Aid to Tunisia and Egypt: Not exactly a Marshall Plan

As the group of industrialized countries that make up the Group of Eight meet in France, few people expect them to announce a Marshall Plan for the Arab Spring.

Their economic and financial support for new Arab democracies will be modest compared with what America offered to help Europe get back on its feet after World War II – a stunning $120 billion in today’s dollars.

But size is not so much the issue today; effectiveness is.

Tunisia and Egypt, which toppled their dictators, have lost economic ground as a result of their largely peaceful revolutions. For their seedling democracies to succeed, they need timely financial and commercial aid that yields tangible results – and that shows autocratic neighbors that the grass is indeed greener on the other side of the fence.

As bureaucracies go, the United States, European Union, and World Bank have moved relatively quickly on the aid front. President Obama pledged $2 billion to Egypt last week. The EU announced this week an extra $1.7 billion for its “neighborhood” budget (about two-thirds of that program has traditionally gone to North Africa and the Middle East). The World Bank, meanwhile, is proposing a package of $6 billion.

Their proposals also show they’ve learned something about foreign aid over the decades. “Trade, not just aid,” Mr. Obama said last week. And America needs to encourage private investment in these places, “not just assistance.”

Coincidentally, the EU recently undertook a review of its neighborhood policy. It acknowledged it needs to change the way it helps countries on its periphery, including those on the more distant shores of the Mediterranean Sea, such as Tunisia and Egypt.

EU officials say they erred by favoring stability over democratic and economic reform. They also failed to build in proper accountability. Now they’re working to reward reform and punish backsliding, and tailor assistance to individual countries.

Obama and others point to the successful rebuilding of Central and Eastern Europe as their model for the Arab world. But the conditions are far different. The countries emerging from communism had a unity of purpose, and accepted pain for gain. As aspiring members of the EU and NATO, they had powerful economic and security incentives to keep them going during the difficult transition years.

The Arab Spring is anything but uniform in its desired outcome (consider, for instance, the religious and tribal schisms plaguing many of these countries). A young, restive, and unemployed population is impatient for jobs and curbs on corruption. There are also no “club” memberships to aim for, no uniform requirements to encourage would-be members to reform, such as Eastern Europe had with the EU and NATO.

High unemployment and austerity budgets in the West demand a creative approach to help the Arab Spring blossom. As with aid for natural disasters, when lots of countries want to pitch in, donor countries will have to coordinate who is doing what. That saves time and money, and yet it is supremely hard to pull off.

Obama wants to launch a trade and investment partnership in North Africa and the Middle East. The partnership would be integrated with EU and US markets and meet Western trade norms. Apparently, he sees this as a new regional “club” that can inspire change and bring benefits in reforming countries. Indeed, the region itself will have to rise up and join forces together.

But even the good intentions shown by the West so far can get clogged up in bureaucracy and the approval process. Time is of the essence as Tunisians and Egyptians go to the polls later this year – perhaps voting in Islamic radicals who offer social services (such as Hamas, in Gaza).

The best way to beat this clock is for Western governments to do all they can to support the far more nimble forces of “civil society” – the charities, business groups, women’s and youth advocates, legal advisers, health organizations, and democracy promoters who are outside government. These are the folks who can best offer on-the-ground help that the local population can see with its own eyes.