G-8 Pledges $40 Billion for 'Arab Spring'

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Japanese Prime Minister Naoto Kan, French President Nicolas Sarkozy, Jose Manuel Barroso, head of the European Commission and the President of the European Council, Herman van Rompuy in Deauville on May 27.

DEAUVILLE, France—The Group of Eight industrialized economies pledged Friday to provide billions of dollars in funding to newly democratic nations in North Africa and the Middle East, underscoring big nations' eagerness to press reforms in the region but kicking many key decisions about financial support to later in the year.
At their two-day meeting in this Normandy seaside town, individual G-8 members offered few new specific financial commitments for Egypt and Tunisia, which launched the "Arab Spring" revolutions early this year. Instead, they pledged that international development banks—in which G-8 members are top shareholders—would supply more than $20 billion in aid over the next three years for economic transitions.
French President Nicolas Sarkozy said a further $10 billion would come in the form of bilateral aid from G-8 members and another $10 billion that has been offered by Saudi Arabia, Qatar and Kuwait.
But the G-8's official declaration avoided giving details about how much new aid individual countries were willing to commit to the region, which has undergone upheaval in the year's first half. "G8 members are already in a position to mobilize substantial bilateral support to scale-up this effort," they said. "We welcome support from other bilateral partners, including from the region."
G-8 leaders, increasingly concerned with protracted and bloody conflicts in Libya, Yemen and Syria, indicated their support has strings attached: It will be contingent on social and economic reforms, such as strengthening transparency in government and encouraging private-sector development.
Egyptian economic analysts said the funding pledged by the G-8 would provide valuable financial support in an economic crisis. "We see this as very positive for the business climate and investment activity in the country because it confirms the belief in the country's potential and the strong fundamentals that it's shown in the past year," said Alia Mamdouh, an economist at CI Capital, a Cairo-based investment bank.
Other observers were more skeptical. "The official announcement is purposefully vague," said Igor Lukes, professor of history and international relations at Boston University. "In its present form, no one can determine how consequential it might become once it's implemented."
Mr. Lukes also said the West has a spotty record providing assistance to emerging democracies. He noted Egypt, for instance, has been the recipient of one of the biggest U.S. aid packages since the Camp David accords in 1978. And when former president Hosni Mubarak's regime collapsed, members of his family had bank accounts worth hundreds of millions of dollar.
The Arab Spring carries high stakes for the G-8 nations—the U.S., U.K., Japan, Canada, Russia, France, Germany and Italy. For Europeans, democracy and prosperity in the region could provide new growth opportunities and prevent a further flood of unwanted migrants. The U.S., after wars in the Middle East, sees an opportunity for homegrown revolutions to promise stability in the region.
"We have all the ingredients for success…but need economic support for our march towards democracy," said Tunisian Prime Minister Beji Caied Essebsi, who spoke at the summit. Success in Tunisia would be "an example to other countries—to show that Islam and democracy are not incompatible."