What’s more important to peace in the Mideast than secure borders and treaties? (Part I)

While it often seems like most Middle Eastern countries are bogged down solving the problems of the 20th century — or, in some cases, those of the eighth century —  here in Abu Dhabi and the rest of the United Arab Emirates, they are grappling with the challenges of the century to come.

It has been said before, but it is hard to overstate the striking nature of the successes in this small country on the edge of the Gulf of Oman and the Persian Gulf. The UAE undoubtedly faces some growing pains and has a long list of reforms that are yet to be made. But, remarkably, in public forums like the one I’ve just participated in here co-sponsored by the Aspen Institute and the Emirates government, UAE business and government leaders are the first to identify these and debate openly how to prioritize, what models to emulate, what country they want to be a decade from now or in a generation or two.

Here they have carefully studied whether the path to be followed is that of Singapore or of Korea, of Norway or of Ireland … and where and how it must be unique, playing to their special and evolving comparative advantages. Even as they remain rightfully grateful for the benefits brought by the discovery of oil and gas half a century ago to what was once a desolate, desperately poor corner of the Arab world, they are working harder than any of their neighbors to be less dependent on those first economic windfalls. In their now world-renowned Masdar project, they are building a green city of tomorrow in the desert. But they are doing even more — investing in technologies being developed in every corner of the world, not just in green energy but in satellites, semi-conductors, and a carefully selected array of other industries.

While much of their innovation is the result of what is a national industrial policy that might have been reflexively condemned by free marketers a decade ago, they are now seen as a shining example of the growing list of countries that have concluded that in order to compete globally must behave more like companies. (It is worth noting that this is a trend complemented by the fact that increasingly, big companies are discovering that to grow globally they must increasingly behave like countries — whether through meeting a growing list of social responsibilities to shrugging off national identities and conducting something very much like their own independent foreign policies.)

Like the Chinese and the Singaporeans and the Norwegians, they have made the development of a sovereign wealth fund a central element of that business-like approach to building their nation. Like the Singaporeans, they have developed a national growth strategy. They are recruiting talent from around the world to help them achieve their goal of investing in new industries while seeking to find ways to better educate their own citizens, boys and girls.

The genuinely fascinating conference in which I participated was focused on innovation.  It was not, as it might have been, a self-congratulatory exercise highlighting the recent national track record of growth and creativity. Rather, it was an open honest discussion of how the country could take innovation to the next level, recognizing that it’s a messy prospect requiring that they more willingly embrace failure and promote diverse and sometimes dissenting views on where promise lies and how assets should be allocated. There is a recognition that the first stage of their development was very much top-down, the consequence of an ambitious leadership deploying substantial national resources in pursuit of the development of a few big, world class businesses. But now many within even the local elite recognize that to create a truly vibrant and enduring story of economic growth, the next stage of development will require an approach that is more bottom-up, provides support for more small and medium size enterprises, turns on new partnerships with universities, corporations and research laboratories worldwide.

As one drives through Abu Dhabi or Dubai, looking at the remarkable architecture and spanking new infrastructure that is light years ahead of what you might typically find in all but a handful of cutting edge cities around the world, it is not surprising that they have achieved world-leading cell phone penetration and among the highest per capita incomes anywhere. What’s surprising is the context of the region in which it finds itself, from the poverty and extremism of Yemen on the other side of Arabian Peninsula to the social repression and lack of economic creativity found in Saudi Arabia to the north.

In fact, there really is only one other country in the entire Middle East that has achieved anything like what they have done in the UAE. Unfortunately for that country, it is also one of the countries of the region that is held back … and indeed, is seriously threatened, by both the past … and a leadership that has their eyes firmly focused on the rear-view mirror.

Some thoughts on that country in light of my visit to the UAE tomorrow.