Arab uprisings are pushing aside deficits and austerity as the biggest worry of the leaders of the Group of Eight industrialized nations this year.
PARIS – President Barack Obama and the other leaders will seek to marshal their combined economic might behind the grass-roots democracy movements that have swept the Arab world and driven away tourists and investors.
Egypt and Tunisia, where popular revolts this year overthrew authoritarian regimes, want to show G-8 leaders and international financiers that they are still sound investment destinations which might be a tall order as the future shape and policies of their governments remains unclear.
The discussions starting Thursday in the chic Normandy resort of Deauville will see the host, French President Nicolas Sarkozy, bring together the heads of wealthy nations for what one of Sarkozy’s top advisers describes as “the founding moment” of a partnership between the G-8 and the Arab countries.
That partnership may be strained, however, by tensions over how to handle Libya‘s rebel movement and entrenched leader Moammar Gadhafi. NATO appears to have no exit strategy, and efforts to oust Gadhafi remain elusive.
The leaders of the U.S., Canada, Britain, Germany, France, Japan, Italy and Russia will greet counterparts from Tunisia, Egypt and the head of the Arab League to hash out details of what some are calling a new “Marshall Plan” for these countries, similar to the massive U.S. aid to Europe after World War II that helped the continent rebuild and stave off communism.
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The historic parallel is fitting, as Deauville is just a short drive along the English Channel from the D-Day landing beaches where the U.S. and its allies began to roll back the Third Reich in 1944.
A top Sarkozy official drew another historical analogy, saying the aid and investment to be promised to the Arab nations would resemble that which the G-8 offered to Eastern and Central European nations after the collapse of communism in 1989.
Last week President Barack Obama said the U.S. has asked the World Bank and the International Monetary Fund to present a plan at the G-8 summit that sets a path to stabilize and modernize the economies of Tunisia and Egypt.
The U.S. will forgive up to $1 billion in Egyptian debt and guarantee another $1 billion to finance infrastructure and new jobs. Obama said he will ask Congress to finance enterprise funds that will provide money for investment in both countries _ a request that comes as Congress seeks to cut spending.
Tunisia, followed by Egypt, kicked off change around the Arab world, as broad-based popular movements took to the streets demanding greater rights and political representation from their authoritarian governments.
But the street demonstrations in Cairo and Tunis that thrilled and inspired the Arab world also drove away the tourists and investors on which these economies are heavily dependent.
“The first thing they will be looking for is direct financial aid,” said Said Hirsh, a Middle East economist with Capital Economics consultancy in London. “Both countries need quite a lot of money considering the hit to their economies and their revenues.”
While U.S. officials say G-8 countries will discuss their role in the process, they say it is too soon to reach a deal on dollar amounts for assistance.
The European Bank for Reconstruction and Development, a London-based institution set up in 1991 to foster transition to market economies in post-communist Europe, could be “repurposed” to focus its expertise on the southern Mediterranean region, a top official in Sarkozy’s office said, speaking on condition of anonymity because of protocol.
The heads of the World Bank and the United Nations will also be present and add their signatures to the partnership declaration. Former IMF chief Dominique Strauss-Kahn, under house arrest in New York following his indictment for sexual assault, will be replaced for the event by the institution’s acting managing director John Lipsky.
Finding a permanent replacement for Strauss-Kahn is likely to take up a good part of the summiteers’ small talk.
Nuclear safety will be another topic, with Japanese Prime Minister Naoto Kan scheduled to provide leaders with an update on the continuing crisis at the Fukushima Dai-ichi nuclear power plant.
The future of the Internet will also figure in the G-8 leaders’ talks. Mark Zuckerberg of Facebook and Eric Schmidt of Google and other Internet executives took part in two days of debates focused broadly on the Internet’s impact on the global economy. Several of the Internet conference’s speakers will then take policy recommendations to Deauville in talks with the G-8 leaders.
Police have established one security cordon around the conference center where the leaders are meeting, and another perimeter encompassing all of Deauville. Local ports, train stations and the airport will be shut from Wednesday to Friday, and a no-fly zone enforced over the town.
The show of force may have discouraged radicals and other protesters from attempting to organize demonstrations close to the summit. Anti-G8 protesters plan symbolic demonstrations in the neighboring towns of Caen and Le Havre, but they do not plan to try to disrupt the event in Deauville itself, according to a statement circulated by radical groups online.