries recognize its benefits in terms of international competitiveness, the investment climate, and market development. Greater emphasis on ethical values in business benefits companies and contributes to social progress.

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Civil society representatives urge governments of the G8 to: Adopt a common code of good practices in corporate social responsibility inspired by

existing international standards (UN, OECD, ISO). The state sets an example by:

Implementing social responsibility standards, in particular those pertaining to transparency and access to information, within public enterprises and private enterprises engaged in public-private partnerships for the production of public goods Granting preferential access to public markets for companies that adopt the aforementioned standards.

Develop policies for education, information, and awareness-raising to establish a

culture of social responsibility. Develop support mechanisms for companies seeking to establish best practices in

corporate social responsibility. The latter could include tax credits or subsidies to support the investment necessary to comply with standards of social responsibility in specific sectors (e.g., environmental conformity). Further incentives for corporate activities in support of youth employability, underprivileged groups, and training to meet standards could be implemented.

Provide incentives for compliance with specific standards in industries that are high

consumers of nonrenewable resources or that deplete those resources (e.g., mining industries, heavy water consumers, etc.), above and beyond the measures that international laws and conventions already impose upon these sectors.

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Regional integration must be a common objective pursued by all in the region. It will be achieved through greater economic convergence. The countries of the region have extremely diverse economic realities. Some are resource-rich, but natural resource exploitation in itself does not create opportunities for large-scale employment. Others have already developed more diversified economies but need to broaden and deepen the product and service lines they offer, adding greater value to the business chains in which they participate. Eventually, opening to regional and international trade will help generate and sustain growth. Such an opening is the goal of the CMI’s 2012 action plan to enhance trade and foreign direct investment in the Mediterranean, following the request made by the G8 in September in Marseille. Supporting innovation in all its forms—from the creation of new technology that is embedded in new products and processes, to the diffusion and use of existing technology and the promotion of innovations to eradicate poverty—is key to developing new economic activities, and particularly new services. Innovation is a hallmark of knowledge economies, and building a knowledge economy requires that countries cooperate regionally—to integrate, accommodate labor mobility, and exploit North–South synergies. MENA countries need to maximize the benefits to be gained from trade, foreign direct investment, financial regulation and integration, technology diffusion, labor mobility, and participation in global production networks and value-chain arrangements. The way to create jobs is to invest in knowledge-related domains and develop competitive activities that have high levels of productivity and are sustainable. This path is referred to as a move toward a true knowledge economy. Ultimately, migration is a major challenge for further development of the region and must be addressed through customized and coordinated policies. The old paradigm of permanent migrant settlement is progressively giving way to temporary and circular migration, making diasporas an even more efficient tool to foster regional integration. By building transnational networks, developing trade and investment, supporting cross-borders entrepreneurs, and transferring remittances, circular migration benefits economies and promotes the development of small and medium enterprises. It may even improve institutions. MENA countries’ situations regarding migration vary widely. Over the last two decades migrants’ remittances to North Africa have constituted the highest ratio to GDP of any region in the world, while some GCC countries are among the greatest sources of those remittances. The movements of migrants between their homelands and foreign places of work can lead to “win-win-win” results—wins for the countries of origin and destination and for the migrants themselves (with professional, social, and familial consequences). However, to create this positive feedback specific practices are needed in both countries of origin and destination. Integration, demographics, and 21st-century socioeconomic developments present us with challenges that demand new answers with a truly regional dimension. Solutions lie both in concerted national policy implementation and in direct multilateral cooperation. For these solutions to be sustainable, their development needs to be a common effort.

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The MENA region is a unique case when it comes to regional integration. Dynamics of integration and fragmentation have gone hand in hand in the region and have tended to alternate strongly over time. While most MENA countries share some common features and cultural traits, there are few places in the world that have been more politically divided and conflict-ridden. And while the region has served historically as an artery of global trade and commerce, more recently it has turned into an economic backwater characterized by one of the lowest levels of trade integration in the world. Despite this fragmentation, regional ideas and ideals remain in high currency across the region. A unique blend of projects of region-building are evolving in concert and competition. These various trends, the expression of a multicultural history and heritage, have contributed to a number of multilateral, regional, subregional, and bilateral trade agreements. Today, both the context and content of MENA regionalism differ from those of other regional integration enterprises that have become part of global politics. First, the MENA region has been subject to several overlapping forms of regionalism. Political and economic orientations and allegiances are pulling countries in different directions and impose different sets of rules that reinforce regional divisions. The pragmatic implications of these overlapping and competing regionalisms have often been ignored. Second, despite attempts to foster regional integration, intra-regional trade and economic integration, especially in the southern countries, remain lower than in most other parts of the world. The reason can be found in structural and political factors that represent an enduring obstacle to integration. As a result, trade agreements are shallow, tariff and non-tariff barriers are comparatively high, and Euro-Mediterranean trade is biased towards the northern rim. As regional cooperation has foundered, economic globalization has provided an incentive for many southern countries to choose bilateral avenues of trade liberalization, further increasing fragmentation.

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Civil society representatives urge governments of the G8 to: Undertake effective action to resolve the Arab-Israeli conflict, in order to promote

and further strengthen stability in the region and increase trust that will open up new possibilities for economic, social, and cultural integration.

Turn the private sector into a driving force of economic growth. To achieve this end, the governments of the region must implement reforms to boost investments and prevent any form of collusion with the economic sector, in particular by dismantling trade barriers, preventing unfair competition, and increasing transparency. Similarly, the behavior of the private sector should be ethical. Ethical corporate behavior should be encouraged and supported by strong and independent institutions that are able to implement the necessary reforms.

Engage the countries of the region in an enhanced process of regional integration by eliminating barriers to trade and promoting financial and labor exchanges in order to go beyond a free trade area and to create a customs union, with the long-term objective of forming an economic and monetary union.

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A knowledge economy is one in which knowledge is acquired, created, disseminated, and applied to enhance overall economic development. Moving to a knowledge economy thus includes investing in four pillars:

o An economic and institutional regime that provides incentives for the efficient development, use, and application of knowledge in economic activity, in particular through a dynamic private sector;

o An innovation system comprising firms, research centers, universities, and other

organizations that can tap into global and local knowledge, creating and using technology for the development of new products and processes that can compete in export markets while also meeting needs at home;

o An information, communication, and technology infrastructure that facilitates the

effective communication, dissemination, and processing of information;

o An educational system that supplies a pool of skilled, educated people to create, absorb, and share knowledge and to use it well.

Given present challenges and opportunities, the knowledge-based approach is one that can help MENA countries diversify their economies, innovate, set up new enterprises, and, in so doing, create jobs, increase the overall productivity of different sectors of activity, and raise economic competitiveness. This calls for adopting a pragmatic approach to regional cooperation and integration that maximizes benefits from trade and financial integration, promotes labor mobility, diffuses technology, and encourages participation in global production networks. Many countries of the region are already seeking new ways to boost growth and competitiveness by seizing the opportunities provided by the twin forces of globalization and technology. By building on their strengths and carefully planning investments in human capital, effective institutions, relevant technologies, and competitive enterprises, they are betting that they can capitalize on the knowledge era and make an effective transition to the knowledge economy.

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Civil society representatives urge governments of the G8 to: Create a guarantee fund, financed by the G8 and the countries of the region, to

support and encourage investment in technological and industrial projects at the international and local levels and to promote the transfer of technology within a transparent framework for contracts between beneficiary enterprises and the public sector.

Building on the framework of PISA (the Program for International Student

Assessment), extend international educational standards involving the assessment of students’ learning achievements and the quality of teaching.

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Circular migration is high on the agenda of policymakers in most migrant-receiving countries, particularly Western societies. Circular migration reflects the increasingly global nature of labor markets and progress in communication technology, and is widely acknowledged as beneficial for source and destination countries. As a matter of fact, it provides destination countries with a steady supply of needed workers in both skilled and unskilled occupations, without the requirements of long-term integration. Countries of origin can in return benefit from the inflow of remittances while migrants are abroad. The migrants are also thought to gain much, as the expansion of circular migration protects migrants and increases opportunities for legal migration for those who wish it. Beyond its tangible benefits, circular migration also responds to the aspirations of many if not most migrants. Contrary to popular representations, many migrants, including members of the diaspora, wish to return to their country of origin. For many migrants, however, various circumstances, either man-made or natural, currently prevent them from doing so. Intentions to return home either temporarily or permanently do not translate into actual circulation. Some migrants may find return prohibitively expensive or may fear losing their job or not being able to return. They may fear losing eligibility for residency. For others, particularly the highly skilled, returning to a country that does not offer professional or business opportunities may not make sense. Still others develop strong ties in their adopted country and lose interest in returning home. If circulation occurs, the impact on development, in sending and receiving countries, may be negligible, and in some cases even negative. Although not an impossible objective, circular migration that fosters the win-win scenario as envisaged by an increasing number of policymakers and academics is hard to achieve on the ground. The appropriate goal of policy, then, is not to encourage circular migration per se, but to foster a type of circular migration that is beneficial to the economies of the countries involved as well as to the migrants and their families. This ambitious goal, although difficult, is clearly warranted. It requires innovative thinking, an endeavor that the bulk of current policies have yet to address.

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Civil society representatives urge governments of the G8 to: Encourage governments of both sending and receiving countries of the G8 and the

BMENA region to support the efforts of immigrant diasporas to promote development in their countries of origin, on their own terms, under their leadership, and in coordination with national and regional development strategies.

Strengthen their links with diasporas abroad, for example, by considering the possibility of multiple citizenship and external voting rights for citizens abroad. Host governments should encourage the integration of diasporas (e.g., by granting local voting rights for permanent residents).

Organize a mutually beneficial skills flow across the countries of the region, with improved possibilities for the highly skilled both to work abroad and to return to their countries of origin.

Address the lack of a skilled workforce by providing greater incentives for the highly skilled to work in deprived areas (e.g., pay and promotion opportunities), and through multilateral or bilateral cooperation programs, including twinning and outsourcing of education institutions, keeping in mind the long-term view of creating an integrated space for labor and student mobility in the region.

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Many uncertainties remain about the future of the BMENA region in general and of Arab and Muslim societies in particular. The watershed developments of 2011 have shown the strength of a young and dynamic generation which, by its hope for change and courage, has forever changed the region’s face and destiny. As the region now enters a second phase, a phase of transition, it is vital that civil society organizations should continue to nurture and boost the democratic process and remain fully involved in the course of events. To do so they will need the means to voice the expectations and aspirations of their constituents, especially young people, so that those expectations and aspirations are heard by the new governments in the region and by the international community at large. Civil society engagement is the real way to preserve the gains of the revolutions from the risk of renewed political and social regression and from another breakdown in trust between citizens and political leaders. Although the weeks and months ahead will be challenging and marked by confusion and occasional setbacks, civil societies will define priorities and work out concrete timelines for reform and change through the MENA region. There is a clear momentum upon which to build continued progress on the priority themes of skills, employment, and labor mobility (especially as regards young people and women); urban and spatial development; environment and water; transport and logistics; and the knowledge economy, innovation, and technology. To this end, it is essential that the recommendations contained in the present report incite positive action from the new regional governments and from the international community. The VIII Forum for the Future in Kuwait on November 21–22 gathered ministers and other high-level representatives from all across the region to dialogue with civil society organizations and help them perform their vital role in the democratic transition of the region. For its part, the CMI, through its programs and activities, is committed to supporting this change and stands ready to further facilitate intergovernmental work and outreach to civil society. It will continue to accompany the countries of the region through their journey toward democracy by helping governments through the decisive reforms ahead and ensuring ownership of the policy agenda by all sectors of society.

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