A Marshall Plan for the Middle East

A woman mechanical engineer working in the Middle East gas and oil industry. Courtesy: Gasco.

Instead of continuing to wage wars in Afghanistan and in the Middle East, the cost of which has already been estimated at $4-$6 trillion, the United States should end its combat operations in the region and launch a major economic aid package to restructure the economies of the Middle East and Central Asia. A $500 billion economic aid package over the next 5 years has a potential to do for Asia what the Marshall Plan did for Europe at the end of the Second World War. It would stabilize the region economically, lay a foundation for a long-lasting peace, and offer democracy and liberty a fighting chance against the forces of religious extremism that today pose the major security treat to the region and the US. Such a plan would also boost American economy by growing consumer markets for American-made products and establishing trading partnerships with countries in the region.

Proposed economic aid by country under the Marshall Plan for the Middle East

The funding for the program should come primarily from major cuts in the American military budget. Based on the 2015 report of the Congressional Budget Service, US is today spending $74 billion of year in direct costs of combat operations in Afghanistan and the Middle East. Over the 5 year period, that would total $370 billion which could be used to fund 74% of the Middle East Marshall Plan. The remaining 26% or $130 billion would come from additional cuts in the Pentagon budget over the 5 year period. This would mean a $26-billion cut in the Pentagon yearly expenses, which in 2017 are expected to be $773.5 billion. For example, the cost of US Navy new aircraft procurement and ship building and procurement alone cost the US government $30.6 billion a year. Putting only these two projects on a 5-year hold without touching the rest of the Pentagon budget, together with the end of funding for the Afghanistan and the Middle East combat operations, would be sufficient to fund the proposed $500 billion Marshall Plan for the Middle East. Because one half of the $500 billion aid package will consist of loans, funds from the repayment of the loans can be redirected to the Department of Defense budget. By investing the same amount of money over the period of the next 5–20 years, the US Navy would actually benefit from having technology that will be also 5–20 years ahead of what is today being built into Navy aircraft and ships.

To implement the Marshall Plan for the Middle East, the US would first establish the Economic Cooperation Agency (ECA) and appoint the ECA Administrator to oversee the effort. It would then appoint an ECA Envoy to each of the participating country’s capitals. The role of the ECA Envoy would be to work with the country’s government in deciding how to allocate the economic aid package provided by the United States. An important part of that would be to establish a Development Country Fund, which would operate on the well-establish model the United States has used since the World War Two to administer economic development aid in recipient countries. The participating countries would establish the Organization for Middle East Economic Cooperation (OMEEC) and send each their country’s OMEEC representative to the OMEEC headquarters in Baghdad. In its first 5 years, the OMEEC would be headed by an Iraqi national, serving as the President.

The US would dedicate special task forces in its Department of Labor, the US Bureau of Labor Statistics, the Department of Treasury and the Federal Reserve Bank to assist the OMEEC countries in developing a plan to increase worker productivity across industry sectors, modernize business practices, build a sustainable domestic financial sector, stabilize their currency, and enact a simplified set of minimal regulations that would open each country’s economy to regional trade and trade with the United States.

Half of the total $500 billion would be grants and the other half would be in a form of loans to be repaid by participating nations to the United States. All the aid given to the countries in the region would come with a requirement that all overseas purchases using the money be made from the United States. Overall, this would have a significant positive impact on the US economy, by leading to some additional $100 billion in sales of US raw materials and semi-manufactured products, $50 billion in sales of US food and agriculture products, $100 billion in sales of US machines, vehicles and industrial equipment, $100 billion in sales of US computer and telecommunications equipment, and $50 billion in sales of US fuel.

Breakdown of projected purchases from the United States, in US$ billions, over 5 years, using funds from the Middle East Marshall Plan.

While the idea of the Marshall Plan for the Middle East should be to direct massive economic aid capable of inducing major restructuring of the target economies, the economic aid should come with an established set of preconditions. To qualify, the recipient countries should be required to hold periodic free multi-party elections, the winner of which should be allowed to form a civilian, secular government that respects the freedom of speech and the media, the freedom of association, the freedom of religion, the right to due legal process and equal protection under the law for all of its citizens, regardless of their gender or sexual orientation, race and ethnic origin, disability, religious or ideological belief. Importantly, the set of established and enforced political rights must include comprehensive minority rights, including the right to self-determination and self-governance, while preserving sovereignty and established international borders of all participating states. The Washington-based ECA and the Baghdad-based OMEEC should provide election monitors, legal aid, and other technical assistance the participating countries may need in meeting these obligations.