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Tue 15 Feb 2011 03:17 PM

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Arab rumblings may lead to democracy, free markets

A push for reform may see the Middle East follow in path of the Soviet Union

Arab rumblings may lead to democracy, free markets
EGYPT PROTESTS: Hundreds of thousands of Egyptians, protesting peacefully, forced President Hosni Mubarak, 82, to resign last week after 30 years of autocratic rule (Getty Images)
Arab rumblings may lead to democracy, free markets
Arab rumblings may lead to democracy, free markets

Twenty-two years ago, the Soviet Union’s police state began collapsing under its own weight, leading to democracy and capitalism throughout Eastern Europe.

A striking parallel is developing in the Mideast.

Hundreds of thousands of Egyptians, protesting peacefully, forced President Hosni Mubarak, 82, to resign last week after 30 years of autocratic rule.

The Egyptian masses took a cue from their North African counterparts in Tunisia, who in January shoved long-time President Zine El Abidine Ben Ali into exile.

Demonstrations against dictatorships have spread to Yemen and Algeria. Jordan’s King Abdullah changed his government. Bahrain threw cash at its people. Non-Arab Iran, while officially praising Egypt’s revolution, steeled itself against demonstrations by its own dissidents.

It’s far too early to declare victory for representative government and free markets across Arab lands. While military minders in Egypt have dissolved Mubarak’s parliament and promised elections in six months, maneuvering from dictatorship to democracy will be tricky.

Satraps in Saudi Arabia and Kuwait, where so much of the world’s oil is, and in Syria - where oil isn’t a factor  - show little sign of relinquishing control.

Still, the coincidence between 20ll in the Middle East and 1989 in Eastern Europe is intriguing for what it might portend for the world economy.

Former Soviet satellites Poland, the Czech Republic, Slovakia, Hungary, Bulgaria, Romania and the Baltic states are now members of the European Union, trading freely with the likes of the UK and Germany.

Even Russia, the linchpin of the old dictatorship, is a freer place, and its companies can partner with Western corporations. Unfortunately, the nation has backtracked under Vladimir Putin.

Remember, there’s already one democracy in the Arab world, though it’s incomplete and the result of US. coercion. Iraq can’t get its Sunni and Shiite Muslims and its Kurds to agree on much, yet it has a somewhat functional parliament and its people get a fair vote.

Just as Egypt is a model for non-violent rebellion against a dictator, it might become a force for free markets. Democracy and capitalism are twins. Egypt is by far the largest Arab state, with a population of more than 80 million - more than three times as many people as Saudi Arabia.

Those who took to the streets in recent weeks were proud and persistent, the kind of folks who become successful entrepreneurs, if given the chance. Though Egypt doesn’t have the same oil wealth as many of its neighbours, it grows cotton and manufactures textiles.

Tourism is already big in this country, where the population congregates along the Nile River. Visiting the Pyramids and Egypt’s other monuments should be even more popular without Mubarak’s thugs lurking around. Egypt, whose culture goes back 6,000 years, could be another France, where tourism is a major economic force.

Who knows what the limits are. The Middle East in the future may see widespread voting by women and religious tolerance. Economic competition among nations might lead to the breakup of the Organization of Petroleum Exporting Countries oil cartel. An Arab bloc that trades numerous goods with Europe and the US would be less likely to view outsiders as enemies.

Events may show this view to be hopelessly naive. Muslim extremists might co-opt any revolution. The old Soviet empire isn’t completely free, as anyone in Belarus or Kazakhstan knows. Ukraine may be backsliding.

Still, the similarity with what’s going on today in the Middle East with what happened two decades ago in Eastern Europe is as hopeful as it is fascinating.

(David Pauly is a columnist for Bloomberg News. Opinions expressed are his.)

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