Aug 23

It Takes A Revolution To Find A Solution: Five Ways that the Arab Spring has Changed the Business Landscape in the Middle East

Historically referred to as the “Old World,” the Middle East has always been a center of significant trade and commerce. Over the past century its importance has been less tied to its innovation and new business creation and more reliant on its exports of key world natural resources.

The past fifty years the political scene in the Middle East has brought stagnation and a significant brain drain as dictators have spanned the Asian and African continent. This has limited the ability of new business to grow and thrive as the governments have lined their coffers and controlled the flow of commerce. After what seemed like a hopeless eternal situation, the Arab Spring has spread across the Middle East. The results are a changed business landscape and an exciting new but unknown future. Here are five of the critical changes one has to be aware of if they plan to do business in the region.

The Old Status Quo is no Longer the Standard: With the ousting of long standing cohorts, the old standards of doing business no longer apply in this Middle East. In an effort to clean up the corruption and governmental holds put by past regimes, new democratically elected regimes in places like Egypt are re-negotiating and nullifying old contracts with multinational firms.  The binding contracts that assured both the government and these companies money will now be open to more scrutiny and revision. The aim is to make the process more transparent, encourage active competition and generate growth in commerce.

The New Ottoman Empire: Turkey has seen its role grow exponentially in Middle Eastern politics over the last five years. After its rejection from the European Union, Turkey has taken a strong interest in the Arab Middle East and has made significant monetary and diplomatic investments in the area.  With the Turkish economy booming, look for it to continue to cultivate its sphere of influence in the area.

Innovation and New Business Creation is Key:  With brand new governments in power, look for many new business friendly reforms and attempts by the active governments to spur the economy.  The Arab Spring was motivated by an economic stagnation, political corruption and suppression, the key to the success of any new regime will be to eliminate these elements. This will be an interesting time for entrepreneurs and multi national businesses to invest in the region. There will be many opportunities and areas of growth that previously were unthinkable in this region of the world.

Government Instability: In many ways the Arab Spring was the unification of many competing political factions against a common enemy. With many of the old corrupt governments out of power, there will be a power struggle among these political factions in the new democratic Middle East. This is always a challenging proposition for businesses as it is unclear who will gain ultimate power and how this will affect the long-term prospects of business owners and operators. Entrepreneurs and businessmen must study and understand the pulse of each country individually before setting up shop.

Cross Border Commerce & Trade: With the sweep of new governments across many of the main countries in the Middle East comes an easing of trade relations between certain Middle Eastern countries. For years with staunch dictators and their bureaucratic rules in place, it was hard to conduct cross-country commerce. With a common sentiment and goal the new Middle East could be a revitalized center in the middle of the world for commerce and trade. This possibility is perhaps the most exciting as the potential for its development and application could positively affect the welfare of all countries in the region.

The Middle East at this point offers investors and entrepreneurs a great opportunity. A tabula rosa that comes with significant risk but exciting and unparalleled rewards. It will be truly exciting to monitor and be involved in its development.



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