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The Arab Spring, One Year On

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By Christine Lagarde
Managing Director, International Monetary Fund
It is an absolute delight to be here and to see so many old and new friends. I would like especially to thank His Excellency Mohammad Safadi, the Lebanese minister of finance, for his kind invitation to address you today.
And I would like to thank all the organizers—the Safadi Foundation; Stanford University’s Center on Democracy, Development, and the Rule of Law; the Center for International Private Enterprise, and—last but not least—our hosts today, the Woodrow Wilson Center.
This is my second time in a few short months giving a speech at the Wilson Center—I hope I do not wear out my welcome! But this time is different. When I was here in September, I talked about the challenges facing the global economy. Today, I will focus exclusively on the historic transformation taking place before our eyes in the Middle East and North Africa.
Let me talk about two specific things today.

  • First, I will talk briefly about the general context of the Arab Spring, and where it stands one year later.
  • Second, I will then address some specific economic challenges facing the region during this momentous period.

Context: Rejecting the Past, Defining the Future
Let me start with the context. As we all know, almost one year ago, everything changed for the people of the Middle East. The region embarked upon a historic transformation.
But at the time, few realized where this journey would lead. When Mohamed Bouazizi, the Tunisian street vendor, set himself on fire last year, who could have predicted that his tragic death would herald a whole new Middle East?
Who would have foreseen that this act of desperation against a violation of human dignity would ignite a flame that would eventually illuminate the entire region, toppling governments and leading to mass awakening of social consciousness?
This much is clear: The Arab Spring embodies the hopes, the dreams and aspirations of a people yearning for a better way of life. Yearning for greater freedom, for greater dignity, and for a more widespread and fairer distribution of economic opportunities and resources. Basic human yearnings.
Today, a year has passed, and the state of play remains uncertain. Spring has turned to autumn, and autumn to winter. People feel uneasy and grow impatient.
This is to be expected. Momentous changes of this sort—a new society in the making—are never smooth. They are almost always messy and complicated.
But still, I think it is fair to say that the setbacks have been bigger than expected. It has always been clear that each country must find its own path, and that the pace of change would vary by country, but few predicted the size of the setbacks or the intensity of the disruptions.
And here, I’m thinking especially of the deplorable loss of life in places like Libya, Syria, and Yemen. Such violence against civilians is always a blight on humanity. It pains me deeply to think about it.
And now we are moving into the most difficult period of all. We are in the middle of a delicate transition between “rejecting the past” and “defining the future”, a key psychological inflexion point.
“Yesterday is but today’s memory, and tomorrow is today’s dream,” wrote the great Lebanese poet, Khalil Gibran.
This is naturally a risky and uncertain period. It is a period when hard choices must be made, when post-revolutionary euphoria must give some way to practical concerns. It also doesn’t help that this is happening at a time of great turmoil in the global economy.
It will be important to manage this difficult transition in an orderly way. And here, I want to pay tribute especially to the people of Tunisia, who are going through a smooth and inclusive process of transition. Just as Tunisia provided the first spark of the Arab Spring, so now can it light the path forward for other countries in the region.
I remain ever hopeful. Although the journey might take some unpredictable twists and turns, and even prove perilous on occasion, the final destination is clear. The Arab Spring is still poised to unleash the potential of the Arab people. The potential of a better future for all. That’s what matters. And that’s what everyone must keep in mind.

Economic challenges
Let me turn now to my second point: how this ties into the economic challenges faced by the region.
We all learned some important lessons from the Arab Spring. While the top-line economic numbers—on growth, for example—often looked good, too many people were being left out.
And, speaking for the IMF, while we certainly warned about the ticking time bomb of high youth unemployment in the region, we did not fully anticipate the consequences of unequal access to opportunities. Let me be frank: we were not paying enough attention to how the fruits of economic growth were being shared.
It is now much clearer that more equal societies are associated with greater economic stability and more sustained growth.
While each country in the region must find its own path to change, the over-arching economic goals of the Arab Spring remain clear—higher growth, growth that creates more jobs, and growth that is shared equitably among all strands of society.
So how do we get there? How can we turn the dreams of the Arab Spring into reality?
At this delicate point in the transition, the risks are not only political, but also economic and financial.
We are already witnessing an economic slowdown across the oil-importing countries that is pushing up already-high unemployment and aggravating social tensions.
We must manage these risks carefully. In his context, I want to talk about two specific dimensions—macroeconomic stability and inclusive growth.

Macroeconomic stability
Let me first emphasize a very important point: macroeconomic and financial stability remain absolutely essential, core building blocks of any new society. Without this secure foundation, any efforts to respond to people’s aspirations will not be realized. Macroeconomic and financial stability must remain fundamental.
To date, governments have responded to social pressures by increasing subsidies, wages, and other spending to help lessen the hardship faced by ordinary people. This was needed for social cohesion in the short term.
But it does not come without cost. Fiscal deficits have widened, which raises concerns about sustainability. It pushes up interest rates, which makes it harder for the private sector to get credit to set up or expand businesses and start hiring people.
So across the region, governments need to move toward better and more sustainable fiscal policies. In particular, more targeted social protection systems would help free up funds for spending on areas like infrastructure, education, and health while laying the foundations for inclusive growth. This would be a break from the past when generalized subsidies were used to appease the population while allowing the privileged to benefit from unfair practices.
Inclusive growth
So macroeconomic stability is essential. But macroeconomic stability and inclusive growth can—and indeed must—go hand in hand.
And here, the government and the private sector must work in harmony. The private sector, including small and medium-sized enterprises, must take on a leading role, to boost investment, productivity, competitiveness—and create jobs.
But for this to happen, the government must provide an enabling environment. It should put in place modern and transparent institutions to encourage accountability and good governance and ensure fair and transparent rules of the game. It should slay, once and for all, the dragon of corruption.
The government must also lay the foundations of a modern and competitive economy by breaking down the vested interests and cozy networks of privilege that prevent the region from reaching its true economic potential. There is simply no other way to create the 50-70 million jobs needed for the people joining the labor force and to reduce unemployment over the next decade.
Again, to succeed, the debate needs to move beyond “what is wrong with the past” to “what is right for the future”.

Role of the international community
Of course, the region’s destiny lies ultimately with the region itself, but the international community also has a responsibility to help. It must listen to the hopeful voices and provide support including through financing and technical assistance.
The international community must also offer greater market access to countries in the region. If these countries are to modernize and become more competitive, they will need to be given the opportunity to trade more with the rest of the world. To create the needed jobs and inclusive growth, there is simply no other alternative.
The IMF too stands ready to help. We are working closely with our members in the region, and we are willing to walk the path with them. We are offering the best policy advice possible. We will provide financial help if requested.
And with our technical assistance, we are helping countries build better institutions for a better world. Some examples: We are helping Egypt make its tax system more equitable. We are helping Libya develop a modern system of government payments. We are helping Tunisia improve its financial sector. And we are helping Jordan with fuel subsidy reform.

Conclusion: A Beacon of Hope
Let me briefly wrap up. Amidst a darkening economic outlook and waning confidence, the Arab Spring still shines as a bright light and a beacon of hope, a symbol of what can be accomplished.
One year on, the region stands at a critical juncture. The transition is going through a rocky patch, and the challenges are substantial, but the light remains on. And the region, together with its international partners, must make sure that this light is never extinguished.
This is a region that stands at the center of human civilization. Names like Carthage and Alexandria and Damascus are forever etched in our collective consciousness. The time has come for the region to live up to its legacy.
Let me end with another quote from Khalil Gibran: “March on. Do not tarry. To go forward is to move toward perfection. March on, and fear not the thorns, or the sharp stones on life’s path.”
I cannot top that.
Source: www.imf.org

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Investing into a more sustainable future: changing businesses from the inside out

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Investing into a more sustainable future: changing businesses from the inside out 1

By Shawn Welch, Vice President and General Manager of Hi-Cone Worldwide

As industries across the world are facing unprecedented uncertainty and anticipating the economic implications of the current health crisis, business leaders have the unique opportunity to seize the chance to make lasting, positive changes and re-interpret the business challenges in a positive way – without forgetting or minimising the toll the pandemic has taken. When trying to identify a way forward, the future must be sustainable. We must take this opportunity to find a more sustainable way for businesses and manufacturers to survive.

Environmental and economic concern have only increased the gap on what consumers want – more sustainability – and how much progress businesses can make without risking their viability. However, rather than giving up on ambitious goals, maybe we need to reframe the way we look at sustainability. So far, businesses have tended to react to consumer demands, often without looking into the long-term implications and research-based due diligence one would expect. Therefore, now is the right time to be more deliberate: to continue on the path towards a truly sustainable ‘new normal’, businesses need to consider the bottom line impact more than ever before and truly invest in changing their business models to become more sustainable.

Shawn Welch

Shawn Welch

To meet the UN’s ambitious 2030 Sustainable Development Goals, businesses ultimately must thrive – working towards establishing a circular economy remains crucial. Instead of a linear ‘extract, use, dispose’ approach, materials need to be respected and re-used as many times as possible, which is only possible if products are designed for re-use, re-manufacturing, repair or restarting. After all, any and all consumption comes at a price. In manufacturing, processes draw on resources to produce items that, once they have served their purpose, become surplus to requirements. Yet, to ignore this is to take an incomplete view of sustainability: instead, materials are extracted from waste to re-enter production processes. Reuse and recycling initiatives are central to this and great strides have been made in raising awareness of this need. The full environmental cost of production and consumption includes the choice of materials themselves but also the level of carbon emissions generated, and energy consumed.

Once products and processes have redesigned for a circular approach, this initial investment will often easily be recouped, especially if we start with looking at the facts when starting this crucial process. To make the Circular Economy a focus for any business very often means changing the business model. Here, investing in research and development is vital. In the packaging industry, for example, we are seeing that customers and consumers are increasingly more focused on sustainability, and that surprising changes can unlock societal and business value. Through minimising a product’s carbon footprint or making recycling easier for consumers, lifecycle-assessment-based product redesigns or using recycled plastics instead of larger quantities of cardboard, companies are identifying these more creative options and enjoying the long-lasting benefits that come with implementing them. In any case, leadership is key. A research-driven approach gets everyone on-board and seeing management committing to these goals as part of business plans helps cement these. At a recent Reuters Responsible Business Summit virtual panel, I was part of an interesting conversation. Here, Yolanda Malone, Vice President Global R&D Snacks PKG, PepsiCo, discussed how leaders have to drive the behaviours within the organisation and the tone for the culture. She explained that her sustainable plastics vision is a world where plastics never become waste. Only through putting the mantra of “reduce, recycle, rethink and reinvent” can we bring circular products to consumer. She stressed that, if we don’t reinvent, we will fall back into old habits.

Of course, consumer behaviours play a part and the easier the solution, the more likely consumers will get behind it. End consumers are becoming increasingly conscious of packaging. So, to be truly circular, we need to take into account the entire lifecycle. Mindset change needs to continue to happen. Consumers need to be clear about what their choices are. To achieve this, we must change our businesses from the inside out, allowing for close collaboration inside and outside of our organisations. Other organisations – such as governments and recycling organisations – will need to be involved in businesses’ efforts, multiplying the impact our investments will have. We must address all aspects of sustainability and, for example, have better recycling, a focus on infrastructure and emphasis on consumer education. To recover, reuse and recycle, the R&D must be in place and dedicated to sustainability. Partnerships are important as we, as other leading global companies realise, cannot do this alone. Collaboration is key when investing in a more sustainable, more Circular, future.

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Securing Information Throughout the Supply Chain – Preventing Supplier Vulnerabilities 

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By Adam Strange, Data Classification Specialist, HelpSystems 

The financial services sector is experiencing extreme disruption coupled with rapid innovation as established institutions strive to become more agile and meet evolving customer demand. At the same time, new market entrants compete fiercely for customers. Increasing operational flexibility, through the deployment of cloud infrastructure or via digital transformation initiatives, is critical for future competitiveness but it has also driven regulatory and security challenges, particularly around working with suppliers.

That said, the benefits of a diverse, interconnected supply chain are compelling: agility, speed, and cost reduction all weigh on the positive side of the equation, prompting financial institutions to pursue close, collaborative relationships with suppliers, often numbering in the hundreds or thousands.

Weakness in the supply chain

On the negative side is the increased cyber threat when enterprises expose their networks to their supply chain. In our modern interconnected digital ecosystems, most financial organisations have many supply chain dependencies and it only takes one of these to have cybersecurity vulnerabilities to bring a business to its knees.

As a result, breaches originating in third parties are common and costly – a Ponemon Institute/IBM study found that breaches being caused by a third party was the top factor that amplified the cost of a breach, adding an average of $370,000 to the breach cost.

Concern around the supply chain was also evidenced in a recent report we have just issued, whereby we interviewed 250 CISOs and CIOs from financial institutions about the cybersecurity challenges they face and nearly half (46%) said that cybersecurity weaknesses in the supply chain had the biggest potential to cause the most damage in the next 12 months.

But sharing information with suppliers is essential for the supply chain to function. Most financial services organisations go to great lengths to secure intellectual property, personally identifiable information (PII) and other sensitive data internally, yet when this information is shared across the supply chain, does it get the same robust attention?

Further amplified by COVID-19

Financial service organisations have always been a key target for cyber attacks.  Our research showed that since COVID-19 hit, the risk has elevated further, with 45% of the respondents seeing increased cybersecurity attacks during this period. Likewise, hackers are rejecting frontal assaults on well-defended walls in favour of infiltrating networks via vulnerabilities in suppliers.

But financial services organisations must maintain reputations and ensure customer trust. Firms are keen to demonstrate that they are protecting customer assets, providing an ultra-reliable service and working with trustworthy partners. So, what can they do to better protect their supplier ecosystem?

At the very least, they need to ensure basic controls are implemented around their suppliers’ IT infrastructure.  For example, they must ensure suppliers maintain a secure infrastructure with a minimum of Cyber Essentials or the equivalent US CIS certification controls. Cyber Essentials defines a set of controls which, when implemented, provide organisations with basic protection from the most prevalent forms of threats, focusing on threats which require low levels of attacker skill, and which are widely available online.

Likewise, they need to ensure good information management controls are in place and this begins with accurate information/data classification. After all, how can you apply appropriate controls to your information unless you know what it is and where it is?

How ISO27001 helps organisations put in place a data classification process

The international standard on information security, ISO27001, describes the basic ingredients for data classification to ensure the data receives the appropriate level of protection in accordance with its importance to the organisation. It comprises three basic elements:

  • Classification of data – in terms of legal requirements, value, criticality and sensitivity to unauthorised disclosure or modification.
  • Labelling of data – an appropriate set of procedures for information labelling should be developed and implemented in accordance with the organisation’s information classification scheme.
  • Handling of assets – procedures for the handling of assets developed and implemented in accordance with the organisation’s information classification scheme.

Adoption of this methodology will help financial services organisations and their supply chain take a more data-centric information security approach. However, there are essentially four key stages for implementing a data risk assurance supply chain approach and these are:

 1. Approval – in organisations with complex supply chains senior management, vendor management, procurement and information security will all need to support a robust risk-based information management approach. Details of previous incidents and their impact alongside the business benefits will be essential to gain stakeholder buy in.

 2. Preparation – Organisations should start with Tier 1 suppliers and initially identify the contracts with the highest business impact/risk. They should identify and record information repositories and the data that they contain together with the responsible business owners. Define a business taxonomy based on information categories of that data and include supply chain factors such as what information categories are shared.

For example, they need to understand the business impact of compromise against each of the information categories. Have any suppliers suffered security incidents? What assurance mechanisms are in place? Once all this information is collated the organisation can create a data classification policy and define a set of controls for each data category.

 3. Discovery – Select each data category and identify the associated contracts. Then prioritise the data category based on the risk assessment and verify that the data security controls and arrangements for each data category and contract meet the overall requirements. Once complete, hand over the contract for inclusion in the vendor management cycle.

4. Embed process – the overall objective is to embed information risk management into the procurement lifecycle from start to finish. Therefore, whenever a new contract is created there are a number of actions required which embed data risk at each stage of the bid, tender, procurement, evaluation, implementation and termination phases of the contract.

To summarise, organisations should start by researching the information risk and security frameworks such as ISO27001 and others. They should then focus on defining their business taxonomy and data categories together with the business impact of compromise to help develop a data classification scheme. Finally, they should implement the data classification scheme and embed data risk management into the procurement lifecycle processes from start to finish. By effectively embedding data risk management and categorisation into their procurement and vendor management processes, they are preventing their suppliers’ vulnerabilities becoming their own and are more effectively securing data in the supply chain.

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Deloitte: Middle East organizations need to rethink their workforce in the wake of COVID-19

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Deloitte: Middle East organizations need to rethink their workforce in the wake of COVID-19 3

Organizations in the Middle East have had to take immediate actions in reaction to the COVID-19 pandemic, such as shifting to remote and virtual work, implementing new ways of working and redirecting the workforce on critical activities. According to Deloitte’s 10th annual 2020 Middle East Human Capital Trends report, “The social enterprise at work: Paradox as a path forward,” organizations now need to think about how to sustain these actions by embedding them into their organizational culture.

“COVID-19 has created a clarifying moment for work and the workforce. Organizations that expand their focus on worker well-being, from programs adjacent to work to designing well-being into the work itself, will help their workers not only feel their best but perform at their best. Doing so will strengthen the tie between well-being and organizational outcomes, drive meaningful work, and foster a greater sense of belonging overall,” said Ghassan Turqieh, Consulting Partner, Human Capital, Deloitte Middle East.

According to the Deloitte report, many organizations in the Middle East made quick arrangements to engage with employees in the wake of the pandemic through frequent communications, multiple webinars where senior leaders addressed employee concerns, virtual employee events, manager check-ins, periodic calls and other targeted interactions with the workforce.

The report also discussed how UAE and KSA governments have reexamined work policies and practices, amended regulations and introduced COVID-19 initiatives to support companies and the workforce in the public and private sectors. Flexible and remote working, team-building and engagement activities, well-ness programs, recognition awards and modern workspaces are among the many things that are now adding to the employee experience.

Key findings from the Deloitte global report include:

  • Only 17% of respondents are making significant investments in reskilling to support their AI strategy with only 12% using AI primarily to replace workers;
  • 27% of respondents have clear policies and practices to manage the ethical challenges resulting from the future of work despite 85% of respondents saying the future of work raises ethical challenges;
  • Three-quarters of leaders are expecting to source new skills and capabilities through reskilling, but only 45% are rewarding workers for the development of new skills; and
  • Only 45% of respondents are prepared or very prepared to take advantage of the alternative workforce to access key capabilities despite gig workers being likely to comprise 43% of the U.S. workforce this year according to the Bureau of Labor Statistics.

“Worker well-being is a top priority today, and similarly to the rest of the world, companies in the Middle East are focusing their efforts to redesign work around well-being by understanding workforce well-being needs,” said Rania Abu Shukur, Director, Human Capital, Consulting, Deloitte Middle East.

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