People in the region need an economic perspective
The Lehmann collapse, the financial crisis, the euro crisis, the earthquake and nuclear disaster in Japan – unexpected catastrophes, crises and shocks seem to be dominating the course of world events. A few weeks ago, however, virtually the whole world was hoping for a positive outcome from at least one unexpected development. After the events in Tunisia and Egypt, many people were confident that we would see changes in the Arab world like those in eastern Europe after the Berlin Wall came down.
Some of this hope has meanwhile given way to uncertainty. Do the upheavals in the Arab world pose the next risk for the global economy and global security, or is the region about to embark on a path to freedom and prosperity in the coming years? Forecasts are difficult, especially since the dramatic turn of events in Libya. Clearly, despite certain parallels and common features, it is wrong to lump all the countries together. But it is also clear that the crucial factor for their long-term development will be whether they manage to overcome the economic challenges they face. Over 50% of the population in these countries are younger than 25. They will measure the success of the revolutions according to whether their prospects improve.
Insurance industry as stabiliser
The insurance industry has a significant role to play here. At present, the Middle East and North Africa (MENA) region makes up only 1% of the global insurance market. But in the coming years, we expect growth in insurance premiums there to be twice as strong as the global average.
History shows that major change towards freedom and democracy is almost always followed by a period of economic instability and volatility. The insurance industry demonstrated its stabilising effect on the economy in the financial crisis. This important economic function is now needed more than ever.
Not only oil - power generation in the desert
With two-thirds of the world's conventional oil reserves and 50% of its gas reserves, the MENA region is of supreme importance for the global economy. Trade and cooperation should not be limited to oil, however. Also needed are projects like Desertec. Both sides of the Mediterranean will gain in the long run if solar power from North Africa becomes a cornerstone of prosperity – a project that would be inconceivable without insurers and reinsurers. Admittedly, the current increase in political risks requires a prudent approach. But writing off and isolating the region would mean not only missing out on great economic opportunities but also taking a huge long-term political risk.
The insurance industry demonstrated its stabilising effect on the economy in the financial crisis. This important economic function is now needed in the Arab countries more than ever.
Isolation and withdrawal are risky
The developments of recent years have shown that most of the autocrats in Arab countries are not able to offer their (young) populations attractive economic prospects. Thus there will inevitably be fundamental changes in the long run, but the direction of these changes is open. People will decide themselves in what type of economy and society they want to live. It is conceivable that this may be a model that is more open to the West, as in Turkey. But it may take a direction that is even further removed from stability and freedom than in some Arab states today. This decision will be partially influenced by the experience people have with the "Western world" in the period of upheaval. The long-term credibility of our economic and social system is therefore important for the further development of the Arab world. And that, in turn, is of crucial significance for the global economy and hence for us. What happens in the region must concern the rest of the world. We have the option to get involved, help and at the same time benefit. That also applies to the insurance industry.