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Our Annual Report was submitted shortly after the October War,
but I think the observations made then concerning the new set of
conditions pertaining in the Middle East remain relevant. The Saudi Arabian-Egyptian friendship continues to be an
important force in Arab politics; world oil prices have remained high;
big power involvement in peace negotiations continues to be prominent
and important; and Palestinian guerrillas, despite their savage efforts
to the contrary, have been unable to halt the search for peace by the
governments of the Middle East. Obviously,
the successful outcome of the present negotiations is not assured,
but by now the genuine interest of all concerned countries in reaching a
settlement seems clear.
During the past six months, the mood in Egypt has been, if
anything, too euphoric. President
Sadat has made no secret of his personal trust and liking for Dr.
Kissinger and of his personal antipathy for the Russians. The sense of political well-being does not, however, overshadow
Egyptian determination to end economic stagnation. The President and his first Deputy Premier, Dr. Hegazy, are
strongly anti-bureaucratic and believe that Egypt must escape from the
stifling controls of the Nasser period and get the economy into a higher
gear.
Foreign investment is viewed not just as a source of needed
capital infusion, but also as a sharp edge with which to cut the red
tape which binds the economy. The
creation of free zones is meant, I suspect, to yield models of
industrial efficiency as well as income-producing and employment-generating
enterprises.
Given the importance attached to foreign and Arab investment in
jolting Egypt's lethargic economy, the invitation to the Foundation to
do what it can to improve procedures for attracting and handling foreign
investments is, in itself, something of an honor. Some might call it a
dubious honor because it contains the opportunity to become closely
associated with a program which probably cannot yield the kind of
rosy results apparently expected of it and which may, indeed, collapse
from internal opposition.
Ed Mason advised us that
this will be a very risky program area but, in his view and ours, it is
an area of such fundamental
importance to the success of
Egypt's new domestic and foreign policies that we could hardly, in good
conscience, refuse to
participate. Nor
should we wish to refuse, except on grounds of our own poverty; the
investment decisions Egypt will make in the next few years are likely to
affect much more than who gets the dividends. The choice of technology, the location of industry, and the
degree of local participation in management will all have deep
implications for the future shape of Egyptian society.
In Saudi Arabia, the mood seems less one of euphoria and more one
of somber responsibility. Saudis
have always been a rather sober lot but now, propelled
unexpectedly to the head of the family while still in adolescence, they
achieve a gravity that belies their years. There is a keen sense that all the world is looking at Saudi
Arabia rather too enviously, while Saudi wealth on a per capita basis is
not yet extraordinary, depending, of course, on how you count the
capitas. The provision of
goods and services to their own people is certainly well below the
standards of most countries.
The proverb "charity begins at home" is thus much in
vogue, but along with it
is the ill-concealed
belief that the Arabs are
on the verge of a new Golden Age, which will again be led by men
from the sandy peninsula. Although
aware that much needs to be done, and soon, on behalf of Saudi living
standards, there is a feeling of broader responsibility, not just to
their Arab brothers, but to underdeveloped nations of the world and even
to the economies of the affluent states.
Despite their responsible outlook, Saudi performance in assisting
faltering underdeveloped nations and even their Arab sister states may
eventually lead to bitter criticism, because however strong the will,
the Saudis simply lack the manpower to accomplish all they would wish to
do at home and abroad. Their senior officials, at least those we know well, are very able
and often work far into the night trying to keep abreast of their
responsibilities. It seems
unlikely that they can hope
to do so.
Over the past year, the number and variety of Foundation contacts
with Saudi Arabia have increased, due primarily to the efforts of Sam
Bunker and Wes Edwards. A
manpower projection done for the Ministry of Education by Wes and Jim
Socknat was so well received that the Ministry requested on several
occasions that Wes be allowed to join them as
an advisor. We
finally agreed to this request when it became apparent
that the volume of our
work and its potential importance justified
the investment of a staff
man in Saudi Arabia. During the past few months, he has been instrumental in arranging
for a Foundation evaluation of the educational TV pilot project
feasibility study for the Ministry of Education, an evaluation of the
curriculum of Riyadh School by a science teaching specialist from SMEC,
visits by teams from SMEC and ELI for discussions about training and
textbook production, and the production by Jim Socknat of a report on
vocational education in the Kingdom.
In addition, Wes has been asked by the Ministry of Education
to assist actively in the preparations for the coming Five-Year Plan. In this, as in other fields, he will of course be able to call on
other Foundation staff members throughout the region.
The possibility of cooperating with Saudi Arabia in establishing
foundations or special purpose funds for regional projects of an
educational, scientific, or cultural nature is currently being explored
with the Deputy Minister
of Finance. In principle,
there is strong receptivity to the notion, but it is a very new idea and
one suspects it will take some time before much will come of it. The lack of spare Saudi executive capacity is an important
inhibiting factor. Nevertheless,
it is a very high priority for us to continue seeking ways to make use
of Saudi capital for broader purposes.
As stated in our
Annual Report, we believe the oil-rich states of the Gulf have much to
gain by filtering their own development through the more sophisticated
Arab lands on the Mediterranean littoral. The cultural gap between the traditional peninsular societies and
the modern West is too great to be taken with one bound. Conversely, the better-educated peoples of Egypt, Lebanon, Jordan,
and Syria need Saudi capital to realize their own potential.
Many cases come to mind where western technology, if fused with
Lebanese- or Egyptian-trained manpower and Saudi capital, can offer
great promise for the Arab world. Formal
and non-formal educational
television is an exciting
possibility, and CTW is
standing hopefully in the wings waiting for an opportunity to participate.
On the
agricultural front, Sudanese land, Egyptian skilled labor, and Saudi
capital seem made for each other. The chief lack
there seems to be entrepreneurial skills, but there may also be
technical and economic expertise required for that three-way marriage to work,
and we would wish to be of service if that turned out to be the case.
The war and subsequent events have also affected the chances of
ALAD’s being incorporated into an internationally funded agricultural
research center under the Consultative Group. In some ways, the impact would seem to be positive in that the
interests of the Arab states are somewhat higher in the consciousness of
most members of the Consultative Group than was formerly the case, and
the Arab states themselves have greater ability to share in the cost of
a center. If
there is a
negative aspect to all of
this it may be that
Consultative Group members will not feel justified in any participation
in such a center if a major part of the financial burden is not borne by
the wealthy Arab states.
We have high
hopes that the Saudis will be receptive to substantial participation in
the financing of an international center, but we have not, of course,
ventured to test the idea with them in any way. In the meantime, ALAD itself continues to gain recognition in
international agricultural circles. The arrangement with IDRC is proceeding smoothly and IDRC-financed
staff are contributing greatly to the overall
effort.
To look, for a
moment, to the horizon, three situations seem likely to offer us
problems and/or opportunities. The
first is AUB, which continues on a downward spiral of financial and
student crises. Both seem
to be coming to a head this term and it is not clear that the University
administration or the Board of Trustees
has the power or the perspicacity to arrest the trends.
It seems to me that AUB needs a new definition of its role and
that some Arab intellectual
and political leaders need to be
consulted in arriving at that definition. At the present time, when political relations between the United
States and Arab countries seem likely to improve dramatically, it is
unfortunate for AUB to be in a weakened condition. The University has
not only a proud history but also an important potential role as an
intermediary between Arab and western culture.
The nature of that role needs some thinking. I don't believe
that an American university in Beirut should have precisely the same
functions as such an institution in Vermont, nor should
it have the same functions as a national university in one of
the Arab lands. The appropriate definition of
AUB's mission seems to me something to be worked out in the
broader context of Arab-Western mutual interests. Following that, a broader base of financial support should be
obtained from those interested parties.
We have not been invited to come reason together with the
administration of AUB, but informal discussions with a member of the AUB
Board of Trustees and with members of the Harrington committee, which
reviewed the financial state of the University for AID, revealed
widespread concern over recent events. If the Board of Trustees
were to decide that AUB's future needed to be discussed in the broader
context of Arab-Western relations, I suspect they would seek to convene
a meeting at Bellagio, and quite possibly ask the Foundation to finance
the preparation of appropriate discussion papers before the meeting.
A second foreseeable development that may require some form of
Foundation response is the rather rapid improvement of relations
between the United States and Syria and Iraq. There are already indications of a change in attitude toward the
Foundation in terms of increased participation in ALAD seminars and
workshops by delegates from those two countries. There are strong rumors that a disengagement agreement, coupled
with diplomatic recognition, would be followed by the provision of
American assistance to Syria on the order of $200
million dollars. PL
480 funds are not available in Syria, so cooperative
projects, with the U.S. Government paying the heavy freight, may be less
available than in Egypt. Nevertheless,
we should perhaps be alert to opportunities for working in cooperation
with U.S. Government and
U.N. funds in Syria in the future.
I would
not want to suggest the shape of future Foundation work in either Iraq
or Syria at this time, even if one could be certain that the climate
would improve. We would
want to get first-hand familiarity with institutions in these countries and
areas in which they would desire cooperation, before making even
tentative plans. I suspect
the way to go about this would be for Bob Havener and me to spend a week
or two in the country desiring cooperation, and then to send in
professional staff members to follow up in the fields of mutual interest
that were identified. This
is roughly the way we went about re-establishing our
program in the Sudan.
It does seem to me that both Syria and Iraq are countries of
sufficient importance that we should be responsive if a genuine
opportunity presents
itself in either place. We
would need to make clear at the outset that we could not be looked to
for substantial sums of money, but they may well be interested in the
pattern of technical cooperation we have evolved with other countries in
the Middle East.
A genuine settlement of the Middle East conflict that included
the creation of an autonomous or independent Palestine would present
another important opportunity for the Foundation. The
Palestinians would have among their top priorities, I should think, the
creation of a national university of their own. Such an institution probably would not be in want of funds,
but would require careful planning if it were to avoid becoming another
mediocre and overcrowded teaching institution such as those that typify
higher education in Syria and Egypt.
None of these situations will necessarily require major grant
inputs; indeed, if they did we would probably be unable to respond affirmatively.
They
would, however, require
a good deal of professional
staff time, initially at least, from
program management staff. Our
style of operation in the Middle East has become increasingly
labor-intensive, and it seems to us right that this should be so.
We recognize
that this runs counter to the direction taken in many field
offices, where staff numbers are being cut and a higher proportion of
the funds is being used for making grants. It also is
contrary by implication to guidelines from
New York urging us to reduce program management costs. We hope
that by the end of your visit you will advise us on the propriety of our
continuing this swim against the stream.
Our reasons for taking this position have been spelled out in more
detail in various grant documents, particularly the social science DAP request, which is currently in draft. They may be summarized as
follows:
- It
is our perception that the main problems of the region have less to
do with the shortage of funds, or even of trained manpower, than
they have to do with the failure of institutions and systems to
yield the output that might be normally expected from the quantity
and quality of the inputs. There
is no simple answer as to why this is so; to find answers requires
employment of a staff deeply conversant in the workings of their
disciplines.
- The
need to understand more deeply the nature of the development process
leads us to prefer experimental or innovative activities. Highly competent staff are required to design and conduct an
experimental program.
- The
Foundation's comparative advantage lies with the analytical
capacities of its staff and the flexibility with which it can use
funds. It has been
recognized for some time that the Foundation's budget is not
particularly significant in terms of resource transfer even to
rather poor countries; it has also been generally accepted that the
direct transfer of technology is often not wholly appropriate. I would also maintain that a direct transfer of knowledge or
"competence" is often not wholly appropriate. Both technology and knowledge may require some cultural
leveling or adaptation to work well in non-western countries. This has implications for staff numbers because it means that
fine-tuning is needed for the effective use of funds.
- Any
large grant to an institution represents to some extent a
re-ordering of a society's priorities by a foreign donor. The distortion produced is accentuated when the donor
insists, as we frequently do, upon a commitment to sustain the
institution or activity within the institution once Foundation funds
for the purpose are exhausted. It seems to me this type of distortion is defensible
only in terms of time perspective. The social discount rate operative in many governments is
exceedingly high, and the Foundation can be valuable because it
concerns itself with problems of a somewhat longer time horizon. One wonders, however, just how often the distortion
involved in major institutional development grants is actually
contemplated by the Foundation. It would seem to me worth thinking about, not just in terms
of the nature of the activity, but of the style that often
accompanies Foundation largesse. I suspect we often support activities at a level of
excellence or elegance not really justifiable in the society in
question. Here again
the argument is: the smaller the grant, the less the distortion.
- In
the Middle East, funds are potentially available for regional
development from the large oil producers, from Arab institutions
such as those of the Arab League or the development banks, PL 480
funds, and from the U.N. agencies. If our comparative advantage is in the quality of our staff
and the flexibility with which they are allowed to operate, we
should attempt to associate ourselves, wherever possible, with
larger capital from other sources. To do this effectively we require some funds to justify our
seat at the table. This
means, incidentally, that our program management costs are likely to
be a fairly substantial share of our total budget. The operative consideration should be the percentage our
management costs represents of the total funds we invest, control
and influence the use of. On
that criterion, I suspect we would stack up well against the other
divisions of the Foundation.
To illustrate the
way in which our funds are being expended for staff and small actions
out of DAPs, it may be useful to look at the actual expenditure rate
under our current DAPs, plus anticipated changes in the rate of
expenditure under the social science, environment and
investment planning DAPs. In
the table below, I have annualized the average monthly expenditures for
the past three months where data are available in order to get the
actual, rather than budgeted, figures.
Actual figures
are most instructive because of the arbitrary timing of DAP
replenishment.
DAP
Annual Expenditure
Program
Management
900
Logistic
Support for Project Staff 200
TANDS
and Discretionary
125
ALAD
815
Development
Planning and Management
250
Education
200
Social
Science
75
Population
120
Current
actual rates
2,685,000
Anticipated
changes
Annual Expenditure
Investment
Program - Egypt
190
Social
Science (increase)
100
Environment __
50
Total
3,025,000
From these figures, it can be seen that on an annual basis we can
expect to make grants totaling only around a half-million dollars at our
present budgetary level. We do anticipate that our annual expenditure on ALAD will
decline sharply when a new international center is created, and this
could increase our grant-making capacity if the funds are not diverted
elsewhere.
The range of fields in which we work is quite wide, but they fit
into a general conceptual framework that reflects our view of the nature
of the development process and our analysis of the particularities
affecting the process in the Arab Middle East. Development is not
our only program objective, but it is the principal one. We are also working
to increase food production, limit fertility, protect the environment
and improve
international relations. These
worldwide objectives of the Foundation affect the amount of resources
allocated to various program elements, and also influence our style of
operations in those areas. But
the conceptual framework outlined below refers only to the development
objective.
Development can be
defined in broad terms as the process of adjustment by a society to a
higher level of technology. It
is turning out
to be a more difficult and complex process than was earlier supposed. The functional demands on institutions and the behavioral demands
on individuals in a modern society are really very different from those
of a traditional society, and the process of adjustment required is
profound.
In South Asia, where the inexorable growth of numbers of people
living in grinding poverty is the dominant factor of life, it would be
difficult and quite possibly wrong to focus on programs designed to do
other than reduce fertility and increase primary productivity. In the Middle East, however, where poverty is present but not a
dominant concern, we have tended to focus more on the cultural
constraints on this process of institutional and individual adaptation
to modern life. (The ALAD
program is an exception to this general theme, one dictated by the
urgency of the worldwide need to increase food production.)
We assume that lasting cultural change can be accomplished only
by the indigenous peoples themselves. The role of foreign assistance, including that of the Foundation,
could be therefore to acquaint people of the culture with modern
technology and then let them get on with making whatever cultural
changes are necessary to make
use of it. This,
in fact, has been the
predominant theme of foreign
assistance in the post-colonial era -- that is, since Westerners stopped
trying to remake foreign cultures in their own images.
In the Middle East, however, this approach to technical
assistance hasn't been very successful, perhaps because of the richness
and pervasiveness of the traditional Arab
Islamic culture. Western-style
institutions function rather poorly, and western-trained people are less
productive than their training would lead one to
expect. In fact,
it seems they are more productive when they leave their native lands
and take employment in western countries.
Considering the relative abundance of highly trained people in
the Middle East, we have concluded that our program should focus on
improving the effectiveness of these trained people, rather than on
increasing their numbers or quality as judged by international standards.
Thus, we are
more concerned with the adaptation of technology (skills, knowledge and
procedures) to the factor proportions and culture of the Middle East
than with the wholesale transfer of western technology intact.
Our programs can be grouped under three headings: the first
having to do with improving the preparation of children for modern life,
the second with adapting Arab institutions to the functional demands of
modern society, and the third with adapting imported technology to meet
Arab needs. (Continued)
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