Event Recap: Arab Spring and Business Investment

Monday morning I attended an event hosted by the National Press Club on "The Arab Spring: the Challenge for Business in North Africa and the Middle East 2012". The speaker, Richard Fenning is CEO of Control Risks, a risk management and consulting firm focusing on political, security and integrity risk assessment via analysis and events on the ground. (more info: http://www.control-risks.com/SitePages/Home.aspx )

The focus on the talk was to merge the recent destabilizing events in the Middle East with potential foreign investments. Fenning broke his talk into three layers: geopolitical, country by country analysis, business environment.

In discussing the current geopolitical climate of the region, Fenning argued that the specific events of the Arab Spring are not the number one concern of international corporations looking to invest. In fact, their biggest concern is Iran and its nuclear capabilities. Fenning pointed out a very interesting fact that all the major players in this international situation,  (US, Iran, Russia and China) are either going through or expecting to go through leadership changes in the next year. I thought that was a particularly insightful comment, because domestic leadership change will directly impact international policies.

In his country by country analysis, Fenning discussed Libya, Iraq and Egypt. Interestingly, he felt very very optimistic about Libya's future, and the future amount of business investments to be made there. His support of his optimism was in large part due to the natural wealth in the country and the small population, a recipe for a strong amount of wealth per capita. The location of Libya and the diaspora of Libyans throughout Europe also supports his argument that there is great potential for Libya to be a "highly successful European orientated North African state". Fenning does acknowledge the difficulties that lie ahead for the country, mostly in the lack of political infrastructure (no real army, no functional ministry, etc). While Fenning feels the positives outweigh the negatives, I am not so sure. This is Libya's first real attempt at a modern state, and to make that attempt with no unified army or functional governmental infrastructure (no ministries, no bureaucracies, no agencies, etc) seems to be a situation that calls for a bit more guarded optimism at best, and probably a fair amount of pessimism at the very least. I hope Fenning is right, and that Libya manages to become a successful democracy with a strong economy--the "Norway of the North Africa".

In terms of Iraq and Egypt, Fenning said that the prospects for Iraq look quite bleak, but that the foreign investors and companies who are currently involved in that country, are wealthy enough to weather the current storm. In Egypt, Fenning said that the current message being read by the international business community was to stay away for now.

All in all it was a very interesting take on the recent changes occurring in the Middle East. I think only time will tell how stable and open to investment markets are in that area, but based on what Fenning was saying, there still seems to be cause for optimism.