The comprehensive US scheme, initially targeting Egypt and Tunisia, will serve as an incentive for other states currently rocked by “Arab Spring” turmoil, to embrace people power and turn towards democracy, officials said, according to Agence-France Presse.
Mr. Obama will lay out the initiative in a long-awaited major speech sketching Washington’s response to the historic wave of change sweeping across the Middle East and North Africa, at the State Department at 1540 GMT Thursday.
Washington would also loan or guarantee loans up to a total of $1 billion through the Overseas Private Investment Corp (OPIC) for Egypt to finance infrastructure development and boost jobs, the officials told reporters on a conference call.
Several billion dollars in additional financing would come from multilateral development banks as well.
The administration would also seek to foster trade and economic development throughout the region and encourage private sector investment, the officials said.
“We think these initiatives will help Egypt and Tunisia as they undertake the twin challenges of economic transformation and democratization,” one official said.
The officials dodged a question on whether the debt relief package was enough.
“Egypt has, I think, a very good prospect of accessing private capital markets, and that’s important to Egypt’s future economic vibrancy, and that’s something that we know economic leaders in Egypt want to reinforce,” one official said when asked why the country’s full debt was not canceled, as reported by Reuters.
In his widely anticipated speech on Thursday, Mr. Obama aims to present a coherent approach for dealing with unprecedented political upheaval that has swept the region and upended decades of US policy.
Part of that approach will include boosting economic fundamentals to spur democratic reform.
“We ... know from our study of the past that successful transitions to democracy depend in part on strong foundations for prosperity, and that reinforcing economic growth is an important way of reinforcing a democratic transition,” one official said.
The United States would form “Egyptian-American and Tunisian-American Enterprise Funds” to promote investment from the private sector, the White House said in a statement laying out some of its proposals.
Washington would also work with allies to reorient the European Bank for Reconstruction and Development to support the Middle East and North Africa region just as it helped countries in Central and Eastern Europe.
US officials are concerned about the economic outlook in Egypt and Tunisia after democratic revolutions swept out long-ruling autocratic leaders.
Growth forecasts have been revised downward to 1 percent in Egypt and gross domestic product growth in Tunisia is expected to be close to zero this year, the White House said.
The White House hopes to send a message to other countries in the region that they, too, could benefit from economic backing if they pursue a democratic path.
“Part of the purpose of this economic program ... is to reinforce not only positive change in Egypt and Tunisia, but a positive model that can empower and incentivize democratic change and economic reform in other parts of the region,” one official said.
US officials said they would also seek to support better economic management in transitioning nations, try to improve economic stability by easing deficits and spurring growth and would support economic modernization and reform.
Trade will also be used as a lever, in an attempt to help nations help themselves.
“If you take out oil exports, (in) the countries of this region, 400 million people export about the same amount of goods as Switzerland does, with eight million people,” AFP quoted another senior official as saying.
The rationale of Obama’s Arab plan appears to be an attempt to tackle the economic deprivation and miserable prospects of vast swathes of Arab population, which, along with repression of basic rights, triggered a wildfire of protests.
President Obama will seek Thursday to sketch a plausible policy response to the sudden, complex and often contradictory demands thrown up by revolts that started in Tunisia, and spread to nations including Egypt, Syria, Libya and Yemen.
But it was unclear whether the president would use the speech to re-launch his stalled drive for Israeli-Palestinian peace, according to AFP.
The breathtaking speed, historical scope and complexity of change sweeping the region caught Washington, like the leaders it challenged, unawares.
For many Americans, the most significant foreign event of the year is the US killing of Al Qaeda leader Osama Bin Laden in Pakistan, a fact pointing to a key domestic audience for Thursday’s speech.
Mr. Obama is also expected to have harsh words for US foes Syria and Iran.
(Abeer Tayel, an editor at Al Arabiya
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