Washington -- The Wall Street Journal, the leading U.S. business newspaper, and the Heritage Foundation, a Washington-based think tank, are urging the countries in the Middle East and North Africa to develop the rule of law and fair, fast legal systems with professional judiciaries as the path to economic prosperity.

The journal and the foundation reported in the recently released 2003 Index of Economic Freedom that the problems of bureaucracy, corruption and uncertainty make it difficult to build a business bigger than a market stall in much of the region.

"If accountable government and the rule of law could be brought to the region, fortunes could change very rapidly," the 2003 index said.

The index used figures in the Arab Human Development Report, issued for the first time this year by the U.N. Development Program, to describe the economic difficulties that engulf most of the region.

-- With a combined GDP of $531 billion in 1999, the 280 million citizens and 22 countries in the Arab League produced less than Spain.

-- The income of the average Arab citizen was just 14 percent of the average citizen of an Organization for Economic Cooperation and Development (OECD) country.

-- If the Arab world's per capita growth rate of 0.5 percent annually over the past two decades continues, it will take the average Arab citizen 140 years to double his income, while citizens in other regions of the world are set to achieve that in less than 10 years.

In Chapter 2 of the index, dealing with the Middle East, Robert Pollack wrote that strengthening rule of law is the key element to expanding economic freedom in Arab countries.

Without rule of law, people cannot benefit from property rights or have the ability to settle disputes peacefully and fairly, Pollack said. He said rule of law is more important than privatization.

"In virtually every Arab state, the whim of an unelected ruler reigns supreme and the constitution -- if one exists -- remains mere words," Pollack said.

Good governance and market-oriented reforms are central elements of the Free Trade Agreements that the United States has negotiated or is negotiating with Arab countries.

The 2003 index identified Bahrain as the most economically free country in the region, and as tied for 16th freest economy in the world. Saudi Arabia, United Arab Emirates, Kuwait, Qatar, Oman, Jordan, Morocco and Tunisia were categorized in the index as "mostly free" economies.

Commenting on Qatar's economy, the index noted that its ruler, Sheikh Hamad bin Khalifa al-Thani, has undertaken a bold program of political and economic reform since coming to power in 1995.

"He has liberalized the political system; given women the right to vote; created a democratically elected Municipal Council," the index said.

The 2003 index lumped Lebanon, Algeria, Egypt, Yemen and Syria in the "mostly unfree" category; Iran and Libya were put in the group of "repressed" economies and Iraq was not given a ranking because of lack of information.

The index ranked 161 countries in the world according to ten factors -- trade policy, fiscal burden of government, government intervention in the economy, monetary policy, capital flows and foreign investment, banking and finance, wages and prices, property rights, regulation, and black market.

"A systematic analysis of these factors continues to demonstrate that countries with the highest levels of economic freedom also have the highest living standards," the index said.

The entire 2003 Index of Economic Freedom is available on the Heritage Foundation website: http://www.heritage.org/index

(The Washington File is a product of the Office of International Information Programs, U.S. Department of State. Web site: http://usinfo.state.gov)

... Payvand News - 11/26/02 ... --