CAIRO — In the Gulf War's aftermath, Egypt--the most populous and powerful Arabic-speaking nation--will suffer thousands of lost jobs and undergo a complete overhaul of its economy. And Egypt was one of the war's big winners.
But the economic strains the war imposed, shutting off tourism and stopping work for half a million Egyptians in Iraq, were the final straw for Egypt's chronically ill economy. Now this country of 54 million people, nearly half under age 16, has to cut back government subsidies and reform its economy if it is to get help from the International Monetary Fund and qualify for credit from global bankers.
Egypt is not alone. Other Middle Eastern countries, from the oil-rich Persian Gulf to Algeria in North Africa, are having to rethink economic policies as they realize that the recent war was the culmination of an era. It marked the end of a time when these nations could think of themselves as strategically special and able to ignore the trends of the global economy.
They have spent almost four decades living directly or indirectly off the flow of oil or engaged in local battles--and enormous arms spending--while the world economy has moved on.
Thirty years ago, Egypt had greater economic output than South Korea. Now Egypt's gross national product is less than one-fourth that of South Korea, and it is looking to tiny Singapore to make an investment that would employ Egyptian young people.
In battered Kuwait, many are having second thoughts. At a Kuwait City \o7 dewaniyah\f7 , a place where men of a large merchant family meet to discuss business and politics, one elder says bluntly: "Our young people face dark years ahead because we did not develop our resources correctly."
He means that Kuwait did not develop oil and gas in concert with its neighbors, fostering industrial development throughout the Middle East. Instead, it invested the proceeds from oil in the industrial economies of Europe, the United States and Japan. In one sense that paid off. Today, even as its oil fields burn, Kuwait has annual income of $10 billion-plus to support its small population.
But its neighbors have turned on it and its young people, not used to hard work, are not prepared to take over operation of the country's institutions. "We have cash, but cash is not the same as training our young people for real work," remarks a Kuwait official.
